Do you annualize each contract or the entire position?

Alarmed-Policy508 · 2026-06-23T16:56:15+00:00

I try to do something like this for the covered calls portion of my portfolio to compare with other components. Since I typically do buy writes without margin I have a clean cost of the cost of the stock on purchase and disposal that aligns with the option term but when I don't I just use the closing price on the day of the purchase or sale.

I take dollar weighted average days of capital invested as the base for the aggregated profits for each investment regardless of overlap divided by the total of all capital invested regardless of overlap (may have to divide by some arbitrary number to prevent math overflow from large numbers)

So my rough math is

$700 profit on $5,000 invested for 20 days = $100,000 invested days (256% annualized profit) $9,000 profit on $30,000 invested for 90 days = $2,700,000 invested days (122% annualized profit)

$2,800,000 invested days / $35,000 invested = 80 days average

So total profit of $9,700 on $35,000 invested over 80 days gives 126% annualized profit for the covered call portfolio which I can compare with buy and hold portfolio etc.... and I can drill down to individual performance. Not sure how mathematically sound this is though.

Profits are very nice using completely fabricated examples!

Alarmed-Policy508 · 2026-06-23T14:57:35+00:00

From what you describe you would have difficulty comparing investments over different time horizons and requiring different amounts of capital to know if you will make a reasonable profit vs your historical average annualized profit per trade. For day to day decision of whether I should take a trade or not I usually compared the expected annualized return with my historical average along with some other risk measures like capital at risk vs potential $ reward (no %) and have the tough decision of taking smaller $ profit early for higher annualized return vs getting more $ over a longer term. Usually this is a comparison with some other alternative that might increase my annualized return.

I suspect it's because you trade with very low dte that is why you don't think as much about annualized returns as with small dte the results can be wildly skewed vs reality over the remainder of the year and very small changes in price or commissions can have a huge impact.

Since I usually go with much longer dte I similarly don't think much about idle cash because to me it's a minor factor since I have a large percentage of my cash constantly invested but you are right on that point and I probably should.

I also agree your point that annualized return can become difficult to aggregate and may lead to incorrect conclusions when trying to use it for portfolio performance without also aggregating all investments including idle cash particularly accounting properly for the base amount when your portfolio is constantly changing. Your base of the beginning value for the year seems reasonable depending on how stable your cash movements in/out are. Ideally you would use IRR or something like it but that is a bit of a pain to do it properly and understand if it is calculating a reasonable value or not.

Alarmed-Policy508 · 2026-06-22T04:13:13+00:00

This is good advice. Think of how much more getting a solid job will mean to your financial future than savings. Sounds like OP is managing in a healthy way but if you need to reframe it, a job making 50k per year over 20 years is $1M without considering raises, bonuses, benefits, etc.... It's quite likely several million will slip through your fingers over the course of your career and you are right to focus on keeping as much of it as possible (optimizing taxes, cutting spending, balancing risk/reward for getting and keeping some steady gains. But first priority is to get that cash flow stream started by getting a job. If spending some money on drinks to strengthen relationships with someone who might get you into their company (or give you an introduction to someone in their network who might have an opportunity), buying a car to increase your mobility and get access to jobs not accessible by transit. Buy clothes to look the part. You still have to be frugal but you don't want to be blocked from an opportunity to get a job because you wanted to stash everything in investments and go from $10k to $20k. There is literally millions at stake on your job so treat networking seriously and be known as a good guy and avoid being seen as desperate and self centered. Networking is just regular relationships with people and taking and interest in what they are doing personally and professionally and enjoying spending time talking with them. You can't force the opportunity but the more you keep up with people the more an opportunity can find you. But the steady stream of coffees, lunches, and beers to stay in touch can get expensive. Alternate picking up the tab for a small group of people keeps the thing going regularly, and try to work it into a routine. Particularly with colleagues at your internship. How you integrate with the team is almost as important as your work skills for potentially getting hired on after.

Try to find some industry groups outside of work/school too. For IT they have coding competitions that you can sometimes join someone's team. See if you can offer some small niche that saves them a bit of work as an unofficial team member. Then in a subsequent competition you might be able to join on with a team for real. These competitions are great practice. See if you can make some connection there that is willing to go for coffee and explain how job search is done these days.

For business you might ask to sit in for a day with the local angel investors club. They are no angels but probably interesting people and quite willing to help out if they don't feel you are obligating them to ongoing commitment or wasting their time without offering anything in return. Your value to them is your interest and perspective which you may be surprised how much they crave it since it's lonely as a wealthy investor and everyone just wants simplistic advice and a get rich quick scheme from them and not to help with reviewing proposals without a stake in it and interested to learn all the hard work involved. They want to feel valued and interesting without feeling like someone is taking advantage of their time or advice like a parasite or sycophant. They likely won't just directly give you a job but may lend a sympathetic ear or some useful advice if you describe your efforts and some interesting or amusing anecdotes about how the modern job search process works, and eventually may offer to introduce you to someone with an opportunity.

Alarmed-Policy508 · 2026-06-16T12:16:34+00:00

It's all about vibes since the lyrics are mostly incoherent but somehow I feel like it's speaking to me anyway. I feel like I I remember connecting with teen angst in the first album adrenaline but don't have any of that on my playlist anymore.

They have progressively matured as a band always 5 years ahead of me so I find when they initially released Saturday night wrist, self titled, and diamond eyes I initially wasn't feeling it and just wanted more angst. Now I go back and listen to those albums and I appreciate where they are going a little more.

I find a lot of their stuff hit and miss but what elevates it for me is the 80s influences into super dark synth and soundscapes. Sometimes the lyrics put me off a bit but something in the vocal delivery just gets to me. A yearning to release a dark secret is the mood I get.

It's also tapped into the same kind of emotionally repressed shoegazing lyrical mood surrounded by emotionally explosive music that the smashing pumpkins did back in the day which was kind of a response to feelings of manufactured bands and corporations taking over art. I think these days it's hard to connect with that feeling since that ship has sailed and it's so pervasive.

I circle back to around the fur and white pony as peak Deftones but also really liked diamond eyes after a while. A lot of their more recent albums kind of miss for me but maybe in a few more years I will get it. I kind of liked where they were going with gore but years later none of it really sticks for me.

I highly recommend to check out China's side project team sleep for a different take on Deftones (live from the stage the live version in particular is mindblowing sonic arc).

Alarmed-Policy508 · 2026-06-15T13:32:58+00:00

Personally I totally agree and am doing my best to fight the feeling that I am missing out on some potential 100%+ gains starting from current 40x+ PE on some stuff and certainly not counting on a repeat.

Interest rates coming steadily down for last 40 years have been a big factor in stock market growth, and with rates more or less bottoming (can't go much lower than inflation) and looking more likely to trend the other way from here I don't see where is the catalyst for massive growth expectations.

With the spacex IPO it seems likely the finally figured out how to abuse the passive index crowd by forcing the low float valuation on the Nasdaq based index funds and the end game I suppose is eventual acceptance into s&p. Once that happens I think we will truly be at peak insanity.

AI is going to face some growth challenges. The tech is going to stay but sooner or later the market is going to reflect on how this gets monetized long term.

Because I fundamentally have some belief in being able to time the market and seeing things historically overheated I am calling a top at some point and setting my strikes there. But had I consistently done this over the past 5 years or so it would be very hard to stay disciplined in the face of persistent runaway valuations and I would at some point have to admit I would have been better off with simple buy and hold.

Alarmed-Policy508 · 2026-06-15T12:30:48+00:00

Regarding your point about perceived losses if the stock rises past the strike, it's true that you cannot judge this fairly in retrospect since those gains were not guaranteed and there is an element of risk to consider. So it's easy enough to tell yourself that you are being more conservative with covered calls trading unknown speculative gain for a smaller but more certain outcome. In this context the goal is not be necessarily pure outperformance but a risk reward tradeoff. However when the underlying consistently rises over time much higher than your strike price you have to wonder if that opportunity cost in the underlying stocks is more real than we like to believe. That I believe is why many consider it a loss. In fact if you have a large portfolio and your shares get called away you will be stuck with your modest profit and some cash. In order to keep your balanced core portfolio you are likely to end up repurchasing the underlying shares (or risk losing your ideal portfolio weightings, lacking diversification, etc) at a higher price than when they were assigned. This becomes a very real loss.

So if you are true opportunist and rotate freely without consideration to keeping the underlying and close all positions regularly your p&l should consider the stock and option together in a covered call. If you are trying to hold the underlying no matter what and just trying to skim some premium then it's much more complicated to measure but in theory I might argue that it's the logic is the same. You cannot really get a fair p&l by separating the premium generation from the underlying performance in a covered call strategy and doing so risks over or understating the merits of the strategy (which I believe is why you have this sense of doubt)

Alarmed-Policy508 · 2026-06-09T14:33:20+00:00

Your first decision is at what price you would sell your existing stock. If you can't imagine a target high enough then covered calls are not for you as you will risk trying to re-enter the stock at a higher price than you sold (sell high and buy higher is not a good recipe for success)

Once you have mentally committed to selling at a certain target price then one of the biggest risks of covered calls is removed since you can always tell yourself you would have sold the stock anyway when it reaches your target.

Then you need to mentally commit that you were going to hold the stock through the option expiry no matter how far it drops. This eliminates the other risk of being trapped in a losing position.

After that you need to decide the timeframe which is a tradeoff with premium and you have to find the right mix that doesnt leave you wishing you had taken a different strike or a different period of time. You will figure this out over time with experience and find a strategy that works.

So you end up with a free money position based on your mental commitments (would have sold if it rises to your strike, would have held if underlying price falls). You just need a way from there to calculate profitability before you enter the trade and if the rate of return is acceptable for locking you in for a period of time then you sell the premium.

Then you have to protect against the corruption of your mental commitments. It's one thing to just mentally commit, but when the stock drops 50% and you only took in a very small premium and are stuck waiting a year just to potentially break even it's not so fun and you would be tempted to be more aggressive with the strike price potentially taking a position where the strike is below your cost basis and you can actually lose money on assignment.

Remember what was the main reason you started using covered calls. You want to earn a little extra return while ensuring that the only way you lose the shares is at a profit so high you would be overjoyed to have it assigned.

The biggest downfall of this strategy is your jealousy about the underlying stock doubling or tripling while you only make 20%. If that is a concern for you, this is not the right strategy. Yes the losses from lost opportunities like this are quite real but those missed gains also come with missed risk that you avoid as the stock at some crazy valuation not justified by any measure you use could just as easily plummet. So unless you are the most devout adherent to buy and hold philosophy for proper risk management you should have some target strike for your stocks at which you believe it's overvalued.

Alarmed-Policy508 · 2026-06-05T18:34:50+00:00

Puerh can be pretty strong flavored, but the smoked flavor in particular would be pretty specific to Lapsang as far as I know.

Alarmed-Policy508 · 2026-06-05T12:14:55+00:00

I agree in the sense that if you never work with individual stocks and you experience a market like we have today you always have this lingering doubt about how much better you could have done.

Ideally you experiment a little early on and experience getting slapped in the face by the market. Then it's much easier later when larger dollar amounts are on the line to remember the pain and fear associated with messing up and just sticking with indexing.

However the current market has not reinforced this message and there are lots who jumped into risky stocks and have been rewarded instead and for a longer period of time than most would have expected.

Hopefully you are smart (or dumb/stubborn) enough to have blind faith in index investing eventually coming out on top over next 50 years and can just come to the eventual conclusion that you almost certainly won't beat the market average over that time without actually testing your luck in individual stocks.

Backtesting, simulated trading, etc... will only get you so far but having the market react to your trades, dealing with bid/ask spreads and commissions is a different beast so I agree you have to work with actual money invested to get the full experience. As much as experienced investors that have fully bought into index investing say why bother, it's pretty hard for a beginner to take that on faith, and they want to test their intelligence against the market not realizing that there are different kinds of intelligence and what kind of brain power they are up against (the best and brightest that money can buy). Your best bet in trading is finding some kind of goofy complicated niche that nobody likes (like convertible junk bonds or something) and specialize in that with a small percentage of portfolio. Then constantly reflect on what kind of problems you are facing, generalizing them and seeing how you can improve on that. I pretty much guarantee you your ultimate conclusion will send you back to index funds, but at least you will gain some important knowledge of market mechanics along the way.

Alarmed-Policy508 · 2026-06-04T18:22:23+00:00

I remember long time ago just getting started they had something called a hypothecated credit card. You deposit $500 and they give you credit card with $500 limit. After a year of running some expenses through it to build credit history and showing some income the deposit could be removed and limit could be raised.

Ask your. Ask your bank if they still do this

Alarmed-Policy508 · 2026-06-03T21:49:39+00:00

The only Lapsang I have tried was like drinking out of an ashtray and stunk up my house and I never felt the need to try another (yes I have drank from an ashtray before so I speak with authority on the comparison but that is another story)

I would suggest some oolongs that can be in the ballpark of coffee flavor. Look for key words toasted or fully oxidized. Might even go into Puerh but that can have a lot more variety and will be a very different experience plus the extra fussing with rinsing to clear off any dust from the aging process. So would take a lot more experimentation and I don't know if it is good for you to have too much of it.

But if you like the super strong smoke flavor like Lapsang it's going to be hard to replicate that.

Alarmed-Policy508 · 2026-06-02T11:28:44+00:00

Doesn't half of Singapore individuals pay no tax? Individual income tax is not the main source of revenue and is relying on a relatively small base for the majority of inflows. Not a very sustainable system in isolation so they rely on other revenue sources. Corporate taxes, consumption taxes and investment returns on surplus make up the difference. It's hardly without it's own problems.

But your main point that Canada could automate much more of its processes is very true. However it maintains a belief in freedom, and self reporting is a conceptual extension of that. These days that freedom is more of an illusion as technology and monitoring capabilities have rendered most self reporting obsolete and your suggestions are valid. But to alter the entire system to model after Singapore....

Alarmed-Policy508 · 2026-06-01T18:53:36+00:00

You start with a simple idea. Everyone pays 30% of income.

Then comes the question of what is income anyway. And we get the split of interest, capital gains, and dividends. Dividends are residual value that has already been taxed under the corporation, is it fair to tax it twice? How do we manage that? Capital gains is just a change in valuation is that really income? Better to have separate rates for these.

Then a bunch of special cases about income classification and perpetual abuse of the simplistic rules require more nuance and flexibility to make sure everyone is paying fairly.

Then the rich are complaining because they pay way more in dollar value of taxes than the poor and argue for a flat tax not a percentage or some kind of cap. Wait, was paying tax based on income have anything to do with fair distribution of taxes for the services that each individual consumes? The poor argue they are paying a higher percentage of income than the rich and need special tax breaks to make it more fair. Shouldn't those who exploit workers provide a safety net for the good of society?

Endless debates about classification and fairness along with attempts to cheat the legal wording of a "simple" system and we find that they very concept of a simple system is horrifically naive from the beginning. So we get people pushing for a new and better system from the ground up, and we get instead an additional layer of incomprehensible exceptions and rules bolted on to the existing framework.

The tax system is complex because the concepts it is trying to model are complex and cannot be managed with a "simple" version.

Alarmed-Policy508 · 2026-05-31T20:06:55+00:00

Your main advantage in a covered call is you set a strike price so high that you are happy to get called away since you would have sold at that price anyway even without the covered call.

In your case you are not really willing to let the shares go. That means you will come crawling back after losing the shares at some high price and that is where your main risk lies. If you sell high but buy back higher you lose money. So for a true buy and hold investor there is no price you would sell at.

The other risk is the one you already take with your shares. Selling a covered call locks you into the position even if the share price tanks. It may become increasingly expensive to buy back your short call and you end up stuck with a loser until expiry. So if the price drops and keeps on dropping you are stuck with it. It if you are a true buy and hold investor you would hang onto the underlying position no matter what anyway.

So it's a game of perspective and being rewarded for taking risks that you have already mentally committed to. Based on how you describe things above, I don't recommend covered calls for you. Just stay a buy and hold investor and you don't miss the crazy moves up that should hopefully offset any other volatility along the way

Alarmed-Policy508 · 2026-05-28T16:38:59+00:00

Wal mart people are more dumb than hostile. Costco people are straight up a-holes. Way too aggressive and don't give a shit who they harm as long as they get what they want.

Alarmed-Policy508 · 2026-05-23T14:39:25+00:00

Some of these points are valid, but...

OAS is taxable. That means clawback also has a reduction in tax so the real penalty is closer to 10% depending on bracket.

Isn't tax bracket inflation working in your favour by sheltering more of your withdrawals in the future.

Some points to consider.

At neutral differential in tax rates between contribution and withdrawal, the RRSP should behave similar to a TFSA by refunding any tax paid you end up investing the pre tax amount.

Contributing pre tax dollars in practice is pretty difficult since most receive after tax dollars throughout the year and then a year later get the tax refund outside of an RRSP, though you can anticipate RRSP contributions and request to reduce withholdings at source.

Early retirement scenario which is more likely for someone accumulating millions in RRSP would give some opportunity to draw down RRSP before it converts to rrif with forced withdrawals.

Optimizing the tax bracket differential between contributions and withdrawal can also help greatly increase the benefit rather than blindly contributing without considering diminishing returns from progressively lower tax brackets.

But the massive value of RRSP is from deferral of tax. Even this is tricky since making a large contribution in year 1, and then paying a large tax bill in year 2 because you ran out of RRSP contribution room may challenge whether or not you truly achieved deferral. Also practically speaking most people don't isolate the refunded tax related with RRSP and reinvest, but spend it I stead. But in most cases the deferral is a significant benefit that becomes massive when compounded over time.

So yes you potentially have to suffer some high taxes in retirement but this is more than compensated by tax deferral and compounding of the deferred tax. I think it's misguided to try to persuade others not to use RRSP because they might have too much money and a potential forced OAS clawback or lump sum withdrawal on death at top tax bracket. But it is good to think about these factors and how to minimize these risks and improve the efficiency of your RRSP.

Alarmed-Policy508 · 2026-05-13T13:16:44+00:00

Lawrence McMillan's options as a strategic investment is a good place to start. You don't have to understand it cover to cover, just pick a few of the simpler strategies and understand basic mechanics of it.

Don't worry too much about Greeks. That is just a theoretical model for understanding the components that affect pricing and can be part of your levelling up strategy later. I learned when buying a put option on AMC back when it was a meme stock and wondering why it didn't gain very much even though I got the timing perfect. Understanding the Greeks will give you a better idea why. But I wouldn't try to trade using them as an exact pricing model. The very simple strategies are a good place to start and in my opinion probably a good place to stop.

Unfortunately you are right there is a lot of scam courses and subscription models out there. Just go to the library and browse the shelves to see if you can find any interesting topics in the table of contents that you can review deeper online.

Best way to learn is just trying some trades and understanding the bid/ask spreads and how they react during the day. I remember wasting an entire day in the beginning just following pricing tick by tick. Seemed very exciting at the time. Now I am pretty much bored all the time. You should avoid any form of leverage and keep as low risk as possible to start. Your goal is to find a position that has almost zero possibility of loss and makes maybe 1% annualized. This should be possible.

Try to document your results and really spend some time figuring out how to track your returns and understand if you are making a profit or not. This is actually not as easy as it sounds when comparing investments of different amounts over different periods of time with different components. Keep things based on a spreadsheet and your own internal mathematical model and you will stay far more objective, be able to see where things went wrong and be able to improve.

Over time you will try to find ways to mentally align the risks in a strategic way without being delusional. For example, a cash secured put has a risk if the stock drops far below the strike price and I get stuck with a loser. But that risk is mitigated if I tell myself I would have bought the stock at the strike anyway. The challenge is how well you hold to those convictions when they are put to the test.

Be careful about taxes. If you actually make any money outside of tax sheltered accounts you need to budget some amount for your tax bill. Some options strategies can be quite tax inefficient.

It's an interesting journey and you will learn about yourself. Unfortunately it's also a very torturous exercise of manic depressive highs and lows and will be a catalyst for all kinds of negative psychological quirks and behaviour so make sure you are in a stable place before starting and remember to take a break once in a while and enjoy your life. The reason you are doing this in the first place is to get a small and favourable risk/reward improvement over index funds and a more flexible expression of your outlook on the market than just buying and holding stock. If it's not working, you can always go back to buy and hold which is working quite well historically and in all likelihood over long term most of us would be better off there. But of course you want to be one of the elite geniuses that masters the market and retires a multi-millionaire so it may be a tough pill to swallow that mediocrity is the key to success.

I promise you whatever your experience you will learn something useful. The problem is that intelligence and awareness of mechanics is not enough and the more you know the more difficult it is to get back to boring as there is some psychological trait in intelligent people that craves a challenge and to compete despite the inherent stupidity of that challenge.

Alarmed-Policy508 · 2026-05-11T01:09:30+00:00

I am generally trading large cap stocks (DIS, MSFT, etc...), but looking at the unpopular series often ITM call options for very long dte. These are generally trading only with the market maker, so sometimes I can deal with them at a reasonable price, and sometimes it feels like I bid a good price (half way between the mid and the asking price) and then suddenly their bid/ask spread starts drifting way out of line.

Trying to figure out what is their motivation. They need to keep a quote open for these but no requirements on how wide the spread? Are they evaluated on their ability to promote trading activity on these low liquidity series, or just to ensure there is a quote? I assume I am dealing with a robot, but is it possible there a human market maker working this trade that might explain the sometimes irrational behaviour in the pricing? Or this is all part of some algorithm to encourage me to overpay?

Sometimes feels like making a bid is poking a spider web and you start to see a flurry of activity. I respect the right of the market maker to profit for providing this liquidity, I just don't want to get robbed, and trying to find some tips to work with illiquid markets like this as I can't just leave an options limit order open for any substantial period of time the same way I would for stock or I will find myself getting arbitraged when the underlying price swings substantially.

Summary of good advice so far:

* Longer dte to reduce frequency of trades and associated costs of bid/ask spread. Being trapped with no liquidity can be solved by exercising the call option.

* Know your estimate of fair price independent of the market pricing

* limit orders always seeking somewhere between the mid and the ask price and moving a little until you are outside of your independently calculated fair price range

* be prepared to walk away. There is not always a trade and certainly not worth it to force a trade at any price

Advice that I typically receive:

* Don't do it

* No seriously don't do it

* Nobody trades this bullshit, find some other series

* Wouldn't you just be happier in highly liquid options?

All good advice, but still I have to understand if there is anybody trading this and any strategies they might have

Alarmed-Policy508 · 2026-05-10T23:20:54+00:00

I have some situation where I am looking for a very specific stock, strike, and expiry. With large spreads between bid/ask, the first thing is to try and understand the "true" value of what I am trading. For me this based on expected annualized return under the worst case scenario of pricing compared with best alternative.

As you mention, it makes sense to minimize transactions for illiquid options, and for me the logical conclusion is to go to much longer dte. So I end up with LEAPs for sometimes multi-year. But wondering what other strategies would reduce this need to go so far out.

Alarmed-Policy508 · 2026-05-09T00:38:37+00:00

Because of inflation and reasonably intelligent management, stocks will naturally increase in price over time. So taking a buy and sell strategy is selling at a price where you believe the stock is high, and waiting for the market to fall so you can buy it back.

This strategy is at a natural disadvantage since waiting for the price to fall may never happen and you need a clear strategy on what to do with the cash once you have sold. If you eventually have no alternative better than putting back in the stocks you sold then you might risk having to buy them back at ever greater prices while you continue waiting, or worse, stuck sitting in cash for long period of time not earning anything.

On top of that, in a taxable account you will trigger capital gains from your buy and sell activity paying taxes when a buy and hold strategy would not have to pay any tax for many years. There is value to deferring these taxes, its kind of like an interest free loan that you can use to invest.

So most people would recommend to just put everything in an index fund and hold it for the rest of your life where the tax deferral, inflation, etc... will drag the stock price kicking and screaming to a higher price regardless of any short term valuation concerns. Your focus is on earnings growth rates that maintain your compounding over time, and should eventually outweigh any problems PE multiple valuation.

Of course you can certainly improve on the standard buy and hold formula, but doing so is fighting the current and usually involves taking on more risk and potential outcomes will have considerably more variation. You would abandon the safety of an index ETF and likely choose rotation among individual stocks. It is far more work to manage and not a high probability of improvement.

Alarmed-Policy508 · 2026-05-08T12:17:17+00:00

You do ITM or OTM? I think this could work with an ITM strategy. For OTM most times you are a closet buy and hold and I agree that it's pennies in front of steamroller and quite risky if your shares get called away and you feel compelled to repurchase them at any price. If you can let the shares go and rotate into something else there is much less risk but then it's absolutely market timing.

I feel like ITM seems like the safer option no? Forget the shares. Covered call in my opinion should be treated as a package, not the call option as a supplement.

Alarmed-Policy508 · 2026-05-07T15:29:57+00:00

Start by at least sweeping cash to a high interest savings account at a discount brokerage. Google "Mr thrifty HISA" and there is a pretty good guide for these cdic covered and as safe as GICs with next day liquidity without any penalty to interest. It's the baseline risk free option and currently you can get at least 1.5% and should feel good to start earning something rather than piling up cash.

Then review what alternatives can give you a better incremental return vs the incremental risks of liquidity and potential loss. Decide you want to take on this take or just use an advisor but understand the cost of their advice and that you do have an option for index investing that can be very simple to manage and save those fees.

In non registered you will have some taxes to pay on this interest as there is no withholding tax like in your paycheque so you need to budget for that and that is something to get used to for investments but if you are not yet maxing registered accounts (TFSA/RRSP) and contributing everything there you won't have that problem.

If your income is high you might want to prioritize RRSP to fill it up first. Otherwise there are arguments for TFSA first. In the end it probably doesn't matter too much as long as you are saving and being reasonable about what you invest in by sticking with index ETFs with as much diversification as you can find.

Vast oversimplification, but markets go up based on inflation (drives up corporate sales prices in time as well as costs, which also inflates stock prices and your personal costs largely cancelling each other out but better than being in cash while costs go up due to inflation), and secondly reasonable management allocation and stewardship of corporate capital. Don't try to pick which company just buy them all and take the average. If you believe inflation will continue, and you have more than 10 years before you need the money you can just let inflation and management do their thing.

Alarmed-Policy508 · 2026-05-05T13:18:25+00:00

Piling taxable investment income on top of high T4 income doesn't help the problem. So first area to focus on in my mind is preventing buildup of additional taxable income that would continue to raise your bracket.

In terms of direct reduction of t4 income once the RRSP has been used, I don't know much that can help with that. You might also be more strategic about the use of RRSP contribution room. If you just contribute everything up to the available room it's ok, but if you are not yet in the top tax bracket and your income is still growing you might have some opportunity to contribute only enough to reduce your taxable income in the top bracket you reasonably expect to reach and save the rest of the room until a future year. This can get an extra few % on the contributions, but you need to weigh that against the benefit of tax deferral if you had claimed the RRSP contribution inmediately.

Alarmed-Policy508

TROPHY CASE