Friday, December 7, 2018

Short Takes: Dividend ETFs, Dynamic Pricing, and more

I managed only one post in the last two weeks:

Smart Couples Finish Rich

Here are some short takes and some weekend reading:

Dan Bortolotti has a very sensible take on dividend ETFs.

Squawkfox tells us how to beat dynamic pricing where retailers change online prices based on what they know about you.

Ron Lieber attends a steak dinner annuity pitch and makes the salesman unhappy. A lot of complex financial products look good if you compare them to stocks without their dividends.

The Blunt Bean Counter explains the tax implications of renting out your property Airbnb-style. His explanation is more than enough to scare me away from becoming a casual landlord.

Jason Heath explains the details of how to defer RRIF income taxes when a spouse passes away. There are a number of different cases to consider.

Robb Engen lays out his financial goals for 2019. As usual, my favourite goal is “Don’t take on any new debt.” Without this goal, he could meet all the other goals painlessly by borrowing a pile of money.

Big Cajun Man didn’t hold back on his opinion of GM for closing their plant in Oshawa.

John Robertson reviews Passiv, a tool to automate the management of a do-it-yourself portfolio based on ETFs. It performs some of the functions I’ve built into my investment spreadsheet. It also does some things my spreadsheet can’t do such as sending trades to a brokerage account.


  1. On the GM thing, this is a gut-based response that is largely void of considerate thought, and kind of unbecoming of the high-quality thought I usually find on this site.

    Let me play Devil's Advocate here. GM is basically one of the most hated companies out there (one might argue, owing much to its own ham-fisted-ness), but I think for once the company is TRYING to do the right thing, and they are in a no-win situation because people will react badly no matter what.

    The Canadian Fed/Prov government did provide GM money in the 2009 crisis. That money was in the form of multiple loans, and some equity. The Canadian/Ont governments have since sold their equity, and GM has paid back some (but not all) of the loans. The direct recovery on the cash has been ~80% I think. Also, in the interim, GM has maintained almost 10,000 jobs in Canada, each one paying taxes. And as recently as last year, invested $500M into the Oshawa plant itself (as well as other investments in its other facilities)

    So one question I'd ask, is what is the statute of limitations here? The bailout was 10 years ago. It's been mostly (but not all) repaid directly. And there has been considerable other investment. When is the penance paid, then?

    It's also worth stating that GM has massively expanded it's engineering presence in Canada since, adding 1000 highly paid professional engineering jobs in the GTA - about half there alone of what is being lost in manufacturing.

    Second, the governments made a decision to sell their GM shares precisely because they dont want to be involved in corporate governance. So you have to then accept what the company decides is best. (and dont suggest they shouldve maintained a stake/tried to influence... you know how well that'll go)

    So here's a company that went bankrupt 10 years ago precisely because it stuffed its head in the sand and carried underutilized assets, couldnt make hard decisions, etc. Now it's trying to do the right thing - compete and survive - and everyone's mad. So I'll ask again, under what plausible, reality-constrained circumstances would you be happy here?

    A more appropriate response would be to look at the state of Canada's ability to compete in manufacturing in general these days, and discuss what lessons can be learned from this going forward? Our governments, companies, and unions have all "dropped the ball" on this one. Maybe, rather than expletives, a better idea would be to discuss what we can improve.

    1. @Anonymous: It's true that the GM rant is a gut-based response from the Big Cajun Man. But I'm not above pointing to someone else's article for little reason other than I find it funny. Apparently, you didn't find it funny. To each, his or her own.

      I don't know if GM is among the most hated companies. Canada's telecommunications companies, cable companies, and big banks are ahead of GM on my personal scale. I'm not sure what you mean by GM trying to do the right thing. Companies seek profits, and the population generally benefits from this capitalist behaviour.

      GM gets a lot more subsidies than just the bailout a decade ago. But so do other businesses. I think subsidies aimed at trying to fend off market shifts to new ways of doing things is just expensively delaying the inevitable. Subsidies are better aimed at new technologies. I have sympathy for those who lost their jobs, but it's about time Canadian governments left car companies to market forces. Closing the Oshawa plant had to happen sometime.

      The future of manufacturing is ever-more automation. So, I don't see much of a union role in future manufacturing. The government's role should be to set sensible rules and then get out of the way. Companies should stop begging for free money.

    2. "Anonymous" while your arguments seem rather "robotic" or "troll-like", they are still good points. My response was a gut reaction, and I stand by my statements. If you wish to have a cogent conversation, please drop by my site, and we can continue it there, if not, hope your SQL lookups never return 49918.

  2. I too liked Dan Bortolotti's article. I do however take exception to the common misconception that Canadian dividends have a tax advantage over regular income. Just not true when you include the tax that the company paid on your behalf. Dividend income is (at least partially) tax paid money. It is the whole reason that the CRA gives us the dividend tax credit. Would love to see you do a piece on this sometime...

    1. @Garth: I'll give some thought to writing about this. However, I only partially agree with you. You've dug deeper than most people in understanding dividend taxes in Canada. But I think we need to dig even further to get to the right way to think about this issue.

    2. Here is a good article on the subject:

    3. @Garth: I've written on a related subject before as well:

      I'm not convinced that this comparison is the last word. I need to think more about the fact that the company's taxes must be paid whether they pay a dividend or not.