Should Kathy take monthly payments or the commuted value of her pension? + MORE Jun 15th

How to go about securing the best Retirement Plan in Canada.
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DIY investing for busy people—the portfolio management tool you didn’t know you needed + MORE Jul 13th

If you’ve been on the fence about managing a self-directed brokerage account because you think DIY investing is too much of a time commitment, think again. While DIY investing certainly can be an all-consuming “hobby” filled with spreadsheets, calculations and trade activity, it doesn’t have.... More »

TFSA vs RRSP: How to decide between the two Jun 29th

One of the most common questions out there is whether to invest in a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). Both will help you save, and save on taxes, but each works in different ways. Understanding these investments will help you know when to use one or the.... More »

Should you buy back pension service from your employer? Jun 22nd

While defined benefit (DB) pensions are the Cadillac of retirement plans, they also entail a unique set of decisions. Buybacks are one of them. There are a few ways to build up the value of your DB pension: by working to accumulate years of “pensionable service,” of course; by transferring servi.... More »
Q. I am torn about making a key financial decision in my life. First, a little about myself. I worked for about seven years (actually, six years and 360 days) as a teacher in the Arctic. I resigned this year and have returned to the “south.”
Now, I have about a year to decide whether I cash out my federal public service pension plan or transfer the holdings into an annuity (about $93,000) and RRSP (about $71,500).
I have consulted with a financial planner at one of the large banks, who has made a seemingly convincing argument in favour of transferring the entire pension amount out. But I am well aware that I don’t know enough to be able to ask the right questions and make an informed decision. I am also aware the bank will benefit from my investment, as will my financial planner.
Can you give me some good advice on what I should do at this important juncture in my financial life?
A. I recently wrote an article on making the decision to keep your pension or take the cash, and you can read it here…

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For obvious reasons, a lot of personal finance and retirement books come my way and, from time to time, we’ve dedicated a particular edition of this column to a single book. This one looks at a dozen noteworthy books I’ve read lately, or plan to—most of them published in the last few years.
If you want to learn about…global macroeconomics
Let’s start with global macroeconomics, which is top-of-mind for many investors and would-be retirees these days. With central banks around the world putting their printing presses into overdrive to combat the coronavirus bear market (however brief it may have been), I suggest reading Graham Summers’ The Everything Bubble: The Endgame for Central Bank Policy, first published in 2017. It describes what the author calls “serial bubbles”—not just stocks but virtually every asset class, including fixed income and real estate. The U.S. tech bubble was $7 trillion (U.S.)  in size; the subsequent U.S. housing bubble, $14 trillion; and the U…

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Borrowing money to invest


There are different ways to borrow to invest.
Opening a margin account
A simple option is with a margin account at a brokerage. Depending on the existing investments in the account, a brokerage will lend up to a certain percentage of the value to an investor, at a specified interest rate.
The amount of “maintenance excess” that needs to be kept in the account as collateral for borrowed securities generally ranges from 30% to 100% of the market value. Larger, established, blue-chip stocks may only have a 30% margin requirement, meaning up to $70 borrowed for every $100 invested.
Margin interest rates generally range from 5% to 10%, but can vary. The interest is tax-deductible when the borrowed money is being used to invest. If stocks fall, a margin account investor could have a “margin call” and need to deposit more funds, or sell stocks to reduce leverage.
Investment and RRSP loans
Investment loans with required monthly principal and interest payments are another option for borrowing to invest…

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