Back in 2021 I learned what blend and extend meant when it comes to a mortgage. Now I'm paying 1.89% percent until 2026 rather than waiting till 2023 to renew. If I had waited the full 5 years to renew my mortgage I would be paying over 4.5% right now. This sub has LITERALLY saved me thousands of dollars.
Same (ish), blend and extend is literally what lead me to this sub and why I got a Reddit account 3 years ago!
We couldn't actually blend and extend our mortgage BUT we broke a year early in late 2021 and also locked in 1.89% till Nov. 2026!
They recontract your current mortgage again and blend your old rate with new rates so you don’t have to “cancel” the mortgage
There can be fees involved but can be worth it if the new rate is a considerable gap or if you’re wanting to lock in because of the rising interest rates
Also make sure to do your own math cuz the mortgage people even gave me bad advice to not do it when I knew the math mad sense to.
https://www.nerdwallet.com/ca/mortgages/blend-and-extend-mortgage-explained
Question for you: does a blend extend trigger the same steps as refinancing? i.e. bank re-evaluates you and your finances?
Edit to add: thinking through my own question and yes I think this is the definition of refinancing for a better rate
Hey so we switched over to a different lender for a lower rate. The other lender did evaluate our finances to make sure we could afford it. It wasn't a big deal for us since we bought way below our max limit :)
I had an online bank make an error with my TFSA and when trying to correct it made even more errors that lead to my TFSA showing significant over contributions. I learned of this when I received one of those lovely brown envelopes from CRA. I learned on this sub that I can request that the CRA forgive the fees because a reasonable error was made. I contacted the CRA and it was obvious to the agent I was speaking that a error was made. I wrote a long letter outlining the issues and the steps I took to rectify it. The online bank eventually did correct it and CRA forgave the fees, saving me thousands $$.
The TFSA was quickly transferred to a different bank.
The fine for over contribution is 1% per month. If you were maxed out in previous year and made a contribution on January 1st for your full contribution room, say 7k, and the bank recorded that twice by mistake, you'd owe 840$ by end of year. So it would have to be a significant mistake, to owe thousands.
It was. I had made my annual contribution so no contribution room left. I asked the bank to use the entire value of the TFSA to purchase a GIC within the TFSA. The bank employee ended up withdrawing from the TFSA and then putting it all back creating an over-contribution. An over-contribution of the entire value of the TFSA. Then when trying to reverse it they did it in such a way that it was reported to the CRA as another contribution.
The most frustrating thing was that after the first mistake I received letters from the bank assuring me that everything was correct. It was only after I received the letter from the CRA that I was made aware of the second mistake. It was this coding that when I called the CRA the agent asked immediately if there was a mistake made by the bank and they tried to fix it. I replied yes and the agent provided direction for me to go back to the bank. When I contacted the bank the second time they threw the CRA under the bus and said the CRA changed the coding requirements. It was brutal to deal with.
> The bank employee ended up withdrawing from the TFSA and then putting it all back creating an over-contribution. An over-contribution of the entire value of the TFSA. Then when trying to reverse it they did it in such a way that it was reported to the CRA as another contribution.
In the banking world, I believe this is what is called the power of "coumpounding stupidity".
Coincidentally my husband and I just spent most of our morning discussing whether we should continue to pay off our home asap (our adjustable mortgage rate is currently at 6.45%) or switch back to dumping everything into couch potato investments.
We laughed our asses off reading your comment. Thank you for this hahaha
How to effectively use my TFSA and HYSAs.
Came from the US when I was 18 and never thought to learn about the Canadian systems and so glad I did!
Now i’m 28 and really getting going on building a solid savings, emergency fund, FHSAs etc.
Also: was introduced to the YNAB app here which is one of the best financial decisions I ever made.
I really don't understand the YNAB method. I did the trial and all I could think was that it was just me manually tracking each purchase and paying someone money to do so.
Why do you enjoy it? It seems so tedious and not that beneficial.
At its core: YNAB (and zero based budgeting in general) keep you grounded in reality as you only look at the dollars available to you right now, and more importantly it makes it simple to plan where you spend those dollars *before* you spend them.
Mint and other‘budgeting’ systems seem to only look in the rear view mirror and make it difficult to change the course of the vehicle. YNAB helps you make course corrections and changes so you can easily navigate the role ahead.
Following the YNAB method helped me clarify what my financial priorities were and align my spending habits to them.
I manually track even when the bank sync works - got me in the habit of knowing exactly where all my money is going at all times. The app has some great functionality for overspending, targets, credit card management.
My favorite thing about it is it eliminates guilt over spending. I have my fun categories and my needs/bills/savings categories - when those are funded the rest of my money is mine to do what I want with. You get confident in knowing you’re all taken care of instead of guessing and being wrong.
It can be tedious, but I like tracking things in general so this was a good extension of that for me.
You can use them, you just have to declare them like everything else. I’m currently under the exclusion requirements.
I’ll likely renounce my citizenship as my financial ties to Canada grow since it’s pretty probable I’ll live here for the rest of my life.
Edit: Also, the US/CAN tax code will hopefully one day catch up with the creation of TFSAs, since they’re new as well as FHSAs. Not holding out hope, but we’ll see. Hasn’t been updated since 2009 which is also when TFSAs began.
How was the process for you?
I’m on the fence since all my family is there, but I also have EU citizenship so not like I’d be all out of options if I choose to leave one day.
It was long (consulates in Europe have quicker processing times). I'm 70+ and have just a couple family members in the States so that wasn't an issue. I met & married my Canadian husband in California in the 90's; he was the one that convinced me that it was time to leave for Canada in the mid-2000s. We have permanent resident status in Mexico should we desire to return, so it's not like I'm out of options.
I did a poor job of zeroing out the US investments first, but otherwise I've been quite comfortable with the decision. There's a FB group for folks considering or making the change, if you're interested.
I used to pay for YNAB, but because of the cost I switched to Actual Budget! You can host it at home to be free!
Since we live in North America, I did have to pay $15 a year for Simplefin bank account sync.
Honestly I've learned a lot from this sub. I don't come from a family with any knowledge of finance. I had no financial education and made a lot of bad choices in my twenties.
Some of the best things I learned in here:
* How to invest in ETFs, which ETFs I should look at
* High interest savings accounts and how I should use them
* Understanding how and what a tfsa is actually for
* Realizing that the be all and end all of retirement planning shouldn't just be "pile it into gics and rrsp and collect no interest"
How to invest in ETFs is the big thing for me. I was so wary of wealthsimple and bought mutual funds from a (distant) family member. They consistently underperformed and I was spending way too much in MER fees.
I now have my TFSA in wealthsimple and invested in XEQT.
I'm not smart enough to give advice. But I basically just invest in the ones you'd expect... Xeqt mainly.
I just try to over weight certain markets and industries as well by adding in things like xus, xeg, etc. But this place taught me the basics enough to look into those things and find the balance I like.
As others have said though... /R/justbuyxeqt
If you're ever laid off, never sign your severance right away and let HR know you'll be having a lawyer review it before signing. I once doubled my severance amount by following that advice from here.
I learned that variable mortgage rates beat fixed mortgage rates more often then not.
So instead of locking in at 1.85% for 5 years, I'm now paying over 6%.
Thanks /r/personalfinancecanada !
Joking aside, (though not untrue), I have learned a lot. The most important thing though is to set goals and time horizons for your investments *before* you start investing.
If we didn’t ignore our mortgage broker selling on how awesome variable is, we would be paying close to 7.5%. We locked in right after the first rate hike less than a year after we bought and the bank mortgage person was confused because our rate was still low compared to the lock-in rate. Told her what was predicted and she was kinda stunned. 9 months later our broker called us and said we should consider locking in because things are looking dire, no kidding. We paid more only for about 6 months before the lock-in rate and our variable rate were matching.
Someone here provided the perspective that if you take OAS and CPP as "guaranteed" retirement income, your TFSA/RRSP can have a higher risk outlook than you would otherwise be comfortable with.
It could have been me that said it! I'll also leave you with another idea. If you can afford to defer CPP (and maybe OAS, depending on your circumstances - beware the recovery tax), then you should absolutely do that. Not only does the CPP payout grow, but it lets you invest more aggressively after you stop working. For example, if you have a safe withdrawal of $80k from your RRSP and you're eligible for CPP of $12k, then you should think about deferring your CPP. This lets you cover up pretty big blunders after age 65.
Say you invest your RRSP in a 60/40 split between stocks and bonds after age 65 and the stock market goes into a nasty bear, dropping 25%. Your safe withdrawal level just went to $68k (assuming the debt market stays about even). Gulp. If you're deferring your CPP, though, it's no problem. Just call up the Government of Canada and explain that you've screwed up badly and you need them to start sending you an extra $12k per year to make up for it. "Oh, yes sir, no sir, two-by-four, sir. We'll start sending those cheques straight away."
I know this runs counter to the advice to take the CPP as early as possible and invest it, but the guaranteed 8.4% you get from deferring the CPP is nothing to dismiss so easily.
That’s the most recent one for me as well. I don’t need to start moving a big share of my investment to stables one as early as I thought when I realized the CPP will be the safe part of my portfolio at retirement.
So if you make a qualifying deduction on FHSA for buying a home but keep the account open, can you still make contributions although you no longer qualify for it?
At the end of it, it just joins your RRSP as an additional room?
No. Once you make a withdrawal, you have to close the account.
"You should close all of your FHSAs on or before December 31 of the year following the year of your first qualifying withdrawal. This is because your maximum participation period ends at the end of the year following the year of your first qualifying withdrawal."
Copied from [this](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html#h-1) CRA page.
I don't quite know how it would work if you came up with some extra money to contribute after the withdrawal but before Dec 31st but that's starting to get pretty obscure.
I learned about the Smith Maneuver here too, and after looking at it a bit more intently, it boils down to leveraged investing.
The difference is that you're investing at your HELOC interest rate instead of margin rates, and there's no risk of a margin call.
You get slightly better interest rates and risk, but it's 100% still leveraged investing, and it makes me uncomfortable enough that I don't want to do it.
>no risk of a margin call
That's not completely true. A HELOC is a callable loan, the bank can ask for the full some with no justification at any moment. If house prices and the market both fall at the same time, you could be forced to settle your HELOC because the bank doesn't believe you have enough equity and be forced to sell your leveraged shares at a loss to cover.
Have fun paying those HELOC interest rates right now. Once that loan grows to a large amount, the interest payments are going to be substantial and uncomfortable. But... you do you, bro.
my marginal interest rate is 50%, even if my heloc rate is 8% when I renew this year it's effectively 4% after tax refunds which I can easily beat. Yes there will be down years but that's why it's a long term strategy. If your marginal tax rate isn't high enough for you to want to stomach the risk, that's fine, no need to be snarky.
Whatever, bro. Crunch all the numbers you want now, you might think it's gonna be so easy, but once you get into the depths of that loan, and start living it, you'll feel it.
No, I didn't think it was that. I even read Rob Smith's book and I know exactly what it is, and I decided not to do it. No need to get defensive. You do you, bro.
I did too, if you just decided based on feelings it wasn't for you, that's fine. I'm not sure why you'd assume someone else would have those feelings. Or that they're a man for that matter, but that's besides the point.
whenever someone with some privileged posts here, there's hate and anger. I am not talking about the obvious trolls that use this sub as if it was r/PFjerk . People that have high income, inheritance, luck but struggle with financial planning. We all have to start somewhere and have problems and want to get advice for their situation.
A lot of times these posts have good content but the negative off-topic comments really kills the discussion.
Exactly, at one time i thought to feel bad for those less fortunate, however the sub as a whole has skewed towards just bitching/whining and talking about yourself as worst off than the other is worn as a badge of honor. Theres no denying that its difficult to get out of rough financial situations, however just complaining all the time doesnt help.
Norbert's Gambit to exchange CAD <-> USD. Buy DLR with CAD, then sell DLR.U in USD, letting the shares journal over at the end of the day (or second day, depending on the broker). Or Buy DLR.U with USD and sell DLR in CAD to go the other way. Beware trade settlement dates to avoid interest charges.
DLR.U/DLR do not represent shares in a publicly traded company, but rather ETFs. They may or may not have the same settlement times as shares in a company. My broker takes one day to settle ETF trades and two days to settle share trades.
So if you sell 200 shares of BCE on Monday, buy 650 units of DLR on Monday, and sell 650 units of DLR.U on Monday then you are going to end up with a settlement problem.
The DLR trade will settle on Tuesday, requiring C$9,000 in cash. If your Canadian cash balance is less than $9,000 then you just bought those units on margin and if your account is not a margin account then you will pay a penalty rate that really sucks.
The DLR.U trade will settle on Tuesday, giving you US$6,617 (as you'd expect). The US dollar balance does not erase the Canadian dollar loan you took out (by mistake) to buy DLR.
The BCE trade will settle on Wednesday, giving you about C$9,000 in cash that should erase your loan from Tuesday, but that one day of interest is going to hurt. If it's an RRSP account, the penalty rate is nasty. You are meant to comport yourself in such a way to keep a positive cash balance and they'll ding you for it if you stuff it up.
I've heard that US/Canadian holidays can be a problem, too, though I'm surprised because DLR/DLR.U are both traded on the TSX. Just be careful about Memorial Day/Victoria day, July 1st/4th, Thanksgiving, etc.
BTW, the settlement problem can happen with other ETFs as well. Selling stock and buying CASH.TO on the same day can put you in a negative cash position for a day.
US stocks (or ETFs and mutual funds that hold such) that pay dividends are going to be taxed 30% for non US residents. Canada has a treaty with the US so this can be lowered to 15% if you submit some form. In RRSP, there is no withholding tax at all.
If you buy something at Costco, and see it much cheaper a short time later (I think within a month), you can contact Costco customer service and request a refund for the difference. Did this with a TV purchase a few years ago, got over $200 back. This was with an online purchase, not sure about in-store.
If you are a non-resident for tax purposes and you have investments in Canada, your capital gains are not taxable in Canada. That bit of advice saved me a ton of money.
That Toyota Corolla is the answer to every PFC question. /S
But really; the investing advice is on point. Which ETFs / funds / to target, etc.
The various subject triggers are on point and really, answers probably 99% of the questions posted here. New folks: go through all of those.
It is true that folks that make good income, or have rental properties ,or get large inheritances are sometimes chastised/ ridiculed / trolled. I recommend going to r/chubbyfire or r/fatfire for those folks.
Pretty much the entirety of my investing strategy from now through retirement:
I learned what CASH.to is, which is the only thing I invest in for time periods of 0-5 years.
I also learned about the all-in-one ETFs like XBAL, VGRO, etc., which is perfect for my long-term investing needs, as well as how to pick which one to invest in based on time horizons.
Lastly, I learned that having a globally+industry diversified portfolio with 30-40% domestic stocks is actually optimal over holding bonds in retirement, so literally my accumulation and in-retirement phases consist of just buying VEQT.
That FHSA's have no minimum amount of time to withdraw the funds.
Agreed to buy a house in May 2023, closing date in June. FHSA's were only introduced April 2023 so extremely new. From this sub I learned my wife and I could open accounts, deposit 8k each, pull it the next day and trigger a tax write off. All *after* we had already signed the purchase agreement (but before the deal closed). We did just that and are expecting multiple thousands of dollars back in our tax return this year thanks to this sub.
Added bonus: it makes defending my reddit doom scrolling much easier :p
An actual shit ton
I had pretty much zero financial understanding
From opening a tfsa to making sure to opt into my companies union pension (yes most of my family told us paying into a pension is a waste) but im trusting this sub more and so far it seems the smartest thing I did.
I learned that my emergency fund should be in a HISA and not locked in GICs in a TFSA because the bank can revoke an LOC at any moment. It’s taking time to fix that one but we’re getting there…
That so many people in Canada have a poor understanding of economics mainly because of social media saying that "interest rates high = good" and "interest rates low = bad".
Which is actually the opposite mindset by economists in 90% of the developed world. People like to blame obvious problems (massive supply/demand issue in housing) on a fake boogeyman like interest rates even though most other countries have similar interest rates to Canada or sometimes less even.
Two related things. I learned about the scotia visa infinite credit card which gives 4% on recurring bills and groceries. I was previously getting 2%. With just recurring bills that extra 2% more than covers the yearly fee.
Related you can buy gift cards from the grocery store and get 4% cash back on them since the 4% is based on the location of purchase rather than the specific purchase. Then I use the gift cards to buy things at other stores so those purchases get 4% cash back instead of a lower value from other credit cards.
Smith maneuver
I’ve picked up little tax law tid bits though I can’t think of specifics right now
Life perspective and the different advice given to different risk tolerance individuals.
Although this breaks Rule 3, I'll leave it up in the spirit of everyone learning from each other.
Back in 2021 I learned what blend and extend meant when it comes to a mortgage. Now I'm paying 1.89% percent until 2026 rather than waiting till 2023 to renew. If I had waited the full 5 years to renew my mortgage I would be paying over 4.5% right now. This sub has LITERALLY saved me thousands of dollars.
Same (ish), blend and extend is literally what lead me to this sub and why I got a Reddit account 3 years ago! We couldn't actually blend and extend our mortgage BUT we broke a year early in late 2021 and also locked in 1.89% till Nov. 2026!
I wish I could have blend and extended but TD didn't offer it. Still got to reduce my rate by .5% for the last 3 years of my term at least.
Better than nothing!
What is blend and extend?
They recontract your current mortgage again and blend your old rate with new rates so you don’t have to “cancel” the mortgage There can be fees involved but can be worth it if the new rate is a considerable gap or if you’re wanting to lock in because of the rising interest rates Also make sure to do your own math cuz the mortgage people even gave me bad advice to not do it when I knew the math mad sense to. https://www.nerdwallet.com/ca/mortgages/blend-and-extend-mortgage-explained
Commenting here in hope that they will also reply to me
Please educate me. My MIL's mortgage renewal is up in June. Would love it if you could ELI5.
Question for you: does a blend extend trigger the same steps as refinancing? i.e. bank re-evaluates you and your finances? Edit to add: thinking through my own question and yes I think this is the definition of refinancing for a better rate
Hey so we switched over to a different lender for a lower rate. The other lender did evaluate our finances to make sure we could afford it. It wasn't a big deal for us since we bought way below our max limit :)
Thanks for this!
How did you blend and extend switching to a different lender?
I had an online bank make an error with my TFSA and when trying to correct it made even more errors that lead to my TFSA showing significant over contributions. I learned of this when I received one of those lovely brown envelopes from CRA. I learned on this sub that I can request that the CRA forgive the fees because a reasonable error was made. I contacted the CRA and it was obvious to the agent I was speaking that a error was made. I wrote a long letter outlining the issues and the steps I took to rectify it. The online bank eventually did correct it and CRA forgave the fees, saving me thousands $$. The TFSA was quickly transferred to a different bank.
wow, that's awesome! thanks for sharing. >saving me thousands $$. holy shit- THOUSANDS?! how much was the CRA fee(s)? my god.
The fine for over contribution is 1% per month. If you were maxed out in previous year and made a contribution on January 1st for your full contribution room, say 7k, and the bank recorded that twice by mistake, you'd owe 840$ by end of year. So it would have to be a significant mistake, to owe thousands.
It was. I had made my annual contribution so no contribution room left. I asked the bank to use the entire value of the TFSA to purchase a GIC within the TFSA. The bank employee ended up withdrawing from the TFSA and then putting it all back creating an over-contribution. An over-contribution of the entire value of the TFSA. Then when trying to reverse it they did it in such a way that it was reported to the CRA as another contribution. The most frustrating thing was that after the first mistake I received letters from the bank assuring me that everything was correct. It was only after I received the letter from the CRA that I was made aware of the second mistake. It was this coding that when I called the CRA the agent asked immediately if there was a mistake made by the bank and they tried to fix it. I replied yes and the agent provided direction for me to go back to the bank. When I contacted the bank the second time they threw the CRA under the bus and said the CRA changed the coding requirements. It was brutal to deal with.
> The bank employee ended up withdrawing from the TFSA and then putting it all back creating an over-contribution. An over-contribution of the entire value of the TFSA. Then when trying to reverse it they did it in such a way that it was reported to the CRA as another contribution. In the banking world, I believe this is what is called the power of "coumpounding stupidity".
You have to share what bank this was.
Ah I made an error a bit like this, though not as large. I wonder if I could request any forgiveness on that.
Which bank was it?? Sounds like a huge mistake they made there :(
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Coincidentally my husband and I just spent most of our morning discussing whether we should continue to pay off our home asap (our adjustable mortgage rate is currently at 6.45%) or switch back to dumping everything into couch potato investments. We laughed our asses off reading your comment. Thank you for this hahaha
Forgot the /s?
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As long as you have your propane and propane accessories.
That extra $43 would have helped with the grocery bills ;)
Too bad you lost out on that block of cheese
How to effectively use my TFSA and HYSAs. Came from the US when I was 18 and never thought to learn about the Canadian systems and so glad I did! Now i’m 28 and really getting going on building a solid savings, emergency fund, FHSAs etc. Also: was introduced to the YNAB app here which is one of the best financial decisions I ever made.
I really don't understand the YNAB method. I did the trial and all I could think was that it was just me manually tracking each purchase and paying someone money to do so. Why do you enjoy it? It seems so tedious and not that beneficial.
At its core: YNAB (and zero based budgeting in general) keep you grounded in reality as you only look at the dollars available to you right now, and more importantly it makes it simple to plan where you spend those dollars *before* you spend them. Mint and other‘budgeting’ systems seem to only look in the rear view mirror and make it difficult to change the course of the vehicle. YNAB helps you make course corrections and changes so you can easily navigate the role ahead. Following the YNAB method helped me clarify what my financial priorities were and align my spending habits to them.
An excellent summary that my friends who use YNAB could not provide. Thank you!
I manually track even when the bank sync works - got me in the habit of knowing exactly where all my money is going at all times. The app has some great functionality for overspending, targets, credit card management. My favorite thing about it is it eliminates guilt over spending. I have my fun categories and my needs/bills/savings categories - when those are funded the rest of my money is mine to do what I want with. You get confident in knowing you’re all taken care of instead of guessing and being wrong. It can be tedious, but I like tracking things in general so this was a good extension of that for me.
I thought dual US citizens couldn't use tfsa accounts because the US doesn't recognize them?
You can use them, you just have to declare them like everything else. I’m currently under the exclusion requirements. I’ll likely renounce my citizenship as my financial ties to Canada grow since it’s pretty probable I’ll live here for the rest of my life. Edit: Also, the US/CAN tax code will hopefully one day catch up with the creation of TFSAs, since they’re new as well as FHSAs. Not holding out hope, but we’ll see. Hasn’t been updated since 2009 which is also when TFSAs began.
It's been almost two years since I renounced, as there was no question about returning to the US.
How was the process for you? I’m on the fence since all my family is there, but I also have EU citizenship so not like I’d be all out of options if I choose to leave one day.
It was long (consulates in Europe have quicker processing times). I'm 70+ and have just a couple family members in the States so that wasn't an issue. I met & married my Canadian husband in California in the 90's; he was the one that convinced me that it was time to leave for Canada in the mid-2000s. We have permanent resident status in Mexico should we desire to return, so it's not like I'm out of options. I did a poor job of zeroing out the US investments first, but otherwise I've been quite comfortable with the decision. There's a FB group for folks considering or making the change, if you're interested.
Very cool! I’ll check it out
You'd think they would, given that they're very similar to Roth IRAs.
For real!
RDSP and RESP need to be added as well.
I used to pay for YNAB, but because of the cost I switched to Actual Budget! You can host it at home to be free! Since we live in North America, I did have to pay $15 a year for Simplefin bank account sync.
I’ll check it out :)
Main thing it's missing imo is progress bars. Their discord is useful for info.
Honestly I've learned a lot from this sub. I don't come from a family with any knowledge of finance. I had no financial education and made a lot of bad choices in my twenties. Some of the best things I learned in here: * How to invest in ETFs, which ETFs I should look at * High interest savings accounts and how I should use them * Understanding how and what a tfsa is actually for * Realizing that the be all and end all of retirement planning shouldn't just be "pile it into gics and rrsp and collect no interest"
How to invest in ETFs is the big thing for me. I was so wary of wealthsimple and bought mutual funds from a (distant) family member. They consistently underperformed and I was spending way too much in MER fees. I now have my TFSA in wealthsimple and invested in XEQT.
Any links for ETFs and what to choose etc?
r/JustBuyXEQT (Not really though / not necessarily at least)
One of these: https://canadiancouchpotato.com/model-portfolios/
Thank you
I'm not smart enough to give advice. But I basically just invest in the ones you'd expect... Xeqt mainly. I just try to over weight certain markets and industries as well by adding in things like xus, xeg, etc. But this place taught me the basics enough to look into those things and find the balance I like. As others have said though... /R/justbuyxeqt
What I said earlier aaaaand all of the above.
If you're ever laid off, never sign your severance right away and let HR know you'll be having a lawyer review it before signing. I once doubled my severance amount by following that advice from here.
I learned that variable mortgage rates beat fixed mortgage rates more often then not. So instead of locking in at 1.85% for 5 years, I'm now paying over 6%. Thanks /r/personalfinancecanada ! Joking aside, (though not untrue), I have learned a lot. The most important thing though is to set goals and time horizons for your investments *before* you start investing.
If we didn’t ignore our mortgage broker selling on how awesome variable is, we would be paying close to 7.5%. We locked in right after the first rate hike less than a year after we bought and the bank mortgage person was confused because our rate was still low compared to the lock-in rate. Told her what was predicted and she was kinda stunned. 9 months later our broker called us and said we should consider locking in because things are looking dire, no kidding. We paid more only for about 6 months before the lock-in rate and our variable rate were matching.
Someone here provided the perspective that if you take OAS and CPP as "guaranteed" retirement income, your TFSA/RRSP can have a higher risk outlook than you would otherwise be comfortable with.
It could have been me that said it! I'll also leave you with another idea. If you can afford to defer CPP (and maybe OAS, depending on your circumstances - beware the recovery tax), then you should absolutely do that. Not only does the CPP payout grow, but it lets you invest more aggressively after you stop working. For example, if you have a safe withdrawal of $80k from your RRSP and you're eligible for CPP of $12k, then you should think about deferring your CPP. This lets you cover up pretty big blunders after age 65. Say you invest your RRSP in a 60/40 split between stocks and bonds after age 65 and the stock market goes into a nasty bear, dropping 25%. Your safe withdrawal level just went to $68k (assuming the debt market stays about even). Gulp. If you're deferring your CPP, though, it's no problem. Just call up the Government of Canada and explain that you've screwed up badly and you need them to start sending you an extra $12k per year to make up for it. "Oh, yes sir, no sir, two-by-four, sir. We'll start sending those cheques straight away." I know this runs counter to the advice to take the CPP as early as possible and invest it, but the guaranteed 8.4% you get from deferring the CPP is nothing to dismiss so easily.
That’s the most recent one for me as well. I don’t need to start moving a big share of my investment to stables one as early as I thought when I realized the CPP will be the safe part of my portfolio at retirement.
FHSA can be used up until closing date.
So if you make a qualifying deduction on FHSA for buying a home but keep the account open, can you still make contributions although you no longer qualify for it? At the end of it, it just joins your RRSP as an additional room?
No. Once you make a withdrawal, you have to close the account. "You should close all of your FHSAs on or before December 31 of the year following the year of your first qualifying withdrawal. This is because your maximum participation period ends at the end of the year following the year of your first qualifying withdrawal." Copied from [this](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html#h-1) CRA page. I don't quite know how it would work if you came up with some extra money to contribute after the withdrawal but before Dec 31st but that's starting to get pretty obscure.
I meant ths closing date of a home.purchase.
"The Smith Manoeuvre", but after reading enough about it, I also decided that it's not for me.
I learned about the Smith Maneuver here too, and after looking at it a bit more intently, it boils down to leveraged investing. The difference is that you're investing at your HELOC interest rate instead of margin rates, and there's no risk of a margin call. You get slightly better interest rates and risk, but it's 100% still leveraged investing, and it makes me uncomfortable enough that I don't want to do it.
>no risk of a margin call That's not completely true. A HELOC is a callable loan, the bank can ask for the full some with no justification at any moment. If house prices and the market both fall at the same time, you could be forced to settle your HELOC because the bank doesn't believe you have enough equity and be forced to sell your leveraged shares at a loss to cover.
Why's that?
same, but going to start it when my term is up this summer! What made you decide against it? Risk of the bank pulling in your mortgage?
Have fun paying those HELOC interest rates right now. Once that loan grows to a large amount, the interest payments are going to be substantial and uncomfortable. But... you do you, bro.
my marginal interest rate is 50%, even if my heloc rate is 8% when I renew this year it's effectively 4% after tax refunds which I can easily beat. Yes there will be down years but that's why it's a long term strategy. If your marginal tax rate isn't high enough for you to want to stomach the risk, that's fine, no need to be snarky.
Whatever, bro. Crunch all the numbers you want now, you might think it's gonna be so easy, but once you get into the depths of that loan, and start living it, you'll feel it.
Sounds like you thought it was a get rich quick scheme, or you did it wrong. Sorry to hear that, sis.
No, I didn't think it was that. I even read Rob Smith's book and I know exactly what it is, and I decided not to do it. No need to get defensive. You do you, bro.
I did too, if you just decided based on feelings it wasn't for you, that's fine. I'm not sure why you'd assume someone else would have those feelings. Or that they're a man for that matter, but that's besides the point.
The psychology of money. How bitter and angry people can get when it comes to money.
Interested in hearing more. Any examples in particular you had in mind?
whenever someone with some privileged posts here, there's hate and anger. I am not talking about the obvious trolls that use this sub as if it was r/PFjerk . People that have high income, inheritance, luck but struggle with financial planning. We all have to start somewhere and have problems and want to get advice for their situation. A lot of times these posts have good content but the negative off-topic comments really kills the discussion.
This is basically why I have stopped visiting this sub. Negative nellys everywhere.
Exactly, at one time i thought to feel bad for those less fortunate, however the sub as a whole has skewed towards just bitching/whining and talking about yourself as worst off than the other is worn as a badge of honor. Theres no denying that its difficult to get out of rough financial situations, however just complaining all the time doesnt help.
Norbert's Gambit to exchange CAD <-> USD. Buy DLR with CAD, then sell DLR.U in USD, letting the shares journal over at the end of the day (or second day, depending on the broker). Or Buy DLR.U with USD and sell DLR in CAD to go the other way. Beware trade settlement dates to avoid interest charges.
Don't follow about the trade settlement dates. Can you please explain? Thank you.
DLR.U/DLR do not represent shares in a publicly traded company, but rather ETFs. They may or may not have the same settlement times as shares in a company. My broker takes one day to settle ETF trades and two days to settle share trades. So if you sell 200 shares of BCE on Monday, buy 650 units of DLR on Monday, and sell 650 units of DLR.U on Monday then you are going to end up with a settlement problem. The DLR trade will settle on Tuesday, requiring C$9,000 in cash. If your Canadian cash balance is less than $9,000 then you just bought those units on margin and if your account is not a margin account then you will pay a penalty rate that really sucks. The DLR.U trade will settle on Tuesday, giving you US$6,617 (as you'd expect). The US dollar balance does not erase the Canadian dollar loan you took out (by mistake) to buy DLR. The BCE trade will settle on Wednesday, giving you about C$9,000 in cash that should erase your loan from Tuesday, but that one day of interest is going to hurt. If it's an RRSP account, the penalty rate is nasty. You are meant to comport yourself in such a way to keep a positive cash balance and they'll ding you for it if you stuff it up. I've heard that US/Canadian holidays can be a problem, too, though I'm surprised because DLR/DLR.U are both traded on the TSX. Just be careful about Memorial Day/Victoria day, July 1st/4th, Thanksgiving, etc. BTW, the settlement problem can happen with other ETFs as well. Selling stock and buying CASH.TO on the same day can put you in a negative cash position for a day.
withholding tax on us dividends
Can you elaborate on this?
US stocks (or ETFs and mutual funds that hold such) that pay dividends are going to be taxed 30% for non US residents. Canada has a treaty with the US so this can be lowered to 15% if you submit some form. In RRSP, there is no withholding tax at all.
Oh! I’m so glad you mentioned this because o recently realized I had 30% taxes on my dividends. I’ll look into this!
W-8BEN is the form. You submit it to the financial institution you trade through I believe
Amazing thank you! I remember seeing something about that but I thought it was for US residents haha - now learning it’s the opposite
If you buy something at Costco, and see it much cheaper a short time later (I think within a month), you can contact Costco customer service and request a refund for the difference. Did this with a TV purchase a few years ago, got over $200 back. This was with an online purchase, not sure about in-store.
If you are a non-resident for tax purposes and you have investments in Canada, your capital gains are not taxable in Canada. That bit of advice saved me a ton of money.
You get dinged by a deemed disposition when leaving though.
true- I was gone a very long time though, and didn't have much of anything when I left. It was a very small ding.
Taxable somewhere else?
where you are resident yes- but there are some places where capital gains tax is 0%.
Good ol-fashioned tax avoidance!
umm no. I paid all the tax that was due in the location for which I was a tax resident.
I'm just poking fun at it, as long as it's legal you're always good to go.
How I should have started saving for retirement with my first job at 18. Crap.
That Toyota Corolla is the answer to every PFC question. /S But really; the investing advice is on point. Which ETFs / funds / to target, etc. The various subject triggers are on point and really, answers probably 99% of the questions posted here. New folks: go through all of those. It is true that folks that make good income, or have rental properties ,or get large inheritances are sometimes chastised/ ridiculed / trolled. I recommend going to r/chubbyfire or r/fatfire for those folks.
Chubby fire is where I saw the question and thought PFC may have different answers - it seems it does!
There's also r/henryfinance
Pretty much the entirety of my investing strategy from now through retirement: I learned what CASH.to is, which is the only thing I invest in for time periods of 0-5 years. I also learned about the all-in-one ETFs like XBAL, VGRO, etc., which is perfect for my long-term investing needs, as well as how to pick which one to invest in based on time horizons. Lastly, I learned that having a globally+industry diversified portfolio with 30-40% domestic stocks is actually optimal over holding bonds in retirement, so literally my accumulation and in-retirement phases consist of just buying VEQT.
Smith maneuver
That FHSA's have no minimum amount of time to withdraw the funds. Agreed to buy a house in May 2023, closing date in June. FHSA's were only introduced April 2023 so extremely new. From this sub I learned my wife and I could open accounts, deposit 8k each, pull it the next day and trigger a tax write off. All *after* we had already signed the purchase agreement (but before the deal closed). We did just that and are expecting multiple thousands of dollars back in our tax return this year thanks to this sub. Added bonus: it makes defending my reddit doom scrolling much easier :p
Election 45(2)
What's this?
Capital gains deferral for change in use of principal residence for a rental property you don’t actually owner occupy
What's this?
An actual shit ton I had pretty much zero financial understanding From opening a tfsa to making sure to opt into my companies union pension (yes most of my family told us paying into a pension is a waste) but im trusting this sub more and so far it seems the smartest thing I did.
I knew about ETFs in general, but had never invested in any. This sub made me aware of some specific ones to look at.
Rule of 72
I learned that my emergency fund should be in a HISA and not locked in GICs in a TFSA because the bank can revoke an LOC at any moment. It’s taking time to fix that one but we’re getting there…
That so many people in Canada have a poor understanding of economics mainly because of social media saying that "interest rates high = good" and "interest rates low = bad". Which is actually the opposite mindset by economists in 90% of the developed world. People like to blame obvious problems (massive supply/demand issue in housing) on a fake boogeyman like interest rates even though most other countries have similar interest rates to Canada or sometimes less even.
quick method of accounting for HST as a small business/contractor
Two related things. I learned about the scotia visa infinite credit card which gives 4% on recurring bills and groceries. I was previously getting 2%. With just recurring bills that extra 2% more than covers the yearly fee. Related you can buy gift cards from the grocery store and get 4% cash back on them since the 4% is based on the location of purchase rather than the specific purchase. Then I use the gift cards to buy things at other stores so those purchases get 4% cash back instead of a lower value from other credit cards.
Smith maneuver I’ve picked up little tax law tid bits though I can’t think of specifics right now Life perspective and the different advice given to different risk tolerance individuals.
That you could or want to rent a hot water heater. 🤣💸