Finally, I got the T3 from Questrade yesterday. I could not wait to enter all the information in Studio Tax and netfile my tax right away. It looks like I am going to get round $8000 in tax refund this year! Sweet!
March 31, 2008
I have been using NetworthIQ to track my networth for a while. Besides the fact that you can easily see where your networth is heading to by using it, there is another feature that I really like. I can run various comparison reports with NetworhIQ.
After updating my networth this month, I wanted to see where I am standing now. So I ran following comparison reports and discovered some interesting trends.
1. Networth Comparison Report
As you can see you can compare yourself among the people who have the same age, income, occupation, education as you do. I usually look at the median value in my age and income group since it will reflect how I am doing more clearly and correctly. Average value tends to be more skew. There might be some persons born with a silver spoon and drag the average networth ridicularly high in my age and income group. Also, I don’t look at the networth data in my occupation and education group since I don’t want to compare myself with a people with 10 more years experiences than me. They will and should be having more networth than me. Right?
So how am I doing in terms of networth? In my income group, I am doing pretty well and my networht is above the median value of $13,919, which means I have been well ahead of 50% of the people in my income group. And for the first time, I am almost there for the median value of $33,100 in my age group, just $61 short. I hope I will exceed the median networth of my age group next month!
2. Home Ownership
Interesting enough, it looks like in my age and income group nobody is owning a home or having a home mortgage now. Hum…….
3. Credit Card Debt
Wee~~~, I don’t have any credit card debt at all,which is a very good thing, while the median number of the debt is $800 and $700 for my age and income group.
4. Cash
I am well behind in this category. As I am building up my emergency fund now, I expect to see the situation got changed next month. The target for my emergency fund is $5000.
There are more reports you can check out in NetworthIQ other than those four mentioned above. Although the number will not be 100% correct and perfect, it is still nice to see where you are standing, well, roughly.
March 26, 2008
The Great Canadian Rebate is offering 5.25% cash back for Canadian Tire purchase this week. Time to buy the CT gift cards and save on gas!
March 17, 2008
Update on the tax forms and got an interview tomorrow
Posted by lazyinvestor under Miscellaneous[3] Comments
Up to now, I have got my T3 from Scotiabank and T5 from ICICI(surprise, surprise, surprise, it actually came on time from ICICI. Maybe their service is getting better. Who knows). What I am still waiting for is the T3 from Questrade. I got an e-mail from them saying the T3 will be mailed out on March 31. More waiting game, I guess.
Also, I have been actively searching for a new job for about two months. Tomorrow, I will have an interview with ING for System Analyst position. It is a contract work, not something I would like. I prefer a permanent job. But I think I will go for the interview anyway. What is the salary I should ask for if they question me? Considering the job is in Atlantic Canada, I am thinking around 60k/yr. Is it too high?
March 14, 2008
I got the quote for my car insurance renewal from Monnex yesterday. To my surprise, with a speeding ticket last year, they drop my insurance by $366, almost $400!! I will be paying $790 all in for my one year old Mazda3 next year. It is a full coverage as well, including third-party liability, collision, and comprehensive. Not bad at all.
A happy day. I won’t complain. 
March 1, 2008
About tax return, got my T4, still waiting for some forms
Posted by lazyinvestor under Tax[2] Comments
It is tax time! Got my T4 from my company last Friday. ING Direct has sent me T5 and my RRSP contribution statement back in January. The forms I am still waiting for are:
1. T5/T3 from Scotiabank. I have less than $50 interest from my MoneyMaster Savings account in Scotiabank. So I don’t think they will send me a T5. But I do have mutual fund account with them as well. My fund distributed some capital gains last year. I should get a T3 for that.
2. T5 from ICICI Bank. ah, this Indian bank, I should get a T5 from them for my US$ account. However, I totally do not expect any form sent to me in time from them. The customer service from ICICI is as horrible as it can get. So rather than waiting for the T5 to come, I just calculated the interest income I need to file myself and get over with it. Fortunately, I don’t have any investment or RRSP account with them. They do have high savings rate. But I will recommend to have very simple investment account with them, such as savings and GICs.
3. T3 from Questrade. I don’t know what the deadline is for T3. I think it is sometime in March. I need the T3 to file the dividend paid out by my ETFs.
So after I got all the forms above, I can officially file my tax. As calculated roughly today, I should get back all my tax paid during 2007. 
I do not want to rush the return this year. I want to identify every possible tax deduction/credit available to me although there might not be any more than I have already known. But it never hurts to double check. Now I just hope I can get all those forms as soon as possible. Then I will be a very happy person.
February 27, 2008
So now, we have the TFSA. Compared with RRSP, which one is more favorable depends on a lot of factors including your marginal and average tax rate, the pension you will receive when you retire, if you are going to use this money to buy your first home, etc. Let’s look at one of the most important factor, your tax rate, for this comparison first. The following tables show you three scenario:
a) you have the same tax rate when you contribute to your TFSA or RRSP as when you withdraw money from then. As you can see in the table, the overall return from TFSA and RRSP is the same.
Reference: http://www.budget.gc.ca/2008/plan/ann4a-eng.asp#personal
b) & c) If you have higher tax rate when you contribute to your TFSA/RRSP than the time when you withdraw money from the account, you are better off to contribute the money into RRSP first. On the opposite side, it will be better for you to contribute into TFSA rather than RRSP.
If we look at the tax rate alone, the answer seems to be very simple. If your tax rate is going to be lower than the time you contributed into this type of account, RRSP is better. Otherwise, TFSA is better. If you expect to be in the same tax rate for your whole life, then it does not matter to contribute into RRSP or TFSA.
However, it is not THAT simple. There are still many other factors might affect the decision. For example, even if you are going to have the same tax rate for your whole life, the RRSP will still be better for the first $20,000 if you are ever going to buy a house since you can withdraw it tax free from RRSP account. If not, it looks like they are equally good. But since Income earned inside the account and withdrawals from the account WILL NOT affect eligibility for federal income-tested benefits and credits(Income from RRSP does), TFSA is actually better since you will not affect the CPP, OAS benefits that you might receive from the government.
Scenario c) actually makes me wonder for the people who save a lot, there must be a point when contribute into TFSA is better than into RRSP. I have not quite figured out what that point is yet.
February 26, 2008
The budget 2008 has been announced today. The following is the highlights:
- Tax exempt saving fund, up to $5,000 annually. No tax on gain, withdraw anytime without penalty.
- 10.2 Billion to pay down debt.
- Maximum RESP time limit extended to 35 years; contribution period extended by 10 years.
- tax break on capital equipment depreciation extended to 2012
- $500-million for investment in public transit.
- A $2-billion fund for infrastructure investment will be made permanent.
- $250-million over five years to help the automotive industry develop more environmentally friendly vehicles.
- $350-million for a Canada Student Grant Program.
- $90-million for older workers hurt by factory closures.
- $300-million to for nuclear energy.
- $330-million over two years to improve access to safe drinking water for First Nations.
- $400-million to encourage provinces to recruit 2,500 police officers.
- $43 million to Communications Security Establishment
- $75 million to Canada Border Services
- Permanent annual increase in military spending of 2% by 2011
- New organization to administrate EI premium.
As you might have noticed, there is a new account type being introduced today. It is called Tax Free Saving Account(TFSA).
What is TFSA?
It stands for Tax Free Saving Account. According to the budge 2008, Starting in 2009, people 18 and older will be able to put up to $5,000 per year in a Tax-Free Savings Account and rack up investment gains without paying taxes at any time, including withdrawal. Any unused contribution room will be carried forward just like your RRSP room. The $5,000 annual contribution limit will be indexed to inflation in $500 increments. Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death
What is the benefit of TFSA?
The major benefit of TFSA is that it allows the money you put into it to grow tax free.
Don’t we have RRSP to allow my money grow tax free already? What is the difference between them?
The differences are:
- Although the money in RRSP can be withdrawn anytime before actual retirement, you are subject to withholding tax while doing it; the money in TFSA could be withdrawn anytime without any withholding tax with all the gains being tax exempt.
- When you withdraw your money from your RRSP account, your contribution room is forever lost. Withdrawals from TFSA will create contribution room for future savings.
- The money put into RRSP is tax deductible. In other words, you get tax refund from contribution in RRSP. The money you put into TFSA is not tax deductible. Therefore, you use after-tax dollar to fund your TFSA account.
What could be held inside TFSA?
You can hold many investment vehicles inside your TFSA, such as stocks, bonds, GIC, mutual funds, etc. However, please note that since all the capital gains inside TFSA is tax free, it also means any capital loss inside it cannot be claimed to be offset your other capital gains or carried forward. So please think carefully before holding any stocks inside TFSA. Technically, TFSA works the best for the fixed income investment vehicles, such as GIC and bonds.
What works the best to be held inside TFSA?
Like I just said, it works the best for fixed income investments. However, if you think you are a very good trader, you can try to trade stocks inside TFSA. If you make 10% profit, all 10% will be tax free. Also, I am thinking it might be good to hold some nice US DIVIDEND stocks such as Bank of America. Since under regular non-registered account, any dividend from US Stock will be considered as income and is taxed at the full tax rate. I think it will be beneficial to hold those inside TFSA.
It will be another year from the date we can actually contribute to TFSA. I think it will be an interesting topic in the personal finance blog world.
February 19, 2008
I got my power bill for Jan 10-Feb 10 in the mail today. To my surprise, the total amount is a crazy $264 for my two-bedroom apartment. We use electronic baseboard for heating. Considering three people living in the apartment, I think it is an acceptable amount. But still, it was a shock to me at the first sight.
Since I want to get a three-bedroom townhouse/house in the next year or two, I am just wondering how much it usually costs each month to heat up a three-bedroom house. Will it be a lot?
February 18, 2008
Why the real estates are cheaper in the states?
Posted by lazyinvestor under Real EstateLeave a Comment
I love watching the show “My First Home” on TLC on Saturdays and Sundays. It is fun to watch people hunting for their first home, going through the mortgage application process, and dealing with all the unexpected crises along the way. I plan to buy a house in the next one or two years. Watching the show is also very beneficial to me when I begin to start the house hunting.
However, I did notice something. It seems to me that the housing price in the States is so much cheaper than in Canada. For example, in Las Vegas, you can get a two bedroom detached house with garage for not more than $180,000. In Orlando, $260,000 for a four bedrooms house. In Texas, the price tag is even smaller. I don’t think you can drop less than $300,000 for a detached house in any of the three big cities in Canada.
Why it is that way? I don’t think those American cities have less population than Canadian ones. And the housing demand is probably also higher there? Maybe it is due to lower cost of the materials? But it should not be that significant, shouldn’t it?
Or maybe I did not see the big picture. There are some places in the States with crazy housing price(Like NY?).
