Short Takes: Renting Out a Room, Floating Rate Notes, and more

Here is my post for this week that drew quite a few reader comments:

 One Thing Investors Must Do for Themselves

Here are my short takes and some weekend reading:

Potato does some analysis to show that renting out part of your house doesn’t help all that much to make Toronto’s high house prices more affordable.

Dan Hallett points out problems with floating rate note (FRN) funds that some investors like because they don’t have to lock in long-term fixed rates and suffer if interest rates rise. The trouble is that these funds carry significant risk that isn’t properly reflected in fund risk ratings.

Big Cajun Man had some post-dated cheques stolen from his son’s school which led to him paying several stop payment charges. A fee of $12.50 seems manageable until you have to pay it 10 times, but not 11 as his bank tried to charge him.

 Million Dollar Journey answers a reader question about which type of investment account is best for holding Canadian index ETFs.

Comments

  1. PotatoSeptember 20, 2013 at 12:55 AM

    Oh, I don't know if I'd break out fancy words like "analysis" for that particular post, especially given what else I threw out there last week. That's just a quick bit of friendly math and angry ranting that is.

    ReplyDelete
    Replies
    1. Michael JamesSeptember 20, 2013 at 7:47 AM

      @Potato: I'm giving you credit for finding the right way to think about the value of renting part of a house and how it affects the price of house you can afford. I'm always more impressed with simpler analyses.

      Delete
  2. Big Cajun ManSeptember 22, 2013 at 7:33 PM

    It was that I had to clean up the problem over the phone (again), that irked me. Good jibbering with you at the conference, too bad we both got pneumonia from the A/C on the train.

    ReplyDelete

Post a Comment

Popular posts from this blog

Short Takes: InvestorLine’s HISAs, 24-Hour Trading, and more

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...
Read more

My Asset Allocation

I’ve resisted discussing my asset allocation for some time, but now is finally the time to describe it and the reasons behind it. I’m not holding it out as a model portfolio; I believe it’s suitable for me and not necessarily anyone else. With that warning, enjoy the discussion and feel free to ask questions or take some pot-shots. The main reason why I haven’t discussed my asset allocation in detail before now is that I don’t want readers to treat it like a model portfolio and follow it blindly. Everyone’s situation is different. The need for variation in asset allocation from one investor to the next usually isn’t huge, but there is no one-size-fits-all portfolio. A secondary reason for keeping my asset allocation to myself is that I can’t be sure I’ll never change it. For example, I recently made the minor change of switching from an ETF of small-cap stocks to an ETF of small-cap value stocks . I don’t have any plans to change my current allocation, but I may think differe...
Read more

Updated Currency Exchange Method at BMO InvestorLine

There is now a more recent update of the method I use for exchanging currency at BMO OnvestorLine . I recently changed the procedure I use to convert large sums between Canadian and U.S. dollars at BMO InvestorLine. The method I use saves a lot of money compared to using the InvestorLine foreign exchange system. The latest change I made eliminated an annoying interest charge that I had to ask to be reversed. Most people don’t realize how expensive it can be to exchange currency. The extra charge banks and brokerages add gets hidden in the exchange rate. To see this extra charge, start by taking a sum in Canadian dollars, say C$10,000, and finding out how many U.S. dollars you can get. Then see what this U.S. amount would get going back to Canadian dollars. Many people might guess they’d get their original C$10,000 back, but they’d be wrong. In a recent test I did at BMO InvestorLine, I’d get back C$9754, for a loss of C$246 in two currency exchanges. That’s $123 per excha...
Read more

Archive

Show more