End of February Networth Update (-2%)

Well, February was again a very volatile month. So how did we do in February?

RRSP: $42200
CASH: $15366
STOCKS: $33400 (outside RRSP)
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TOTAL: $90966 (-2%) month over month

For the month of February my networth decreased by about 2% due to more volatility in the market and a few unforeseen costs that I ran into. Namely, my car was in for repairs that costed me way more than I had originally expected. Also, I liquidated some old poor performing mutual funds that I had purchased about 10 years ago with advice from an advisor. I had neglected those funds for a long time and it wasn't until recently that I discovered that the MERs for those funds were ridiculous that I decided to sell them and purchase some index funds.

Overall, I am still keeping a long term focus even though this past month was not as prosperous as I would have liked. Let's hope things improve in March!

Thanks again for reading the Canadian Dollars Blog.

Braggers of their Hot Performing Stocks

I love riding the TTC. It takes me to and from work and occasionally I get to witness the outrageous - whether it's a crazy man that's talking to himself or two friends talking about hot stock picks. I generally prefer the latter type of outrageous because the risk to me is very minimal.

It usually starts like this. One guy is a bragger - he'll brag about how he made a killing shorting some stock or being able to time the market. The other guy, on the other hand just sits there an listens. You can immediately tell that the second guy is an investing newbie because he's listening intently to what the first guy has to say. You can see the disappointment in the newbie's face when he exclaims that he only achieved index performance last year. The bragger makes fun of the index performer and claims that the index performer doesn't have any skill at reading the markets.

I knew it was going to 13,000 the bragger says in a loud voice. I knew Apple was overpriced so I shorted it. Sometimes you have to wonder if the bragger is really a 'stock picking expert' or if he's just highlighting the successful picks that he accomplished. Or, who knows? Maybe he made up everything. After all, it's really easy to predict what happened to the markets in the past. Predicting what will happen is obviously a lot more difficult.

When asked by his index performing friend where he says the market going, the bragger replies - I'm not going to tell you since you don't know what you're doing. This leads me to think that maybe index guy shouldn't trust this so-called 'friend' of his and that maybe his boasts are a wee bit inflated.

Criticisms of the Tax-Free Savings Account

Less than 48 hours after the budget was revealed, there are already many criticisms of the proposed Tax-free Savings Account. Some argue that the amount is not enough, while others argue that all it does is make the wealth middle class richer.

In today's Toronto Star, there is an article which compares the proposed system with the British Individual Savings Account (ISA) in which the critic writes:

• "But almost invariably, the only people who participate are the ones with lots of spare cash – the sort of people who already do save and who would have saved anyway. So it ends up being a giveaway to the wealthy middle class."

This sort of thinking would also poo poo on the idea of RRSPs as well. What the author is failing to see is that in an age where the average Canadian saves next to little what they earn, there is a merit to programs like this. By sheltering the first $5000 every year, the policy clearly helps and gives Canadians an incentive to save up their money. I would say that this new TSA would work well as a rainy day fund for anybody (rich or poor) since it has the benefit of being tax free while at the same time you can withdraw any of your gains (or losses depending on your investment performance) without having to pay any additional taxes.

Will this new policy switch us over to being a massive nation of savers? Probably not, but if as a whole, the nation can improve their savings habits, the retirement and mindset of Canadians will definitely improve. It'll allow Canadians to take a more proactive approach to their retirement. As a result, this will put less strain on the system as fewer people will be dependent on the government to help bail them out in their retirement years. This is surely a good thing, isn't it?