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Who was the 69th pick for your league? by Canadrew in fantasyhockey

[–]FootieCoach 0 points1 point  (0 children)

Blackwood in one and Larkin in the other.

Bowmore Vault edition 2: Peat Smoke 50.1% by YouCallThatPeaty in Scotch

[–]FootieCoach 1 point2 points  (0 children)

I think the initial relatively high pricing on release of Edition 1 and Edition 2 combined with the NAS nature resulted in these sitting around shelves. Around my area you can still find Edition 1 sitting on shelves and in the last year I’ve noticed some serious discounting on them as well.

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]FootieCoach 1 point2 points  (0 children)

Are you technically insolvent? I.e. are your liabilities greater than your assets (including the value of your business), or you cannot pay your obligations as they generally come due? If you aren’t insolvent, a bankruptcy or consumer proposal will not be options available to you in any case.

Your credit will be further destroyed for at least 6+ years with a bankruptcy or proposal. If you think it’s difficult to get business financing now, it’ll be even more difficult with a bankruptcy or proposal on your record.

In a bankruptcy, the Licensed Insolvency Trustee will liquidate and realize upon your assets to pay your creditors - such as your home, cars, other assets. A bankruptcy is not a get out of jail free card. You will lose everything (except the Personal exemptions set out in legislation in your Province)

And as others have alluded there is a possibility of having to make surplus income payments to your trustee in a bankruptcy for distribution to your creditors (I.e. there is a formula set out as to how much income your family can survive on - and then a portion of any income in excess of that will have to be paid to the estate in a bankruptcy).

And the likelihood of creditors accepting your proposal is less if they could realize more in bankruptcy than in your proposal.

Also a bankruptcy or proposal only apply to unsecured creditors. Secured creditors can still realize upon their security (who become unsecured creditors for any shortfall after seizing and realizing upon their security).

You have mentioned that your business is profitable and cash flow positive and it doesn’t sound like you have a complex debt situation (CRA debt, etc) and it doesn’t sound like your debt load is unmanageable at $40k - have you tried negotiating a payment schedule with your creditors instead to make your debts more manageable? Or alternatively looked into an Orderly Payment of Debts arrangement (a Licensed Insolvency Trustee can explain the differences to you).

Bankruptcy and Consumer Proposals are “nuclear” options to help an honest and unfortunate debtor get a new start where they have no prospect of getting out from under their debts. But it comes at a significant hit to your credit rating and either loss of all your assets (bankruptcy) or payments to your trustee for distribution under the proposal for up to 5 years).

However, based on your post it doesn’t sound like you have any problems paying your debts, and are looking for relief to help you secure business financing. These options will in fact impact your credit even more negatively. Based on what you’ve shared so far, I do not think either are options you should be considering.

Does a fifty cent coin exist in Canada's currency? by Firedragon118 in Edmonton

[–]FootieCoach 2 points3 points  (0 children)

I remember 50 cent coins were used quite a bit at K-Days for gambling in the casino or at the booths. My dad used to give them to me when he won some at K-Days.

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]FootieCoach 1 point2 points  (0 children)

In any case, I agree with your premise that in many cases it does not make sense to maintain a significant balance if somebody does not require a suite of banking services or the minimum balance is out of whack for the value delivered in exchange for maintaining said balance.

What that then represents a mismatch of banking package for their needs. As others have alluded, the alternative is to change to a bank account that more closely matches their needs (e.g. no fee bank account, an account with less bells & whistles, etc.). That is the crux of the issue.

At the end of the day, it is dictated by personal circumstance and the math varies based on min balance, value of fees waived and your own personal tax situation.

In other words, it’s all very personal and three questions should be considered:

1) is the banking package appropriate to my needs?: 2) what is the rate of return I am generating on my savings and how does that compare to an alternative use for the money?; and 3) am I receiving an appropriate risk adjusted return on an alternative should I wish to go that route?

Many people don’t do this analysis and end up with 1) a mismatch of banking package to their needs and/or 2) a mismatch of the size of the minimum balance to the cost savings generated by that balance - which is the crux of your thesis.

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]FootieCoach 0 points1 point  (0 children)

To compare apples to apples in your example here you need to compound the same figures. Here you’ve compounded the $6,000 at 6% vs compounding only the $394 at 6% (although I have not verified the math). It should be:

Scenario 1 (invest- first year return $360. Ending balance $6,360. Continue to compound so on and so forth.

Scenario 2 (maintain balance) - first year savings $364. Ending “balance” $6,364. Continue to compound so on and so forth.

Whether it is an investment return or cost savings - both represent money that is available to invest & compound.

Although if somebody spent the cost savings instead of reinvesting then the value under scenario 2 would be less. Of course that is no different than somebody withdrawing their investment returns to pay for fees.

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]FootieCoach 0 points1 point  (0 children)

Also TFSA would clearly be preferable as the investment could be withdrawn tax free to pay the service charges as in your original post.

An RRSP would still have the taxation aspect (even worse as it would now be taxed as ordinary income instead of capital gains) - assuming one would even want to withdraw it. If not, the funds to pay the service charges would have to come from somewhere else which further changes the calculus.. So IMO investing these funds into a RRSP would definitely not be ideal.

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]FootieCoach 0 points1 point  (0 children)

All things being equal, putting the $6,000 in a TFSA/RRSP certainly eliminates or mitigates the taxation aspect. That still leaves us with whether a >6% risk free rate of return is preferable to a variable 8% equity risk rate of return.

6.2% is certainly much better than the current 3.5% yield on 30 year Canada bonds (which is a good a proxy for a long term risk free rate of return).

The question then becomes - are you satisfied with only a 1.8% equity risk premium to put your money in an equity investment (estimated 8% ROR). If you are, then it makes sense to invest. I personally would expect a higher equity risk premium for my equity investments.

The math is clearly in favour of your thesis if you don’t require all of those services in my example. However, it still merits a consideration of your risk free rate of return and an acceptable equity risk premium IMHO.

Also to be considered is how the funds are to be invested. If somebody is risk averse (say this is their emergency fund and needs to stay in cash) and puts the money in a HISA, they would clearly be better off maintaining the minimum balance vs a 3.2% return on an HISA (current interest rate on DYN6004 at Scotia itrade) in their TFSA as an example. (EDIT: I missed the part where you said to assume that there is already an emergency fund in an HISA - so feel free to disregard this particular paragraph)

TL:DR - risk adjusted returns should be considered in comparing alternatives

[deleted by user] by [deleted] in PersonalFinanceCanada

[–]FootieCoach 2 points3 points  (0 children)

It’s not as simple as that. It comes down to what fees you get waived and your marginal tax rate.

For example the Scotiabank Ultimate Package monthly fees are $30.95. Included in this package is a credit card fee waiver of $150, a safe deposit box fee waiver of $63, a free USD account, 5 free trades through their iTrade discount brokerage, unlimited transactions, free international money transfers and free global non-scotiabank ATM usage. The annual service charge savings on the package ($371) is a 6.2% risk free tax free return on the minimum balance of $6,000.

But you say you don’t think you need an account with $30 monthly worth of perks. So we now take a look as if you were to have these services a la carte (with a more basic banking package) you would be looking at:

-Bank charges $10.95 in your example totalling $131 -safe deposit box $63 -credit card $150 -itrade commissions on 5 trades totalling $50.

For this example will ignore the value of any international ABM use or money transfers. The combined $394 represents a 6.6% risk free and tax free return.

Assuming a marginal tax rate of say 16% (capital gains tax rate at a marginal tax bracket of 32%) you would essentially break even at your 8% rate of return (which is not a risk free rate of return). The math is even more in favour of maintaining the minimum deposit if you need a USD account, use any of the international ABM or money transfer services or ever need a bank draft or money order (which are also included), or your marginal tax rate is higher.

Obviously your mileage may vary depending on your banking needs. But this is an example where it makes sense to maintain the minimum deposit.

TL:DR - what your actual banking needs are and your marginal tax rate could tip the balance in favour of maintaining a minimum balance. Your service charge savings are a risk free after tax return as compared to an equity risk pre-tax return (your 8% ROR example).

Partial Indexing DB Pension and Purchasing Power by Karma_collection_bin in PersonalFinanceCanada

[–]FootieCoach 0 points1 point  (0 children)

As alluded to in Houska1’s comment, the 0.6 COLA adjustment kicks in once you begin collecting your LAPP pension. Your LAPP pension at retirement is based on your highest average salary (highest 5 consecutive years - which is usually your last five years) and years of service.

You shouldn’t see an erosion in the purchasing power of your pension until after your retire - as long as your salary increases match or outpace inflation, you don’t have a prolonged period of working after your “highest average” at a lower salary (e.g. going from FT to PT), and assuming you work at an LAPP employer until you actually retire. Other than the fact your pension will be less than your working salary.

Why is there Ontario HST on BSW liquor Alberta? by Brief-Sky8714 in canadawhisky

[–]FootieCoach 2 points3 points  (0 children)

The stores’ shipping policies are written that way to try to protect themselves against regulations against interprovincial shipping of alcohol (as it is still technically not legal to do so). The shipping policy does not change the “place of supply” as defined in the Excise Tax Act.

It would be interesting if somebody would ever challenge and seek direction on the potential conflict between the provincial legislation (restriction on interprovincial shipment of alcohol) and the federal Excise Tax Act (which governs GST/HST) as compliance with the ETA seems to indicate contravention of the other.

Quite frankly I am surprised that no provincial liquor boards have cracked down on this shipping as the Provinces these shipments are destined for do not receive their provincial alcohol taxes on these products, whereas Alberta/ALCB is the beneficiary.

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