Friday, May 8, 2020

Short Takes: Risk Tolerance, Proposed Tax Changes, and more

Here are my posts for the past two weeks:

Another Emotional Reason to Take CPP Early

Portfolio Rebalancing Based on Expected Profit and Trading Costs (Redux)

Calculating My Retirement Glidepath

Here are some short takes and some weekend reading:

Boomer and Echo has a sensible discussion about using the recent market crash to learn about your risk tolerance. I made the following comment: “I’m all for people using real experience with losing money in markets to learn about their true risk tolerance. The tricky part is when to change allocation percentages. I’d like a rule something like, you can only reduce stock exposure when stocks are within 5% of making a new high, and you can only increase stock exposure when stocks are at least 20% below the most recent high. The waves of people wanting to do the opposite are predictable.”

Jamie Golombek discusses some tax proposals to help investors in these difficult times. To the best of my knowledge none of these proposals have come from the government, so don’t hold your breath. The first one is to allow people to use their RRSPs like the home-buyer’s plan. You’d be able to withdraw funds up to some limit tax-free, but you’d have to put the money back in the future. Another proposal is to eliminate the superficial capital loss rules for 2020. So, you’d be able to sell stock to crystallize a capital loss and rebuy the stock right away. Normally, the capital loss is disallowed in this case. Another proposal is to allow people to offset regular income with capital losses incurred in 2020. I’m guessing wealthy people could make good use of the proposed capital gains changes.

Justin Bender describes his “Ludicrous” ETF portfolio, the third in a series of four portfolios. I can understand why a money manager would use this portfolio for clients who don’t understand how to measure the risk of their portfolios; they need to be tricked into taking more after-tax portfolio risk. However, I don’t see how it makes sense for a DIY investor who understands this issue to use the Ludicrous portfolio. For someone correctly focusing on after-tax portfolio risk, the Ludicrous asset location decisions send stocks and bonds to the wrong accounts. For more background on these issues, see my earlier discussion.

Doug Hoyes has an interesting take on the possibility of a debt jubilee.

The Blunt Bean Counter uses an example case to show how Alter Ego Trusts and Joint Partner Trusts work and illustrate their advantages.

Big Cajun Man is using his extra time at home figuring out the different ways his expenses have dropped during the pandemic lockdown.


  1. Thanks for the inclusion! Enjoy the cold weekend in Ottawa, I will ponder other things looking out my front window.

    1. Big Cajun Man: It's a beautiful February day in my neighbourhood.

  2. I could stand to benefit from the proposals in Golombek's article, but wow, with the possible exception of the HBP-like withdrawals, those are terrible policy proposals that look like handouts to the wealthiest, who don't need the help.

    1. Anonymous: Yes, there is always a steady stream of proposals that would benefit wealthy old people. I assume they're mostly dreamed up by financial advisors of some type.