I have had stock in Bank of Montreal (TSX-BMO) since 1983, in the Royal Bank (TSX-RY) since 1995 and in the Toronto-Dominion Bank (TSX-TD) since 2000. After my recent reviews of Canadian Banks, I see no reason to change my bank stock.
I would be rather reluctant to sell BMO or Royal as these are held in my trading account and I would face rather large capital gain taxes. I do not think that BMO is as good as a bank as when I bought it, but it has been performing quite well over the years. However, if a bank was really in trouble I would or if I really liked another bank that much better.
I have always like the Bank of Nova Scotia, but not well enough to sell another bank I hold to buy this stock. I do not think as well of its involvement the South America as others. We are always expecting great things to come from South America, but it always seems to disappoint.
I think if you are buying a bank for the short term you might want to go with the one with the highest dividend yield. However, if you buy for the long term, my first choice would by Royal Bank of Canada (TSX-RY, NYSE-RY) and my second choice would be Toronto Dominion Bank (TSX-TD, NYSE-TD). However, these are just personal choices.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Wednesday, January 30, 2013
Monday, January 28, 2013
Planning in Retirement
I have built a spreadsheet to talk about 5 year planning in retirement if you have a stock portfolio. When you take money from a stock portfolio, you want to ensure you have enough in cash and projected income to allow you to withdraw money in the next 5 years.
Basically in this scenario you expect to take out money from your RRSP stock fund, have pension income and to use the dividend income of your stock fund. If you are using money from a stock fund, you want to make sure you have enough for withdrawals over the next 5 years.
I am projecting a budget to increase by 3% per year, the pension income to increase by 2% per year and the dividend income to increase by 6% per year. (The dividend increase is quite conservative and 8% could also be used here.) See my first spreadsheet on my site at planning.htm.
Personally I use a similar sheet and change the month in column 1 each month and adjusted the budget and income left. So I track my progress month by month. See sample on my site at planning2.htm.
With the second spreadsheet, I have showed the information slightly differently and it shows that there is not enough money in either the Trading Account or the RRSP Account to cover withdrawals and therefore something would have to be sold to give the full 5 year coverage. For the Trading Account, you could also lower your budget. See my third spreadsheet on my site at planning3.htm.
In these spreadsheets, if you have a self-directed RRIF, you can just put the RRIF in the RESP spot. If you want a table showing the RRIF withdrawal rates, see Tax Tips site or the RRIF document from Canada Revenue Agency.
I use Quicken and I find it great for keeping track of my current investments. However, there is nothing like a spreadsheet to answer the question of "What if". There is why I use spreadsheet to project what I could likely expect in the next 5 years. However, with all projections, you are making assumptions. For example, I made an assumption of inflation at 3% in connection with my budget.
If you want a copy of the spreadsheet, just email me at brunner@rogers.com.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Basically in this scenario you expect to take out money from your RRSP stock fund, have pension income and to use the dividend income of your stock fund. If you are using money from a stock fund, you want to make sure you have enough for withdrawals over the next 5 years.
I am projecting a budget to increase by 3% per year, the pension income to increase by 2% per year and the dividend income to increase by 6% per year. (The dividend increase is quite conservative and 8% could also be used here.) See my first spreadsheet on my site at planning.htm.
Personally I use a similar sheet and change the month in column 1 each month and adjusted the budget and income left. So I track my progress month by month. See sample on my site at planning2.htm.
With the second spreadsheet, I have showed the information slightly differently and it shows that there is not enough money in either the Trading Account or the RRSP Account to cover withdrawals and therefore something would have to be sold to give the full 5 year coverage. For the Trading Account, you could also lower your budget. See my third spreadsheet on my site at planning3.htm.
In these spreadsheets, if you have a self-directed RRIF, you can just put the RRIF in the RESP spot. If you want a table showing the RRIF withdrawal rates, see Tax Tips site or the RRIF document from Canada Revenue Agency.
I use Quicken and I find it great for keeping track of my current investments. However, there is nothing like a spreadsheet to answer the question of "What if". There is why I use spreadsheet to project what I could likely expect in the next 5 years. However, with all projections, you are making assumptions. For example, I made an assumption of inflation at 3% in connection with my budget.
If you want a copy of the spreadsheet, just email me at brunner@rogers.com.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Wednesday, January 23, 2013
Market Systems
As I understand history and economics, several cultures had market systems.
China
They had a market system or economy and it provided for a growing population. They had the rich and the poor. (That is until it all fell apart in the 18th century.)
Islamic Mideast
They had a market system or economy and it produced some very rich merchants. They had the rich and the poor. (It fell apart in the 19th century.)
Western Society
We have had a market system or economy for some time. It started in the Italian city states and then moved on Belgian and the Netherlands. It basically came to England with William of Orange. It provided for a growing population (in fact it seems to thrive on a growing population). It produced rich merchants. It produced rich bankers. It also produced a middle class.
It was the middle class that demanded and got democracy. (Democracy spreading so everyone could vote was an unexpected consequence.)
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
China
They had a market system or economy and it provided for a growing population. They had the rich and the poor. (That is until it all fell apart in the 18th century.)
Islamic Mideast
They had a market system or economy and it produced some very rich merchants. They had the rich and the poor. (It fell apart in the 19th century.)
Western Society
We have had a market system or economy for some time. It started in the Italian city states and then moved on Belgian and the Netherlands. It basically came to England with William of Orange. It provided for a growing population (in fact it seems to thrive on a growing population). It produced rich merchants. It produced rich bankers. It also produced a middle class.
It was the middle class that demanded and got democracy. (Democracy spreading so everyone could vote was an unexpected consequence.)
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Monday, January 21, 2013
Stock Options
One thing that stands out when reviewing our banks is the value of the options outstanding for bank CEOs. There was also a recent article in CanTech about this very subject pointing out lots of options for some tech companies.
I looked at the stocks I have recently reviewed and there is no doubt that banks CEO's are big winners. In order of the value of their options, Toronto Dominion (TSX-TD) CEO was at the top with options worth $228,494,787 and Bank of Nova Scotia (TSX-BNS) CEO was close behind with options worth $224,649,146.
The other two banks I looked at had lower options with Bank of Montreal (TSX-BMO) CEO having stock options worth $102,005,447 and Royal Bank of Canada (TSX-RY) CEO having stock options worth $94,307,850. This is a snap shot taken when I reviewed these banks.
Some of the big energy company's CEO did well also with Suncor Energy Inc. (TSX-SU) CEO's stock options worth $84,022,602 and EnCana Corp (TSX- EXA) CEO's stock options worth $63,925,060.
There was a sort of mid-range in options in Real Estate with the H & R Real Estate (TSX-HR.UN) CEO having stock options with $27,675,000 and the First Capital Realty (TSX-FCR) CEO having stock options worth $38,695,960.
I also found some small tech companies with little in the way of CEO options. They included Hammond Power Sol. (TSX-HPS.A) who's CEO has options worth $1,060,605; Calian Technologies Ltd (TSX-TXY) who's CEO has options worth $935,100 and Exco Technologies Ltd. (TSX-XTO) who's CEO has options worth $560,000.
See my spreadsheet at options.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
I looked at the stocks I have recently reviewed and there is no doubt that banks CEO's are big winners. In order of the value of their options, Toronto Dominion (TSX-TD) CEO was at the top with options worth $228,494,787 and Bank of Nova Scotia (TSX-BNS) CEO was close behind with options worth $224,649,146.
The other two banks I looked at had lower options with Bank of Montreal (TSX-BMO) CEO having stock options worth $102,005,447 and Royal Bank of Canada (TSX-RY) CEO having stock options worth $94,307,850. This is a snap shot taken when I reviewed these banks.
Some of the big energy company's CEO did well also with Suncor Energy Inc. (TSX-SU) CEO's stock options worth $84,022,602 and EnCana Corp (TSX- EXA) CEO's stock options worth $63,925,060.
There was a sort of mid-range in options in Real Estate with the H & R Real Estate (TSX-HR.UN) CEO having stock options with $27,675,000 and the First Capital Realty (TSX-FCR) CEO having stock options worth $38,695,960.
I also found some small tech companies with little in the way of CEO options. They included Hammond Power Sol. (TSX-HPS.A) who's CEO has options worth $1,060,605; Calian Technologies Ltd (TSX-TXY) who's CEO has options worth $935,100 and Exco Technologies Ltd. (TSX-XTO) who's CEO has options worth $560,000.
See my spreadsheet at options.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Wednesday, January 16, 2013
Dividend Spreadsheet
I have loaded up a sample Dividend spreadsheet to use to track dividend income. See the spreadsheet on my site. Most dividends are paid quarterly and these are designated to be in Cycles 1, 2 or 3. Cycle 1 dividends are paid in January, April, July, and October. Cycle 2 dividends are paid in February, May, August and November. Cycle 3 dividends are paid in in March, June, September and December. Unfortunately, dividends are hard to even distribute over the three cycles. Most dividends are paid in Cycle 1.
How you can handle this is that you could move money into your chequing account each month for an amount just under the monthly average. (You would have to start this in a Cycle 2 month. A number of cycle 1 stocks pay at the end of the month, so to get the full amount in your trading account, you would have to wait until the end of a cycle 1 month.)
For the stocks that I follow I have index page. On that index page I have a column of DP for Dividend Payment and that is where I put what cycle a dividend is paid in for a specific stock. See my notes on Dividend payment cycles. This post also talks about dividend dates.
My Dividend spreadsheet is quite easy. All you need to do is check the stocks every quarter to see if there are any changes to dividends paid. You can use the G&M for this. Say you want to check BNS's dividend amount, you can do that on the stock's summary page. See BNS summary page.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
How you can handle this is that you could move money into your chequing account each month for an amount just under the monthly average. (You would have to start this in a Cycle 2 month. A number of cycle 1 stocks pay at the end of the month, so to get the full amount in your trading account, you would have to wait until the end of a cycle 1 month.)
For the stocks that I follow I have index page. On that index page I have a column of DP for Dividend Payment and that is where I put what cycle a dividend is paid in for a specific stock. See my notes on Dividend payment cycles. This post also talks about dividend dates.
My Dividend spreadsheet is quite easy. All you need to do is check the stocks every quarter to see if there are any changes to dividends paid. You can use the G&M for this. Say you want to check BNS's dividend amount, you can do that on the stock's summary page. See BNS summary page.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Monday, January 14, 2013
Bear Markets
I know a number of people have predicted a bear market for 2013. This is certainly possible. We have them and one is going to come. Whether it will be in 2013 or not is another question. Others have predicted a continued market and economic recovery. It is hard to know who is right.
My experience has been that bear markets unless something big happens, will occur after April or in the fall. Still, every time we get a bear market or recession, everyone seems to act surprised. Yet these things happen on a regular basis.
Frequent cyclical bear markets fall 10 to 20%. However, everyone once in a while, the market falls much more. We will have a market drop of 20 to 50% before we move from the current secular Bear to a secular bull market.
There is an interesting article in Forbes about what different people have to say about.2013. Also, the Market Oracle talks about our secular bear market and its possible end possible end. Even though this last article is about the US markets our markets have pretty much tracked the US markets in secular bull and bears since the depression of 1930.
Of course there is always someone expecting an cyclical bear market. See article at the MNS Money.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
My experience has been that bear markets unless something big happens, will occur after April or in the fall. Still, every time we get a bear market or recession, everyone seems to act surprised. Yet these things happen on a regular basis.
Frequent cyclical bear markets fall 10 to 20%. However, everyone once in a while, the market falls much more. We will have a market drop of 20 to 50% before we move from the current secular Bear to a secular bull market.
There is an interesting article in Forbes about what different people have to say about.2013. Also, the Market Oracle talks about our secular bear market and its possible end possible end. Even though this last article is about the US markets our markets have pretty much tracked the US markets in secular bull and bears since the depression of 1930.
Of course there is always someone expecting an cyclical bear market. See article at the MNS Money.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Wednesday, January 9, 2013
Tax Free Savings Accounts
I have done a spreadsheet for a TFSA. I am assuming inflation is running at 2% in order to determine the increases in the maximum amount for the TFSA. This would be that approximately every 5 years, the government will increase the maximum limit for TFSA by $500. This is what has occurred by 2013.
If you were 18 when the TFSA came out and put into a TFSA the maximum and you earn 8% a year, then by age 65 you could have $2.7M in your account.
If you were 30 when the TFSA came out and put into a TFSA the maximum and you earn 8% a year, then by age 65 you could have just over $1M in your account.
If you started depositing on January 1, 2009 at an 8% return you could have some $77,000 in 10 years. It would take almost 27 years to get a $0.5M. In year 35, you could have $1M.
See my spreadsheet at tfsaa.htm. If you want me to send you a copy of this spreadsheet, just email me. (Also a spreadsheet with first 5 years filled in at tfsab.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
If you were 18 when the TFSA came out and put into a TFSA the maximum and you earn 8% a year, then by age 65 you could have $2.7M in your account.
If you were 30 when the TFSA came out and put into a TFSA the maximum and you earn 8% a year, then by age 65 you could have just over $1M in your account.
If you started depositing on January 1, 2009 at an 8% return you could have some $77,000 in 10 years. It would take almost 27 years to get a $0.5M. In year 35, you could have $1M.
See my spreadsheet at tfsaa.htm. If you want me to send you a copy of this spreadsheet, just email me. (Also a spreadsheet with first 5 years filled in at tfsab.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Monday, January 7, 2013
Is the Bond Market in a Bubble?
Interest rates on bonds have never been lower, especially when you look at government bonds and especially the US government bonds.
Some people think that there is this huge bond market bubble forming and it will be very ugly when it bursts. Personally, I have not been in bonds for some time and have no plans to buy bonds anytime soon.
Of course, nothing lasts forever. Interest rates will, at some time in the future, go up. Since value of bonds (capital) and interest rates move in the opposite directions, people with bonds will lose money. I doubt if the interest rates will make up for this capital loss.
However, the situation of low interest rates could last for a long period of time. These sorts of situations can last a lot longer than people imagine. It is like the tipping point situation. Things will change rapidly when they do change.
Ambrose Evans-Pritchard being interviewed by Lars Schall in December 2012 also remarks on this. See interview on Gold Switzerland.com. This is one of the things that Pritchard talks about.
See also an interview with Jim Grant on Capital Account. He talked about the fact that we had a bond bear market (rising interest rates, falling bond values) from 1946 to 1981. Then we have had a 31 year bull market (falling interest rates, rating bond values) from 1981 to date. Interview starts 3:15 minutes into the video.
What I am into is buying assets (stocks) that pay dividends. I do not look at buying stocks as gambling. I look at buying stocks as assets. I buy assets that produce an income stream.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Some people think that there is this huge bond market bubble forming and it will be very ugly when it bursts. Personally, I have not been in bonds for some time and have no plans to buy bonds anytime soon.
Of course, nothing lasts forever. Interest rates will, at some time in the future, go up. Since value of bonds (capital) and interest rates move in the opposite directions, people with bonds will lose money. I doubt if the interest rates will make up for this capital loss.
However, the situation of low interest rates could last for a long period of time. These sorts of situations can last a lot longer than people imagine. It is like the tipping point situation. Things will change rapidly when they do change.
Ambrose Evans-Pritchard being interviewed by Lars Schall in December 2012 also remarks on this. See interview on Gold Switzerland.com. This is one of the things that Pritchard talks about.
See also an interview with Jim Grant on Capital Account. He talked about the fact that we had a bond bear market (rising interest rates, falling bond values) from 1946 to 1981. Then we have had a 31 year bull market (falling interest rates, rating bond values) from 1981 to date. Interview starts 3:15 minutes into the video.
What I am into is buying assets (stocks) that pay dividends. I do not look at buying stocks as gambling. I look at buying stocks as assets. I buy assets that produce an income stream.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Wednesday, January 2, 2013
Fiscal Cliff Deal
Or, how stupid are people? This deal has solved nothing. The Americans have only just kicked the can down the road. Problem is not taxes, it is entitlements. We want gold-plated social programs, pensions and health care, but we want someone else to pay for it.
Unfortunately, the republicans were right. You can collect more taxes, not by raise tax rates, but by getting rid of tax deductions. An economy would do better with low broad tax rates rather than higher rates with all sorts of tax deductions for this and that and for that other thing. Taxes are far too complex. However, no one wants to hear this.
If you have read anything on this deal you would have seen that the deal is all about higher taxes. There were no cuts to entitlements. We need to get spending under control. This is not only a US problem; it is a problem for the whole Western world. Here in Canada, we have the same problem. What we need to do is get budgets balanced and then start to pay down debt. We need to get into better shape before the next recession comes.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Unfortunately, the republicans were right. You can collect more taxes, not by raise tax rates, but by getting rid of tax deductions. An economy would do better with low broad tax rates rather than higher rates with all sorts of tax deductions for this and that and for that other thing. Taxes are far too complex. However, no one wants to hear this.
If you have read anything on this deal you would have seen that the deal is all about higher taxes. There were no cuts to entitlements. We need to get spending under control. This is not only a US problem; it is a problem for the whole Western world. Here in Canada, we have the same problem. What we need to do is get budgets balanced and then start to pay down debt. We need to get into better shape before the next recession comes.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
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