I had a full week of posts:
Different Ways of Comparing RRSPs to Other Types of Accounts
Dishwasher Commits Suicide
Reader Question: How to Protect against the Dropping Canadian Dollar
Malcolm Hamilton on Public-Service Pensions
Here are some short takes and some weekend reading:
Preet Banerjee interviews Dan Hallett in his latest podcast discussing The Financial Advisors Act of Ontario. My 1000-foot take on this act: it’s about weeding out unlicensed advisors and does nothing to address the systemic problem of the bulk of advisors hiding their fees from their clients and choosing ridiculously expensive products for their clients.
The Blunt Bean Counter explains that CRA now expects those who earn income from a web site, even if it is just advertising income, to fill out a T2125 form reporting these business activities. I’m still trying to get my tax software to handle this for me. I expect to get this to work, but if I end up having to file on paper, I’m pretty sure I’m done with advertising on my blog.
Potato has an interesting discussion on the regulation of financial advisors. I agree that the problems are systemic, but I’m not looking to the types of regulations that are designed to weed out a few bad apples. These things are fine as far as they go, but to handle the systemic problems requires a different approach. I think we need to cut off the funds flowing from funds to advisors. If advisors are performing a valuable service, their clients should be willing to pay them directly. The payment model doesn’t even have to change from the usual percentage of assets if clients are willing to pay that amount. A big benefit of this approach is that advisors would no longer have any incentive to recommend expensive funds. Remember that a 2.5% MER fund may only ship 1% of that to the advisor. The remaining 1.5% kept by the fund is a high cost with questionable benefit.
Big Cajun Man warns that you should read your home insurance renewal documents. He found a note in his renewal that his coverage for water damage is not capped at $15,000. This is too low to be considered real insurance. Although it would be painful, I wouldn’t be devastated if I had to pay $15,000 to repair some water damage. If the insurance company only paid for the amount above $15,000, that would be insurance.
Gail Vaz-Oxlade responds to some readers who need to give their heads a shake. The first response is worth the price of admission. It ends with “And don’t be a dope.”
Million Dollar Journey gives some insight into how Frugal Trader structures his personal finances with his corporation.