Investment Q&A

Q: Hello 5i,
Today Youssef asked about converting $CAD to $USD and getting the best rate. I would suggest that in his research he look into Norbert's Gambit. I have just used it for the first time with RBC's Direct Investing and one thing I discovered that DI is fully aware of the process and actually seems to condone if not encourage it. When I needed some help with some of the technicalities of doing it, they were extremely good about assisting me.
Once my trades have settled and I find the time, I will be going over the numbers to determine for myself just how beneficial the process was in terms of the actual rate I received.
In a nutshell, the theory is that you gain by not paying the spread that the banks charge on CAD - USD FX but lose your trading costs - which should be a pittance as compared to the spread.
It is my understanding that RBC's D.I. is one of the better platforms for executing Norbert's Gambit, but that is only surmise.
Perhaps Youssef or others might want to open up a "Norbert's Gambit" topic on the Forum for further insights from other members?
Hope this is of some help....
Cheers,
Mike

Q: Good morning and HNY
My wife and I have several investment accounts ( two individual, one joint, one RIF, one RRSP, one LIRA, two TFSA). We recently retired and transferred from an advisor to self managing. My first question is how to allocate both sector and type of investment ( equity, prefs, bonds etc) given the different types of accounts. Should we look at the aggregates or each account individually. Second question. We have roughly 20% of our total worth in GIC’s, largely held in our RRSP/RIF/LIRA. Safe, for sure, but it seems we are just parking our money which is galling in retrospect as our advisor charged his normal fee for said parking. Are we better off with pref shares versus GIC’s. Our prefs have suffered recently with the interest rate increases and they are more “risky” than GIC’s, but having so much money parked is concerning. I would appreciate your suggestions. BTW, we have followed your service for the past year to gain confidence as has our neighbour.Thanks for providing an integrous platform.

Q: Hi;

This question is more about trying to figure out a possible fraud. This afternoon, I received a telephone call from a guy claiming to be with an investment company. He was calling to priovide me this some unsolicited stock tips related to companies including US Gold Corp. He claimed that he the company he worked for was paid to promote stocks by individual companies and that he got my contact information through a third party website. He knew my first name.

I heard him out, he never asked me for my credit card information or personal information and asked only that I look at the stock and he would call me back on Friday to get my thoughts. He told me if I were to buy the stock, which trades on the NASDQ, I would have to do so through my own broker.

I have been in law enforcement for the past 31.5 years, and I can generally smell a rat a mile away. I felt this way with this call, but could not find the ‘string’ in what he was tellng me.

Have you or any of your members run into this type of scam before and it so, where is the hook?

Out of interest, what can you tell me about this company which apparently has some strong gold properties in Wyoming and Nevada.

I am not looking to invest in a speculative gold play, just trying to understand the call.

Thanks in advance.

DON

Q: When I am reading the questions that other people asked, every time I have to click the "Read" button to open your response. Is there any setting that I can select so your answers are automatically open so I don't have to do an extra click?
Thanks.

Q: Hi Peter and Team,

Can you explain the advantage of purchasing CBO with a yield of 2.74% instead of GIC's (1yr @ 2.6% & 2yr @ 2.8%-3% ) and Corporate bonds such as BNS 2-yr @ 3.27%?

Cheers,
Debbie and Jerry

Q: Hi Peter & Team,
Happy new year!!
I want currency exchange currency from CAD to US to invist in the US market. I came across Knightsbridge FX an online currency exchange platform that provide better exchange rates. I wounder if you came across this company in the past, do you thing it will be safe to use them to exchange a large some of money?
Thanks,

Q: Hi
I often see on the SEDAR website the title Company A (formerly Company B) where company B is totally unrelated to company A. Would this be a form of cost savings for company A by taking over/changing a name or a red flag for me?
Thank you
J

Q: Morning good 5i people,

My question is on calculating capital gains. I have the same stock in both a non-registered (cash) account and an RRSP, bought at different times and at different prices. To calculate the adjusted cost base for when I sell the stock from the cash account, am I supposed to use the average of the 2 acquisition prices, or just the price from the cash side? In other words, do I use the purchase price of the RRSP stock in the calculation of the ACB?
Thanks,
Mike

Q: I purchased 300 shares of ENB.PR.V on TSX @$21.25 but Itrade charged me $29.24 USD, on inquiring with them, they told me this PR would only be purchased in USD. I understand dividend is paid in USD . How could I tell when I purchased them (for future) since quotation was in Canadian dollars? Lots of Canadian companies pay a dividend in USD
Thank you
Cec

Q: Hi team,

There is no urgency to this as it is just a question on portfolio weightings given Berkshire’s AAPL holdings. With the AAPL warning last week, Warren Buffett lost $3.8 billion (on paper), as AAPL is 21% of his holdings. Other major weightings are BAC and WFC at about 11% each and KO at 10%. Four stocks make up over 50% of his portfolio, a very concentrated bet. The downside as seen is that one wrong turn can drive big losses.

I don’t follow your portfolios all that closely as I have a U.S. focus, although I do hold several of your stocks. I believe your portfolios each hold 20-25 stocks, at 4 to 5% weighting each, which makes sense for diversification purposes and to avoid big losses on one stock.

Given these two different perspectives, and with Buffett viewed as the greatest investor of all-time, how has he done so well over the past 50 years with such a concentrated portfolio?

Your views are appreciated.
Dave

Q: Hello 5i,
Further to Ken's comment about transferring "In Kind" from an RRSP to TFSA: my wife and I have just completed this process for the second year in a row. We select holdings that we have had to buy in our RRSP's even though they should have gone into a TFSA in the first place - think SIS and VET for example.
The process involves the transfer of the shares first into a margin (non-registered trading) account and then into the TFSA. The Fair Market Value may or may not reflect the current stock quote.
There is definitely withholding tax which is on a sliding scale depending upon the size of the transfer. (We both had a wee bit of extra room, so our withdrawal - contribution was larger than the $6,000.) Also, the withholding tax will be required to be paid as cash, so it is important to have enough cash available in the RRSP account to cover it. If there is not enough cash in your Canadian RRSP side, you will have to either sell something or transfer cash from your U.S. side if you cash available there. It is something that needs to be accounted for in the decision to proceed.
We feel that taking the tax hit now (both retired and under 70) will benefit us in the long run (however long that might be....). We had a long time of benefiting from RRSP's and now it is time to further enhance the TFSA side and reduce the impending limitations that will come with age.
Hope this is of some help to Ken and perhaps others.
All the best for a New Year to all!!
Cheers,
Mike

Q: Are gic's inside brokerage accounts at banks protected from the "bail in " legislation or are they fair game just like regular deposits.

Q: Regarding your answer to Paul's question on Jan. 04 on stop loss orders.
Ref.: "From what I recall one of the reasons 5i Research does not like to put stop losses in place is to avoid being stopped out in "flash crash" events...." You stated: "Stop limits are better" Did you mean trailing stops? Please clarify, and why you prefer these. Thank you.

Q: From what I recall one of the reasons 5i Research does not like to put stop losses in place is to avoid being stopped out in "flash crash" events.

How frequent are "flash crash" events? There is the May 2010 flash crash, but that was 8 years ago. Can you tell me when all the market flash crashes occurred in each of the last 5 years?

If "flash crash" events are rare then is it really worth the risk of not having stop losses in place?

Many stocks in the balanced and growth portfolios are down substantially from their peaks (e.g. NFI, TCL.A, KXS, MX, PBH, TSGI, SIS, MG...), so if trailing stops of 20% were in place they could have been sold by now. I know, "don't sell a stock just because it's down", but with some of these former winners now down 30% to 50%, it seems that stop losses could have helped limit the losses or preserved some of the gains.

Q: Hi peter and team!
Please give me advice from which websites you most like to read the news about Canadian and American companies and stocks?
Which are the most reliable and quickest to inform? What sites brokers are looking in the morning as soon as they get to work?
Thank you!

Q: I am a new member to 5I Research.
Can you please review the beneficial tax implications of receiving dividends from Canadian companies vs companies outside of Canada?

With this in mind, what would be 10 top dividend paying Canadian companies you would recommend for a tax efficient retirement income?

Thanks and I look forward to your reply.

Q: BMO has new issues ie. Bank of Montreal U.S. Equity (CAD Hedged) Callable Income Principal At Risk Notes, Series 789 (CAD). Is there a simple description of these auto callable shares. Are they risk protected? How? It seems that these may be “ timely” given the market meltdown and not necessarily very investable. I found these while researching fixed income.

Q: I am in the process of trying to compare my historical investment performance to that of the indexes (total return statistics, including dividends). I am finding it difficult to obtain statistical data (not charts) of the total return performance for various indexes. Can you suggest a reliable source please.

Thank you again for all of your excellent advice over 2018! Best wishes for a very Happy New Year!

Q: Regarding Bob's question on moving stocks in kind from an RRSP to a TFSA , there would be a tax implication when the stocks come out of the RRSP would there not?

Q: Peter,

I am confused. The major banks have a year end of October 31st. I can go to Morningstar and the financial statements are already posted. Are these tentative numbers? It would take a lot longer than two months to have final numbers Taxes are not even due until 180 days after year end. As a general rule, how many months after corporate year end do companies release their final financial statements?

Happy New Year and many thanks for all the work this year !

Paul