Friday, December 22, 2017

What Not To Like About Canada

Canada is having one of those satisfying moments when it can look at its big brother, the USA, and say "Canada is Better!".  A good economy, a benevolent immigration system, health care for everyone, much less violent gun crime, a leader who is not a narcissistic know-nothing blowhard - Canada is doing well, right?  Well not so fast, not everything is great in the land of mooses, hockey, doughnut shops, and snow.  Let's look at a few Canadian negatives:

  1. The weather - there is no where in Canada with good weather year round, and there are a few places that never get good weather.
  2. Things drop off drastically after the big weather negative, but let me continue with a few much smaller knocks on Canada............
  3. Winter bicyclists - who got the crazy idea that bicycling works in a snowy frozen -20 degree country?  The laws of physics and gravity say that balancing on two skinny wheels in the Winter will not work and it is damn uncomfortable as well.  Yet we have bicycle lanes on our roads year round that are cleared so the snow bicycle lunatics can have at it.  I see about 3 of these morons each day, but it probably costs us millions to keep their bicycle lanes up and running year round.
  4. Solar energy - some idiots decided that Ontario should go green and have renewable solar energy, so they funded and built tons of solar panel fields in this far northern country.  They did it quickly and kept most of the old electricity plants so now we generate too much electricity and our electricity bills are too high.  And who thought that solar panel fields next to the foggy St Lawrence River made sense?
  5. Senior citizens with tattoos, piercings, and orange hair.  Who convinced our seniors that looking like a 20 year old was a good idea?  If you scan the sale flyers for deals on Depends and Tylenol Arthritis pills, stay away from mythical butterfly tattoos and orange or green hair.
  6. Plastic currency.  The plastic 5-10-20-50 dollar bills do not fold well, and it looks like you are paying for your purchase with a Pokemon card.
  7. Cirque de Soleil.  I don't know about you, but I am tired of shows called "Skooza" with weird looking people twirling from the ceilings while lousy music plays.  I think their next show should be tailored to the gun lovers in the USA and called Glock.
  8. Bugs.  Canada has world class insects.  They won't give you malaria or river blindness, but the black flies, mosquitoes, and horse flies will make you miserable during the two weeks of Summer each year.
  9. Well that's all I can think of for now.  Let's keep our Canadian humbleness and not be too critical of our American friends and their nasty, racist, know-nothing, blowhard, narcissistic, lying, ugly President.

Photo credit: Flickr

Wednesday, December 20, 2017

Why The Rich of the USA Should Reduce Wealth Inequality

Inequality in the USA has doubled over the past 20 years according to the Congressional Budget Office (see graph below).  The richest 10% have doubled their share of wealth since 1995.  Good for them, why should they care about the other 90% and their reducing share of the nation's wealth?  The big losers are the middle class, who are sinking towards lower middle class or poverty.  

The middle class has a strong interest in the rule of law, reducing crime, a clean environment, functioning roads and other infrastructure, a strong military, and a generally orderly society.  They own good homes, want their children to go to good schools, want to feel safe, and take pride in their country and community.

The poor do not have as strong an interest as they are too busy surviving and they don't need some of these orderly society characteristics.  They may also need to break the law to survive and may resort to drugs to tolerate their situation.

Now let's look south for what happens in a country with a small and poor middle class.  Some examples are Mexico, El Salvador, Peru, and other central and South American countries.  Their middle class is expanding, but is nowhere near as big and wealthy as the American middle class of the 80's and 90's.

What is it like to be rich and live in Mexico or these other countries?  You must live in a walled fenced house with alarms and maybe armed guards, as crime is high and you are an obvious target.  You must pay off the local police and government to get protection and to ensure you are not hassled or shaken down, because the government is corrupt and their employees are poorly paid.  You cannot wear expensive watches or other items when you go out as you will be a target.  When you are forced to travel outside your home, you are at risk of being kidnapped or robbed, so you keep travel to a minimum.  Your kids cannot go to the park or easily participate in sports, other than at their private school.  You cannot count on clean drinking water, garbage removal, sewer service, or clean air as these are luxuries that the government will not provide as the majority of people cannot afford them.  You should be careful to have your family vaccinated against most known communicable diseases as the population around you lives poorly and is prone to hepatitis, cholera, parasites, dengue fever, etc. 

Not a great place to be rich, right?  This is why the rich of the US should be working to ensure a strong American middle class.  The trend is in the wrong direction.

Monday, October 30, 2017

Facebook is Evil

Traditional news outlets (newspapers, TV news, radio news) were dedicated to reporting the "truth".  While it can be argued that some sources slant their coverage one way or another, most western media try to be honest in their reporting.  This honesty has a few characteristics:

  • Report the facts, not opinion.  If an article is opinionated, identify it by calling it an editorial or opinion piece.
  • Report all the news, do not just pick and choose what to report.
  • Do not let commercial considerations influence reporting
  • And probably a few more that I would have learned if I studied journalism instead of engineering at school
Facebook is becoming people's main source of news, but they are an evil source of information.  This is probably not because they want to be evil, but their business model demands it.  Facebook wants you to spend lots of time on their site so they can advertise things to you.  Therefore, they want to know your likes and dislikes, and want to know what interests you.  So they only show you news and opinion that interests you - things you really like and things that get you angry or concerned.  They also show you comments on these pieces of news - the positive comments make you think you are right and the negative comments make you angry and so you read more comments.  You are getting a biassed opinionated snapshot of some of the news.

On top of this, Facebook allows people to buy ads with no oversight, like Russian operatives, Climate Change Deniers, Big Corporations.  You will only see these ads if you might agree with them.  It is unclear whether you are seeing news or ads, adding to readers' confusion.

People who rely on Facebook are being brainwashed by the Facebook algorithms into thinking they are right, that there is no other valid point of view except the ones they know, and that most people agree with them.  They are also missing all news that Facebook censors out of their news feed in order to keep you interested.

This is amplifying the issues of today:
  • Climate Change is manmade?
  • Can muslims be good citizens of western countries?
  • Should American government help with health care?
  • Is free trade good for workers?
So I think Facebook is evil - a biassed commercially driven unregulated source of news - along with being a good way to find out what your old school buddies are doing these days.

Friday, October 6, 2017

Canada's Best Savings Account Interest Rate?

I was frustrated with the abysmal savings account interest rate in Canada: 0.1% to 0.50% at major banks.  In the USA, you can get 1%+ at Capital One Bank or Allied Bank.

Finally, I found a proper bank (CDIC insured) that pays almost 2% interest and charges nothing to electronically transfer money to and from my big bank (RBC).  This bank is Alterna.  Just thought I would pass on the info for folks who would like to make their money work a little harder.

Wednesday, October 4, 2017

Americans' Gun Obsession

As a Canadian returning from 20 years in the USA, I am often asked why Americans have an obsession with guns.  About one in two Americans have guns, and the death statistics for guns are eye-popping.

I am no expert, but I have some opinions on why most Americans love guns and are afraid of any restrictions on them.

  1. Most Americans are actually in favour of increased gun control, however they are drowned out by fervent gun supporters.  Few people want bans, but the majority would support laws that limit magazine size, mandate background checks, and limit access to silencers and automatic weapons.  However, most of these restrictions were soundly defeated in recent years.  Most Americans are more concerned about their money than guns so elections are won and lost on economic issues.
  2. The fervent gun supporters are organized by the NRA,which is expert at manipulating the USA's democratic process.  The NRA is supported by gun manufacturers and members.
  3. There is a whole mythology in the USA about the righteous citizen with a gun, defending his house, family, himself, and the American Way in a society that is full of criminals or "bad hombres" according to President Trump.  Think about the old movie "Death Wish" starring Charles Bronson.
    1. Many Americans believe that violent crime is increasing, and they don't want to wait for police to deal with criminals, they believe they can do it themselves with guns.  Statistics actually show crime is decreasing, but never mind.
    2. Many Americans believe that their government is evil, based on what they have heard for years from Fox News, the Republican Party, and websites like Breitbart.  They believe that they can keep the government at bay by owning guns.
    3. It is macho to own guns.  The idea that you can kill anyone within 100 yards whenever you want has appeal to many.
  4. There is a fear, stoked by the NRA and Republicans, that to give any concession on gun regulation with start a landslide that will end with gun bans.  Better to energetically oppose any measure, no matter how reasonable, than to give an inch.  How else can we explain the NRA's opposition to not allowing people on the no-fly list to buy guns?  If they are too dangerous to fly, why is it OK for them to buy AR-15's with 100 round magazines and ammunition?
  5. The Second Amendment is often cited as a reason for all the guns, but it is just an idea on an old piece of paper.  If Americans did not want guns, they could repeal the amendment just like they repealed the Prohibition of alcohol.  The second amendment is cited like the bible to justify guns, but ignore this distraction, lots of stuff in the constitution and the bible are ignored because Americans have different desires.
  6. There are many Americans who enjoy hunting and target shooting with guns.
The latest mass shooting will not cause any changes in gun laws, in my opinion.  It will take a much higher body count of innocent victims caused clearly by unregulated guns for the majority of Americans to shake off their apathy and put some common sense gun laws in place.

Monday, September 11, 2017

A Rational Approach to Climate Change

Manmade climate change has become a political football in the USA with proponents on the left wing and opponents on the right.  After dividing the country in two, the debate is turned into a winner-take-all game instead of a scientific rational approach.

Let's look at it rationally and please put your politics on hold for a few minutes.

The world is definitely getting hotter, year by year statistics are pretty clear on this.  Check out the NASA measurements here.

Most of us would accept that a warming Earth will cause the ice caps to melt and rising sea levels.  It is pretty hard to deny this if you like ice in your drinks - the warmer it gets, the more it melts.  NASA also measures this and it is clear that sea level is rising.

Most of us would also accept that rising sea levels and rising temperatures are not good for people, plants, or animals as we know them today.  Low lying cities like New York, London, Miami, Houston will be flooded.  Hot areas like the US Southwest, Saharan Africa, and the Chinese desert will be much less compatible with human life. These bad things will cause people to do bad things to each other to survive.  You can debate how bad it will be but its going to be nasty.

So now comes the hard parts:

  1. Why is this happening and will it continue?
  2. What can we do about it?
The why is very politicized and seems to split into two camps:
  1. It is caused by CO2 emissions from fossil fuels that cause a greenhouse effect.  The scientists generally believe this and the argument can be found here.
  2. It is caused by something else that has nothing to do with man.  If you believe this, you probably know where to look for reinforcement of this idea.
Let's skip the debate on who is right, that is covered better elsewhere.  Let's look at what can we do?

We know the effects of global warming will likely be very bad.  Kind of like a big version of your house burning down or a tornado.

We disagree on what is causing it.  Let's assume you don't believe it is caused by man and CO2.  Do you believe that 100%, swear on the bible, bet my last dollar..??  Probably not, there is some uncertainty but you don't want to admit it publicly because politics is a win-lose game or whatever.  Let's say you think there is a 20% chance that climate change is man-made.

Given the very bad consequences, isn't it prudent to take action against a probable cause, however unlikely?  The worst that will happen is that money is wasted taking action to prevent a tragedy.

The analogy is that houses almost never catch fire, but we spend a lot of money trying to prevent and insure against a fire, including causes that are quite unlikely.

That is my core rational argument: given the catastrophic consequences of global warming, why would we not take action to mitigate the cause(s) and effects, even if you believe a cause is unlikely??

Tuesday, July 25, 2017


British Soldiers on the Beach at Dunkirk Waiting to Evacuate

We went to see the movie "Dunkirk" which was very good.  Pretty true to history, graphically shows the horror of war and the different sides of the human spirit, and just the right amount of patriotism.

When I spoke to my 87 year old mother last night, I told her about the movie, and her reaction was surprising.  She said something like "..well I won't go and see that movie, it cuts too close to home.  I remember the ships gathering in the estuary for the evacuation.."  She was a 10 year old school girl in Westcliff on Sea, a city at the mouth of the Thames, and must have seen the little ships going and coming back.  Sadly, some of the local fishermen lost their lives in the evacuation.

Saturday, July 8, 2017

Why Do Canadians Buy Canadian Mutual Funds?

Now that I am back in Canada, I see more Canadian financial information.  After looking for a Canadian stock index mutual fund, I thought, "why do Canadians buy Canadian mutual funds??".

I searched for "series D" Canadian equity mutual funds, and the minimum expense ratio (MER) was 0.60%.  This is quite high compared to US index mutual funds, which are around 0.20% or lower.

Then I searched for Canadian stock index ETFs.  The expense ratios are under 0.10%.  Here are some samples:
So why would anyone buy a Canadian mutual fund and give up over 0.50% of their return?  In today's low return environment, that is a lot.  I just don't see the point, am I missing something?

Wednesday, June 14, 2017

Canadian Customer Service Compared to U.S. Customer Service

You would think customer service would be identical north and south of the border, but it's not.  There is one fundamental difference that I run into constantly.

In the USA, if you the customer have a problem and common sense indicates that the store bends its rules or policy to make you happy, they generally will.  If not, they will certainly agree that the rule is silly and apologize profusely that they cannot take the right actions to make you satisfied.

In Canada, the RULES ARE THE RULES.  If you have a problem and the store's rules do not allow it to be solved, even though common sense says it should, you are out of luck.  Not only that, you will feel that you are causing the problem by exposing the weakness of their rule.

An example illustrates this difference:

  1. I want to transfer all my stocks and ETFs from my US broker Vanguard to my new Canadian broker, RBC Direct Investments (part of Royal Bank, a huge Canadian bank).
  2. This can be done by filling out a standard form.  Vanguard, like most brokers, requires that you get a special identity verification called a Medallion Stamp.  This is normally done by a US bank.
  3. RBC says that they can stamp the form, which makes sense since they operate in the USA, and they are the ones receiving all these investments.
  4. Long story short, RBC gives me the runaround of all their divisions (two weeks of calling and email) and finally says that they can only stamp their own form.  They cannot stamp the Vanguard form even though they know me, know what I am doing, I have lots of my money in their bank, I pay them lots of fees, and the form is almost identical to their form.  "It is a rule at the bank".  It is just a stamp saying they guarantee my identity, but they cannot do it.
  5. So I call Vanguard, tell them I cannot do the transfer because I cannot get the stamp.  Even though they are losing the business, they quickly come back to me and say they will accept voice verification of my identity using their voice identification system.  They will bend the rules to lose business and RBC will not bend the rules to get more business.  This is the essence of Canadian customer service - you will get good service as long as the rules allow it, otherwise you are SOL.

Saturday, June 10, 2017

Another Monte Carlo

Monte Carlo - Monaco

Some of my readers, well, at least one, are interested in Monte Carlo tools to evaluate retirement savings.

I will not bore you with the details of Monte Carlo simulation, it is covered in a previous blog post here.  It basically gives you a better estimate of how much you can spend in retirement based on your portfolio and the variability of the stock and bond markets.

The previous tool I recommended was from  I recently found another tool at this website that you can try.

Photo credit

Monday, June 5, 2017

Avoid CAD to USD Ripoffs

You can lose a lot of money converting Canadian dollars (CAD) to US dollars (USD).  This is not a big deal when you are converting $200 so you can buy that camouflage recliner at the Walmart in Buffalo.  It can be thousands of dollars if you are sending $20,000 to a relative or $200,000 on that retirement condo in Fort Lauderdale.

If you go to a Canadian bank and ask to change CAD to USD, you will get their standard rate.

Today June 5, 2017, the Standard Over the Counter Rate at the Royal Bank is $1.3791 USD per CAD.  Most banks are very close to this rate.

But, if you convert your money using their online brokerage, RBC Direct Investing, you will pay $1.3349 to get a USD, a savings of 3.2%.  On that $200,000 USD Florida condo, that is $6,410 CAD (real money).  You have to move money from your bank to the brokerage and back, but this can be done online in about 15 minutes.  Most bank-affiliated brokers have this service.

But what if you don't have a brokerage account or don't want to open one?  You could use an online money converter like  If you wanted to get $200,000 USD today, their rate would be $1.3669, which is 0.88% better, or $1,770 CAD.  Not as good, but it is still good money you want to keep in your pocket.  There are other online services you can investigate like

So if you are moving a lot of money to or from USD, I recommend you investigate alternatives to the simple and convenient method of going to the bank.  Oh, and avoid buying that hideous recliner, your wife will thank you.

Disclaimer: this is not professional financial advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.

Sunday, June 4, 2017

American Versus Canadian Golf Clubs

We just joined a golf club here in Ottawa, we have never joined a club before.   It is one of the top clubs in town.  My only previous experience was playing as a guest multiple times at high end country clubs in Dallas and Virginia.  The differences between Canadian and US clubs are interesting.

Canada: elite but practical
USA: elite and luxurious, Caddyshack without the comedy

What have I noticed?

TippingBring a wad of $1 bills and tip everybody: bag drop boy, locker room attendant, beverage cart girl..Never tip, employees are overjoyed if you do tip.
CartsAll golfers use powercarts, which have GPS, built in 2 way radio to call for food, refreshing towel, tees, ..Everyone walks and uses a pull cart. If you are really righteous, you carry your bag.
Beverage CartCart comes around every 10 mins with a good looking young lady in daisy dukes. Tip heavily and flirt.Beverage cart only operates if the course is full, most people just take free water. Cart girl is ecstatic when you give her 50 cent tip.
BarBar stocks 50 different kinds of single malt whiskey, 45 kinds of tequila, and lots of cigars.Bar stocks 20 kinds of draft. Cigars must be smoked off the property on the side of the road.
Lost ballsWoods and ponds full of high quality balls that no one bothered to findWoods and ponds scoured clean
Course MaintenanceSpare no chemicals or treatments to keep it beautiful. Good thing Trump took us out of the Paris Accord.Sierra Club would be proud.
Course DesignCourse designed by Jack Nicklaus or Greg NormanCourse designed by founder's brother in law Norman.
ClubsCleaned after every round, make sure to tip.There is a bucket behind the pro shop if you want to do it yourself.

Tuesday, May 30, 2017

Stocks At All Time Highs, Time to Rebalance

The stock markets in the USA are hitting new records again, 21,000+ for the Dow Jones etc.  This happens about once a decade or so, and is unpredictable.  It means your stocks, ETFs, Equity Mutual Funds are probably at all time highs as well.

You probably have a desired portfolio allocation for stocks, bonds, international stocks, cash, etc.  Check your holdings and you will likely find you are over-weighted in stocks because of the market's performance.

So now is a good time to rebalance your portfolio if your allocation is out of balance by more than a few percent.  Sell some of those winning domestic equity holdings, buy bonds or international stocks or whatever you are underweight.  This means "take some of your winnings off the table."

This technique of keeping a balanced portfolio is recommended by Warren Buffet, Vanguard, Fidelity, and most other respected investment authorities.

Disclaimer: this is not professional investment advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.

Photo credit: flickr

Tuesday, May 23, 2017

Russia and Putin are Winning

Getting your opponent taken over by a radical leader has worked in Russia.  Lenin was actually sent by train to Russia by Germany during WW1 to undermine the government and get the Russians out of the war.  The German plan worked perfectly as Russia devolved into a civil war and withdrew from WW1, freeing many German troops to go to the Western front to fight the English and French.

Helping Trump get elected is not quite as powerful and will not result in an immediate civil war in the USA, but it is paying big big dividends in terms of weakening the world's superpower.  We are lucky that Trump is not as smart as Lenin or as charismatic.

Not all of this can be directly tied to the Russians but they certainly helped:
  1. Reduce the USA's stature in the world by getting an obvious blowhard, lying, racist narcissist elected President.
  2. Make democracy look bad as Trump lost the popular vote, won the election, and he does not care about the people who did not vote for him.
  3. Undermine the free press by having the President and his supporters call it "Fake News".  Kudos also to Rupert Murdoch for destroying trust in the press while running a company that considers itself part of the press.
  4. Undermine the judicial system by having the President and his supporters attack judges, defendants, free speech, and the courts.
  5. Undermine the US intelligence agencies (CIA, FBI, NSA) by having Trump accuse them of criminal acts and lying.
  6. Making the USA look silly as they know the Russians manipulated the election, but cannot do anything about it since Trump is President.
  7. Split the USA into two camps that detest each other:
    1. Conservatives
    2. Liberals
So the Russians are certainly winning at this point, we can only hope that this stops soon.

Tuesday, May 9, 2017

Saturday, May 6, 2017

Why Boomers Are Not Downsizing

There are numerous news reports that Baby Boomers are not selling their houses and downsizing to condos or smaller dwellings.  As a boomer who has downsized to a condo, this intrigues me.  Why is this happening?  Perhaps some anecdotal evidence from friends and acquaintances will shed some light on this.

Downsizing Requires Foresight

Typically, you will become physically unable to maintain a house and handle a move in your mid 60's to early 70's.  If you are going to downsize, you should really do it in your early to late 60's based on foresight that you will be physically unable to handle your house or a move later.  It is easy to overlook your coming infirmity and stay in your lovely house until you are too old to move without major disruption.  We know a 75 year old couple who are now too infirm (she has cancer, he is too weak) to ever move out of their 3000 square foot suburban house.


It is easy to stay in your current situation, enough said.

"I Will Never Pay Condo Fees Like That!"

After 30 or 40 years of owning a home and paying for maintenance of the home, it is hard to swallow the idea that you will pay a fixed monthly fee for condo fees or rent.  These folks religiously believe that it is better to buy than rent and condo fees seem too much like rent.  We know a couple of 60 year olds who balk at the idea of $500 a month for condo fees but they are OK with getting a new roof installed for $10,000 and paying $400 a month for utilities.

We Need The Space

I have some sympathy for this idea as downsizing means that you cannot keep all that "stuff" that you accumulated over your 45 years as an adult.  You cannot put all that junk you own or buy in the basement or garage.  The alternative of spending $200 to $300 a month for a storage unit brings them back to the issue of spending money on rent.  We know a few couples with this hangup.

We Like the Neighborhood

This is a very valid reason to not move assuming you cannot find a condo or smaller dwelling close to your current home.  It is harder to make friends and settle in a new area when you are older.  If you lived in a place for 10 years, it is easier to stay than move.

photo credit: flickr

Thursday, March 16, 2017

How to Kill US Gerrymandering

One of the most objectionable and undemocratic characteristics of American government is legalized gerrymandering.  Gerrymandering is defined as "the dividing of a state, county, etc., into election districts so as to give one political party a majority in many districts while concentrating the voting strength of the other party into as few districts as possible."  Basically, the votes of the minority are devalued further by grouping them into districts that give them as little representation as possible.  One person's vote is worth less than another - NOT democracy.

I lived in a gerrymandered district in Virginia.  It was drawn up by the Republican state legislature to guarantee a Republican federal representative, and it has delivered this result for over 35 years, in spite of the fact that the area voted for Obama twice and Clinton in the last election.  You can see that it was drawn to guarantee a result by looking at the map, which is carefully drawn to ensure enough Republicans to elect a Republican federal representative.  The map does not follow logical geographic, municipal, or any other boundaries.
Virginia 10th District, courtesy Wikipedia

Many districts in many states are like this, and they favor the right or the left depending on who owns the state government.

How to defeat this undemocratic abomination?

Answer: vote in the primary of the party that always wins the district.  Since the district is guaranteed to go to a particular party, your only choice is in the primary election of that party. Do you want a more moderate representative or do you want the other party to choose a radical?  Of course you, the minority voter, want someone who is more moderate.  If you have to register as a supporter of the other party to vote in the primary, do so.  It costs nothing and does not bind you to vote for them in the general election.  Also, what is the point of voting in the primary for your party?  They are going to lose anyway.

If enough people do this, you will get a more moderate candidate for the favored party.  A Republican who does not want to eliminate Social Security and Medicare or a Democrat who does not want to outlaw cars and turn the roads into Kale farms.

So this is my idea to improve democracy in the USA.  After the last 15 years of turmoil, we certainly need it.

Tuesday, March 14, 2017

USA to Canada - Moving Investments

This is an update to my guide to moving to Canada, covered in this post.

One of the issues with moving is getting your investments moved from the USA to Canada.  Why would you bother?

  1. The USA will consider you to still be a resident and will expect tax payments on your income.  But you now live in Canada, and the Canadian government expects payments on this same income.  Untangling this mess will take a lot of time and money from your tax accountant.
  2. Your US broker will likely kick you to the curb if they find out that you moved out of the USA.  They will quickly close your account and you will have to scramble fast to get the investments moved.  If you don't move the investments before the brokerage acts, they will sell all investments with resulting capital gains that you will owe to the USA and Canada.
  3. You will not be able to claim any Canadian tax reductions on dividends as your investments are held by a US brokerage and they don't calculate Canadian tax reductions.  You will also have more paperwork to submit concerning foreign investments, just trust me on this one.
  4. NB: You actually end up with two cost bases when you move from USA to Canada:
    1. The USA considers your cost basis to be what you paid for the investments.
    2. Canada considers the cost basis to be what the investments were worth when you moved.
So how do you make this transfer?  It does depend on the investments and the US brokerage or mutual fund company you used.

  1. If you can, convert your US mutual funds to ETFs.  Vanguard will do this at no charge and with no tax consequences.
  2. If you own mutual funds that cannot be converted to ETFs, you should call your broker/mutual fund dealer where your hold the mutual funds.  Call the customer service number, do not say who you are, then ask "what happens if a person who owns mutual funds with you moves to Canada?"  You may get these replies:
    1. No problem.  This is good.  Keep the investments with them and just change your address.
    2. You can continue to hold the mutual funds, but you can only sell them for cash, no changes in investments.  This is not so good.  You have to look at the tax consequences and your investment plan.  Should I sell immediately and take a gain or loss?  If I hold the funds for a long time, will I continue to be happy with them, will they meet my diversification goals, are the fees reasonable, etc.?  Probably best to talk to your financial planner.
    3. You must sell the mutual funds.  This is bad.  Again, you need to look at the tax consequences as you may trigger large gains or losses.  Probably best to talk to your financial planner.
  3. If you own stocks, bonds, or ETFs in the USA:
    1. Open a brokerage account in Canada with the exact same owners as you have in the USA.  If it is a joint account in the USA, open a joint account in Canada, same for individual account.
    2. Call your brokerage in Canada, get the forms to transfer from a US brokerage to their brokerage, and fill them out.  Call your Canadian broker to make sure you fill the forms out correctly and that you selected a straight transfer with no tax consequences (simple transfer of securities, no buying or selling).  Make double sure that you are doing this.  Make copies and send them via registered mail or similar method to your Canadian broker.  This will cause the US brokerage to send the securities to your Canadian broker and they will appear in your account.  Expect to get phone calls from both brokerages during the process to verify information, ask questions.  Expect to call your Canadian broker to follow up if you don't hear from them, it will likely not happen automatically with no intervention by you.
    3. After the transfer is done, inform your US broker that you are a Canadian resident.  In the case of stock brokerage accounts, they will start the "kick the foreigner to the curb" process immediately. 
NB: If you are a US citizen, do not buy Canadian mutual funds or ETFs unless you are willing to submit a lot of paperwork to the US government.  These are considered PFICs (passive foreign investment company), which, for some unknown reason, the US government does not like.

Remember, you should talk to a competent financial planner before taking action.  This blog is just a single information source and a lot of information on the Internet is wrong, maybe including this blog, so do your research before taking a decision.

Photo credit: flickr

Thursday, February 16, 2017

Do Your Expenses Decrease After Downsizing?

In August last year, we downsized from a 3800 sq foot suburban house with 2 cars in the USA to an 1800 sq ft urban condo with one car in Canada.  This is supposed to be a trend for baby-boomers: urban to suburban, bigger to smaller, Trump to No-Trump, etc.

  1. But what happens to your expenses?  
  2. Do they really decrease and is it significant?  
  3. What are the sources of the savings?
Luckily, I track expenses using Quicken and we follow a budget so the answers should be easy to find.  We also have not changed our lifestyle or budget since downsizing.

The answer to 1. and 2. is yes, there are savings of about 10 to 15% overall, depending on which downsized month is compared to our previous full-size average.

The harder question to answer is number 3, what are the sources of the savings.  
  • Unfortunately, the biggest absolute saving was in a category that I call "household" and includes a lot of miscellaneous expenses: decorating items, small services, small purchases, etc.  I am not sure why our expenses dropped by 8 to 10% in this category.  Maybe we don't have the space for impulse purchases or the need for a lot of services?
  • Utilities dropped by about 10% and that makes sense.
  • Auto expenses dropped by 50%
  • Groceries went up by 15%, prices are higher at urban supermarkets
  • HOA fees went up, home repairs and services went down, for no net change
  • Entertainment expenses went up by 10%, there is more to do downtown than out in the suburbs.
But net-net, our expenses have gone down by about 10 to 15%.  So you can expect some savings but this will not radically change your lifestyle.

Monday, February 6, 2017

Killing the USA While Defeating Terrorism

The US public is afraid. They are bombarded daily with negative stories about muslims, terrorists, immigrants, crime, climate change, wars, and unemployment.

Some of the fear is justified, but much is not.

Let's look at terrorism, one of the greatest and most emotional fears. It is behind the immigration ban, airport security measures, security at concerts, government surveillance, militarizing the police, huge security spending, casualties in Iraq, Afghanistan, Libya, and other negative and inconvenient changes to our daily routine. Fear of terrorism helped elect Donald Trump, a racist bombastic narcissistic misogynist.

But how big a problem is terrorism? The last attack on the US by organized terrorists was the underwear bomber about 10 years ago. All other attacks were from self radicalized lone wolves. The casualty rate from all attacks averaged 171 per year from 1995 to 2014, or 0.00005% of our population. A very very low rate compared to deaths from drugs (47,000 per year), traffic (32,719 per year), crime (14,196), workplace accidents (4836 per year), and medical malpractice.

Yet we are radically changing our society to combat this tiny terrorist threat. Why spend trillions on something which kills so few? Why change our society into a repressive police state with intrusive surveillance for such a small problem? Why divide our country by whipping up fear and enacting controversial laws such as immigrant bans and encouraging suspicion of certain religious groups? Why give up our rights and liberty? Are all our military casualties worth it?

Clearly some measures make sense such as airport security since we know terrorists have repeatedly targeted aircraft. Increased police activity makes sense since they have caught some terrorists before they acted.

My point is that US society is changing for the worse due to massive efforts to combat a small problem while we neglect other more serious threats to our health and safety such as opioid addiction, violence in the inner city, health care for the poor, bad roads, and our low high school graduation rate.

We are turning America into a divided, fearful, less free, overly policed, and more racist society to combat a threat that is 300 times less that the problems of drug addiction or traffic deaths. We have to rethink our priorities, or America "the shining city on a hill" will be destroyed in our misconceived all-out fight against terrorism.