Friday, October 16, 2009

Short Takes: Bond Yield Fantasy, Money Delusions, and Alternative Minimum Tax

1. Larry MacDonald explains the difference between a bond’s nominal yield and its yield to maturity. If any fixed income product such as a bond or preferred share is paying a rate that seems too good to be true, check whether it will be redeemed soon for less than its current price.

2. Gail Vaz-Oxlade is in a unique position to see the financial mistakes made by many people and she lists the big mistakes people make in their attitudes toward money.

3. Million Dollar Journey explains the Alternative Minimum Tax (AMT). The AMT exists to prevent high income people from driving their income taxes to zero with certain types of deductions. If you’re old enough to remember NDP politicians thundering about the number of millionaires who pay no tax, you’ll see the motivation for having an AMT that gets wealthy people to pay some tax each year. AMT can be a pain if it applies to you, but the difference between the AMT and the amount resulting from the regular tax calculation becomes a deduction in a future year.

4. Canadian Capitalist shows that Scotiabank’s online store ScotiaMocatta is an expensive way to buy gold and silver.

5. Thicken My Wallet finds that dividend ETFs are redundant because of their significant overlap with broad-based stock indexes.

6. Big Cajun Man has a take on the great debate of whether you should contribute to your RRSP or pay down your mortgage.

7. Preet explains why investing in managed futures over the last couple of decades would have reduced portfolio volatility.

8. Jonathan Chevreau reports that Invesco Trimark is travelling the country pushing an asset mix that would have performed better over the last couple of years than the traditional mix of stocks and bonds (the web page with this article has disappeared since the time of writing). Of course, there is no guarantee that adding commodities, real estate, and other exciting assets to your portfolio will help over the next two years. I’ll be following Trimark’s advice as soon as I perfect my time machine.

9. Ellen Roseman helped some Sears Canada customers get satisfaction after the company’s call centre moved overseas causing delays and frustration.

5 comments:

  1. Thanks for the mention, keep warm this cold fall weekend.

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  2. Thanks for the mention. A good post or column would be on how stock tables and quotes can often be misleading on yields (because it's just not bond ETFs but also other securities). I wonder how many people have made investment decisions based on the flawed yield figures.

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  3. Thanks for the link - hope the weekend was kind!

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