As the years go by more and more companies are getting rid of their defined benefit plans. This is because they are a big liability for them. A defined benefit plan means a guaranteed pension income from the same company you work for until your death indexed to inflation. The 2 most dependable defined benefit plans are for government employees and military personnel. To replace these plans, new retirement plans came out which were defined contribution plans?
What are defined contribution plans?
A defined contribution plan is where the individual is responsible for their own retirement. An employer might match a percentage of your salary up to a given percentage ( which is basically free money). With a defined contribution plan there is no guarantee of your investment gaining in value. For example, if you are about to retire and there is a big stock market crash then the value of your portfolio could be drastically reduced.
The 2 common defined contribution plans in North America are the RRSP ( Canadian) and 401k (US). These are basically tax deferral plans, in which you investments grow tax free, until you go take the money out. An added benefit of investing in these plans you can claim a tax deduction for your contributions against the your taxable income at tax time. The higher your tax bracket, the greater percentage of the tax deduction that you are eligible for.
An individual can invest in various investment vehicles inside the registered savings plan such as stocks, bonds and mutual funds.
What happens if you take money out of your plan early? When you take money out early, you are penalized and plus come tax time you are taxed at your marginal tax rate. At a previous employer, there was a GROUP RRSP plan. When I left there, a few months late I called the place that the company has it GROUP RRSP through. They told me I can switch it too an individual plan. I decided to cash it out has it was small. I was penalized right away at 10% of the balance right away and then taxed at my marginal rate at tax time.
Currently, I am not investing in an RRSP as I would like to escape the rat race early in life. Currently, I invest in a non-registered account and a TFSA.
So, why be an investor?
Today, more and more people are responsible for their own retirement!!! Individuals can make better investment decisions by learning how to read financial statements and increasing their financial education. Individuals can read financial information from reports published by companies, the investor relations section of a company's website or various financial websites. If an investor is not comfortable investing on their own, they can still use a financial planner or broker.
DISCLAIMER:
Sunday, September 22, 2013
Wednesday, September 18, 2013
Watching Your Account Balance
At the end of last month, I received a dividend from one of my stocks called Just Energy. This stock gets dripped inside my brokerage account. I looked at my account activity and notice it was not right. My account said that I received the correct amount of dividends that I was expected to receive for that dividend payment.
So what went wrong ?
So the stock has the DRIP turned on and I have enough to acquire a whole share. My account activity states I receive 6 shares @ $6.45 for a cost basis of $36.75. I noticed this right away and contacted my broker ASAP through e-mail. I told my broker that either the $6.45 was wrong or the $36.75 was wrong and one of their employees said they think the stock trades in US dollars. I have owned this stock for a year and a half at least. I told them that I purchased the stock in Canada on the TSX. I told the stock in Canada trades in CDN dollars and the listing on the NYSE (New York ) trades in US dollars.
Towards the end of the e-mail they suggested on contacted Just Energy to find out which currency they trade in. I then contact Just Energy Investor Relations and ask them to clarify what currency the stock trades on the TSX and the NYSE.. They replied " The stock in Canada on the TSX trades in Canadian Dollars and the stock trades in US dollars on the NYSE. The dividends are paid in Canadian Dollars for both the Canadian listing and the US listing"
I then contacted my broker through e-mail and attached a copy of the e-mail from JE investor relations. My broker then admitted that they made a mistake and used US currency.
What to learn from this ?
As an investor you need to know the following:
Disclosure: I currently still own JE
DISCLAIMER:
So what went wrong ?
So the stock has the DRIP turned on and I have enough to acquire a whole share. My account activity states I receive 6 shares @ $6.45 for a cost basis of $36.75. I noticed this right away and contacted my broker ASAP through e-mail. I told my broker that either the $6.45 was wrong or the $36.75 was wrong and one of their employees said they think the stock trades in US dollars. I have owned this stock for a year and a half at least. I told them that I purchased the stock in Canada on the TSX. I told the stock in Canada trades in CDN dollars and the listing on the NYSE (New York ) trades in US dollars.
Towards the end of the e-mail they suggested on contacted Just Energy to find out which currency they trade in. I then contact Just Energy Investor Relations and ask them to clarify what currency the stock trades on the TSX and the NYSE.. They replied " The stock in Canada on the TSX trades in Canadian Dollars and the stock trades in US dollars on the NYSE. The dividends are paid in Canadian Dollars for both the Canadian listing and the US listing"
I then contacted my broker through e-mail and attached a copy of the e-mail from JE investor relations. My broker then admitted that they made a mistake and used US currency.
What to learn from this ?
As an investor you need to know the following:
- When your dividend payment dates are roughly
- What currency you dividends are being paid
- What currency you stock trades in
- Monitor activity in your account.
- If dripping, if your cost basis makes sense according to your number of new shares and the reinvestment price.
Disclosure: I currently still own JE
DISCLAIMER:
Wednesday, September 4, 2013
Recent Buy
Recently I made purchase for a long time hold in my investment account. I was not going to make a purchase as I was planning on building up my cash in my account.
The valuations of most companies in Canada are high right now making it difficult to find value. One of the sectors that has been hard hit is REITs. This is due to the concern over interest rates. I didn't add to my positions in the REITs as a big percentage of my stock portfolio is already in REITs and a real estate corporation.
I averaged down my position of Emera (EMA.TO) as Emera was trading near a 52 week low. I purchased 49 shares @29.40 for a total of 1445.72 with commissions. The yield on this purchase is 4.745%. This purchased added $68.60 to my annual dividend income. Emera has increased there dividend yearly since 2007.
Cost = 1445.72
Cash= 775.56
Borrowed Money (6 %) = 670.16 on margin
Emera Inc. is an energy and services company with over 8 billion in assets and 2012 revenues of 2.1 billion. The company is involved in electricity transmission and generation, transmission and distribution along with gas transmission and utility energy services. They are mostly in the north east of United States and eastern Canada. Emera also has operations in the Caribbean. - Emera Investor Relations.
A large percentage of Emera's business is from Nova Scotia Power. Nova Scotia Power is the only company in Nova Scotia, which has a population of near 1 million, to deliver power to consumers. The wind mills there are owned by Nova Scotia Power or companies that supply the power to NS Power.
I believe Emera will continue to grow and make Nova Scotia Power a smaller percentage of their over all business matters.
I will update my portolio in early October.
Disclosure Long EMA.TO
DISCLAIMER:
The valuations of most companies in Canada are high right now making it difficult to find value. One of the sectors that has been hard hit is REITs. This is due to the concern over interest rates. I didn't add to my positions in the REITs as a big percentage of my stock portfolio is already in REITs and a real estate corporation.
I averaged down my position of Emera (EMA.TO) as Emera was trading near a 52 week low. I purchased 49 shares @29.40 for a total of 1445.72 with commissions. The yield on this purchase is 4.745%. This purchased added $68.60 to my annual dividend income. Emera has increased there dividend yearly since 2007.
Cost = 1445.72
Cash= 775.56
Borrowed Money (6 %) = 670.16 on margin
Emera Inc. is an energy and services company with over 8 billion in assets and 2012 revenues of 2.1 billion. The company is involved in electricity transmission and generation, transmission and distribution along with gas transmission and utility energy services. They are mostly in the north east of United States and eastern Canada. Emera also has operations in the Caribbean. - Emera Investor Relations.
A large percentage of Emera's business is from Nova Scotia Power. Nova Scotia Power is the only company in Nova Scotia, which has a population of near 1 million, to deliver power to consumers. The wind mills there are owned by Nova Scotia Power or companies that supply the power to NS Power.
I believe Emera will continue to grow and make Nova Scotia Power a smaller percentage of their over all business matters.
I will update my portolio in early October.
Disclosure Long EMA.TO
DISCLAIMER:
Portfolio Update
Another month has come and gone and time to an update of my portfolio. In doing so, I notice I had a few mistakes.
These mistakes were Bank of Nova Scotia dividend rate ( which also increased its dividend ) and the amount of shares I own of Killam Properties in may margin account (indicated by the non -green lines ).
The additions to the portfolio as of this date is 2 shares of Enerplus and 6 shares of Just Energy I received via DRIP. There is a error in my brokerage account with this reinvestment of Just Energy. It states I received 6 shares @6.45 for an investment amount of 36.75. So either the 6.45 is wrong or the 36.75 is. I contacted my broker and they will review this case and get back to me within a couple of days LOL.. Right now I am going to assuming the 6.45 and my cost basis will be then 38.70.
I think going forward I will wait to the DRIPS for the month are complete. I will update my spreadsheet to reflect the 6 shares.
Hope your portfolio is doing well.
DISCLAIMER:
These mistakes were Bank of Nova Scotia dividend rate ( which also increased its dividend ) and the amount of shares I own of Killam Properties in may margin account (indicated by the non -green lines ).
The additions to the portfolio as of this date is 2 shares of Enerplus and 6 shares of Just Energy I received via DRIP. There is a error in my brokerage account with this reinvestment of Just Energy. It states I received 6 shares @6.45 for an investment amount of 36.75. So either the 6.45 is wrong or the 36.75 is. I contacted my broker and they will review this case and get back to me within a couple of days LOL.. Right now I am going to assuming the 6.45 and my cost basis will be then 38.70.
I think going forward I will wait to the DRIPS for the month are complete. I will update my spreadsheet to reflect the 6 shares.
Hope your portfolio is doing well.
DISCLAIMER:
Sunday, September 1, 2013
Dividend Income for Aug 2013
August 2013 has come and gone. During the month, passive income through dividends having been paid to me.
The total for this month is $182.84.
Not included in this amount is a distribution payment from Dundee REIT in my margin account. This is a trade and all income will stay in this account to help grow the cash in this account to be used for investing or transferred to the TFSA for the same purpose. As this a trade, I am treating it different. Currently, I take 30% of all my income from job, investing and interest from savings and pay myself first . If money is left over at the end of the month, then I put this amount into my investing account.
Currently, the income received from Dundee REIT in the margin account is $91.47 after 3 months. As indicated in the above paragraph this entire money is staying in the account or be transferred to the TFSA account.
I will update my dividend tab with the above total.
DISCLAIMER:
The total for this month is $182.84.
Not included in this amount is a distribution payment from Dundee REIT in my margin account. This is a trade and all income will stay in this account to help grow the cash in this account to be used for investing or transferred to the TFSA for the same purpose. As this a trade, I am treating it different. Currently, I take 30% of all my income from job, investing and interest from savings and pay myself first . If money is left over at the end of the month, then I put this amount into my investing account.
Currently, the income received from Dundee REIT in the margin account is $91.47 after 3 months. As indicated in the above paragraph this entire money is staying in the account or be transferred to the TFSA account.
I will update my dividend tab with the above total.
DISCLAIMER:
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