Author Topic: Investment Culture  (Read 461 times)

Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #30 on: February 26, 2017, 11:39:28 am »
I will add this as a counter/pro point to my post above:  http://thereformedbroker.com/2016/08/30/everyone-is-a-closet-technician-2/

I've gotta have more cow bell! -Bruce Dickinson

Offline eyeball

  • Newbie
  • *
  • Posts: 7
    • View Profile
Re: Investments
« Reply #31 on: February 26, 2017, 03:25:24 pm »
I usually don't let politics or even ethics influence my investing but I will confess that I am feeling dirty right now.

With a Goldman Sachs guy standing over Trump's left shoulder the other day we have seen the gutting of the Dodd's -Frank Act.  https://www.theatlantic.com/business/archive/2017/02/trump-dodd-frank/515646/

Not that I'm necessarily a fan of the act but this is a thread about investing.

The reason I feel dirty is because I have been profiting off of Trump.

I own XLF with 10% of its holdings in JP Morgan and 3% in the devil, er, I mean Goldman Sachs.

At any rate, I have been slowly moving my US positions to cash and I am now thinking this:

Since the US is clearly moving from a developed nation with respect for law and order for all, to a developing nation / banana republic status would I not be better off to simply move my US investments into cheaper emerging market investments?

But if the EM do turn out to be the better performing invesments over the next 10 or 15 years then was it because of the changing political climates or because they were the cheaper invesments.

Meh, whatever.  Think I will buy some cigarrette peddlers instead. 

With this BS preamble now over, what are you investing in?
A political party that's willing to tax the snot out of you and your filthy investments.

Nothing personal.

Sent from my E6560T using Tapatalk


Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #32 on: February 26, 2017, 07:15:05 pm »
A political party that's willing to tax the snot out of you and your filthy investments.

Nothing personal.

Sent from my E6560T using Tapatalk

I agree.  I hope Trudeau raises the capital inclusion rate from 50% to 75%.

With RRSP's and TFSA's and the qualifies small business rules and the qualifies family farm rules and qualifies fish rules etc there is no reason for capital gains to be taxed at a higher rate within non-registered accounts.

Only reason I'm okay with 75% rather than 100% inclusion is because an argument can be made for inflation (when inflation becomes a factor again).

 I do not buy into the risk must be subsidized by the government BS. Risk should be taken for its expected reward not because the government is going to give a tremendous tax break for it. 
I've gotta have more cow bell! -Bruce Dickinson

Offline SirJohn

  • Sr. Member
  • ****
  • Posts: 465
    • View Profile
Re: Investments
« Reply #33 on: March 11, 2017, 10:05:27 am »
Something all people hoping to save for their retirement should read and understand. Banks are not your friend, and neither are most of the 'advisers' you pay.

Louise has been with her adviser for 10 years and has had a net return on her investments of only $1,500 after paying fees of $25,000 (about 2.5 per cent annually), Mr. Miszk says. “Unfortunately, this situation is all too common in Canada.”

http://www.theglobeandmail.com/globe-investor/retirement/retire-planning/artists-portfolio-performance-leaves-little-to-small-about/article34270203/

Offline SirJohn

  • Sr. Member
  • ****
  • Posts: 465
    • View Profile
Re: Investments
« Reply #34 on: March 11, 2017, 10:07:37 am »
I agree.  I hope Trudeau raises the capital inclusion rate from 50% to 75%.

Why? You're hoping to drive high tech companies out of Canada? You realize the inevitable result will be a stampede of people out of investments in small, fast growing technology companies and into dividend paying stocks from the banks, insurance companies, pipelines and telcos, right?

Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #35 on: March 11, 2017, 10:51:30 am »
Nonsense.

The qualified small business shares capital gains deduction is there to shelter gains for the tech entrepreneurs and other businesses. 

I have had some of these as clients and they never even considered the tax rates on their startups until the day after they sold.

Even then, they didn't whine.

As for the rest of us, in an age of $52,000+ in TFSA room and RRSP's the question is: why not a higher inclusion rate?

It will effect few people (so not many to vote against this) while raising proportionately lots of tax revenue.


 


I've gotta have more cow bell! -Bruce Dickinson

Offline SirJohn

  • Sr. Member
  • ****
  • Posts: 465
    • View Profile
Re: Investments
« Reply #36 on: March 11, 2017, 11:19:42 am »
Nonsense.

The qualified small business shares capital gains deduction is there to shelter gains for the tech entrepreneurs and other businesses. 

I'm talking about people like me who buy stock in companies like Shopify, Kinaxis, Enghouse, and other non-tech names like Spin Master or Savaria, Grande West Transport, or CRH Medical. What happens to their stock the day after this goes into effect?

Quote
As for the rest of us, in an age of $52,000+ in TFSA room and RRSP's the question is: why not a higher inclusion rate?

Most people don't start seriously saving until their mid to late thirties. And most people don't earn enough to collect a huge amount of money in their RRSP given the allowable contribution levels. I have been seriously saving for about fourteen years now. My RRSP contribution level was quickly maxed out because my earnings in much of my life were very low. If I'm to save enough for retirement there simply is not enough room in my RRSP or TFSA.

Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #37 on: March 11, 2017, 10:18:04 pm »
I'm talking about people like me who buy stock in companies like Shopify, Kinaxis, Enghouse, and other non-tech names like Spin Master or Savaria, Grande West Transport, or CRH Medical. What happens to their stock the day after this goes into effect?

I doubt it would have any measurable effect.

What would you do? All of a sudden sell and trigger tax because the tax rate went up?

Then buy a bond in a rising interest rate environment?

Definition of dumb is letting taxes influence investment decisions.


Quote
Most people don't start seriously saving until their mid to late thirties. And most people don't earn enough to collect a huge amount of money in their RRSP given the allowable contribution levels. I have been seriously saving for about fourteen years now. My RRSP contribution level was quickly maxed out because my earnings in much of my life were very low. If I'm to save enough for retirement there simply is not enough room in my RRSP or TFSA.

Most people don't have non-registered investments since if they will save anything it will be to own a house first (gains exempt thanks to PR exemption), then TFSA's second (unless they are in a higher tax bracket), RRSP's third and finally non-registered last. 

Why investors need a tax subsidy for taking risk has never been a compelling argument to me.

Particularly as a guy who is almost always all in stocks at all times - volatility is why I make more than those putting money into GIC's. If I want to defer tax then I will use my RSP. If I want to save tax I will use my TFSA.

There is no reason to subsidize capital gain returns other than, perhaps, with the inflation argument.

Even that is a weak argument.
I've gotta have more cow bell! -Bruce Dickinson

Offline SirJohn

  • Sr. Member
  • ****
  • Posts: 465
    • View Profile
Re: Investments
« Reply #38 on: March 12, 2017, 11:23:18 am »
I doubt it would have any measurable effect.

I'll put that up there with "The budget will balance itself"

Quote
What would you do? All of a sudden sell and trigger tax because the tax rate went up?

People who invest in stocks which have no dividends do so in hopes of it going up so they get capital gains. If the taxes rise drastically on those capital gains people are going to stop buying these kinds of stock, which in turn will slow their upward growth. When combined with increased taxes this is something which builds on itself towards a continuing downward momentum. People will dump them in favor of dividend stocks.
 
Quote
Why investors need a tax subsidy for taking risk has never been a compelling argument to me.

Because government is trying to encourage people to put some of what disposable income they have left after their income has already been heavily taxed into savings rather than going down south for a nice warm holiday? Because international investors will flee in droves to other jurisdictions, like the US, where tax on investments will be so much lower?

Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #39 on: March 12, 2017, 01:20:05 pm »
I'll put that up there with "The budget will balance itself"

 

So you think there are enough Canadians in numbers and volume with stocks in non-registered accounts *and* they are stupid enough to allow tax rates drive their decisions, who can move markets?

Really? You have any idea how small Canada is compared to world markets?

Now only consider Canadian non-registered accounts which is a fraction of Canadians total savings.

As I tell my wife: there will be no movement here.

Quote
People who invest in stocks which have no dividends do so in hopes of it going up so they get capital gains. If the taxes rise drastically on those capital gains people are going to stop buying these kinds of stock, which in turn will slow their upward growth. When combined with increased taxes this is something which builds on itself towards a continuing downward momentum. People will dump them in favor of dividend stocks.
 

People invest to earn a return.

If they earn it on their RRSP then they will eventually pay tax on it at the same marginal tax rate no matter the source (i.e. whatever tax bracket their income falls into).

If they earn it in a TFSA then they will pay no further tax on it since the principal they contrbuted to theirmTFSA is already after-tax dollars.

If they earn it in a non-registered account then they can pay tax at up to 48% for interest, wages, foreign income; about 31/41% on CDN dividends, and up to 24% for capital gains.

It is doubtful moving that top rate up from 24% to 36% on caital gains will have a meaningful effect on the markets.


My points:

1) Most people are invested in RRSP/TFSA's (well, besides their home which is tax exempt)
2) There is no need to give capital gains a tax subsidy because
3) if you want a tax break then either defer taxes in your RRSP and/or save taxes in your TFSA because
4) The vast majority of Canadians do not owe those who choose and/or can afford to save above and beyond tax shelters (RRSP/TFSAa) anything. 


Quote
Because government is trying to encourage people to put some of what disposable income they have left after their income has already been heavily taxed into savings rather than going down south for a nice warm holiday? Because international investors will flee in droves to other jurisdictions, like the US, where tax on investments will be so much lower?


This makes no sense.

TFSA's and RRSP's are underutilized by the majority of CDNs because most people can do little more than make their mortgage payments and buy groceries. 

How people choose to save is already incentivized with RRSP's and TFSA's and there is no need for further tax subsidies that, at best, benefit 1 or 2% of the population on a regular basis and maybe 20% on an occasional basis (because they sell a cottage and don't shelter it with the principal residence exemption, for example).

Raising the capital gain inclusion rate will benefit the majority of Canadians because it can ease their tax burden.

Also, you think that a US investor who is buying a CDN stock is going to pay tax the way we do in Canada?

Ever hear of tax treaties?

How much capital gain/loss Canada decides should be included in incomes to be taxed will have little to no effect on foreigners decision to invest here.

Maybe on the real estate side with taxable Canadian property but again one is only taxed on the gain when one sells so other factors such as rate of return on the rental and having a reliable legal system that respects property rights are more important.

I've gotta have more cow bell! -Bruce Dickinson

Offline SirJohn

  • Sr. Member
  • ****
  • Posts: 465
    • View Profile
Re: Investments
« Reply #40 on: March 12, 2017, 02:32:37 pm »
So you think there are enough Canadians in numbers and volume with stocks in non-registered accounts *and* they are stupid enough to allow tax rates drive their decisions, who can move markets?

Really? You have any idea how small Canada is compared to world markets?

Yeah, you have any idea how small many of these stocks are and how easily they can be moved by people selling? You have any idea what market sentiment is like when momentum moves up or down? TD, one of the biggest, most widely held banks in Canada dropped over 5% Friday because of a CBC report that some tellers were pressured into deceptive practices. No one actually thinks this will have any impact on the profits of that bank, but it doesn't matter. You had people bailing in anticipation of other people bailing in fear of some sort of investigation.

Now consider most stocks are far smaller than them.

But I do congratulate you on having the mentality of the Canadian Left. All the money people earn belongs to the government to be redistributed. Any they are permitted to keep to use as they see fit is the government being generous to them at the expense of others who don't earn (or pay) as much.

And in this case, if the government only taxes them once on earnings and then half again on the investments they make off what remains, that is the government being outrageously generous. Why, there are so many freeloading leaches who need that money! Tax it! Tax it!
 

Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #41 on: March 12, 2017, 11:00:00 pm »
Yeah, you have any idea how small many of these stocks are and how easily they can be moved by people selling? You have any idea what market sentiment is like when momentum moves up or down? TD, one of the biggest, most widely held banks in Canada dropped over 5% Friday because of a CBC report that some tellers were pressured into deceptive practices. No one actually thinks this will have any impact on the profits of that bank, but it doesn't matter. You had people bailing in anticipation of other people bailing in fear of some sort of investigation.

As Benjamin Graham said: in the short run the market is a voting machine; in the long run it's a weighing machine.

I do not concern myself with the idiotic day to day changes in the market because those are based on noise and emotions and, oh, look, the guy on the tee vee said it's a dead cat bounce so lets sell the market short....

Sure, the market will have a little freakout. Then it will get back to normal as people realize that rationally it still makes sense to make money since taxes are a fraction of the income and if the fundamentals of the investment is sound then, meh, whatever, in the long run the invesment should generate a satisfactory return, or not, regardless of tax shenanigans.

Of course active traders will not be happy but most of them are freeloading tax evaders anyway so screw them.*

Quote

Now consider most stocks are far smaller than them.


Again, Canada is a small market, the raise in the inclusion rate would only effect Canadians with non-registered accounts and only when they sell.


Quote

But I do congratulate you on having the mentality of the Canadian Left. All the money people earn belongs to the government to be redistributed. Any they are permitted to keep to use as they see fit is the government being generous to them at the expense of others who don't earn (or pay) as much.

It is a matter of taxing income in a similar fashion.

Dividends are taxed at lower rates (personally) than wages/interest because of tax integration: since the CDN corp pays income taxes on the income then used to pay the taxable dividend to the individual shareholder the shareholder pays a lower rate.

Since the corp deducts interest and wages against income and saves corp taxes the individual pays a full rate of tax on wages and the bondholder on interest earned through a non-registered account.

But capital gains?  For some reason this deserves a tax subsidy because people are taking a risk and there may be an inflation component to capital gains.

Nevermind the fact that the investor should be taking those into consideration prior to investing, but, oh no, the taxpayers must incentivize the stock investor by giving them a tax break of 50%.

Utter BS.

Quote

And in this case, if the government only taxes them once on earnings and then half again on the investments they make off what remains, that is the government being outrageously generous. Why, there are so many freeloading leaches who need that money! Tax it! Tax it!


You do realize that it is only gains that get taxed right?

I sell my time as labour and I pay tax.

I buy a bond and get my coupon then I pay tax on the income earned and on any gain if, say, interest rates fall so I sell my bond for more than I paid for it.

I buy a stock low, earn a dividend, and then sell it high: only taxed on the dividend income and the increase in value of the stock and not taxed on the original principal.

None of this "taxed again" BS.

If you don't understand how principal works as the cost base for an investment then there is little point continuing this discussion.

--------------------------
* Lets talk of freeloaders: if one actively trades an account, and especially if one is a Bay Street broker, then your non-registered (and even registered accounts) are considered business income.

This means the AT (active trader) is supposed to pay tax on 100% of the gains.

In the past few AT's did this and got away with it. 

Now? Not so much as the government gets reports to help it weed put these tax evaders and make them pay tax.

From this point of view, raising the inclusion rate to 75% is helpful as it brings these leaches closer to the taxes that they should be payng even if they manage to slip through the review/audit net that is being implemented to catch them.

Ordinary Canadians should cheer this as it will help keep their taxes lower.

__________________________________

And, with this, I will pickup my award for single longets post on this forum to date (at least until Rue finds this forum).
« Last Edit: March 12, 2017, 11:02:15 pm by msj »
I've gotta have more cow bell! -Bruce Dickinson
Winner Winner x 1 View List

Offline wilber

  • Full Member
  • ***
  • Posts: 156
    • View Profile
Re: Investments
« Reply #42 on: March 13, 2017, 12:00:00 am »
The way he is slashing regulations and oversight, I think the Trumpster is setting us up for another 2008.  I will be reducing my equity exposure over the next couple of years regardless of crappy interest rates.
« Last Edit: March 13, 2017, 01:46:21 pm by wilber »

Offline Omni

  • Full Member
  • ***
  • Posts: 237
    • View Profile
Re: Investments
« Reply #43 on: March 13, 2017, 12:16:28 am »
The way he is slashing regulations and oversight, I think the Trumpster is setting us up for another 2008.  I will be reducing my eqityexposure over the next couple of years regardless of crappy interest rates.

Not to mention "yuuuge" infrastructure spending and slashing corporate tax rates. I guess Trump is hoping those interest rates stay crappy or the deficits will become even "yuuuger".

Offline msj

  • Full Member
  • ***
  • Posts: 162
  • Location: Vancouver Island
    • View Profile
Re: Investments
« Reply #44 on: March 13, 2017, 12:23:18 am »
With my post at 11:00:00 and wilbers at 12:00:00 I think we should try and time the market....
I've gotta have more cow bell! -Bruce Dickinson