I’ve noticed an increase in the number of businesses offering discounts for paying in cash.  I’m happy to see this for two reasons.  One is that those who pay in cash (or some equivalent)  have been subsidizing credit card users who collect various perks at others’ expense.  The second is that I’m happy to have some of my purchases not contribute transaction fees to Canada’s banking oligopoly. Here are some short takes and some weekend reading: Teksavvy has some advice for the CRTC aimed at improving competition among internet providers.  The most interesting one is to “Examine functional or structural separation , where large providers are split into two distinct companies. Under such an arrangement, one company owns and operates a network and sells wholesale access to it to all comers on an equitable basis. The other purchases that access on the same terms and rates as every other competitor, and then offers it to customers as retail internet service. Canada'...

After only 10 short weeks, I’ve managed to open a checking account at a U.S. bank and move some money into it.  Some of the delay was due to misunderstandings on my part about what steps I was supposed to take next, and some of it was due to weird restrictions on the type of account in Canada that can be used to transfer money out of the country.  Mostly, though, it was the fact that there are many steps and each one seems to take a few business days. I doubt that the specific details of my experience matter much.  The main takeaway is that if you’re considering opening a bank account in the U.S., consider starting the process long before you need the account to be in place. Here are my posts for the past two weeks: Bad Retirement Spending Plans My Answer to ‘Can You Help Me With My Investments?’ Here are some short takes and some weekend reading: Robb Engen at Boomer and Echo describes a smart two-fund solution for investing in retirement. Tom Bradley at Steadyhand exp...

I mentioned a month ago that I was trying out BMO InvestorLine’s high-interest savings accounts (HISAs) that are structured as mutual funds (BMT104, BMT109, and BMT114).  They pay exactly the advertised rate of 4.35%, but I couldn’t tell this from the confusing list of transactions.  Looking at the month-end balances, I was able to determine that they pay 1/365 of the annual interest each day, accumulating as simple interest over a month, and the accumulated interest is paid each month.  So, longer months pay more interest than shorter months, which is different from most other interest-bearing accounts I’ve had in my life. My most recent post is: Bad Retirement Spending Plans Here are some short takes and some weekend reading: John Robertson signed for a new Ford vehicle, and now Ford is demanding an extra $4000. Nathan Proctor says companies are using legal tricks to get us to pay extra in the form of subscriptions for products we’ve already bought.  He’s fightin...

I prefer to have as few bank accounts and investment accounts as possible.  However, there are RRSPs, TFSAs, non-registered accounts, and Canadian and U.S. dollars that drive me to open ever more accounts.  The latest reason I had to open a new account seems the silliest to me.  I have a U.S. dollar chequing account as part of an InvestorLine account.  It behaves like any other BMO U.S. dollar chequing account except that I can’t do a global money transfer from it.  So, I had to open a “normal” U.S. chequing account at a BMO branch.  So, now when I want to send money to the U.S., I have to move money from InvestorLine to my new “regular” U.S. dollar chequing account, and then from there to the U.S.  When I opened this new account, the bank employee asked what name I’d like to give it.  I was tempted to say “stupid,” but I settled on “USD.” Here are some short takes and some weekend reading: Jason Pereira has a strong take on the supposed financia...

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...

My most recent post is: Finding a Financial Advisor Here are some short takes and some weekend reading: Mr. Money Mustache has decided that he has become too frugal and needs to loosen up.  He’s not alone.  I know many people who spend way below their means, although they are greatly outnumbered by overspenders.  I’ve been told by high-end financial advisors that a high proportion of their clients are underspenders, but that’s an extreme example of survivorship bias.  Underspenders need to learn to spend a little in ways that will make them and others they care about happy.  Sadly, because people tend to embrace arguments they already believe, Mr. Money Mustache’s article is likely to resonate with overspenders more than it reaches underspenders.  Given the reach of his blog hopefully he’ll help a few people with these ideas. Tom Bradley explains the many things that nobody knows, but people think financial advisors do know.  He goes on to explain th...

I came across yet another case of a furious investor whose advisor had promised a minimum return, but the portfolio lost money.  There is a lot wrong with this picture.  On the client side, they often believe that advisors have some meaningful level of control over returns and that advisors can somehow steer around bear markets, which is nonsense.  Advisors can choose a risk level.  The only way to guarantee a (low) return is to take little or no risk.  On the advisor side, I can only assume that many advisors are under so much pressure to land clients that they make promises they know they can’t keep unless they get lucky.  All the while, the management above these advisors know full well what is going on. Here are my posts for the past four weeks: Giving With a Warm Hand The Case for Delaying OAS has Improved Here are some short takes and some weekend reading: Robb Engen at Boomer and Echo sings the praises of Vanguard Canada’s Asset Allocation ETFs....

I’ve lost count of the number of real estate agents and mortgage brokers in Canada and the U.S. who’ve told me that right now is a fantastic time to buy a rental property.  Usually, they don’t own any rental properties themselves and have no plans to buy one now, but they’re sure that it would be a great time for me to buy. When I say that I’m not interested in using my capital to buy the part-time job of being a landlord, they tell me to hire a management company.  When I tell them I’ve heard from landlords that management companies soak up most or all of the profit from being a landlord, they usually give up on me. I guess my message here is that I’ve found a fairly short path to ending an uninvited sales pitch about real estate.  You’re welcome. Here are some short takes and some weekend reading: Robb Engen shows that TFSAs can be very useful for smoothing out life’s financial bumps without creating a big tax bill.  This gives you time for the necessary next step...

I find behavioural economics and other aspects of psychology interesting, but I often get lost between a study’s results and the conclusions people draw from these results.  A good example is the oft-repeated fact that most people believe they are above-average drivers.  I have no doubt that a large majority of people will consistently report that they are above-average drivers.  However, the tidy conclusion that these people are overconfident isn’t obvious to me. There is no single measure of the quality of a driver.  Imagine two brothers where one believes that it is crucial to observe the speed limit at all times, and the other believes it is prudent to always stay up with the flow of traffic to minimize relative speeds.  These standards of driving skill are in conflict, and each brother judges the other to be a poor driver.  Each brother believes he is the better driver based in part on his view of what makes a driver good. It may be that both brothers ...

I haven’t had many people ask me whether I’d consider hosting a podcast, but it’s come up enough to make me think about it.  I have some solid reasons for not doing a podcast: it’s way more work than I’m willing to do, and my voice isn’t good.  To illustrate the best reason, though, consider this hypothetical exchange: MJ : Welcome to the podcast, Dr. G. Guest : I’m happy to be here. MJ : Let’s get right to it.  Please describe your research interests. Guest : I work on retirement decumulation strategies, safe withdrawal rates, and risk levels of equities. MJ : From what data do you draw your conclusions? Guest : I use worldwide historical returns of stocks and bonds. MJ : How do you deal with the challenge that we don’t have enough historical return data to directly draw statistically significant conclusions? Guest : Uh … I perform simulations drawing from the available pool of data. MJ : So, you create seemingly plausible return histories to extrapolate from the small p...

What a difference a year makes.  During the COVID-19 lockdowns, many people saved a lot of money, either from their pay (if they were lucky enough to keep their jobs) or from government payments.  As the world opened up, people started spending this money and businesses couldn’t keep up.  These businesses still can’t get all the new employees they want but the problem has eased considerably compared to a year ago.  I saw a small example in Florida recently.  I was in a burger chain restaurant and saw a sign saying they were looking for employees at $12 per hour.  Last March, the sign in this same restaurant offered $18 per hour and implored workers to “START RIGHT NOW!” Here are some short takes and some weekend reading: Cliff Asness accuses private equity investors and managers of “volatility laundering.”  Failing to value private equity frequently and accurately creates the illusion of smooth returns. Scotiabank’s new President and CEO Scott Thomson...

When people suggest topics for me to write about, more often than not I can point to an article I’ve already written, which is handy for me.  I doubt I’ll ever run out of thoughts on new topics, but it’s good to have a body of work to refer to. Here are my posts for the past two weeks: Car Companies Complaining about Interest Rates RRSP Confusion Searching for a Safe Withdrawal Rate: the Effect of Sampling Block Size Here are some short takes and some weekend reading: Ben Carlson lists some things in the markets that surprised him this year.  The first thing is that stocks and bonds both went down double-digits.  Apparently, that’s never happened before.  I guess if you just look at the history of stock and bond returns, this outcome looks surprising.  However, when you look at the conditions we’ve come through, this was one among a handful of likely outcomes.  Bond markets were being artificially propped up, and the dam had to burst sometime.  As for...

There’s a whole world of retired people who play sports that I didn’t know existed until the last few years.  As I aged and was trying to compete with much younger athletes, I often wondered how much longer I could keep going.  A common mindset among older players is that they’ll have to give it up sometime, probably soon.  However, when I play sports with people my age and older, I see that I can keep going as long as I can stay healthy enough. Rather than focusing on how much physical ability I’ve lost, I can focus on finding people who play at roughly the same level I do.  This has increased my motivation to do targeted exercise to keep my body healthy enough to play sports.  You’d think that staying healthy and strong would be motivation enough, but I find the deadline of completing rehab before an upcoming sports season much more motivating. Here are some short takes and some weekend reading: Justin Bender compares U.S. stock ETFs domiciled in Canada (e.g....

It’s no secret that bonds got crushed this year as interest rates rose.  Rob Carrick went so far as to say “Given how absurdly low rates were in 2020 and 2021, your adviser should have seen the events of 2022 [the bond crash] coming.”  I agree in the sense that the bond crash was predictable, but its exact timing was not.  I explained the problem with long-term bonds back when there was still time to avoid the losses . It’s important to be clear that I was not making a bond market prediction.  What was certain was that long-term bonds purchased in 2020 were going to perform very poorly over their lifetimes.  The exact timing of bond losses was not knowable with any certainty.  The tight coupling between interest rates and bond returns is what made it possible to see the brewing problems; this isn’t possible with stocks. I’ve seen a few attempts by financial advisors to justify their failure to act for their clients by talking about how if you blend poor lon...

It’s amazing how trivial it is to invest well, and yet we need to know a lot to be able to avoid changing course to some inferior strategy that sounds good but isn’t.  I did poorly with my own portfolio for about a decade before smartening up, and I’ve done well for my mother, sister, and mother-in-law, but I haven’t been able to help most others who ask for advice.  In most cases, I end up watching helplessly as they make choices with poor odds.  It would be easier if saying “just buy VBAL” were persuasive. Here is my review of a book on homeownership: House Poor No More Here are some short takes and some weekend reading: Marc Cohodes holds nothing back in his analysis of Sam Bankman-Fried and FTX.  I doubted that I’d end up listening to the entire podcast, but I couldn’t stop once I started. Justin Bender explains U.S. foreign withholding taxes (FWT) on various types of ETFs that hold U.S. stocks.  This is an important topic, because FWT on dividends can be ...

Early this year I got a new U.S. dollar credit card but had a hard time getting a reasonable credit limit.  After some trouble, I managed to get the bank to increase the credit limit a little.  This week I got a popup after logging in to my online banking telling me I was pre-approved for another US$4000 increase.  This happened shortly after I had maxed out the card and then paid it off.  I guess they just wanted to see more of a track record on this card before upping the limit, even though I already have a multi-decade track record with another credit card at the same bank.  I was amused when I clicked to accept the pre-approved credit limit increase and got a message saying that they would let me know whether they would “approve my request.”  Later, another automated message congratulated me on getting “my request” for a higher credit limit approved.  What I’d like to know is how often these “pre-approved” credit limit increases get rejected. Here ...

It’s a strange feeling to watch the beginning of the carnage in the housing market and know that it must get much worse if my sons are to have a chance to buy a home for a price they can afford. Here are my posts for the past two weeks: The Inevitable Masquerading as the Unexpected Inflation Porn Here are some short takes and some weekend reading: Doug Hoyes explains why he does “not expect a significant rise in homeowner insolvencies until mid- to late-2023.”   A judge has ruled against CRA in three appeals of gross negligence penalties, not based on the merits of the cases, but because of CRA’s “egregious” behaviour .  From the judge’s ruling, it seems that CRA is willing to flagrantly violate court rules in cases where they believe taxpayers are guilty of gross negligence.  A powerful government agency such as CRA has no business engaging in such gamesmanship.  If CRA is correct about the conduct of these taxpayers, they should follow court rules and argue the me...

A prominent politician recently referred to CPP premiums as a tax.  This sparked a debate about this question.  Personally, I find CPP premiums look a little like a tax, but mostly not.  I once looked into how much of your CPP contributions are really a tax , but this was not intended to be like the current semantic discussion.  I don’t think this debate about whether CPP premiums are a tax is very important, but the answer a person argues for can tell you something about what they think about more important questions.  Should we scrap CPP?  No.  Should we be allowed to opt out of CPP?  No.  Can Canadians do better investing their savings on their own?  No.  Can most of the people who claim to be able to invest better on their own actually do better?  No. Do most of the people who claim to be able to invest better on their own even know their past investment returns?  No.  Should we reduce CPP premiums to reduce payro...

I’ve been reading a lot lately about how a recent ruling in Ontario has crushed the hopes for making the designation “Financial Advisor” meaningful.  Sadly, this is hardly surprising.  The big banks want to be able to call their employees financial advisors.  Banks will always be formidable foes, and any designation a bank employee is able to hold is necessarily meaningless.  Bank financial advisors may mean well, but they are no match for the carefully constructed banking environment that forces them to sell expensive products to unwary customers. I wrote one post in the past two weeks: Nobody Knows What Will Happen to an Individual Stock Here are some short takes and some weekend reading: Tom Bradley at Steadyhand has an entertaining and important list of investment signs we should look for. Ben Felix and Cameron Passmore come up with estimates of returns for alternative asset classes including private equity, venture capital, angel investing, private credit, hed...

I finally got my $84 from the Microsoft software class action settlement .  As I predicted 19 months ago, I had forgotten about this lawsuit, and when the money arrived, it brightened my day (at least until I had to fight with Tangerine’s user interface to figure out how to deposit a paper cheque).  I’m not sure why it pleases me so much to get these small sums from class actions, but I’ll keep putting in claims when it’s convenient to do so. Here are some short takes and some weekend reading: Jonathan Chevreau describes Moshe Milevsky’s latest work on tontines to solve the difficult problem of decumulation for retirees.  Milevsky says “until now it’s all been academic theory and published books, but I finally managed to convince a (Canadian) company [Guardian Capital] to get behind the idea.”  Guardian Capital offers 3 solutions based on Milevsky’s ideas.  I’ve complained in the past that academic experts such as Moshe Milevsky and Wade Pfau write about the be...