Thanks for the giveaway, Michael. Now I'll have to see what Canada's most-trusted contractor has to say about RESPs. What? That's Mike Holmes, not Mike Holman? Oh, okay, that makes more sense.
Enjoying the book so far, Michael and Mike - easy to pick up for a few minutes here and there for some quick info.
Was pleased to see an article in Moneysense featuring your book, Mike, but was surprised that the magazine got your name wrong: Holden instead of Holman (assuming some imposter hasn't written an extremely similar book to get a piece of the huge RESP book market). At any rate, congratulations on the exposure.
Handy little book you have here, you really present the facts in a succinct, easy to digest manner.
Inflation is a risk we have to face in financial planning, particularly in retirement. We need to measure inflation risk correctly to be able to make reasonable financial plans. The best guide we have to the future takes into account past inflation statistics. But the field of statistics is full of subtleties, and even Dimensional Fund Advisors (DFA) can make mistakes. DFA creates good funds, and their advisors tend to do good work for their clients. I’d prefer to find errors in the work of a less investor-friendly investment firm, but they provided a clear example to learn from. They misapplied a statistical rule, and as a result, they misinterpreted the history of inflation over the past century. I discussed this issue with Larry Swedroe in posts on X. I respect Larry and have followed his work as he tirelessly explains evidence based investing to the masses. A Simple Example To explain the problem, let’s first begin with a simpler example. So...
I recently moved some cash into BMO InvestorLine’s high-interest savings accounts (HISAs) that are structured as mutual funds. Their designations are BMT104, BMT109, and BMT114, and they purportedly pay 4.35% annual interest (which they can change whenever they like). However, the way they report the monthly interest payments is so baffling that I wasn’t able to sort it out in my first 15 minutes of trying. A further complication is the following text in the HISA description: “The Bank may pay, monthly or quarterly, compensation to your Dealer at an annual rate of up to 0.25% of the daily closing balance in the BMO HISA.” I couldn’t find any evidence of such a charge, but I haven’t been invested for a full quarter, and I can’t yet say that such a charge isn’t buried somehow in the confusing reporting. I have more digging to do before I can recommend these HISAs. Here are some short takes and some weekend reading: Preet Banerjee explains the dangers of Robi...
Recently, Braden Warwick at PWL Capital created an excellent CPP calculator that we can all use. One of the numbers this calculator reports is the IRR (Internal Rate of Return) you’ll get between your CPP contributions and the CPP pension you’ll collect. Some financial advisors (but not Braden) decide it makes sense for their clients to take CPP as early as possible (age 60), and invest the proceeds. Their reasoning is that they believe they can earn a higher return. Here I explain why this logic compares the wrong returns. The return you’ll get on your CPP contributions depends on the contributions you and your employer have made and the benefits you’ll get. These amounts depend on many factors about your life as well as some assumptions about the future. Typically, the return people get on CPP is between inflation+2% and inflation+4%. (However, it can go higher if you took time off work with a disability or to raise your children. It al...
Thanks for the giveaway, Michael. Now I'll have to see what Canada's most-trusted contractor has to say about RESPs. What? That's Mike Holmes, not Mike Holman? Oh, okay, that makes more sense.
ReplyDelete@Gene: I kind of like the idea of seeing Mike Holmes stomp around knocking holes in an RESP.
ReplyDeleteI think Mike Holmes would look at all the RESP rules and say "Tear it down!". :)
ReplyDeleteEnjoying the book so far, Michael and Mike - easy to pick up for a few minutes here and there for some quick info.
ReplyDeleteWas pleased to see an article in Moneysense featuring your book, Mike, but was surprised that the magazine got your name wrong: Holden instead of Holman (assuming some imposter hasn't written an extremely similar book to get a piece of the huge RESP book market). At any rate, congratulations on the exposure.
Handy little book you have here, you really present the facts in a succinct, easy to digest manner.