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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I often see people make the following comment on your site, saying to the effect that they cannot realize a loss on a stock because it’s in their RSP/RIF. They really can, and usually to a much greater benefit than in a non-registered account. It’s how you look at the issue.

Withdrawals from RSP/RIF are taxed at your marginal tax rate. The taxman is sharing in your loss, should you decide to sell, they’re just not sharing in the same tax year when you sell. Their ‘sharing’ comes when you withdraw funds.

To give an example of this:

At a $50,000 income level, the combined Provincial (Ontario in this case, but all are similar) and Federal income tax rate is 30%, and the capital gains tax rate is 15%. If you took a $20,000 loss in an RSP/RIF, upon eventual withdrawal, you’ll be paying $6,000 less in tax (because you won’t be withdrawing what isn’t there - because you would have sold already). Had the sale been in a non-registered account - and you suffered the same $20,000 loss - you would only be saving $3,000 in taxes, because the capital gain rate at $50,000 income is only 15%.

At $93,000 income, tax rate is 38%, and capital gains tax is 19%. Using the same example, a $20,000 loss would mean that, upon withdrawal, $7,600 less will be paid in tax versus had the loss been realized in a non-registered account, the capital gains tax saved would only have been $3,800. The higher the income, the more this scenario plays out to the individual’s advantage.

It’s a different way of thinking about it, and I realize that one doesn’t want to see a loss in a registered account because the funds cannot be replaced, but putting that aside, the taxman most definitely shares in your loss in an RSP/RIF, to an even larger extent than they do with capital gains. it’s just that you can’t ‘see’ it, you have to think about it. But it is the long game.

At any rate, just another idea, and please publish if you feel it is worthwhile for your subscribers.
Read Answer Asked by Warren on June 03, 2020
Q: Sis is down 0.38 now. It is moving its CFO function to Ont. from Laval & CFO is leaving at a later date.Any other news Real.As per earlier Q,CEO is selling 750k shares(15%) starting Aug 4 over a year period 9lus donating his balance of 2.9m shares to charities.The big Q here is we do not know what the charities will do with the shares.Possibility they will sell as cash is more important than equities.Ceo does not have to pay capital gain on the donation Txs for u usual great services & views
Read Answer Asked by Peter on June 03, 2020
Q: Hi guys,

Regarding Ronald's question today, what percentage of a balance portfolio should be in technology?
Thanks,
Jim
Read Answer Asked by jim on June 03, 2020
Q: I have just $10,000 U.S. to purchase something with. I heard Brookshire Hathaway is sitting on a whack of money and that the valuation was pretty good. This will be my only US holding currently and wondered if an ETF would be better? Not worried about risk and could get 100 Roku, if you think that might be rewarding? Thank you so much for making the stock market fun and interesting for an amateur.
Read Answer Asked by Jill on June 03, 2020
Q: Why is this company's stock under pressure? What type of minerals so they mine? Insider ownership? Debt levels?
Read Answer Asked by Cory on June 03, 2020
Q: Is SYZ a potential take over candidate? I’m thinking about adding to a half position. Any particular reason why it trades at a p/e multiple (q1 annualized) that is significantly lower then the other software companies in Canada. Any reason you think one of those consolidators hasn’t looked at it (constellation, open text, enghouse etc)? Thanks
Read Answer Asked by Scott on June 03, 2020
Q: Hi Team,
I have recently bought roughly an equal amount of holdings in both CAE and REAL. Currently I am up approx 4% with CAE, and down 9% with REAL. I was wondering if it would be a good move to perhaps trim say 1/3 of my CAE and use it to average down some on REAL at this time. Or, should I just hold the course? I bought CAE as a recovery play, and REAL for its growth its currently experiencing. Which do you see as having more upside in the next year or 2? Thanks

Shane.
Read Answer Asked by Shane on June 03, 2020
Q: I hold a 5.9% position in ZWU in a registered account. I have surplus US cash in a non-registered account to put to work and was thinking of XLU which yields approx 3.4%. I realize this distribution will be treated as income by CRA [I am retired - low tax bracket] but it seems better than letting the funds just sit. If you could offer other suggestions I'd appreciate them. Thanks.....
Read Answer Asked by Ronald on June 03, 2020
Q: Hello,

My partner and I heard about 5i from a friend whose been using you for many years. You came with the highest recommendation.

I feel like I should be copying one of your portfolios, especially due to my lack of knowledge, but it is very important for me that my investments to follow my ethics.

I would like to know which companies on your balanced and growth portfolios would be highest on positive environmental, social and corporate governance, which are low and should be switched and for which companies. I'm happy to do research, but I'm struggling to navigate the important statistics and feeling incompetent in finding good resources. I have seen your ESG scores (https://www.5iresearch.ca/blog/ESG-tsx-companies) and would be keen to know where to find information on how they are created. I would also appreciate other resources that you think would assist in building a portfolio, or simply which companies you would put on it.

Thank-you,
Ellen Perkins
Ucluelet BC
Read Answer Asked by Ellen on June 02, 2020
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