Guaranteed Investment Certificates (GICs) and Savings accounts at banks offer a person in Canada the safest possible place to invest money. Both are backed 100% against any loss up to $100,000 by the Canada Deposit Insurance Corporation, an arm of the federal government. That’s as safe as it gets.Safety against outright loss isn’t enough for the investor. There is inflation to consider. Annual inflation – targeted by official Bank of Canada policy at 2% – eats away the purchasing power of our cash unless the interest rate on the GICs and savings accounts exceed inflation. If inflation is 2% and your interest received is 0.5%, you’ve lost 1.5% in real purchasing power.Unfortunately, the tale told by the numbers is discouraging. The chart below traces the deteriorating trend over time. Data is from the Bank of Canada. Inflation is the CPI (Consumer Price Index) All Items, shown by the red line. Back in 1981, all was wonderful. Savings accounts, 5-year and 1-year GICs issued by the major Canadian banks all paid interest rates comfortably in excess of inflation…

FAIR and the Canadian Centre for Elder Law should have taken the advice of the eldest oyster in the Walrus and the Carpenter poem from Lewis Carroll’s timeless classic book Alice In Wonderland. Instead of listening to elders however, they have adopted the role of busybodies delivering investors further into the hands of the main perpetrators of elder abuse, the financial “advisor” industry.Why is their report on Vulnerable Investors so problematic? What could be bad about asking securities regulators to force the investment industry to prevent abuse of “vulnerable” investors?#1 Absence of fiduciary duty by financial advisors – For the vast majority of investors (the exception being the minority who have turned over discretionary trading power to Portfolio Managers), financial advisors do not have to put the interests of investors only and strictly above their own interests. Almost all financial advisors are in effect salespeople who only have to abide by the weak suitability standard. Why would we want to trust them to suddenly begin acting for the best interest of investors who in addition happen to be vulnerable? It’s a bit like being worried about foxes (untrustworthy family members or false friends) abusing the chickens and asking the wolves (financial advisors) to do the protecting…

The federal government is prepared to consider assuming some of the financial risk as a solution to the Trans Mountain pipeline expansion feud involving Kinder Morgan and B.C.

Grrr! IIROC, please leave us alone! With friends like you, self-directed investors don’t need enemies. Despite receiving many objections and warnings from both investors and discount brokers (such a convergence of views sure doesn’t happen often!) against measures that will make the discount broker business more complicated and costly to the detriment of investors, the regulator IIROC is ploughing ahead with a revised Guidance. What kind of bad things for investors are likely?disappearance and future restriction of many useful useful tools like model portfolios under the pretext that this is making recommendations aka providing advice, which the discount brokers are not allowed to provide; I would dearly like to see a (good) risk assessment module attached to the model portfolio selection tools but this probably won’t happen nowrising fees or commissions charged to investors as the brokers are obliged to provide more complicated vetting procedures to ensure investors are only allowed to open “appropriate” accountsAs I said in my own comments to IIROC over a year ago, the history of the discount brokers over the two decades during which I have been an active investor with a bunch of them (BMO InvestorLine, TD Direct Investing, Questrade, RBC Direct Investing) has been pleasingly positive – low trading and administration costs, broad and steadily expanding product availability and services, responsive people when when a few administrative issues arose, impressive and widening range of useful tools, reports and educational material…

There is much on-going controversy in the financial advice industry amongst regulators, so-called and real advisors and their firms and consumer advocates about the current suitability standard for recommending investments versus a possible best interests standard.There are three main issues:1) suitability definitions (e.g. IIROC Rules or Ontario Securities Commission requirements) for investment industry salespeople are meant to stop abusive practices. Most often this involves putting clients into highly risky, high cost securities. This issue accounts for 99% of the whole suitability vs best interests debate.2) suitability for someone like me, a reasonably informed self-directed investor (who thereby has no ethical conflicts), equates to the best interest standard. The only thing that’s suitable for me is what’s best for me. … But it still leaves a very wide possible variation of investments. I could probably ask three highly experienced, completely ethical true financial advisers to tell me what investments to make and I could probably get three very different answers…

Most retirement advice has a flaw: It’s being given by people who haven’t yet retired.
So I asked money experts who have quit the 9-to-5 for their best advice on how to prepare for retirement.
They still faced curveballs when it was their turn. Making the right financial moves is important, they said, but so is getting ready mentally, emotionally and socially.
YOU CAN’T PLAN FOR EVERYTHING
A central retirement decision is when to do it. Working longer can reduce the odds of running out of money, but delaying retirement too long could mean missing out on the good health or companionship to fully enjoy it.
That trade-off came home to financial planner Ahouva Steinhaus of San Diego when her life partner, Albert, died suddenly last year, just before she was scheduled to hand over her business.
Steinhaus, 69, says she’s grateful she’s not working now, while grieving the loss, but still wonders what might have been if she’d started the process of selling her practice earlier…

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The two richest Canadians have the same amount of wealth as the poorest 30 per cent of the country combined, according to a new report from a group of international aid organizations.
The Oxfam report says the wealth of billionaire businessmen David Thomson and Galen Weston Sr. equals that of about 11 million Canadians.
The group of organizations, under the banner group Oxfam International, published its report “An Economy for the 99%” ahead of the World Economic Forum in Davos, Switzerland, which begins Tuesday. The report also said that the world’s eight richest people have as much wealth as the poorest 50 per cent of the world’s population.
“This is not a report about the rich and the poor. It’s about the super-rich and the rest of us,” said Lauren Ravon, the director of policy and campaigns at Oxfam Canada.
Oxfam made its calculations about global wealth distribution based on the Credit Suisse Global Wealth Data book, and calculated the wealth of the world’s richest people using the annual billionaires list from Forbes Magazine, which was last published in March 2016…

Toronto StarTSX slips as parts makers lose ground on Trump fearsBNNCanada's main stock index pulled back in morning trade on Monday, with several auto parts makers losing ground as U.S. President-elect Donald Trump upped pressure on carmakers to build locally. The most influential weights on the Toronto Stock …Canadian dollar, TSX lower as US markets close for holidayToronto StarMonday's TSX breakouts: A stock with massive revenue growth slated for this yearThe Globe and MailCANADA STOCKS-TSX slips as energy stocks weigh, Stella-Jones fallsNasdaqReuters -Yahoo Financeall 10 news articles »

There is much on-going controversy in the financial advice industry amongst regulators, so-called and real advisors and their firms and consumer advocates about the current suitability standard for recommending investments versus a possible best interests standard.There are three main issues:1) suitability definitions (e.g. IIROC Rules or Ontario Securities Commission requirements) for investment industry salespeople are meant to stop abusive practices. Most often this involves putting clients into highly risky, high cost securities. This issue accounts for 99% of the whole suitability vs best interests debate.2) suitability for someone like me, a reasonably informed self-directed investor (who thereby has no ethical conflicts), equates to the best interest standard. The only thing that’s suitable for me is what’s best for me. … But it still leaves a very wide possible variation of investments. I could probably ask three highly experienced, completely ethical true financial advisers to tell me what investments to make and I could probably get three very different answers…

The average price of a Canadian home continues to move higher, but there are signs of a slowdown, according to the Canadian Real Estate Association.

Some of the most active companies traded Friday on the Toronto Stock Exchange:
Toronto Stock Exchange (13,919.58, up 102.26 points):
B2Gold Corp. (TSX:BTO). Miner. Down one cent, or 0.38 per cent, to $2.64 on 12.4 million shares.
Lithium Americas Corp. (TSX:LAC). Miner. Up seven cents, or 8.64 per cent, to 88 cents on 8.8 million shares.
Encana Corp. (TSX:ECA). Oil and gas. Down 19 cents, or 1.92 per cent, to $9.71 on eight million shares.
Yamana Gold Inc. (TSX:YRI). Miner. Down three cents, or 0.48 per cent, to $6.22 on 7.1 million shares.
Kinross Gold Corp. (TSX:K). Miner. Up five cents, or 0.78 per cent, to $6.50 on 6.7 million shares.
Sandstorm Gold Ltd. (TSX:SSL). Miner. Down 18 cents, or 3.33 per cent, to $5.22 on 6.7 million shares.
Companies reporting major news:
Bell Canada (TSX:BCE). Telecommunications. Up 34 cents, or 0.57 per cent, to $60.34 on 1.5 million shares. Bell is promising to upgrade cellular coverage along a key Manitoba highway as part of its purchase of Manitoba Telecom Services (TSX:MBT) (up 22 cents, or 0…

The Canada Pension Plan will generate only a 2.1% real rate of return for Canadian workers starting out today, concludes Rates of Return for the Canada Pension Plan (May 2016) by Jason Clemens and Joel Emes of the Fraser Institute. Therefore, we Canadians seem to be invited to further conclude (given the Fraser Institute’s past attacks on the idea of expanding the CPP), that’s a very poor investment and therefore a good reason for Canadians not to support expansion of the CPP.Telling half the story truthfully is a sly way to debate an issue. Clemens and Emes appear to have crunched the numbers properly. Here’s what they forgot or neglected to say.2.1% compared to what? – For CPP to be judged as poor, it needs to be compared against a realistic alternative that covers both the savings phase and the retirement phase of life, such as an RRSP and a life annuity. I calculated and posted such a review in 2015 and found that the relative attractiveness of the CPP varied enormously according to whether the person is a man or woman, single or married, and self-employed or an employee…

Parents of two toddlers wonder whether mom can afford to avoid full-time employment while still achieving the family’s financial goals

Marcin (left) and Shannon (Photograph by Cole Burston)
In our April 2016 issue of MoneySense, we introduced you to Shannon Jarrett, 37, and her partner Marcin Duran, 34. They’re trying to track their money, come up with shared goals and cash in bad habits.  Throughout the year we’ll be giving them a financial challenge every month to help them get her finances in tip top shape. Make sure to follow along! Their last challenge had them hunkering down for a money date and things got real.
Challenge No. 2

Shannon and Marcin’s second challenge was to do some research to figure out if rolling their $26,000 in personal debt into their mortgage was a good option for them. If so, could Shannon and Marcin agree on making personal debt repayment a priority? And could they agree on an amount that both Marcin and Shannon would contribute to this? We asked MoneySense Approved financial advisor Rona Birenbaum to have a half-hour phone conversation with the two to see if they could reach an agreement…

Faced with a long commute, close to $300,000 in debt and plans to have kids, a millennial couple struggle to decide their next financial – and lifestyle – move

Learn, save, invest and prosper with My Own Advisor.
Welcome to my latest dividend income update.  For those of you new to these posts on my site, every month I discuss my approach to investing focusing on dividend paying stocks and how reinvesting the dividends paid from the Canadian companies we own are helping us reach financial freedom.
This month, I’ll recap our magic formula for growing our dividend income to $12,200 per calendar year since we changed our investing approach about six years ago.
Secret #1 – We buy Canadian blue-chip dividend paying stocks that have a history of paying shareholders for decades.  Over time during my investing journey, I’ve learned to avoid high-yielding stocks and stocks with a short dividend payment history.  There is too much risk.  Instead we invest in these types of companies.
Secret #2 – We reinvest the dividends paid by these companies where possible, as much as possible.  Like John Heinzl from the Globe and Mail, I don’t like having my dividends sitting around doing nothing – I put them to work every month and quarter – but I reinvest the dividends paid…

TORONTO – Five things to watch this week in Canadian business:
Tax deadline: Have you filed your taxes yet? Normally the deadline is April 30, but because that fell on a Saturday, Canadians have until Monday to do so.
Cineplex: The movie theatre giant releases its first-quarter earnings on Tuesday, the day after it plans to honour the late Prince with special screenings of the legendary musician’s “Purple Rain” in 54 theatres across Canada. A dollar from the sale of every $6.99 ticket goes to MusiCounts, a music education charity.
Poloz: The Bank of Canada governor speaks at a panel discussion at the Milken Institute in Los Angeles on Tuesday. Poloz, along with four other speakers, is going to tackle the topic entitled: “Monetary Policy: Out of Ammunition?”
Earnings season: The latest quarterly reports keep coming. Among the corporate heavyweights releasing their results are WestJet, Fortis, Loblaw Companies and Encana.
Jobs report: Statistics Canada is out with the job numbers for April on Friday…

What’s rule #1? A rule is not a rule unless it’s enforced. Any two year old knows that if the parents say to do or not do something, unless there is a sanction that is actually applied, you can behave as you want. And that’s what kids do. The rule doesn’t actually exist in any practical sense. The CSA is exactly in that situation as the “parent”, supposedly regulating financial firms and their employees dealing with the public, getting them to behave honestly and responsibly towards the public. The Small Investor Protection Association recently released a shocking and dispiriting report Unpaid Fines: a National Disgrace, which details the almost non-existent collection of fines imposed on financial miscreants in recent years. As the report says, this abysmal performance undermines the whole system of regulation. Investors will lose confidence. The financial industry will not feel deterred against misdeeds.Such utter neglect of the CSA’s mandate is especially annoying in the light of its recent excellent proposal to institute a best interest standard (as opposed to the weak suitability standard now in force) for financial advice on the investment industry…

What’s rule #1? A rule is not a rule unless it’s enforced. Any two year old knows that if the parents say to do or not do something, unless there is a sanction that is actually applied, you can behave as you want. The rule doesn’t actually exist in any practical sense. And they do.The CSA is exactly in that situation as the “parent”, supposedly regulating financial firms and their employees dealing with the public, getting them to behave honestly and responsibly towards the public. The Small Investor Protection Association recently released a shocking and dispiriting report Unpaid Fines: a National Disgrace, which details the almost non-existent collection of fines imposed on financial miscreants in recent years. As the report says, this abysmal performance undermines the whole system of regulation. Investors will lose confidence. The financial industry will not feel deterred against misdeeds.Such utter neglect of the CSA’s mandate is especially annoying in the light of its recent excellent proposal to institute a best interest standard (as opposed to the weak suitability standard now in force) for financial advice on the investment industry…

BAGHDAD — Iraqi anti-government protesters tore down walls and poured into the capital’s heavily-fortified Green Zone on Saturday, where they stormed parliament in a major escalation of a months-long political crisis.
Supporters of Shiite cleric Muqtada al-Sadr have been holding demonstrations and sit-ins for months to demand an overhaul of Iraq’s corrupt and ineffective political system, but Saturday was the first time they broke into the Green Zone, home to most government ministries and foreign embassies.
Iraqi security forces fired tear gas at one entrance of the zone but appeared to be largely standing down as protesters marched through the area, chanting and waving Iraqi flags. Hundreds were still pouring into the Green Zone as night fell.
Iraq has been mired in a political crisis for months, hindering the government’s ability to combat the Islamic State group — which still controls much of the country’s north and west — or address a financial crisis largely caused by the plunge in global oil prices…

WASHINGTON – Congress accomplished relatively little in a short work period, missing deadlines on the budget and on helping Puerto Rico with its financial crisis as lawmakers began a weeklong break.
They left behind few clues about how they would address must-do items such as finding money to counter the Zika virus and a second, even scarier July 1 deadline for averting a fiscal disaster in cash-strapped Puerto Rico.
Democrats called upon House leaders to modify this spring’s three-weeks on, one-week off legislative schedule to keep working, as Puerto Rico hurtles toward a half-billion-dollar default on Sunday.
“It’s very, very hard to get anything done if you are a drive-by Congress,” House Minority Leader Nancy Pelosi, D-Calif., said Friday. “We’re barely here. And these deadlines are coming.” Hours later, however, Democrats joined Republicans in sprinting for the Capitol’s exits.
Over the past month, the Senate finally passed a major energy bill — the first in nearly a decade — and made progress on providing help for Flint, Michigan, which is grappling with a water contamination crisis from lead pipes…

THE LONG WEEKEND
By Adrian Tinniswood
“What is a weekend?” Violet Crawley’s ignorance of the concept in Downton Abbey exemplifies the grand, timeless Edwardian ethos that once enveloped English country house life, real and fictional. The First World War changed everything. One in 10 titled families lost an heir, forcing the sale of inherited estates, both large and small. Those that survived faced an increasingly uncertain future of rising taxes, increasing labour costs and falling farm rents. Many families coped by breaking up estates and selling off assets at a rate never before seen.
As Tinniswood shows in this history of the English country house and its evolution during the years between world wars, the upheaval wrought in this once-rarefied world often mirrored the changes taking place in society as a whole, including the rise of the professional classes, now able to afford rural retreats of their own thanks to a flood of available properties. What could be an ordinary social history is transformed into a delicious read by the ease with which the author melds anecdotes from diaries and memoirs into his narrative…

OMAHA, Neb. – The Latest on Berkshire Hathaway’s annual shareholders meeting. Tens of thousands of people will fill an arena to listen to CEO Warren Buffett and Vice Chairman Charlie Munger talk business for more than five hours (all times local):
9:35 a.m.
Berkshire Hathaway’s first-quarter profit grew 8 per cent largely because of the way it had to account for its Duracell acquisition on paper, but revenue fell at its BNSF railroad and at its insurance units.
CEO Warren Buffett offered a preview of the first-quarter results at the company’s annual meeting Saturday although Berkshire won’t release its full report until next Friday.
Berkshire earned $5.589 billion, or about $3,400.89 per Class A share. That’s up from $5.16 billion, or $3,143 per Class A share, last year.
During the first quarter, Berkshire traded roughly $3.8 billion worth of Procter & Gamble stock for Duracell and about $1.7 billion cash. That boosted the paper value of Berkshire’s investments and derivatives to $1…

No need to be alarmed over a rise of financial technology companies – they’re simply picking up the slack in underserved markets

How does one know how risky an investment is, whether it’s a stock or bond, a mutual fund or an ETF? How complicated and hard is it to understand or predict what the investment’s return might depend on? For the retail investor, the basic answer is that you’re on your own, having to wade through the security’s Prospectus, which for Canadian securities can be found in SEDAR. Trying to compare several alternative possibilities that way is such a nightmarishly time-consuming task that most people likely don’t even bother. It’s one reason that as my investing years have accumulated, I am more and more oriented to the simplest possible investment structure.The provincial regulatory authorities under the umbrella of the Canadian Securities Administrators have tried – ineffectually – to help by mandating fund risk rating, the latest revision and supposed improvement exercise of which is currently underway (see Ontario Securities Commission website here). But it relies only on one risk dimension – price volatility – which isn’t nearly broad enough to capture real investment risk as I wrote in my last post referring to Howard Marks’ fantastic discussion of risk…

Howard Marks of Oaktree Capital has written the best explanation of investing risk I have ever come across in one of his Memos – Risk Revisited Again (the title revealing that he has refined and revised and expanded his exposition over many years and much hard reflection with much hard experience to inform him). The point of view is very practical as opposed to the academic theoretical approach and the writing is very readable for the DIY investor. That means he looks at risk in all its many facets and subtle but important nuances (24 different kinds of risk!), as opposed to the single volatility measure academics and regulators so love.I sure wish regulators like the CSA and the OSC would come to grips with this stuff instead of lazily opting for the misleadingly simplistic use of price volatility for classifying the riskiness of mutual funds.

Victor J. Blue/Bloomberg/Getty
WASHINGTON — It can be hard to see where Donald Trump the business ends and Donald Trump the presidential candidate begins.
When rivals level political attacks, the Republican front-runner’s company attorney threatens lawsuits on corporate letterhead. When his campaign needs event space, private businesses sometimes provide it free.
The political novice’s use of corporate resources — both his own and those of others — is another tool in his asymmetrical bid for the White House. But it has drawn the attention of federal regulators, as well as campaign-law experts who say some of what he’s doing could be illegal.
“The entanglements with his business and his campaign are certainly unusual, and maybe unprecedented,” said Kenneth Gross, an attorney who previously led the Federal Election Commission’s enforcement division. “Use of a candidate’s own corporate resources is highly, highly regulated activity.”
At the FEC’s demand, Trump’s campaign on Thursday provided regulators with the names of employees at his real estate and entertainment company who are doing work for his campaign _ mostly security and communications aides…

WATERLOO, Ont. – BlackBerry’s chief executive John Chen says he stands by a controversial blog post he published earlier this week that outlines when he’d be willing to hand private customer information over to law enforcement.
The CEO of the Waterloo, Ont.-based company was taken to task by technology websites and commentators over what some deemed as hypocrisy coming from the leader of a brand that pledges security and privacy.
Without pointing Apple out by name on Tuesday, Chen slammed a recent update to Apple’s operating system which makes it impossible for the company to unlock the devices, even if there’s a search warrant for a criminal investigation.
Talking with reporters on Friday, after BlackBerry released its latest financial results, Chen said he wasn’t fazed by the backlash.
“I strongly believe that if there are bad elements out there trying to harm society, for one reason or another… it’s our social responsibility to help,” he said…

WASHINGTON – Just as the Federal Reserve is pulling back slightly on the economic accelerator, Congress is pressing down a bit harder.
The spending and tax-cut package that Congress approved Friday stands to modestly boost growth next year. It could also help drive a shift away from government as a drag on economic growth to a source of potential stimulus.
“This shift … is currently being overlooked by financial markets and analysts,” said Joseph Carson, U.S. economist at asset manager Alliance Bernstein. “But we believe this will be a key aspect of a more positive and faster growth environment for next year.”
Economists at Goldman Sachs have forecast that increased federal spending and tax cuts should add to economic growth in 2016 for the first time in six years.
The $1.1 trillion budget deal boosts spending for most Cabinet agencies by about 6 per cent next year. A separate tax measure provides $680 billion in tax cuts over 10 years. It would do so mostly by extending or making permanent about 50 different expiring tax breaks…

Vale and BHP could be held responsible for the disaster, government is demanding $5-billion (U.S.)