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SEPTEMBER 2023
SPECIAL FEATURES
Teaching Your Children Essential Money Management Skills
How To Profit From Global Warming - Part 1: Tesla
Lana Sanichar 6
Richard Morrison 8
The Current Ratio:
A Key Metric For Investing In Small Cap Stocks
Mystery Author 11
Estate Planning For Blended Families
David E. Edey 13
Risks To Starting Your CPP Too Early
Jason Heath 15
True Or False? Debunking Investing Myths
Rita Silvan 21
Life Insurance Planning
Versus Buying A Flat Amount Of Coverage
Milan Topolovec 24
Why Getting A Tax Refund Is Worse This Year,
And How To Prevent It
Julie Petrera 26
The Investors Cheat Sheet
Barkha Rani 29
REGULAR FEATURES
Sharing With You
4
Dividend & Company News
5
Model ETF Portfolio
5
EDITOR-IN-CHIEF:
Lana Sanichar
EDITOR:
Peter Hodson
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Ryan Modesto, Richard Morrison, Caroline Nalbantoglu,
Brian Quinlan, Wynn Quon, Rino Racanelli, Barkha Rani,
Colin Ritchie, Norm Rothery, Rita Silvan, Allan Small,
Barbara Stewart, Kornel Szrejber, Brian Tang, Becky Wong.
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SEPTEMBER 2023 Volume 43, Number 1
Sharing With You
S
ometimes, investors need to be careful what news items they pay attention to.
On any given day, there are thousands of news items, company reports, press
releases, analyst ratings and economic data points.
Not all are important. In fact, probably about 95% of them don't need to be read at all.
Unfortunately, though, knowing which ones to ignore is a skill that needs to be developed
over time. Ignoring 'noise' frees up an investor's time and is a big super power for an investor.
Less noise equals more time means more 'real' research can be done.
Let's take an example. In early August, Fitch Rating Service downgraded the USA's credit
rating. On a slow news day, many investors panicked. 'If the US is in trouble', they reasoned,
'maybe I should sell some stocks and get defensive'. The news created a lot of buzz and a bit
of a media frenzy.
But this item could have been completely ignored. A larger, more-respected ratings agency
(S&P Corp.) already downgraded the USA, MORE THAN TEN YEARS AGO.
A downgrade is not something a rating agency does lightly. I know, I used to work for a
ratings agency. But does this rating downgrade impact the average investor? Not really at
all. In fact, I am sure most investors wished they had loaded up on stocks ten years ago upon
the initial downgrade.
Remember, just because an item is in the news doesn't mean you need to worry about it.
Peter
Peter Hodson CFA
Founder and Head of Research
5i Research Inc.
4 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
MoneySaver DIVIDEND& COMPANY NEWS
In this column we list recent news, events, dividend income news and any other relevant information
for MoneySavers. News items are those received after our last publication date.
Please go to https://www.5iresearch.ca/dividend-updates for a more comprehensive list of dividend updates.
■ National Bank (NA) raises dividend by 5.2%.
■ Labrador Iron Ore Royalty (LIF) raises dividend
by 30%.
■ Canadian Western Bank (CWB) raises dividend
by 3%.
■ Laurentian Bank (LB) raises dividend by 2.2%.
■ Decisive Dividend (DE) raises dividend by 14.3%.
■ Gear Energy (GXE) lowers dividend by 50%.
■ Empire Co. (EMP.A) raises dividend 10.6%.
■ CT REIT (CRT.UN) raises distribution by 3.5%.
Canadian MoneySaver MODEL ETF PORTFOLIO
SYMBOL
CATEGORY
PRICE
# OF
UNITS
iShares 1-5 Year Laddered Corporate Bond
CBO
Fixed Income
17.14
506
8,672.84
4.5%
iShares DEX Universe Bond
XBB
Fixed Income
26.91
280
7,534.80
3.9%
iShares S&P/TSX Canadian Preferreds
CPD
Fixed Income
10.57
738
7,800.66
4.0%
iShares S&P/TSX Capped Composite
XIC
Equity: Canada
32.19
740
23,820.60
12.2%
iShares S&P/TSX Cdn. Div Aristocrats
CDZ
Equity: Canada Div.
29.91
613
18,334.83
9.4%
iShares U.S. High Yield Bond Index ETF
XHY
Fixed Income
15.91
350
5,568.50
2.9%
Vanguard FTSE Emerging Markets Index
VEE
Equity: Emerging
33.33
285
9,499.05
4.9%
Vanguard FTSE Developed Europe All Cap
VE
Equity: Interntional
31.79
304
9,664.16
5.0%
SPDR S&P 500
SPY
Equity: U.S.
450.13
41
24,639.71
12.7%
Vanguard US Dividend Appreciation Index
VGG
Equity: U.S. Div.
74.96
217
16,266.32
8.4%
iShares Russell 2000 Growth
IWO
Equity: U.S. Growth
248.28
45
14,916.54
7.7%
BMO Covered Call Utilities
ZWU
Equity: N.A. Div
10.50
604
6,342.00
3.3%
Vanguard Information Technology Index
VGT
Equity: U.S
442.84
27
15,963.36
8.2%
Consumer Discretionary Select Sector SPDR
XLY
Equity: U.S
168.69
60
13,513.08
6.9%
Cash
Cash
Cash
12,049.80
6.2%
ETF
Total Portfolio
Exchange Rate
Inception value:
Inception date:
TOTAL
% OF
PORTFOLIO
194,586.25
1.34
$ Gain/(Loss):
94,586.25
100,000.00
% Gain/(Loss):
94.59%
October 18, 2013
% Annualized:
7.03%
Prices are at market close on on August 2, 2023. Individual prices are in USD$. Portfolio values, $Gain/(Loss), % Gain/(Loss), % Annualized all reflect USD$ values are converted to CAD$.
Returns include foreign exchange gains/losses
Current notes: None.
Other notes: Keep in mind all investors are different. This portfolio is designed as a guide in setting up your own personal portfolio. Unique considerations and
adjustments need to be made to reflect your personal situation. Please perform your own due diligence before making investment decisions. For use by Canadian
MoneySaver subscribers only. Analysts do not own a financial or other interest in any of the above securities. Past performance is not an indicator of future performance.
Not for redistribution. Please direct portfolio questions to moneyinfo@canadianmoneysaver.ca.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 5
Money and New Generations
Teaching Your
Children Essential
Money Management Skills
Lana Sanichar
I
f you've been following along with the articles
that Canadian MoneySaver provides for Costco
or even reading the sharing column in our
monthly newsletter, you'll know that a priority
of MoneySaver is educating the newest generations.
spouse, your children will use those experiences to build
their own beliefs around money.
With the rising cost of virtually everything, it is
becoming increasingly difficult for my now adult children
to move out of our home and find financial independence.
With fewer defined pension benefits, lower job stability
and salaries trailing far behind the rate of inflation, it
has never been so vital that we really drill home the
importance of money management to our kids.
Give Practical Examples
So how can you start to teach your children, and even
your grandchildren, to build the smart money habits
they need to secure a successful financial future? While
it's almost never too early—or too late—to encourage
financial awareness in your children, it's important to
deliver the right lesson at the right time.
School-Aged Children
Think about how you want your children to relate to
money and how you'd like them to feel about it and do
your best to become a leading example of that.
Children learn by doing, not by saying. With young
kids, the best way to teach them anything is to give
practical, real-world examples. Instead of telling them
all about how that toy car costs $5 dollars, show them
how it works. Help them take the cash out of their own
savings jar, bring them to the store, and let them hand
over the money themselves.
The simplicity of taking part in real, meaningful actions
will go so much further than any verbal explanation or
comparison you can make. Plus, the more you can
work financial lessons into normal, daily activities with
your children, the easier it will be for them to begin
understanding how money works.
Examine Your Own Habits
Use a Savings Jar
If your children are young, you might still have time
to reflect on your relationship with money and clean
up any of your own bad habits before you pass them
on. The earlier you can do this, the better, because our
children are picking up on everything that we do from
a very young age.
The classic piggy bank is a great idea, plus it's got
an undeniable nostalgia factor. But for younger kids
especially, the big downside is that it doesn't provide a
visual example of how their savings grow. It's better to
use a clear savings jar instead so that they can see the
money growing.
A study by Dr. David Whitebread and Dr. Sue
Bingham from the University of Cambridge, titled “Habit
Formation and Learning in Young Children” , found that
by the age of seven, children have already formed most of
their money habits and attitudes. Now that doesn't mean
you can't teach them anything after that age. But they will
learn to adopt and mirror your own core relationship with
money, for better or worse. If you're an impulse buyer,
or if you're constantly arguing about finances with your
This is also a great opportunity to teach your children
how to celebrate every “win” and really soak up the joy of
receiving. Don't be afraid to talk through their additions
to the savings jar, no matter how small, and make a big
deal about it growing.
Teens
Give Commissions for Housework
While you may feel your teens need pocket money
6 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
(perhaps if only for your own sanity), rather than simply
giving them all the cash they need, it's a good idea to give
commissions too. This way, you can pay your teens a small
amount for chores they complete around the house. Then
their pocket money can act as a base, ideally with most
of their income coming from commissions.
This is a great way to teach your children that money
is primarily something to be earned rather than simply
being given to them.
Teach Them How to Budget
As soon as your children are in their teens and receiving
pocket money, they're ready to learn how to follow a
budget. Keep it simple, and if they're mature enough,
you can even discuss with them what percentage they'd
like to put in savings regularly—just make sure it's at
least 10%. You can also use a budgeting app to get them
familiar with tracking their expenses.
One important thing to remember here is to avoid
policing their purchases. The more restrictions you place
on them, the less enjoyable their experience with money
will be, and the more likely they are to go against you.
A good budget will provide the structure they need, and
from there, you can allow them the freedom to spend
their money as they wish.
Give Them a Simple Bank Account
Deciding exactly when to open a bank account for your
teenager will depend on several factors, but it's a huge
financial rite of passage. You don't need to make it scary,
but you can encourage your children to take their money
seriously by allowing them to manage a small account.
The good news is that today there are lots of accounts,
both online and with traditional brick-and-mortar
institutes, that are designed for teenagers and students.
These accounts are often great options for easing your
teenagers into the world of banking, preparing them for
successful banking in adulthood.
Involve Them in College Savings
Chances are you've got a Registered Education Savings
Plan (RESP) or other savings accounts already set up for
your child's education. When they reach those teenage
years, it's time to start involving them more directly in
those accounts.
Encouraging contributions here will allow your teen to
feel like they've got some agency over their own future.
This can be a big confidence boost for them.
This can also be a great time to teach them about
compound interest and the basics of investing through
savings accounts.
Young Adults
Teach Them About Credit
As soon as your child turns eighteen, they're likely to
have offers for credit cards left, right and centre. You can
anticipate this by teaching them about the basic concepts
of credit so that they don't feel overwhelmed or pressured
into getting one.
You don't necessarily need to give them a credit card.
However, if you choose that route, secured and prepaid
cards are useful options.
Either way, you'll want to be sure they understand that
credit isn't extra income and that even though you can
get away with minimum payments, they should always
aim to pay off their whole balance each month.
Talk About Cars
Once your children are at the legal driving age, you'll
want to slowly work on some of the concepts around
motor finance. Insurance quotes, gas and maintenance
fees, and even vehicle financing are all important topics
you can chat about.
They don't have to know it all but getting them
involved in the financial reality of driving will show them
that it is a serious commitment. This can also help your
child level up their budgeting abilities and hopefully build
their confidence as they enter young adulthood.
You can also make sure they’re informed about how
to use rideshare applications, like Uber, safely and
economically. Uber for teens has been rolling out across
Canada this year, so if your young adult children decide
not to take their licence, they may want to use ridesharing
apps at least occasionally. The Uber Cash Rewards
Program can help you save money on trips, especially
with frequent use.
Investments and Portfolios
Your children are already well acquainted with savings
accounts, compound interest and building for their
financial future. When they're driving and thinking about
their college preferences, it's a good time to teach them
more about the world of investing.
Stocks, bonds and the basics of risk versus reward are
a good place to start here. But remember to limit the
theoretical side of things as much as possible and provide
as many down-to-earth, real-world examples as possible.
Show them your own portfolio, and use interesting
examples from brands they know, like Apple, Tesla, Nike
and so on.
Lana Sanichar, Editor-in-Chief, Canadian MoneySaver
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 7
Sector Focus
How To Profit
From Global Warming
Part 1: Tesla
Richard Morrison
T
his year has been an inconvenient one for
climate change deniers. Those who refuse
to believe that the world is getting warmer
struggle to make their case when the media
constantly reports record high temperatures, forest fires
and floods, reinforced by interviews with broiling tourists
and worried climate scientists.
Global warming does present investment opportunities,
however. Pessimists can buy shares of companies that
make products such as ice cubes, air conditioners, water
bombers for fighting forest fires and boats for rescuing
flood victims. Optimists can buy into companies that
make products such as electric vehicles (EV).
The market for electric vehicles is growing steadily,
figures from the International Energy Agency (IEA) show.
EV sales exceeded 10 million in 2022, representing 14%
of all new cars sold last year, up from about nine per cent
in 2021 and less than five per cent in 2020. The market
continued to expand this year, as 2.3 million electric cars
were sold in the first quarter, about 25% more than in the
same period last year. For 2023, the agency said it expects
to see EV sales increase by 35% year-over-year, with new
purchases accelerating in the second half of this year to
account for 18% of total car sales.
Regardless of where they traded, Tesla shares plunged
in 2022 but began a rebound at the start of 2023 and
have since increased by about 130%. The company now
has a market capitalization of US$835 billion, making
it by far the largest automaker and bigger than most of
its competitors combined. Ranked by revenue, however,
Tesla falls to eleventh place among automakers, showing
that investors are much more optimistic about Tesla's
prospects than that of any of its competitors.
Tesla's shares trade at about 70 times trailing 12-month
earnings, far higher than other carmakers such as Toyota
(11.1 times) and Honda (10.2 times), while automakers
such as Volvo, Mazda, Mercedes-Benz, General Motors,
BMW, Volkswagen and Hyundai trade at less than ten
times trailing earnings, says the Companiesmarketcap.
com site.
Tesla Inc.
Tesla's production, vehicle sales and revenue have been
growing. The company delivered 1.3 million vehicles last
year. Its facilities in California, Nevada and Texas, along
with Berlin, Germany and Shanghai, China, and a new
plant under construction in Monterrey, Mexico, should
allow it to turn out more than two million vehicles a
year, Tesla's July 19, 2023 second-quarter update says.
By 2030, the company hopes to be producing 20 million
vehicles a year, roughly twice what Toyota made in 2022.
For investors, shares of Tesla Inc. have been the obvious
way to play the electric vehicle market. The stock (TSLA/
NASDAQ) trades at more than US$250, but Canadians
can buy fractional shares of Tesla and other giant U.S.
corporations through Canadian depositary receipts
(CDRs). In July 2021, CIBC issued an initial batch of
18 Canadian-dollar hedged CDRs at C$20 each to track
the largest U.S. companies. The list has since expanded
to 41 names, including Tesla (TSLA/NEO), whose CDR
trades in the C$25 range.
Hampered by economic headwinds that decreased
consumer demand, together with a lack of new models,
Tesla has cut its vehicle prices several times this year.
Tesla's share of the automotive market has grown to four
per cent in the U.S. and Canada, 2.75% in Europe and
2.25% in China, the company's second-quarter update
says. In the second quarter, Tesla's total production of
479,700 vehicles was up 86% over the same quarter a
year ago, while deliveries jumped 83% to 466,140. Tesla's
network of EV charging stations grew by a third.
8 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Tesla's total revenue jumped to US$25 billion in the
second quarter of 2023, up by 46% over the second
quarter of 2022. The price cuts have helped its sales
volume at the expense of earnings. The company's gross
and operating profit margins slipped slightly, but income
climbed 20% over the second quarter of 2022. Tesla
generated a net income of US$2.7 billion or US78 cents
per share in the quarter.
Tesla's balance sheet is strong, with total assets of
US$90.6 billion against total liabilities of US$38.4
billion. Total debt, excluding vehicle and energy product
financing, was just US$44 million.
Investors considering buying shares in Tesla should
watch the company's investor presentation (https://www.
youtube.com/watch?v=Hl1zEzVUV7w&t=1004s). The
three-hour-and-45-minute seminar was streamed live
from Tesla's Austin, Texas, gigafactory on March 1 and
features CEO Elon Musk and his team of senior engineers
and is available on YouTube. Unlike most investor
presentations, this one goes beyond trying to convince
attendees to buy Tesla shares, as making electric cars turns
out to be only a small part of Elon Musk's master plan.
The master plan detailed in Tesla's presentation
describes what Musk says is a clear and easily achievable
path to 100% sustainability by 2050, when all forms of
transportation except rockets will be electric. First, the
electricity grid itself will be powered by renewable energy
sources. Second, all vehicles will be both electric and
fully autonomous, with Tesla turning out 20 million of
them a year. Third, all buildings—homes, businesses, and
industries—will be heated and cooled with heat pumps.
Fourth, all foundries and other heavy industries that
typically use coal will be electrified. Finally, redesigned
planes and ships will be powered sustainably, with batterypowered ships achievable more easily than aircraft.
The ambitious goals would be laughable if they weren't
delivered by Musk, whose track record and wealth add
credibility. Although born in South Africa, Musk moved
to Saskatchewan in 1989 when he was 18 and became a
Canadian citizen by way of his mother, Maye, a model
and dietician who was born in Regina. In 1990, Musk
attended Queen's University in Kingston, Ontario.
Most analysts have a "hold" rating on Tesla's shares,
with average 12-month share price targets that are
similar to the company's current price. Polls by CNN,
the Nasdaq and WSJ markets note that analysts' price
targets for Tesla range anywhere from US$85 to US$350.
Shift In The EV Charging Market
Electric vehicles are best recharged via home charging
stations, which is problematic for EV owners who live
in condominiums or apartments. Those without home
charging stations must rely on public chargers.
I bought a 2023 Chevrolet Bolt EUV last October and
am so pleased with it that I will never go back to gasoline.
Until I had a home charging station installed, however,
I relied on public EV chargers, which were slow when
they worked and useless when they didn't, which was
often. Lineups were another headache, as even the fastest
functioning public chargers took an hour to recharge,
requiring me to take along a good book or magazine in
case the charger was already in use.
Electric vehicle chargers come in three levels. Level 1,
the slowest, uses a regular household 120-volt AC outlet
to deliver about 7-9 km of range per hour, depending
on the vehicle. These chargers are best suited for hybrid
vehicles and for those who don't do a lot of driving. A level
2 240-volt AC charger (which an electrician installed at
our home) adds 200 km of range in about five hours. Level
3, or 480-volt DC fast charging stations, can recharge
a vehicle in under an hour. These are usually found at
commercial locations near highways and rarely found in
home installations because of their high cost.
Drivers of non-Tesla EVs have had "road trip anxiety"
when we had to map out which chargers would be
available to us when we travelled far from home. Tesla's
red-and-white superchargers look lovely, but their plugs
only fit Tesla vehicles. The situation began to resolve itself
this spring when Tesla signed deals with other automakers.
On 25 May 2023, Ford announced that starting early
next year, owners of its Mustang Mach E cars, F-150
Lightning pickup and E-Transit vans will be able to use
an adapter to charge their vehicles at Tesla superchargers.
In 2025, Ford's EVs will have the connector built in,
precluding the need for an adapter. A few weeks later,
General Motors made a similar announcement, with EV
maker Rivian and Mercedes-Benz following suit.
The moves by other companies suggest Tesla's chargers
may become the industry standard.
If all-electric vehicles can be charged at Tesla
stations, its network will become a huge revenue and
profit generator and competing charging networks will
struggle to maintain market share. Certainly, there is
room for improvement in the public charging industry,
as no charging companies are profitable, and aside from
ChargePoint Holdings Inc. (CHPT/NYSE), all are tiny
and have so far been horrible investments.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 9
Conclusion
Tesla is the dominant player in the electric vehicle
market, which is growing and should continue to
expand. The recent moves by competitors to eventually
modify their vehicles to accommodate Tesla charging
plugs are a win for Tesla in two big ways. It should ease
motorists' anxiety about running out of power on long
trips, removing a major roadblock to EV purchases and
may be a major revenue generator for the company.
Tesla's shares are more volatile and clearly trade at much
more optimistic levels than other automakers, but in my
opinion, Elon Musk's track record justifies making Tesla
suitable as part of a diversified portfolio.
Richard Morrison, CIM, is a former editor and investment
columnist at the Financial Post. richarddmorrison@yahoo.ca
MoneyTip
How To Protect Older Investors From Digital Fraud
Setting up verification methods with clients can help prevent them from being fleeced
Digital adoption has made it easier for advisors and
clients to communicate, but it’s also created security
risks — particularly with older investors.
As clients receive more emails from advisors requesting
certain documents or marketing products and services,
scammers have started sending similar emails pretending
to be from financial institutions. For older investors,
sometimes it’s hard to tell the difference.
“There’s these conflicting messages where you have
your bank saying we’ll never email you, then you have
your advisor emailing you, and in many cases it may
have what looks like a bank logo,” said Laura Tamblyn
Watts, CEO of CanAge, Canada’s national senior advocacy
organization.
She recommended that financial advisors use colourcoded headers as a way of authenticating the message.
For example, a marketing email could have a blue header,
an investment-related email could have a green header
and a tax email could have a red header.
communications. Seniors can run an email or text
message by this person to see if something seems off.
Most advisors speak to their clients regularly via
telephone or in-person meetings, and Savone
recommended advisors put that same effort into their
relationship with older clients’ trusted family member.
Savone will call both the client and the designated
relative if she receives an email from her older clients
asking her to make a transaction.
“I know my clients, I know their voices,” said Savone,
who has the elder planning counsel designation. “For
right now, I’d just rather be safe than sorry.”
Staci Werbin-Tanner recently experienced a fraud
attempt when she received a message from a scammer
impersonating her father. Werbin-Tanner is the
director of national accounts with SEI Canada, a
technology and investment firm, and often conducts
workshops for financial advisors about how they can
protect seniors from digital fraud.
Email marketing software, like Mailchimp or Constant
Contact, allows you to create colour-coded templates
for various message types. For mail services like Outlook
or Gmail, design templates are available but can be
tricky to use. Instead, changing the font colour at the
beginning of the email can easily indicate the subject
matter and verify that you sent it.
She put her lessons into practice when the scammer
messaged her on Facebook, pretending to be her
father.
Tamblyn Watts suggested advisors educate clients on
the colour codes during check-in meetings. She also
emphasized the importance of providing a document
or video about the colour codes for clients to reference
after the meeting.
Werbin-Tanner didn’t click and asked verifying
questions about where he was born and for his mother’s
name. The scammer stopped replying.
Similarly, some seniors may not know that a text message
or email can contain unsafe links, even if the message
looks like it’s from a trusted source.
Bona Savone, a financial advisor with Key Wealth
Partners, Investment Planning Counsel in Ottawa,
advises her older clients to find a trusted friend or
family member who can be their “gut check” for these
The scammer used a photo of Werbin-Tanner’s father
to make the account look real and tried to get her to
click a link for a fake government medical grant for
retirees.
As per SEI’s protocols, she also reported the scammer
to Facebook.
“[Fraud] is a problem that is going to get worse as
the population ages,” Werbin-Tanner said. “Financial
advisors and advisory firms, they’re the ones who are
taking care of the money … It’s important to continue
to elevate this.”)
10 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Source: Advisor.ca
Investing
The Current Ratio:
A Key Metric For Investing
In Small Cap Stocks
Mystery Author
T
he current ratio is a financial ratio that
measures a company's ability to pay its
short-term debts with its current assets. It
is calculated by dividing current assets by
current liabilities. A current ratio of 1.0 means that a
company has enough current assets to cover its current
liabilities one-to-one. A current ratio of 2.0 means that
a company has twice as many current assets as current
liabilities.
The current ratio is an important metric for investors
because it provides a quick and easy way to assess a
company's liquidity. Liquidity refers to a company's
ability to quickly turn its assets into cash. A company
with a high current ratio is considered to be more liquid
than a company with a low current ratio.
There are a few reasons why the current ratio is
important for investing in small cap stocks. First, small
cap stocks are often more volatile than large cap stocks.
This means that their share prices can fluctuate more
dramatically in the short term. A high current ratio
can give investors some reassurance that the company
has the resources to weather any short-term storms,
whether they are company specific or related to market
or macroeconomic factors.
Second, small cap stocks are often more cyclical than
large cap stocks. This means that their performance is
more closely tied to the health of the overall economy.
A high current ratio can give investors some confidence
that the company will be able to weather macroeconomic
headwinds.
Third, having a high current ratio can often mean that
a company has a healthy amount of excess cash, which can
give it more optionality and the ability to make strategic
moves such as buy back shares, initiate or increase a
dividend or expand a vital department. This particularly
helps a company stand out during tough economic times
when other peer companies are struggling.
Company-specific Considerations
It is important to note that the current ratio is not the
only factor to consider when selecting a stock to invest
in. Other factors to consider include the company's
business model, its growth prospects, profitability, and its
management team. Further it is important to understand
the story and circumstances of a particular company to
help gauge how useful the current ratio is in one’s analysis.
Here are three small cap Canadian stocks with their
current ratios which we will look at to illustrate this point
with a short example:
■
Lightspeed Commerce (LSPD): Current ratio
of 6.2.
■
Kinaxis (KXS): Current ratio of 2.4.
■
Aritzia (ATZ): Current ratio of 1.4.
If we compare the three stocks mentioned above,
LSPD seems to be the most favourable of the three when
it comes to short-term liquidity. However, LSPD’s stock
has arguably been the most volatile relative to ATZ and
KXS. Shouldn’t a high current ratio indicate a more stable
company and in turn a more stable stock? Not necessarily.
LSPD also has a history of burning through cash, meaning
it is not yet profitable, whereas ATZ and KXS are. In
other words, ATZ and KXS can afford to have lower
current ratios (albeit both having a ratio greater than 1
still quite strong). LSPD, on the other hand, by necessity
needs to have a high liquidity and cash reserves to allow
it to keep going. This is why it is important to consider
all factors when evaluating a company. That said, 6.2 is
still a high current ratio and does provide reassurance
that the company can weather the storm and uncertainty.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 11
Annuities Offer
Income For Life
Prescribed Annuity Rates:
$100,000 10-year Guarantee
1. Male Single Life Prescribed Annuity
ages 65, 70, 75 and 80.
Male age
at purchase
Annual
income
Annual Taxable
Amount
65
$6,779
$1,848
70
$7,529
$1,632
75
$8,555
$1,562
80
$9,617
$1,487
2. Female Single Life Prescribed Annuity
ages 65, 70, 75 and 80.
Female age
at purchase
Annual
income
Annual Taxable
Amount
65
$6,441
$2,022
70
$7,098
$1,772
75
$7,954
$1,481
80
$9,068
$1,317
3. Joint Life Prescribed Annuity
Male/Female ages 65, 70, 75 and 80.
Joint age
at purchase
Annual
income
Annual Taxable
Amount
65
$5,965
$2,146
70
$6,535
$1,947
75
$7,320
$1,706
80
$8,442
$1,550
Annuity income values were obtained from highly rated
Canadian insurers and are for illustration purposes only.
Annuity rates change daily. Income and tax rate will
depend when the annuity contract is issued.
Rino Racanelli, independent annuity advisor
racanelli@sympatico.ca
www.bestannuityrates.ca
Industry-specific Considerations
The current ratio can also be affected by the industry
in which a company operates. For example, companies
in the retail industry typically have higher current ratios
than companies in the industrial sector. This is because
retailers generally have more cash on hand and inventory
that can be quickly converted into cash.
Here is a brief overview of how the current ratio can
be affected by different industry dynamics:
■
Retail: Retailers typically have high current
ratios because they have a lot of cash on hand and
inventory that can be quickly converted into cash.
■
Technology: Earlier stage technology companies
typically have lower current ratios because they
have less cash on hand and inventory. However,
due to the asset-light nature of many technology
companies, they often end up having high current
ratios once they become profitable.
■
Financial services: Financial services companies
typically have high current ratios because they
have a lot of cash and liquid assets.
■
Healthcare: Healthcare companies typically
have lower current ratios because they have a lot of
long-term assets, such as property and equipment.
■
Industrial: Industrial companies typically have
lower current ratios due to their high capex and
working capital needs to service their customers.
By understanding how the current ratio can be affected
by different industries, investors can better assess the
liquidity of a company and its ability to meet its shortterm obligations relative to its peers.
A Complimentary Tool
The current ratio is a valuable tool for investors who
are considering investing, particularly in smaller and less
established small to mid-cap stocks. Overall, the current
ratio can be a useful tool for assessing a company's
liquidity and its ability to weather short-term storms.
However, we certainly would not consider it a be-all-endall financial ratio and believe in most cases, it serves better
as a complimentary tool in one’s analysis and for detecting
red flags related to the financial health of a company.
Disclosure: The author(s) responsible for this article do not have a
financial or other interest in the securities mentioned.
12 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Wills and Estates
Estate Planning
For Blended Families
David E. Edey
A
bout six months ago, I met Sarah and Jack
at an event. They told me they had been
together for close to two years.
Between them, they have five children.
They wanted to make sure their children would be taken
care of in the event of their deaths, but they were not sure
how to go about it.
result in unintended consequences, such as assets going
to an ex-spouse instead of children or stepchildren.
The dangers Sarah and Jack
need to avoid:
■
Communication is key in any relationship, and it
is important for Sarah and Jack to establish clear
communication and expectations with each other,
their children, and any stepchildren. Failing to do
so can result in misunderstandings and conflicts
that can ultimately harm the family.
■
It is crucial for Sarah and Jack to treat all children
equally and avoid showing favouritism toward
their biological children. This can be difficult,
but it is important for building a strong and
healthy blended family. Failing to do so can lead
to resentment and division within the family.
They also wanted to make sure their wishes would be
respected and that their assets would be distributed as
they see fit.
The blended family today is more common than ever.
With a blended family, things can get complicated when it
comes to finances and assets. That is why it's so important
to have an estate plan in place.
If Sarah or Jack passes away without an estate plan,
their assets may be distributed according to their
province's intestacy laws (dying without a will), which
may not reflect their wishes.
This can lead to children from a previous marriage
being disinherited or the current spouse not receiving
the assets you intended them to have.
What kind of legacy do you
want to leave behind?
An estate plan can help to protect assets and ensure
those assets are distributed according to your wishes. This
is particularly important in a blended family where there
may be multiple spouses and children involved.
The answer to this question will be different for every
individual or couple, as legacy can mean different things
to different people. Some may want to leave a financial
legacy, ensuring that their wealth is passed down to their
children and grandchildren. Others may want to leave a
legacy of philanthropy, donating to charitable causes that
are important to them.
Now that Sarah and Jack have decided to blend their
families, it is critical to update their estate planning
documents to reflect the new circumstances. This includes
updating wills, digital assets, trusts, and beneficiary
designations to ensure that all children are provided
for in the event of their deaths. They also need to have
conversations with their executors. Failing to do so can
To answer this question, it is important for Sarah and
Jack to reflect on their values and what's most important
to them. What do they want to be remembered for? What
impact do they want to have on the world? Once they
have a clear understanding of their desired legacy, it is
important to let the estate professionals understand and
make the necessary changes.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 13
Who will be responsible for carrying
out Sarah and Jack's wishes?
How can you communicate your wishes
effectively to your heirs?
Choosing the right person to carry out your wishes
is critical to ensuring your estate plan is implemented as
intended. This person, known as an executor or trustee,
will be responsible for managing your assets, paying
your debts, taxes and distributing your estate according
to your wishes.
Having conversations about your wishes with your
heirs is critical to ensuring your estate plan is implemented
as intended. This probably is the most important step.
It is a big favour to ask someone as they, on average,
will be spending over 100 hours to settle the estate, not to
mention that they must deal with impatient beneficiaries.
When choosing an executor or trustee, consider factors
such as their age, trustworthiness, and availability.
It's also important to choose someone who shares
your values and understands your wishes. Once you've
identified the right person, make sure they're aware of
your wishes and have a clear understanding of their
responsibilities.
The other option is to hire a professional executor
through a bank or trust company, but that choice comes
with a higher cost. In many cases depending on the size
of the estate, it may make the most sense.
The important thing is to have a plan.
NEV
E
Be clear and specific about what you want to happen
to your assets, and make sure your heirs understand
the reasons behind your decisions. Conflicts among
beneficiaries can arise when one person feels they
have been treated unfairly or when there is a lack of
communication or understanding about the estate plan.
This conversation is uncomfortable because couples like
Sarah and Jack have no idea how their children will react
when they are gone.
Blended families face unique challenges, but failing
to create an estate plan can lead to serious consequences
for loved ones.
David E. Edey, CEA, is the author of Executor Help – How
to Settle an Estate, Pick an Executor and Avoid Family Fights.
www.davidedey.com.
S AN EP
S
I
M
I
DE!
SO
R
Don't let your paperwork (the Will) do the talking for
you when you are gone. Start by having open and honest
conversations with your loved ones about your values,
goals, and wishes.
Canadian MoneySaver Podcast
https://www.canadianmoneysaver.ca/TheMoneySaverPodcast
14 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Retirement
Risks To Starting
Your CPP Too Early
Jason Heath
E
very time I write about the Canada Pension
Plan (CPP), I find it to be a controversial
topic. Some people need their CPP retirement
pension, so they have to apply early. Others
apply right away because they feel they are entitled to
this money and want it as soon as possible after years
of contributing and paying taxes, so how dare anyone
suggest they wait? Some are worried they will deplete
their assets and either run out of money or leave a smaller
inheritance for their heirs if they do not apply as soon as
they are eligible.
I think some applicants have a clear advantage in
applying early or late. For others, it may be more of a
coin toss. It turns out I gave the wrong advice to my own
mother, even though it was the best advice at the time.
Life Expectancy
You can start CPP as early as age 60 or as late as age 70.
The earlier you start, the lower your monthly payments,
but you will receive more months of payments over the
rest of your life.
The so-called normal retirement age in Canada is
65. The median life expectancy for 65-year-old men is
89, and for women, it is 91. This is the age to which 50
per cent of 65-year-old Canadian men and women are
expected to live.
Many people are shocked by this statistic. They
point to the Canadian life expectancy of 83 as being
disconnected from this much later age. However, the
commonly quoted general life expectancy is the age at
which the median (average) Canadian died in the previous
year. So, although the average Canadian may die at age
83, this is across the population and is reduced by those
who die at a relatively young age. Once you make it to
age 65 in the first place, you are in a new cohort: 50 per
cent of people are expected to live to age 90 (again, 91
for women and 89 for men).
The average CPP retirement pension at age 65 is
currently $811 per month. The maximum is $1,307. But
if we stick with the average, what would be the impact of
deferring CPP to age 70?
The $811 would grow between the ages of 65 and 70.
It would be subject to a guaranteed 8.4 per cent annual
increase per year, or 42 per cent in total after five years.
It would also be increased based on the cost-of-living
increase, which was a whopping 6.3 per cent alone for
2023. If we assume just a two per cent annual increase,
in line with the Bank of Canada’s inflation target, that
$811 pension at age 65 would instead increase to $1,272
per month by age 70 if it was deferred.
A recipient starting at age 65 would receive $50,659
of total CPP before age 70, but if they waited until 70,
they would get a larger monthly pension and begin the
process of catching up. They would catch up by age 80
and then come out ahead from that point onwards.
If someone expects to live into their 80s, they will
receive more cumulative CPP payments by starting at age
70 than if they started earlier. And since half of today’s
65-year-olds will live to 90, most people would be better
off deferring their CPP—at least if we consider the total
payments received.
Risk Tolerance
But of course, if you start your CPP earlier, you can
invest the money. Or you can avoid drawing down
your existing investments. The Toronto Stock Exchange
returned 8.68 per cent annualized for the 30 years ending
31 December 2022. The S&P 500 returned 9.88 per
cent in Canadian dollars. This assumes all dividends
were reinvested.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 15
However much I hope North American stocks return
nine per cent annualized for the next 30 years, I would
not count on it. My governing body as a financial planner,
FP Canada, suggests about 6.45 per cent for a 50/50
portfolio of North American stocks when doing a straightline calculation to account for the variability of returns
or sequence of returns risk. And that is before fees. Since
most investors will not be 100 per cent in stocks and they
also pay investment fees, I think a more reasonable, albeit
conservative, assumption for a balanced portfolio, net of
fees, is probably four per cent annually.
A retiree with an income of about $50,000 might
pay about 25 per cent tax on their CPP. This is a very
rough estimate that depends on their sources of income,
province or territory of residence, and tax deductions and
credits. So, if we assume a 65-year-old starts their CPP
at age 65, pays 25 per cent tax, and invests their money
in a Tax-Free Savings Account (TFSA), when would the
breakeven point be compared to doing the same at 70?
At age 84, the 70-year-old waiting five years, earning
a higher monthly pension, and playing catch-up would
have more in their TFSA. And since half of the 65-yearolds contemplating a deferral of their CPP will live to
90, most 65-year-olds should defer their pension using
these assumptions.
So, if you have a pension, maybe you hedge your bets
by starting CPP early. But if you do not, as is the case
for more and more retirees, CPP deferral may be a good
risk management strategy.
Registered Retirement Savings
Plan (RRSP) Value
If you have a large RRSP, the sooner you can start
taking withdrawals, the less of a ticking tax time bomb
you have. Unless you are in a high tax bracket, it may
make sense to consider RRSP withdrawals before you
must convert your RRSP to a Registered Retirement
Income Fund (RRIF) at age 72.
If you can take RRSP withdrawals in your 60s,
assuming you retire young, you may pay less lifetime tax
compared to waiting. Especially because if one spouse
in a couple dies young, the survivor has all income after
that taxed on one tax return instead of two. And on the
second death, a large RRSP/RRIF balance may be taxed
at over 50 per cent.
As a result, early RRSP and late CPP may be a strategy
for some retirees.
Do-it-Yourself (DIY) Investor
But what if you could invest at eight per cent per year?
If you could, the breakeven would be much later—age
97. However, I question the likelihood of a 65-year-old
being able to earn eight per cent net of investment fees
for life. Most people have a declining risk tolerance over
time or pay fees on their investment products or to their
advisors. Or they make other bad decisions like buying
high or selling low that prevent them from earning full
market returns. Plus, if there is a poor sequence of returns
in the early years of retirement, that makes it less likely
to achieve such a high long-term return.
Self-directed investors may feel more confident in
their ability to invest their CPP payments and come out
ahead. But I would argue that a DIY investor is better
at dealing with their investments and withdrawals from
those investments in their 60s instead of later.
Even if we split the difference between my conservative
four per cent and a more aggressive eight per cent, the
breakeven at a six per cent return is age 88. If we picked
a lower or higher tax bracket than 25 per cent, the
breakeven calculations are virtually unchanged.
Guaranteed Income Supplement
(GIS)
No Pension Income
What if you live to 110? Pension income is a niceto-have insurance policy that protects you against the
risk of living too long. Consider it longevity insurance.
A declining number of retirees have defined benefit
pensions, and the CPP is a nice, reliable, indexed pension
to rely upon.
Then in their 70s and 80s, a deferred CPP will cover
more of their retirement income and reduce the reliance
on their portfolio when they are likely less able to manage
their investments, especially if one spouse in a couple is
more in charge of their investments.
If you are a low-income senior, there is a Guaranteed
Income Supplement (GIS) that may be payable starting
at age 65. The lower your income, the more you get. CPP
income can reduce eligibility for this supplement by 50
cents on each additional dollar of income.
Although low-income CPP recipients may need their
CPP pension that much earlier for cash flow, others who
can rely on savings, TFSAs, or other alternatives may be
able to receive more government support while at the
same time growing their CPP pension.
16 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Conclusion
There are other considerations impacting the CPP
timing decision. You can start CPP before age 65 or
as early as age 60. If you do not have enough years
of contributions, your pension could be reduced by
deferring the start of it and having more years with no
contributions. Mind you, the reduction is much less than
the increase for a later start date.
If you are still working after 65, you can continue to
contribute to CPP, and the benefits depend on whether
you are self-employed or not and whether you have
already earned the maximum pension.
Your marital status and your spouse’s CPP entitlement
and age also could have an impact on your CPP planning.
My advice to my own mother on CPP when she turned
60, was to defer it. She was semi-retired, healthy, vibrant,
and checked off all the boxes. She got sick and died when
she was 66. You just never know how long you are going
to live, and CPP is primarily dependent on longevity.
If you are in good health and have a good family
history, deferring CPP as late as 70 is worth considering.
Most 65-year-olds will be better off for having done
so. Some will make the wrong choice, but all choices,
financial or otherwise, need to be based on the pros, cons,
and probabilities of success.
Jason Heath is a fee-only, advice-only Certified Financial
Planner (CFP) at Objective Financial Partners Inc. in
Toronto, Ontario. He does not sell any financial products
whatsoever.
– MoneySaver Podcast –
Fight Food Inflation!
© <a href='https://www.123rf.com/profile-volff'>volff</a>, <a href='https://www.123rf.com/free-images/'>123RF Free Images</a>
GETTING TO KNOW:
Sylvain Charlebois
Foodflation!! We are all facing it! In this episode, Ellen Roseman
talks to a Canadian Researcher in food distribution and
policy and otherwise known as The Food Professor, Sylvain
Charlebois, Professor in food distribution and policy in the
Faculties of Management and Agriculture at Dalhousie University
in Halifax. They discuss food inflation, tipflation and even
shrinkflation and how to fight them. They also talk about Canada's
Food Price Report and Skip The Dishes Inflation Cookbook.
Author of five books on global food systems, his most recent one
published in 2017 by Wiley-Blackwell is entitled Food Safety, Risk
Intelligence and Benchmarking.
He also has a podcast called
"The Food Professor" and is the author
of Canada's Food Price Report.
Tune in with us today!
All episodes are free to download and stream.
Hear them all at the link below!
https://www.canadianmoneysaver.ca/TheMoneySaverPodcast
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 17
This column offers excerpts from published and
online sources to provide other viewpoints.
Updated Feasibility For Lynn Lake - ALAMOS GOLD INC.
AGI released the results of its updated Feasibility study
for the Lynn Lake project in Manitoba.
DETAILS
■
The results outline a project with an after-tax
NPV5% of $428M and IRR of 17% at the base-case
gold price assumption of $1,675/oz (USD/CAD
forex rate of 0.75:1).
• At $1,950/oz, the NPV increases to $670M and
IRR to 22%.
■
Key details include average annual production of
207Koz/year for the first 5 years (135Koz/year life
of mine), initial capital of $632M, total cash costs
of $722/oz and AISC of $814/oz. This is based on
a mineable resource of 47.6Mt @ 1.52gpT for
2.3Moz gold.
•
We note that both the G&A (C$7.20/T or 16%
of total operating cost per tonne) and
sustaining capital (~$80/oz) are a little light
compared to what we see most operations
running at. For a remotely located operation
(like this is) with a camp, we typically see G&A
running anywhere from 20% to 30% of total
operating cost per tonne. Sustaining capital
also has a wide range, anywhere from $100/oz
to $350/oz depending on the type of operation
(open-pit heap leach typically the lowest and
deep underground mines typically running the
highest). We think something in the range of
$100-$150/oz here is more likely.
CONCLUSION
Overall, we view this as an improvement from the 2017
Feasibility Study. It is a larger, longer life project and
only incorporates two of the deposits (Gordon and
MacLellan). AGI released an exploration update
Tuesday evening that outlined there is significant
upside potential for further resource expansion
(expanding Gordon and incorporating the other
satellite zones). AGI continues to note though that its
priority is the Phase 3+ expansion at Island and does
not anticipate spending any significant capital
developing Lynn Lake until the expansion is well
advanced. Lynn Lake currently represents 3% of our
NAV.
When we compare the Lynn Lake project to those in our
Takeover Twenty (a compilation of development
projects anywhere from PEA to feasibility), Lynn Lake
does stack up at the lower end of the IRR spectrum, the
median after-tax IRR @ $1,900/oz is 27%, but for a
Canadian project we view anything over 20% as
attractive. Another metric to compare the IRR to is the
“IRR to Acquirer” which assumes a 30% takeover
premium to the current share price is currently a
median of 15%, indicating that from an IRR perspective
building Lynn Lake would be the more attractive option
versus acquiring a development asset. However, it is
important to keep in mind that IRR isn’t the only
deciding factor when it comes to making an acquisition,
often it boils down to whether a deal is accretive or
fills a strategic gap. Overall, for AGI it gives it a
development project that could be a third Canadian
source for production and possibly boost production
well over 700Koz/year in the future.
We continue to believe AGI should trade at a premium
owing to its low jurisdiction risk, growth, long life
mines (we estimate both Island and Young Davidson
producing beyond 2035) and strong balance sheet.
AGI is currently trading at 1.0x NAV (vs. peers at 0.76x)
and at 11.4x 2024e cash flow (vs. peers at 5.0x). Shares
are +13% YTD versus peers +9%.h.
Source: Paradigm Capital
18 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
INSIGHTS FROM ETFs
REVISITING EMERGING MARKETS:
Opportunities and Risks in the Post-Pandemic World
BARKHA RANI, CFA | INVESTMENT ANALYST | 5i RESEARCH
E
merging markets have long been a topic of
interest for investors seeking higher growth
opportunities and diversification in their
portfolios. These economies often are characterized
by rapid development, expanding middle-class
populations, and, sometimes, regulatory limitlessness.
In the aftermath of the COVID-19 pandemic, global
dynamics have shifted, presenting new opportunities
and risks for investors in emerging markets. In this
article, we will explore the current start of emerging
markets, their growth prospects, characteristics of the
market and Exchange-Traded Funds (ETFs) to consider
for this space.
Currency and Geopolitical Risks
Investing in emerging markets comes with inherent
risks, including currency volatility and geopolitical
uncertainties. Fluctuations in exchange rates can
significantly impact returns for foreign investors.
Additionally, political instability or conflicts can
disrupt economic activities and negatively affect
investments. Investors must carefully assess and
diversify their portfolios to mitigate these risks.
Following are a few of the ETF options we think
investors can consider:
Vanguard FTSE Emerging Markets All Cap Index ETF
(VEE)
The New Normal for Emerging Markets
During and post-pandemic, emerging markets pose
unique challenges and opportunities. In many cases,
these economies have demonstrated remarkable
resilience and adaptability, navigating the pandemicinduced economic disruptions more effectively than
anticipated. While some sectors, such as technology
and e-commerce, thrive during lockdowns, others, like
tourism and hospitality, faced severe setbacks.
Economic Recovery and Growth Prospects
The post-pandemic recovery has been a mixed bag for
emerging markets. While some countries experienced
a sharp rebound due to robust government stimulus
and demand for commodities, others faced lingering
challenges like mounting debt and slow vaccination
rates. For investors, understanding the specific growth
prospects and economic policies of individual emerging
market economies is essential to identify promising
investment opportunities.
This ETF tracks the FTSE Emerging Markets All Cap
China A Inclusion Index. It invests primarily directly
or indirectly in large-, mid- and small-capitalization
stocks of companies located in emerging markets. The
fund holds nearly 5,729 stocks from 28 emerging market
countries with the top five regions being China at 32%,
Taiwan at 18.4%, India at 18.1%, Brazil at 6.6%, and
Saudi Arabia at 4.5%.
By market-cap, nearly 57% of the total exposure
comes from large-cap, 23% from mid-cap, and the
remainder from small-cap. While the ETF offers
exposure across all sectors, the top exposures are
currently reserved for Technology 23%, Financials
21%, and Consumer Discretionary 13%. The top three
holdings are no surprise, with Taiwan Semiconductor
Manufacturing at 5.2%, the world’s largest independent
semiconductor foundry, which is a factory for
semiconductor fabrication. Tencent Holdings at 3.6%,
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 19
is one of the highest-grossing multimedia companies
in the world based on revenue and operates and owns
WeChat and Riot Games. Alibaba Group at 2.4% is
China’s largest e-commerce company and is often
referred to as the “Chinese Amazon”.
BMO MSCI Emerging Markets Index ETF (ZEM)
ZEM also tracks the MSCI Emerging Markets Index,
with the difference from XEM that it directly owns most
of the holdings, making it slightly more tax-efficient
for some registered accounts. The fund also holds
exposure to the iShares MSCI Emerging Markets ETF
The fund manages nearly $1.7 billion in assets while
EEM listed on the U.S. markets but at a much lower
charging a Management Expense Ratio (MER) of 0.24%.
weight. EEM is held at a 6% weight at ZEM. Apart
The distribution is paid quarterly with an annual yield
from EEM, the top three company exposures include
of 3.0%. VEE has returned 5.8% so far this year.
Taiwan Semiconductor Manufacturing at 6%, Samsung
iShares MSCI Emerging Markets Index ETF (XEM)
Electronics at 4%, and Tencent Holdings at 4%. Alibaba
Group and Reliance Industries
XEM replicates the performance
round out the top five holdings.
of the MSCI Emerging Markets Index,
Investing in emerging
which captures large and mid-cap
By sector, the largest exposures
markets can offer
representation across 24 emerging
come from Financials at 18%,
markets countries. The index, with
significant growth
Industrials at 16%, and Healthcare
nearly 1425 constituents, covers
at 14%. The sector exposure differs
potential and
approximately 85% of the free floatslightly from that of XEM. The top
adjusted market capitalization in
diversification benefits five country exposures are China
each country. It defines emerging
28%, Taiwan 16%, India 13%, South
to investors. However,
market countries as those that are
Korea 12%, and Brazil 5%.
open and accessible to foreign
it is not without its
The fund manages about $1.4
investors, are not generally
billion in assets and charges an MER
considered as part of the developed
challenges and risks.
of 0.28%, much lower than XEM. The
markets universe, and do not belong
annual distribution yield currently
to countries undergoing a period
stands at 2.75%, with an annual distribution. So far
of extreme economic (for example, hyperinflation) or
this year, the fund has returned 6.3%.
political instability (example: civil war).
This ETF holds its U.S.-listed alternative EEM and
allows Canadian investors to participate in the index.
XEM is not Canadian dollar hedged. XEM’s top regional
exposures are China 30%, Taiwan 15%, India 14%,
South Korea 12%, and Brazil 6%. The top three holdings
include Taiwan Semiconductor Manufacturing at 6%,
Tencent Holdings at 4%, and Samsung Electronics
at 4%, a South Korean multinational corporation
which is the world’s largest manufacturer of mobile
phones and smartphones and semiconductor memory
manufacturer. Alibaba Group and Reliance Industries
come in next, rounding out the top five holdings.
The top three sector exposures are Financials 22%,
Technology 20%, and Consumer Discretionary 14% .
The fund is much smaller than VEE and manages nearly
$255 million in assets while charging an MER of 0.81%.
The trailing yield stands at 1.9% with semi-annual
distribution. Year-to-date, the fund has returned 6.5%.
Investing in emerging markets can offer significant
growth potential and diversification benefits to
investors. However, it is not without its challenges
and risks. As the world navigates the post-pandemic
landscape, understanding the evolving dynamics of
emerging markets is essential for making informed
decisions. By carefully analyzing individual economies,
sectoral opportunities, and geopolitical risks, investors
can identify ETFs that align with their investment goals
and risk tolerance. Combining prudent research with a
long-term investment horizon will position investors to
capitalize on the exciting opportunities that emerging
markets present in the post-pandemic world.
Disclosure: Authors, directors, partners and/or officers of 5i
Research have a financial or other interest in XIT and ZRE.
20 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Women and Money
True Or False?
Debunking Investing
Myths
Rita Silvan
Small-Caps Outperform Large-Caps
groups rarely overlap. Note that large-cap value
portfolios are approximately 11 times more liquid.
Investors have been told that small-cap value stocks
offer a premium that is higher, on average, than the one
from large-cap value stocks. Small-cap value investors
must necessarily endure more volatility, potentially
higher trading costs due to illiquidity, and a higher risk
of permanent capital loss. We accept this as the cost of
business with the expectation of superior returns over the
long-term. But is this really the case?
2. Higher returns in small-cap value may be achieved
through a long-short strategy (long cheap stocks,
short expensive stocks).
A recent study by Jack Vogel, co-CIO and CFO of
Alpha Architect, debunks the small-cap value premium
myth. In his research paper, “Long Only Value Investing:
Does Size Matter”, published in The Journal of Beta
Investment Strategies, Vogel concludes that large-cap
value and small-cap value stocks earn similar returns in
a long-only strategy.
Vogel divides the top 3,000 largest companies from
the NYSE, AMEX, and NASDAQ into the 1,000 of the
largest and the next 2,000 into the small caps. To avoid
the distortion of using a market-cap portfolio, he focused
on comparing equal-weight large- and small-cap value
portfolios sorted by terciles (thirds), not deciles (tenths)
on the value metric of book value/market value. The result
was no significant difference between large-cap and smallcap value returns on an absolute and risk-adjusted basis.
Bottom line: In value investing, size does not matter.
Valuation matters.
Investor Takeaways:
1. Consider dividing value allocations across equalweight, large-cap value, and small-cap value.
Returns will be similar between the two, but there
is the benefit of greater diversification as the two
Stocks Outperform Bonds
Over The Long-Term
Recent research challenges the accepted wisdom that
stocks always outperform bonds over the long term.
By correcting for survivorship bias, including more
stocks, cap-weighting the returns in U.S. stocks since
the 1790s and building a more accurate bond set with
investment grade that would have been available to the
public during the earlier periods, Edward McQuarrie,
a retired professor in California, compared the returns
from equities vs. very long-dated (15+ years) and very
high-quality, corporate bonds. He concluded that returns
from stocks and bonds from 1802-2012 were much closer
than originally thought: 5.9% for stocks vs. 4.1% for
bonds. While it holds true that stocks outperform bonds,
there are long periods, such as from 1793 to 1942, when
the returns from both asset classes are nearly the same.
(5.5% for stocks; 5.6% for bonds). The period of equity
outperformance occurred around the WWII period when
stocks trounced bonds from 1943-1982. (7.1% for stocks;
-1.3% for bonds)
Bottom Line: Sometimes stocks beat bonds, and
sometimes bonds beat stocks, and sometimes they
have similar returns. However, based on historical data,
there has never been a time when fixed income has
outperformed stocks to the same degree that equities
tend to outperform bonds. (Between 0%-5% during the
past 120 years.)
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 21
and interest rates, they respond
differently to economic growth and
unemployment figures. Positive
correlations are more likely when
inflation and interest rates are on
investors’ minds, whereas negative
correlations are more likely to occur
when slower economic growth
is more of a concern. Regarding
inflation, it is not the level of inflation
but the volatility of inflation that is
statistically significant.
Trailing Annualized 10Y Stock and Bond Returns, 1802–2022
Investor Takeaway:
Source: www.edwardfmcquarrie.com and Verdad analysis
Investor Takeaway:
Despite having higher volatility, stocks are more likely
to deliver higher returns over the long term. Capital gains
are also tax-advantaged compared to fully taxable coupon
payments.
Stocks And Bonds Are Always
Negatively Correlated
The period during the last two quarters of 2020 and the
first two quarters of 2021 represented the worst valuations
for these two asset classes in nearly 45 years, thus setting
up 2022 for the year that it was: one most investors would
like to forget. The U.S. Aggregate Bond Index dropped
13%, and the S&P 500 lost 18.1%.
Since the late 1990s, stocks and bonds have been
negatively correlated; holding both provided the
intended diversification benefits. It also provided some
encouragement to investors to buy richly valued equities
in the belief that losses in stocks
could be offset by gains in bonds.
However, data going back to 1927
shows that the relationship between
stocks and bonds is cyclical. In
other words, a negative correlation
is not set in stone. Since the Great
Depression of 1929, there have
only been two periods of long-term
negative correlation: 1956-1965 and
1997-2021.
1. After the severe correction
of 2022, the expected returns of
a 60/40 portfolio look brighter— barring an
unforeseen shock—with forward-looking returns
approaching recent average returns of around
6.7%, slightly below the 7.9% annualized returns
of the past 30 years. (Keeping in mind that there
are pockets of extremely high valuations in some
high-tech stocks at the moment.)
2. According to researchers, neutral and positive
correlations between stocks are bonds favour
equities and commodities such as oil. Negative
correlations tend to benefit Treasuries and
commodities such as gold.
Stocks Are Risky
Looking in the rearview mirror, one that projects as
far as the year 1900, you simply can’t beat equity returns.
The annually updated Credit Suisse Global Investment
Returns Yearbook, which tracks bond, bill, and equity
performance (after inflation), consistently shows equity
outperformance. For the period 1900-2022, U.S. stocks
Bottom Line: Researchers have
observed that while stocks and bonds
have a similar sensitivity to inflation
22 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
delivered an arithmetic mean return of 8.3%
(vs. Canada with 7.0%).
Jeremy Seigel, professor of finance at
Wharton School and author of Stocks for
the Long Run, has famously observed that,
while stocks are more volatile than other
asset classes in the short run, they become
less risky and a better inflation hedge over
the long-term. (The definition of “risk” is
downside risk vs. standard deviation.) This
time-based effect of lower risk over longer
time horizons is often referred to as “time
diversification.” Stocks outperform bonds
due to two factors: the equity risk premium
for owning them and their higher growth Source: https://verdadcap.com/archive/do-stocks-always-outperformrates, which are driven by inflation.
bonds#:~:text=McQuarrie%20also%20points%20to%20international,2021%20
and%205.5%25%20since%201972.
Bottom Line: While stocks may appear
riskier due to recency bias, historically,
they have been less risky than other asset classes on a
real, inflation-adjusted basis.
Investor Takeaway:
An allocation to quality equities is important in a
balanced portfolio to generate positive real returns and
provide an inflation hedge.
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Rita Silvan, CIM is a finance journalist specializing in
women and investing. She is the former editor-in-chief of
ELLE Canada and Golden Girl Finance. Rita produces
content for leading financial institutions and wealth advisors
and has appeared on BNN Bloomberg, CBC Newsworld, and
other media outlets. She can be reached at rita@ellesworth.ca.
Canadian MoneySaver Podcast
https://www.canadianmoneysaver.ca/TheMoneySaverPodcast
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 23
Insurance Planning
Life Insurance Planning
Versus Buying A Flat Amount
Of Coverage
Milan Topolovec
T
his article reviews how you should secure life
insurance, professional/executive disability
coverage and critical illness.
Perhaps you may want to review how
you acquired your life insurance coverage.
When I began my career in the life insurance profession
over forty years ago with London Life Insurance
Company, we were taught “Family Security Service”,
which was a simple life insurance planning service. At
that time, my client base came from the family market,
all sitting at the kitchen table and sometimes while the
family cat hung off my suit.
I decided quickly to educate myself to serve business
owners and professionals, which is where my client base
now comes from. Life insurance, regardless of product
type, can be bought as an amount, for example, $500,000,
without any planning taking place. This method can work
for things like covering an outstanding mortgage and
loans of fixed liability. The problem with this method of
securing a “packaged” policy is that it may be too much
life insurance or, worse yet, not enough for what your
“wants” are.
We have people who call us to buy insurance such
as the individual who contacted me last week who was
looking for mortgage life insurance and said, “we have
never looked at life insurance before and need your help.”
Getting quotes for life insurance from all life insurance
providers can be obtained with a push of a button on
computer software that gets updated monthly.
cumbersome, lengthy exercise, which certainly it is not.
I will walk you through the planning analysis and the
information you will need to provide to your insurance
advisor.
The immediate needs that you want to cover in case
of death:
■
Mortgage Balance.
■
Loans.
■
Burial.
■
Education for children or spouse.
■
Money for charity.
■
Money to support elderly parents.
Remember your monthly income will cease if you die.
Considered what amount of continued monthly income
that will be required:
■
Calculate 60% of take-home pay as a required
amount amount of income.
■
Calculate the number of years you want your
spouse to receive this income-example 20 years.
■
Choose a net interest rate that the lump sum of
money must earn to provide the required income.
Next, list the assets that are available to offset the
amount of money required to meet your wants;
With the individuals that we work with, there is a
Discovery Document they complete which has a needs
analysis for life insurance as well their family business
information.
■
Guaranteed Investment Certificates (GICs).
■
Tax Free Savings Accounts (TSFA).
■
Existing in-force life insurance policies.
You may be thinking completing a needs analysis is a
■
Stocks and bonds.
24 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Sometimes people ask about Registered Retirement
Savings Plans (RRSPs) and the selling the family home
which is something we recommend NOT DOING.
This information can be gathered on a single worksheet
which can be sent to you to complete, or you can speak
with your insurance advisor to complete it for you.
Planning your life insurance needs will ensure your loved
ones will be taken care of if there is a death. In a business,
life insurance protects shareholders and guarantees the
continuity of a business.
Professional/executive disability coverage can also be
planned out rather than purchased as a package. These
coverages are based on your average income for the last
two years. Income sources on these policies that qualify for
the level of coverage include salary, bonus, and dividends.
The waiting period for these policies is usually 30, 60
and 90 days, before your coverage begins. Shorter waiting
times equate to a higher premium. These policies also
allow you to add riders for additional benefits, such as:
■
Cost of Living – increases the monthly benefit
once disabled.
■
“Own Occupation”.
■
Residual Coverage.
For example: If you become disabled and require
assistance of a wheelchair, you may need renovations to
adjust to your situation, such as counters that are now
too high. You no longer may be able to drive your current
automobile without extensive modifications, or you may
need to purchase a new vehicle modified for your needs.
Customizing your disability coverage is what needs to
be done to meet your personal needs.
Critical illness insurance, in my opinion, is the best
coverage you can get. It is five times more likely to require
a critical illness benefit than you dying before age 75. This
coverage can be acquired for up to $3 Million dollars
maximum with select insurance carriers.
This coverage pays a lump sum benefit after a diagnosis
of one of twenty-four covered conditions. Cancer, heart
attack and stroke are the most frequent illnesses being
paid out by insurance companies.
It is more challenging to calculate the amount of
critical illness insurance you should have than life
insurance or professional/executive disability. We know
individuals who have paid $15,000 a month for cancer
medication and other treatments. In the U.S., that can
cost $1-2Million dollars. Lump sum payouts from a
critical illness policy can be used for whatever you choose.
We have a client who is a lawyer and qualified for
$14,000 of monthly coverage. However, he wanted to
get $9,000 as he felt that this was the net income he and
his family wanted to receive at the time of his disability.
We suggest working with a qualified professional
insurance advisor to “plan out your insurance,” to save
you money in the long run, give you peace of mind and
leave nothing to chance.
I caution people who say, “I will not need as much
income because my cost will decrease at the time of
disability.” In fact, your costs can increase.
Milan Topolovec, B.A., TEP, CHS, RCIS, CLU, President
& CEO TK Financial Group Inc.
You could play
connect the dots...
...Or you can advertise your
business here!
CONTACT US TODAY AT
advertising@canadianmoneysaver.ca
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 25
Taxation
Why Getting A Tax Refund
Is Worse This Year,
And How To Prevent It
Julie Petrera
A
tax refund is never something to be excited
about from a financial perspective. And
learning that you’re expecting a tax refund
this year is worse than usual. A refund
means that the Canada Revenue Agency (CRA) is
returning the tax that you over-paid. You effectively lent
this money to them, interest-free, for up to 16 months.
And now they’re giving it back—with less purchasing
power.
Why Does This Happen?
Refunds are the result of you paying more tax
throughout the year than you needed to. For employees,
your payroll department assumes that all the money you
make is taxable, which is true until you do something to
generate a deduction or credit. Deductions and credits
reduce your tax payable, and the bill gets settled when
you file a return the following year. Examples of these
include Registered Retirement Savings Plan (RRSP)
contributions, childcare expenses, medical expenses,
spousal support payments, employment expenses, interest
charges on investment loans and charitable contributions.
The Opportunity Cost
Of A Tax Refund:
To calculate the opportunity cost of the refund,
consider what you could have otherwise done with the
cash that you lent to the CRA in the form of the taxes
paid. For example, if you have debt, the cost of not
applying this cash to the debt is equivalent to the interest
rate on that debt. Depending on to whom you owe
money, it could range from 7.2% if you are borrowing
at the prime lending rate from your bank to over 20%
if you have credit card debt. The cost to borrow money
has significantly increased in the past 18 months; with
the prime lending rate more than doubling from 2.45%
in January 2022 to 7.2% in July 12, 2023. This more
than doubles the opportunity cost of lending money to
the CRA for free.
To put that in dollar terms, it depends on the amount
of the refund you get or the debt you would otherwise
have applied it to. The average tax refund in Canada is
$2,092 . On a refund this size, the opportunity cost of
the refund not applied to debt is roughly between $150
and $420.
The Real Cost Of A Tax Refund
The calculation above doesn’t include inflation erosion,
which further reduces the value of your refund when you
finally receive it. We are also in a historically high period
of inflation, which further erodes the value of the tax
refund this year compared to past years. With inflation
of 6.8%, a refund of $2,0921 is only worth $1,950 in real
terms by the time you receive it, reducing its purchasing
power by $142. And if you receive a refund every year,
these opportunity costs add up.
How To Prevent Tax Refunds
Do not stop contributing to your RRSP or donating
to your favourite charity, instead let CRA know that you
would like to cancel the interest and inflation-free loan
contract that they have set up with you. The form is
called T1213, and it allows you to demonstrate how you
are reducing your taxable income now and request that
your tax withheld be adjusted accordingly. The CRA will
use the info you provide to reduce your tax withheld at
source by the amount you would be refunded next year
over the number of pay periods remaining in the current
calendar year. This results in higher net pay immediately,
thereby transferring the purchasing power and the time
value from CRA back to you now rather than waiting
until the following year when you settle your tax bill.
26 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
Apply The Savings
Now that you’re keeping the extra cash in your hands,
here are some ways you might want to apply it toward
your financial goals:
■
■
Pay off debt starting with the debt with the highest
interest rate first. This will save you on interest all
year long—compounded! An otherwise refund of
$2,092 put toward debt would yield an additional
$150-$420 in interest savings.
Increase your monthly mortgage payments.
Additional payments are applied entirely to the
principal, which reduces the cost of borrowing
and helps to pay down the mortgage faster. A
mortgage-payment increase of $1752 per month
could save you $30,000 in interest over 20 years
and help you pay off your mortgage about two
years sooner.3 (Contact your mortgage holder to
see if this is an option).
Contribute the savings monthly to your RRSP* or
Tax-Free Savings Account (TFSA). This can be set
up to happen automatically. Additional advantages
to systematic investing include dollar-cost
averaging and the extra time the funds are invested
and earning returns tax-deferred or tax-free,
compared to making a lump sum contribution at
the end of the year with your tax refund.
Donate to your favourite charity*. This will
generate a tax credit and help reduce your taxes
payable next year.
■
*If you make regular contributions to your RRSP
or to a charity, complete and submit a T1213
form.
Don’t Let It Happen Again
When thinking about what to do with your tax refund
this year – think about completing at T1213 form and
reducing it.
Julie Petrera, MBA, CFP, CIM is a certified financial planner.
@petrerajulie
1 https://www.canada.ca/en/revenue-agency/corporate/aboutcanada-revenue-agency-cra/individual-income-tax-returnstatistics.html
2 $2,092/12 months = $174.33 per month, rounded to $175
3
Based on a mortgage of $500,000, with 20 year amortization
remaining, with an interest rate of 5.5%, and monthly payments:
https://www.bankrate.com/mortgages/amortization-calculator/
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Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 27
Includes special dividends and prior to any recent cuts
TOP US DIVIDENDS - $2B MARKET CAP MINIMUM
over the last 12-month period.
Ticker
Name
COMT
ISHARES GSCI COMMODITY DYNAM
IEP
ICAHN ENTERPRISES LP
FRO
Market Cap
($)
Proj 12M
Dvd Yld (%)
Price:D-1
($)
P/E
–
4.13B
29.55
28.42
12.46B
23.70
33.75
–
FRONTLINE PLC
3.71B
16.77
16.70
5.59
AGNC
AGNC INVESTMENT CORP
6.09B
14.24
10.11
–
ARLP
ALLIANCE RESOURCE PARTNERS
2.55B
13.93
20.10
3.49
PDI
PIMCO DYNAMIC INCOME FUND
5.11B
13.85
19.10
–
PDBC
INVESCO OPTIMUM YIELD DIVERS
8.74B
13.10
14.72
–
NLY
ANNALY CAPITAL MANAGEMENT IN
9.88B
12.99
20.02
–
FSK
FS KKR CAPITAL CORP
5.66B
12.65
20.24
6.59
ARCH
ARCH RESOURCES INC
2.35B
12.21
130.02
2.84
QYLD
GLOBAL X NASD 100 COV CALL
6.73B
11.95
18.05
–
MPW
MEDICAL PROPERTIES TRUST INC
5.93B
11.69
9.92
10.13
PSEC
PROSPECT CAPITAL CORP
2.56B
11.29
6.38
7.48
CIVI
CIVITAS RESOURCES INC
6.06B
11.25
75.40
5.87
BSM
BLACK STONE MINERALS LP
3.64B
10.95
17.35
7.93
BXMT
BLACKSTONE MORTGAGE TRU-CL A
3.91B
10.93
22.70
14.35
BXSL
BLACKSTONE SECURED LENDING F
4.54B
10.89
28.27
9.01
AMBP
ARDAGH METAL PACKAGING SA
2.19B
10.87
3.68
22.91
IDV
ISHARES INTERNATIONAL SELECT
4.52B
10.75
27.06
–
ABR
ARBOR REALTY TRUST INC
3.31B
10.51
16.36
9.22
4.86B
9.94
10.06
7.44
10.88B
9.83
19.53
8.22
INVESCO SENIOR LOAN ETF
5.15B
9.70
20.96
–
CEQP
CRESTWOOD EQUITY PARTNERS LP
2.89B
9.53
27.50
15.59
GBDC
GOLUB CAPITAL BDC INC
2.36B
9.47
13.94
18.27
HTGC
HERCULES CAPITAL INC
2.41B
9.43
16.97
10.46
OBDC
BLUE OWL CAPITAL CORP
5.46B
9.42
14.01
8.80
ET
ENERGY TRANSFER LP
41.71B
9.34
13.28
10.12
STWD
STARWOOD PROPERTY TRUST INC
6.42B
9.32
20.59
10.57
SBRA
SABRA HEALTH CARE REIT INC
2.99B
9.27
12.94
457.91
IIPR
INNOVATIVE INDUSTRIAL PROPER
2.18B
9.26
77.77
13.56
DBEF
XTRACKERS MSCI EAFE HEDGED E
4.06B
9.04
35.68
–
SLG
SL GREEN REALTY CORP
2.37B
8.86
36.69
–
OMF
ONEMAIN HOLDINGS INC
5.48B
8.79
45.51
8.50
MPLX
MPLX LP
35.57B
8.73
35.53
9.82
DKL
DELEK LOGISTICS PARTNERS LP
2.11B
8.54
48.49
13.31
OHI
OMEGA HEALTHCARE INVESTORS
7.42B
8.46
31.68
58.88
SRLN
SPDR BLACKSTONE SENIOR LOAN
10.11B
8.37
41.59
–
KNTK
KINETIK HOLDINGS INC
5.13B
8.36
35.88
110.61
MO
ALTRIA GROUP INC
80.17B
8.32
45.18
8.84
AMLP
ALERIAN MLP ETF
6.47B
8.29
41.51
–
EXG
EATON VANCE TAX-MANAGED GLOB
2.54B
8.28
8.01
–
UTG
REAVES UTILITY INCOME FUND
2.22B
8.22
27.75
–
CHRD
CHORD ENERGY CORP
6.54B
8.18
157.43
5.77
HIW
HIGHWOODS PROPERTIES INC
2.58B
8.17
24.49
22.85
CSQ
CALAMOS STRAT TOT RETURN FD
2.25B
8.05
15.28
CWH
CAMPING WORLD HOLDINGS INC-A
2.62B
7.99
31.27
UTF
COHEN & STEERS INFRASTRUCTUR
2.22B
7.99
23.27
WES
WESTERN MIDSTREAM PARTNERS L
10.82B
7.98
28.18
10.21
CQP
CHENIERE ENERGY PARTNERS LP
25.16B
7.93
51.98
6.64
VZ
VERIZON COMMUNICATIONS INC
140.54B
7.81
33.43
7.00
OUT
OUTFRONT MEDIA INC
2.54B
7.77
15.44
21.91
T
AT&T INC
102.23B
7.76
14.30
6.05
WU
WESTERN UNION CO
4.54B
7.74
12.14
7.43
DNP
DNP SELECT INCOME FUND INC
3.83B
7.71
10.12
–
TFSL
TFS FINANCIAL CORP
4.13B
7.67
14.74
50.16
RITM
RITHM CAPITAL CORP
ARCC
ARES CAPITAL CORP
BKLN
28 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
21.32
The Investors Cheat Sheet
Let’s be honest, investing and saving can be confusing enough without all the industry jargon
and catchphrases out there. Let this cheat sheet help you cut through the jargon
and hopefully make reading financial literature a little more simplified.
Acronym
Term
Meaning
MER
Management Expense Ratio
Fees charged by a fund to pay expenses. Often one of the largest
charges and easiest expenses to reduce when investing.
ETF
Exchange Traded Fund
A low-cost fund that attempts to mirror a certain market or index
such as the S&P500. Options now include both passively and
actively managed.
Market Cap
Market Capitalization
Refers to the size of a company. Calculated as share price x
outstanding shares. Can be segmented into small, medium and
large capitalizations.
FE load
Front-End Load
Fees charged on a mutual fund investment at the time of initial
purchase. Also known as initial sales charge (ISC).
Yield
Dividend/Distribution yield
Annual dividend/distribution amount divided by the stock price or
fund price. Usually presented as a percentage.
P/E
Price-to-earnings ratio
A classic valuation metric and likely one of the most popular tools
amongst investors. Calculated as share price divided by earnings
per share.
EPS
Earnings Per Share
DRIP
Dividend Reinvestment Plan
Allows investors to automatically buy new shares with the dividend
paid by the investment often commission free and at a discount.
SPP
Share Purchase Plan
Allows for the purchase of additional company shares (through the
company) usually without commissions and at a discount, subject
to certain limits.
ROE
Return on Equity
Essentially tells an investor what sort of return was made on the
equity within a company.
CAGR
Compound Annual Growth Rate
A measure of the average annual growth rate of an investment
over a specified period of time, considering compounding.
Bull/Bear
Bull/Bear Market
A period of sustained rising/declining prices in the financial
markets, characterized by investor optimism/pessimism.
Blue-Chip
Blue-Chip Stocks
Shares of well-established, financially stable, and reputable
companies with a history of reliable performance.
IPO
Initial Public Offering
The first time a private company offers its shares to the public,
allowing it to be traded on the stock exchange.
DCA
Dollar-Cost Averaging
A strategy where an investor regularly invests a fixed amount of
money in an investment at regular intervals, regardless of market
conditions.
OTC
Over-the-Counter
Refers to securities that are not traded on a formal stock exchange
but are instead traded directly between parties.
Crypto
Cryptocurrency
Digital or virtual currency that uses cryptography for security and
operates independently of a central authority, such as Bitcoin (BTC)
or Ethereum (ETH).
The amount of money made for each share of the company.
Calculated as net income divided by shares outstanding.
Back-end load or deferred sales charge (DSC) is banned since 2020.
Low load or low sales charge (LSC), a variation of DSC is also banned.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 29
Q: I'm wondering if the management fees on ETFs and
Mutual funds are tax deductible? My tax software ask for
"Management and safe custody fees" and it tweaked my
interest and this question.
A: No; managed account fees are (as in a discretionary
account held at a brokerage) but ETF and mutual fund
fees are not. But they are deducted from asset value, so
do lower realized gains, so in a way there is some (minor)
tax impact embedded already.
5I RESEARCH
Q: As Great Grandparents is it advisable, to set up a
Life Insurance Policy for a new born Great Grandchild?
If so, what type would you recommend? If not,what other
monetary gift would be useful?
Both of these products have a tax-deferred savings
component which the child can use for an expense as
they get older: i.e. post secondary education ( a good
supplement to an RESP), a down payment on a new home,
a trip, or any other expense they have.
No income tax is payable on the growth of the cash values
while it remains in the policy.
Guaranteed payment plans 10, 15 or 20 years.
You can also add rides to increase their insurance
amount such as: Term insurance rider or the Guaranteed
Insurability Option (GIO) rider which guarantees the child
can purchase more insurance later on in life regardless of
their health situation.
The grandparent or parent should own this plan outright
with the child as the insured person. This is the proper
way to set it up.
Yes, I would recommend life insurance for a child for
several reasons:
When the child gets older and more responsible, you can
then transfer the ownership of the policy between the
parent or grandparent and the insured child without tax
implications.
Starting an insurance plan is easy and affordable. The
younger the child the better the insurance rate and most
children qualify automatically health-wise.
Known as a non-arm’s length transfer in section 148 (8)
of The Income Tax Act, that allows for a tax-free rollover
to a child.
Protection for life-changes pertaining to health, jobs, or
hobbies could make a child uninsurable when they get
older. Having insurance early can protect their future
insurability.
Once the child (the insured) becomes owner, then any
taxable gain on surrender of any of the cash values will
be attributed to the child and not the original owner, the
parent or grand-parent.
The product I would use is Whole Life Participating
insurance that returns dividends or Universal Life
insurance.
This is a tax-effective way to take cash out of the plan
since the child , the new owner, will most likely be in a
low marginal tax bracket just coming out school.
A:
30 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
If the new owner decides not to take any cash, then
that’s fine too. They will have a life insurance plan that
continues to grow in cash and grow in insurance and
could be fully paid-up requiring no more payments.
Once Upon Wall Street – Peter Lynch
These are some of the benefits of starting an insurance
plan for your children or grandchildren and there are
more.
Check out my article in Canadian MoneySaver titled, “The
Christmas Gift That Keeps on Giving” for more information.
RINO RACANELLI
WWW.CORPORATELIFEINSURANCE.CA
Q: In your June 2023 issue, page 19, Barkha Rani says
"First, RESP contributions are tax-deductible, up to a
certain limit, meaning parents can save money on their
taxes."
It has always been my understanding that RESP
contributions are NOT tax-deductible. Has something
changed? Please clarify.
A:
Thank you for reaching out and raising this concern.
I understand your confusion, and we are happy to provide
some clarification on the matter.
In the June issue of Canadian MoneySaver, there has been
a miscommunication or misunderstanding regarding
RESP (Registered Education Savings Plan) contributions.
Your understanding is correct: traditionally, RESP
contributions are **not** tax-deductible.
We apologize for any confusion this may have caused. If
you have any further questions or concerns, please don't
hesitate to reach out. We strive to provide accurate and
reliable information to our readers, and we appreciate
your diligence in seeking clarification.
LANA SANICHAR, EDITOR-IN-CHIEF
CANADIAN MONEYSAVER
Q: Where would I go to learn more about stock
analysis? Do you have any recommended reading?
A:
We think investors could improve stock analysis
skills through reading; here are a few class ones that
we think could help investors analyze companies more
efficiently:
100-Baggers
– Chris Mayer
Outsiders
– William Thorndike
Where the Money Is
– Adam Seessel
In addition, reading famous investor letters (Buffett) and
business biographies could be helpful in understanding
the dynamics of different industries.
5I RESEARCH
Q: Are all-in-one ETFs worth it?
A: All-in-one ETFs are designed to provide diversified
exposure to multiple asset classes in a single fund
offering simplicity and convenience for investors. They
can be suitable for those seeking a hands-off approach
to investing. However, assessing their worth depends
on individual goals, risk tolerance, and investment
preferences. It's important to research the fund's holdings,
fees, and historical performance before deciding if they
align with your financial objectives.
5I RESEARCH
You must accompany your inquiry
with your Membership Number (ID)
and your e-mail to have your
question reviewed.
Inquiries are responded to directly
and the Q&A may be published here later.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 31
Real world confidential portfolio discussions
Portfolio Confidential
Barbara Stewart
Do you have questions about your own investment portfolio? I have recently set up The Rich Thinking®
Financial Advice Hotline. This will be a win/win: you get a free 30-minute confidential Zoom chat offering
an independent, unbiased perspective on your financial situation with no sales pitch! In exchange, I get
to use the anonymized data that will come from these conversations to make my Rich Thinking research
even better. Email me to book your Zoom discussion: barbara@barbarastewart.ca
I
haven't been paying attention to my investment
portfolio as I've been too busy running my
own business. I recently took some time off
to recover from surgery, and I reviewed my
personal finances. On the positive side, my wife
and I have both accumulated sizeable Registered
Retirement Savings Plans (RRSPs)—we have
been diligent savers for the past 40 years. On
the negative side, I really don't know how well
our investments have performed for us. Over the
years, we've always had our accounts with one
of the big banks, but there has been a revolving
door with investment advisors at our bank. I'd
like to understand how we are actually doing.
I
am always thrilled to hear when investors are taking
stock (as it were!) of their investment performance.
At a guess, your bank has not provided you with your
annual rate of return net of fees from the inception date
of your portfolio. A great first step would be to get in
touch with your current contact person and request this
information. Ideally, they will be able to provide you with
your rate of return net of fees for various time periods
such as this year to date, three years, five years, ten years
and from inception (in your case, 40 years ago.) This is a
completely normal request and part of what every money
manager offers.
The relevant market benchmarks should also be provided
for the same time periods as a comparison. A relevant
benchmark is one that is a) investable and b) widely
recognized and accepted. For example, it is not relevant
to measure your equity manager's performance against
a Guaranteed Investment Certificate (GIC) return, a
manager with a different style (such as a hedge fund) or
an entirely different market (real estate, for example).
Investment statements usually show standard indices for
equity accounts (TSX, S&P, for example) as points of
comparison. How has your portfolio performed? If you
can obtain your rate of return net of fees from inception
along with the relevant benchmark information, you will
have a clear idea of “how you are actually doing.”
While performance returns are understandably top of
mind for most investors when it comes to measuring
investing success, there are other factors that deserve
consideration:
1. Results versus plan
When results are strong, it is tempting to pat ourselves
on the back, relax and enjoy our now-larger portfolios.
But it is important to compare your results with the
plan you made at the start of the year. Did you achieve
your investment objectives? Review your portfolio in
the context of your original investment objectives.
Whether or not you have a professional money manager,
you should have an Investment Policy Statement (IPS)
that outlines your objectives and constraints. The
most common points addressed in the IPS are return
requirements, risk tolerance, time horizon, legal and/or
regulatory concerns, tax considerations, liquidity (need
for cash during the year) and unique preferences, such
as "no tobacco stocks."
2. Was the investment process adhered to?
Proper portfolio management involves patience and
discipline. Most good advisors commit to many of the
following portfolio management disciplines: balanced
weightings for each company and sector, low portfolio
turnover, regular rebalancing and active cash management.
Do a check: Were there any investment decisions made
during the year that were not aligned with your plan?
Be sure to review the agreed-upon process with your
advisor. If there are gaps, this might imply negligence or
alternative motives, like an advisor who is maximizing
32 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
their fees rather than your returns. The biggest value-add
an advisor can offer is the discipline to remove emotion
from the investment process and employ proper portfolio
management techniques.
Unfortunately, it sounds like you have not received
consistent proactive communication or detailed
information about your investment portfolio. It is time
to take charge (better late than never!), and you should
request a meeting to review and discuss all these factors
in great detail.
M
y husband and I have Tax-Free Savings
Plans (TFSAs) and RRSPs, and we are
interested in growing our wealth as much as
possible over the next 15 years until we retire.
Our neighbour is a nice guy and a financial
advisor, and he has been in charge of our
portfolio strategy for about five years now. Can
you review our list of holdings and offer a second
opinion?
Canada Life RRSPs and TFSAs
MERs
International Growth Fund
$211,590.39 ....................................... 2.53%
Canadian Focused Div Fund
$121,167.30 ....................................... 2.33%
Moderate Allocation Fund
$158,654.85........................................ 2.36%
Advanced Allocation Fund
$189,935.50........................................ 2.95%
American Growth Fund
$112,724.30........................................ 2.98%
Money Market Fund
$12,037.89.......................................... 0.91%
Global Equity Fund
$122,347.23 ....................................... 2.75%
Canadian Fix Inc Bal II Fund
$163,852.54 ....................................... 1.86%
I
am sure your neighbour is a very nice guy, but I have
to say right out of the gate: that isn't a “portfolio
strategy”; it's an oversight! Yes, most of your mutual
funds are growth-oriented, but there is no evidence that
there has been any thought put into why each of the
eight different funds is there or why the amounts in each
fund vary considerably. The management expense ratios
(MERs) are among the highest in the industry. It looks
to me that you have been dealing with a salesman who
makes his money selling mutual funds but isn't qualified
to offer proper investment advice. What to do?
Fortunately, you have a portfolio that is worth over a
million dollars, so this gives you the option of working
with a discretionary money manager. Discretionary
management is a form of investment management in
which buy and sell decisions are made by a portfolio
manager or investment counselor for the client's
account. The term "discretionary" refers to the fact
that investment decisions are made at the portfolio
manager's discretion. This means that the client must
have the utmost trust in the investment manager's
capabilities. Discretionary investment management
can only be offered by individuals who have extensive
experience in the investment industry and advanced
educational credentials, with many investment managers
possessing one or more professional designations, such as
Chartered Financial Analyst (CFA). For growth-oriented
investors such as you and your wife, the average annual
management fee would be 1.5%, which is much lower
than what you're paying now, and you would get more
personalized service.
Another option would be to manage your own portfolio.
Open online accounts with your bank and set up a simple
strategy using Exchange-Traded Funds (ETFs). Choose
three or four ETFs to offer broad global market exposure
and charge MERs that average around 0.5%. Use
Google to research your options. In my own portfolio,
I am equally weighted in EFA (iShares MCSI EAFE),
QQC.F (Invesco Nasdaq 100), VUN (Vanguard US
Total Market), and I have just a small amount (3%) of
XIU (iShares S&P/TSX 60) given that Canada's global
index weight is only about 2-3% of the global market
cap. The MERs in my four ETFs are 0.33%, 0.20%,
0.17% and 0.18%. There is no scientific rationale for my
ETF selections other than that I want low fees and global
diversification with a bent toward the technology sector.
Neighbours are great for favours like taking out your
recycling bin or borrowing a cup of sugar, but I'd steer
clear of asking them for investment advice.
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 33
DATE AS OF AUGUST 3, 2023
TSX 60 - Constituents listed by Dividend Yield
Name
RIC
Annualized
Dividends ($)
Dividend Yield
(%)
Dividend 5-Year
Growth Rate (%)
Latest Dividend
Pay Date
Latest Dividend
Ex-Date
TC Energy Corp
Enbridge Inc
BCE Inc
Bank of Nova Scotia
Pembina Pipeline Corp
TRP.TO
ENB.TO
BCE.TO
BNS.TO
PPL.TO
3.72
3.55
3.87
4.24
2.67
7.85
7.35
6.81
6.47
6.46
8.09
7.35
5.10
10.79
4.71
31-Oct-2023
01-Sep-2023
17-Jul-2023
27-Jul-2023
30-Jun-2023
28-Sep-2023
14-Aug-2023
14-Jun-2023
04-Jul-2023
14-Jun-2023
Telus Corp
T.TO
1.45
6.18
6.49
04-Jul-2023
08-Jun-2023
Canadian Imperial Bank of Commerce
Manulife Financial Corp
Power Corporation of Canada
Algonquin Power & Utilities Corp
Emera Inc
Suncor Energy Inc
Bank of Montreal
Brookfield Infrastructure Partners LP
Canadian Natural Resources Ltd
Toronto-Dominion Bank
Sun Life Financial Inc
Royal Bank of Canada
Fortis Inc
National Bank of Canada
BROOKFIELD ASSET MANAGEMENT LTD
CM.TO
MFC.TO
POW.TO
AQN.TO
EMA.TO
SU.TO
BMO.TO
BIP_u.TO
CNQ.TO
TD.TO
SLF.TO
RY.TO
FTS.TO
NA.TO
BAM.TO
3.48
1.46
2.10
0.58
2.76
2.08
5.88
2.03
3.60
3.84
3.00
5.40
2.26
4.08
1.70
6.08
5.56
5.54
5.40
5.23
5.05
4.86
4.49
4.45
4.43
4.32
4.16
4.07
3.95
3.93
5.18
10.17
7.02
9.94
4.66
7.99
4.24
4.42
23.03
8.66
9.60
6.51
5.95
1.16
--
28-Jul-2023
19-Jun-2023
01-Aug-2023
14-Jul-2023
15-Aug-2023
26-Jun-2023
28-Aug-2023
30-Jun-2023
05-Jul-2023
31-Jul-2023
30-Jun-2023
24-Aug-2023
01-Sep-2023
01-Feb-2023
30-Jun-2023
27-Jun-2023
23-May-2023
29-Jun-2023
29-Jun-2023
31-Jul-2023
02-Jun-2023
27-Jul-2023
30-May-2023
15-Jun-2023
07-Jul-2023
30-May-2023
25-Jul-2023
18-Aug-2023
22-Dec-2022
30-May-2023
Canadian Tire Corporation Ltd
CTCa.TO
6.90
3.82
17.61
01-Sep-2023
28-Jul-2023
Rogers Communications Inc
Hydro One Ltd
Agnico Eagle Mines Ltd
RCIb.TO
H.TO
AEM.TO
2.00
1.19
2.12
3.44
3.21
3.20
0.82
4.90
32.35
03-Oct-2023
30-Jun-2023
15-Jun-2023
07-Sep-2023
06-Jun-2023
31-May-2023
Nutrien Ltd
NTR.TO
2.82
3.15
--
14-Jul-2023
29-Jun-2023
Magna International Inc
MG.TO
2.44
2.92
11.23
02-Jun-2023
18-May-2023
Restaurant Brands International Inc
QSR.TO
2.92
2.89
22.59
06-Jul-2023
21-Jun-2023
Canadian Apartment Properties Real Estate
Investment Trust
CAR_u.TO
1.45
2.85
2.65
15-Aug-2023
28-Jul-2023
Imperial Oil Ltd
IMO.TO
2.00
2.81
21.85
01-Oct-2023
31-Aug-2023
Saputo Inc
Kinross Gold Corp
Gildan Activewear Inc
Barrick Gold Corp
Open Text Corp
Intact Financial Corp
Cenovus Energy Inc
SAP.TO
K.TO
GIL.TO
ABX.TO
OTEX.TO
IFC.TO
CVE.TO
0.72
0.16
0.99
0.53
1.29
4.40
0.56
2.60
2.57
2.44
2.40
2.32
2.27
2.22
2.71
-13.47
39.05
13.57
9.34
13.61
27-Jun-2023
15-Jun-2023
19-Jun-2023
15-Jun-2023
23-Jun-2023
30-Jun-2023
29-Sep-2023
19-Jun-2023
31-May-2023
23-May-2023
30-May-2023
01-Jun-2023
14-Jun-2023
14-Sep-2023
Canadian National Railway Co
George Weston Ltd
Metro Inc
CCL Industries Inc
Loblaw Companies Ltd
Thomson Reuters Corp
Tourmaline Oil Corp
Wheaton Precious Metals Corp
CNR.TO
WN.TO
MRU.TO
CCLb.TO
L.TO
TRI.TO
TOU.TO
WPM.TO
3.16
2.85
1.21
1.06
1.78
2.60
1.04
0.80
1.99
1.88
1.71
1.68
1.54
1.52
1.52
1.39
12.17
7.08
11.10
15.85
8.11
4.17
-13.60
29-Sep-2023
01-Jul-2023
30-May-2023
30-Jun-2023
01-Oct-2023
15-Sep-2023
30-Jun-2023
02-Jun-2023
07-Sep-2023
14-Jun-2023
09-May-2023
15-Jun-2023
14-Sep-2023
16-Aug-2023
14-Jun-2023
18-May-2023
Franco-Nevada Corp
Teck Resources Ltd
Alimentation Couche-Tard Inc
FNV.TO
TECKb.TO
ATD.TO
1.81
0.50
0.56
0.95
0.87
0.84
7.92
19.16
21.16
29-Jun-2023
29-Sep-2023
21-Jul-2023
14-Jun-2023
14-Sep-2023
06-Jul-2023
Brookfield Corp
BN.TO
0.37
0.83
8.45
30-Jun-2023
30-May-2023
WSP Global Inc
Waste Connections Inc
Canadian Pacific Kansas City Ltd
FirstService Corp
First Quantum Minerals Ltd
WSP.TO
WCN.TO
CP.TO
FSV.TO
FM.TO
1.50
1.35
0.76
1.20
0.21
0.83
0.72
0.70
0.57
0.55
0.00
14.81
11.68
11.46
83.84
15-Jul-2023
24-May-2023
30-Oct-2023
07-Jul-2023
19-Sep-2023
29-Jun-2023
09-May-2023
28-Sep-2023
29-Jun-2023
25-Aug-2023
Dollarama Inc
DOL.TO
0.28
0.33
8.57
04-Aug-2023
06-Jul-2023
Cameco Corp
Constellation Software Inc
Shopify Inc
CGI Inc
CAE Inc
CCO.TO
CSU.TO
SHOP.TO
GIBa.TO
CAE.TO
0.12
5.31
----
0.26
0.19
----
(21.40)
0.80
----
15-Dec-2022
11-Jul-2023
----
29-Nov-2022
19-Jun-2023
----
Source: Thomson Reuters
* Due to pace of changes to dividends, yield may not reflect rates in real-time.
34 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
189.815
CTC.A
40.675
79.83
27.5
94.05
30.77
EIF
FTS
H
IMO
MFC
NA
RY
SLF
SU
SPB
TD
T
Exchange Income Corp
Fortis
Hydro One
Imperial Oil
Manulife
National Bank
Royal Bank
Sun Life Financial
Suncor Energy
Superior Plus
TD Bank
WSP
WSP Global
182.38
66.535
11.62
50.37
70.105
140.18
104.83
55.74
63.2
Low
$53.58
$139.24
$63.05
$111.88
$55.66
$8.70
$50.51
$143.66
$43.70
$23.10
$76.32
$9.10
$36.39
$52.97
$116.75
$82.16
$20.81
$53.43
$30.87
$48.45
$41.05
$48.63
$1,783.98
52-Week
$176.61
$48.08
$23.11
$85.90
$9.79
$40.25
$68.63
$128.49
$102.57
$25.73
$69.74
$36.58
$55.43
$49.83
$52.17
$2,666.83
$56.81
$177.02
$64.72
$119.16
$56.17
$10.56
$64.89
Closing
Price
$1.50
$3.72
$1.45
$3.84
$0.72
$2.08
$3.00
$5.40
$4.08
$1.46
$2.00
$1.19
$2.26
$2.52
$2.76
$5.34
$3.48
$6.90
$4.24
$5.88
$3.87
$0.58
$2.14
Div
0.85%
7.74%
6.29%
4.47%
7.35%
5.17%
4.37%
4.20%
3.98%
5.67%
2.87%
3.24%
4.08%
5.06%
5.29%
0.20%
6.13%
3.90%
6.55%
4.93%
6.89%
5.49%
3.29%
Yield
$6.55
$4.25
$1.01
$8.32
$0.56
$4.93
$6.34
$11.24
$9.69
$3.22
$7.30
$1.77
$2.99
$3.52
$3.17
$80.14
$7.00
$15.46
$7.19
$12.60
$3.20
$0.75
$2.90
EPS
26.98
11.32
22.99
10.33
17.40
8.17
10.82
11.43
10.58
7.99
9.56
20.64
18.51
14.14
16.5
33.3
8.1
11.4
9.0
9.5
17.5
14.1
22.4
P/E
22.9%
87.6%
144.7%
46.2%
128.0%
42.2%
47.3%
48.0%
42.1%
45.4%
27.4%
0.0%
7.5%
6.5%
8.7%
0.0%
8.0%
9.6%
6.5%
1.2%
10.2%
21.8%
N/A
6.0%
66.9%
2.6%
75.5%
4.7%
6.1%
5.2%
17.6%
10.8%
4.2%
5.1%
10.0%
32.4%
5-Yr Dividend
Growth
71.5%
87.1%
6.7%
49.7%
44.6%
58.9%
46.7%
120.8%
77.4%
73.6%
Payout
Ratio %
Calculation for interest equivalent of dividend yield for eligible shares: (100 - marginal rate for dividends) divided by (100 - marginal tax rate on regular income). For example, an Ontario taxpayer with
ordinary income of $65,514 uses: (100 – 11.72) divided by (100 – 31.15) is approximately 1.2822. Therefore, a stock with a Canadian dividend yield of 5.0% has an equivalent interest return of 5.0 x 1.2822,
which is approximately 6.41%.
Yield = Dividend divided by current price. Payout ratio = dividend divided by earnings per share (EPS). The dividend payout ratio is simply calculated by dividing the company’s dividend by its forward
(estimated) earnings. If a company with a low payment ratio experiences an earnings decline, it may continue to pay the same dividend. Or, at least, it may weather the downturn without cutting the dividend.
A high dividend payout ratio of 100% indicates that the dividend payout is equal or above the company’s earnings. Therefore, one should be very vigilant and place the stock on your “watch” list.
Earnings are forward earnings estimates.
Div. 5yr gr: We have added the five-year dividend growth rate to our chart, information obtained from Bloomberg LP.
CHART NOTES - - Prices as of Aug 3, 2023. Source: TD Waterhouse/Bloomberg LP. Stock prices change daily. Check for current prices. These Canadian companies listed on the TSX are our recommended
companies a DRIP. With the DRIP, you can reinvest all your dividends to purchase additional shares at no cost. Some DRIPS offer a discount so that additional shares are bought at a discount to the average
market price. Some dividends are paid in US dollars and we have adjusted numbers and ratios according to recent exchange rates.
TRP
TransCanada Corp
Telus
62
EMA
Emera
2829.34
CSU
Constellation Software
68.74
CM
Cdn Imperial Bk (CIBC)
Canadian Tire
81.98
BNS
Bk of Nova Scotia
66.05
137.64
BCE
BMO
18.79
Bk of Montreal
AQN
Algonquin Power
82.9
High
BCE Inc
AEM
Symbol
Agnico Eagle Mines
TSX Companies
Canadian MoneySaver SUGGESTED CANADIAN DIVIDEND REINVESTMENT PLANS (DRIPs) CANADIAN MONEYSAVER SUGGESTED CANADIAN DIVIDEND REINVESTMENT PLANS (DRIPS)
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 35
0.40
0.40
0.40
0.42
0.38
0.37
0.39
0.36
0.35
0.36
0.38
0.36
0.33
0.32
0.36
0.33
0.32
0.38
0.40
0.40
0.45
0.44
0.43
0.44
0.44
0.43
0.43
0.43
0.45
0.43
0.43
0.43
0.41
0.41
0.00
0.34
0.31
0.40
0.41
0.44
US MONEY MARKET
CIBC US Money Market Premium Class U$
CI U.S. Money Market Corporate Cl US$ P
RBC Premium $U.S. Money Market Fund A
CIBC US Money Market U$
Renaissance US Money Market USD
RBC $U.S. Money Market Fund D
TD US Money Market - Premium Series U$
RBC $U.S. Money Market Fund A
CI U.S. Money Market Class P U$
PH&N $U.S. Money Market Fund A
PH&N $U.S. Money Market Fund D
TD US Money Market - I U$
HSBC US Dollar Money Market Premium
BMO US Dollar Money Market Classic
Fidelity US Money Market Series B U$
IG Mackenzie U.S. Money Market
Scotia US Money Market U$ A
CI U.S. Money Market Corporate Cl US$
HSBC
’ US Dollar Money Market D
TD US Money Market - D U$
1 Month
Return
(mth-end)
CANADA MONEY MARKET
MD Money D
RBC Canadian Money Market Fund D
PH&N Canadian Money Market Fund D
Beutel Goodman Money Market Class D
Pembroke Money Market
RBC Canadian T-Bill Fund D
Leith Wheeler Money Market
Mackenzie Canadian Money Market LW
CI Money Market Class A
Guardian Canadian Short-Term Invest Sr W
BMO Money Market Classic
Dynamic Money Market Class
HSBC Canadian Money Market Investor
Scotia Money Market A
Canada Life Money Market W
Mawer Canadian Money Market A
Desjardins Money Market D
HSBC Canadian Money Market D
TD Canadian Money Market - D
TD Premium Money Market - D
Fund Name
1.35
1.31
1.27
1.33
1.32
1.28
1.30
1.28
1.35
1.26
1.26
1.28
1.24
1.23
0.76
1.03
1.01
1.15
1.23
1.31
1.19
1.16
1.17
1.22
1.15
1.07
1.01
1.08
0.97
1.04
1.14
1.06
0.96
1.03
1.06
0.95
0.99
1.10
1.21
1.21
3 Month
Return
(mth-end)
TOP FUNDS RANKED BY FIVE-YEAR RETURN AS OF AUGUST 2, 2023
2.57
2.46
2.44
2.53
2.53
2.45
2.43
2.44
2.55
2.40
2.40
2.41
2.26
2.28
1.78
2.00
1.86
2.10
2.25
2.46
2.27
2.29
2.27
2.33
2.02
2.09
1.93
2.05
1.92
2.01
2.18
2.02
1.82
1.99
2.02
1.75
1.91
2.10
2.31
2.32
6 Month Return
(mth-end)
3.00
2.69
2.85
2.96
2.96
2.84
2.82
2.83
2.91
2.78
2.78
2.79
2.59
2.63
2.11
2.27
2.11
2.30
2.58
2.86
2.63
2.66
2.65
2.72
2.37
2.43
2.24
2.39
2.24
2.33
2.54
2.33
2.12
2.29
2.36
2.00
2.22
2.45
2.70
2.70
YTD Return
(mth-end)
4.47
4.30
4.16
4.41
4.42
4.14
4.11
4.13
3.18
4.07
4.08
4.05
3.76
3.78
3.23
3.19
2.86
3.54
3.76
4.17
3.95
4.06
4.00
3.30
3.61
3.67
3.56
3.64
2.60
3.52
3.83
3.37
3.15
3.41
3.54
2.99
3.22
3.72
4.08
4.09
1 Year Return
(mth-end)
1.63
1.63
1.53
1.60
1.60
1.52
1.51
1.51
1.27
1.48
1.48
1.47
1.34
1.30
1.13
1.11
1.02
0.86
-
1.52
1.53
1.51
1.15
1.39
1.38
1.30
1.27
0.96
1.23
1.35
1.21
1.13
1.25
1.23
1.09
1.13
-
3 Year Return
(mth-end)
1.77
1.77
1.76
1.73
1.71
1.65
1.63
1.63
1.61
1.59
1.58
1.55
1.37
1.22
1.22
1.11
0.99
0.99
-
1.51
1.41
1.40
1.32
1.31
1.31
1.29
1.19
1.17
1.16
1.15
1.14
1.14
1.13
1.13
1.01
0.98
-
5 Year Return
(mth-end)
1.23
1.19
1.18
1.16
1.12
1.09
1.09
1.08
1.08
1.01
0.80
0.70
0.77
0.62
0.58
0.57
-
0.97
0.99
1.09
0.78
0.86
0.83
0.76
0.68
0.69
0.66
0.76
0.72
0.60
-
10 Year Return
(mth-end)
0.94
0.96
0.87
0.86
0.89
0.82
0.86
0.83
0.74
0.60
0.62
0.46
0.44
0.40
-
0.90
0.91
1.02
0.60
0.78
0.70
0.64
0.56
0.51
0.66
0.51
-
4.38
0.00
4.08
4.32
4.33
4.06
4.03
4.05
3.13
4.00
4.00
3.98
3.70
3.71
3.18
3.14
2.82
0.00
3.70
4.10
3.88
3.98
3.93
3.25
3.55
3.61
3.50
3.58
2.57
3.47
3.76
0.00
3.10
3.35
3.48
2.95
3.18
3.65
4.01
4.01
15 Year
Yield 12
Return
Mo
(mth-end)
0.21
0.03
0.22
0.22
0.19
0.12
0.21
0.67
0.19
0.20
0.17
0.38
0.43
0.28
1.01
0.71
0.80
0.50
0.26
0.25
0.18
0.26
0.22
0.00
0.16
0.74
0.78
0.52
0.49
-0.03
0.76
0.66
0.82
0.43
0.62
0.46
0.28
0.25
MER
0.35
0.30
1.00
1.00
0.30
0.30
0.30
0.30
0.30
0.65
0.40
0.70
1.00
1.00
1.00
0.40
0.25
0.23
0.30
0.30
0.50
0.30
0.60
0.50
0.70
0.50
0.50
0.85
0.75
0.60
0.40
0.65
0.35
0.40
0.25
Mgmt Fee
748.56
5.64
389.15
748.56
123.07
217.15
1132.35
217.15
53.03
51.02
51.02
1132.35
356.95
216.49
46.12
12.76
163.44
5.64
356.95
1132.35
137.08
3440.92
2682.20
34.40
15.31
279.99
1.15
1227.58
211.87
181.48
1270.40
23.28
663.37
1125.51
207.96
591.46
70.12
663.37
2502.34
1410.93
($Mil)
Total Assets
TOP FUNDS
36 | Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023
7.04
6.15
4.92
7.12
6.64
6.11
4.91
7.06
8.41
4.62
6.64
7.14
6.49
4.69
10.19
4.43
5.27
10.12
5.90
1.26
1 Month
Return
(mth-end)
5.44
3.87
-0.99
4.43
6.75
3.74
-1.01
4.25
3.80
-1.86
4.79
7.69
4.20
-2.00
9.45
1.83
-2.37
9.22
-1.02
-9.77
3 Month
Return
(mth-end)
3.63
2.41
2.01
2.62
3.35
2.16
1.96
2.28
1.56
0.92
3.32
4.27
2.45
0.54
2.06
-1.27
-3.77
1.64
-3.87
-7.78
6 Month Return
(mth-end)
8.59
7.50
6.21
6.16
10.34
7.20
6.15
5.75
5.58
4.84
8.40
11.25
7.48
4.79
8.17
2.30
1.03
7.65
-0.68
-0.67
YTD Return
(mth-end)
14.51
13.18
15.95
9.13
9.96
12.62
15.83
8.41
17.75
12.82
14.44
11.19
12.84
12.47
11.43
11.63
10.31
10.50
17.31
-12.90
1 Year Return
(mth-end)
28.42
28.45
18.63
40.76
29.14
28.03
17.64
39.83
30.19
15.13
29.50
30.19
28.63
15.13
41.31
21.63
17.49
40.14
25.42
-
3 Year Return
(mth-end)
12.04
11.56
11.34
11.26
11.25
11.25
10.73
10.52
10.46
9.84
9.69
9.39
9.00
8.64
7.82
7.66
7.17
6.92
6.43
-
5 Year Return
(mth-end)
7.17
11.52
1.58
7.48
10.73
0.73
9.30
4.63
6.98
6.93
2.50
-
10 Year Return
(mth-end)
2.07
-4.42
3.44
4.24
-1.79
-
0.90
3.93
1.18
3.43
3.84
1.13
5.16
0.50
0.00
2.54
2.49
0.67
1.13
2.16
0.00
0.32
3.60
0.00
15 Year Yield 12
Return
Mo
(mth-end)
2.33
1.38
0.09
2.42
1.38
1.87
0.18
3.05
0.21
2.04
1.35
1.35
2.18
2.56
1.21
1.26
2.24
2.06
1.24
-
MER
1.60
1.25
1.50
1.25
1.35
0.80
1.90
0.00
1.75
1.25
1.25
1.80
2.25
1.00
1.00
1.75
1.75
0.85
1.50
Mgmt Fee
79.09
26.23
103.20
20.81
19.82
26.23
103.20
20.81
49.04
104.26
283.51
214.25
467.28
23.95
354.61
142.49
26.78
354.61
151.69
22.14
($Mil)
Total Assets
For information on the category definitions, please visit http://www.cifsc.org/en/index.php. Front load funds (Frnt) charge a fee to investors when units are
purchased; deferred load funds (Def) charge a fee when units are redeemed. Front loads may be reduced (in percent terms) as the size of the investment increases;
deferred loads may decrease as the time elapsed between purchase and redemption lengthens. Some funds have either a front load or a deferred load (FnDf). Others
have no load fee (None). Deferred sales charges also known as a back-end load, these deferred charges typically go down each year you hold the fund, until eventually
they reach zero. Deferred sales charges give investors an incentive to buy and hold, as well as a way to avoid some sales charges. n Year Return - The average annual
compound (annualized) rate of return the fund has performed over the last “n” years. It assumes reinvestment of any dividend or interest income. 1 Year Return (Yr
ending DecYY) - An annual return is the fund or portfolio return, for any 12-month period, including reinvested distributions. Tax Efficiency - Calculated by dividing
the fund’s tax-adjusted return (pre-liquidation) by its pre-tax return, and can only be calculated when both pre-tax returns and tax-adjusted returns are positive.
Distribution Frequency - The interval at which regular capital or income dividends are distributed to fund unitholders. Year end Quartiles - The quartiles (1 to 4) give
the individual fund its position relative to all others in the fund type category. For example, if the fund’s quartile value is “1” for the Dec 2010 yearend, this means
the fund’s rate of return for the 12 months ending Dec 31, 2010 is in the top 25% of all funds in its fund type category.
Source - Morningstar PalTrak, Morningstar Canada, (800) 531-4725, http://www.morningstar.ca.
CHART NOTES
NATURAL RESOURCES EQUITY
IG Mackenzie Global Natural ResII J DSC
Mackenzie Global Resource II D
Dynamic Strategic Resource Cl Ser I
Purpose Global Resource Series L
Mackenzie Global Resource II D
Mackenzie Global Resource II I
Dynamic Strategic Resource Class Ser IP
Purpose Global Resource Series A
CI Global Resource Corp Cl P
Scotia Resource A
Mackenzie Global Resource D
Mackenzie Global Resource D
Canada Life Global Resources W
DMP Resource Class Series G
RBC Canadian Small & Mid-Cap Resources D
RBC Global Resources Fund D
CIBC Canadian Resources
RBC Canadian Small & Mid-Cap Resources A
TD Resource - D
Ninepoint Resource Fund Class Series D
Fund Name
TOP FUNDS RANKED BY FIVE-YEAR RETURN AS OF AUGUST 2, 2023
TOP FUNDS
Canadian MoneySaver | https://www.canadianmoneysaver.ca | SEPTEMBER 2023 | 37
Specialty ETFs
TOP EXCHANGE TRADED FUNDS RANKED BY FIVE-YEAR RETURNS AS OF AUGUST 2, 2023
Fund Name
Ticker
Mkt Tot Return Mkt Tot Ret
Mkt Tot Ret
YTD
1 Mo
3 Mo
(Current) (%) (Current) (%) (Current) (%)
Mkt Tot Ret
12 Mo
(Current) (%)
Mkt Tot Ret
3 Yr
(Current) (%)
Mkt Tot Ret Mkt Tot Return
5 Yr
Since Incept
(Current) (%) (Current) (%)
Harvest Tech Achievers Gr&Inc ETF
HTA
41.16
4.08
17.89
22.14
16.85
16.35
-
FT AlphaDEX US Technology Sector ETF
FHQ
27.40
5.97
19.64
19.40
9.22
16.34
-
Horizons Natural Gas ETF
HUN
-24.55
-1.36
-1.53
-46.79
15.51
15.72
-8.46
CI TecGntsCovCallETFComm(UnH)
TXF.B
41.26
6.02
18.07
28.62
12.50
12.98
-
iShares S&P/TSX Global Base Metals ETF
XBM
14.82
9.39
7.28
34.36
31.85
12.52
3.58
CYBR.B
21.01
1.91
12.40
17.70
3.77
12.46
-
iShares Global Agriculture ETF Comm
Evolve Cyber Security ETF UnHdg
COW
-4.83
7.15
2.26
-1.80
21.13
12.27
8.99
Mackenzie US Large Cap Equity ETF
QUU
18.80
3.17
8.17
16.18
12.21
12.14
12.04
TD U.S. Equity Index ETF
TPU
17.88
2.84
7.95
16.22
12.19
12.11
13.32
FT AlphaDEX US Technology Sector ETF H
FHQ.F
22.85
0.00
14.74
19.07
7.68
12.08
-
CI WisdomTree US Qual Div Gr ETF Non-Hdg
DGR.B
11.51
2.14
5.08
17.85
14.11
12.04
-
BMO MSCI All Country World High Qual ETF
ZGQ
21.66
2.50
8.06
19.68
10.30
11.92
12.88
RBC Quant US Equity Leaders ETF (CAD)
RUE
16.64
5.90
9.27
19.72
14.06
11.61
12.08
Bristol Gate Concentrated US Equity ETF
BGU
11.78
4.19
6.20
13.18
11.07
11.60
-
BMO Equal Weight Global Gold ETF
ZGD
9.12
5.46
-10.14
30.24
-7.72
11.45
0.21
CI TecGntsCovCallETF Comm
TXF
44.66
5.06
20.76
23.33
11.89
11.37
14.02
iShares Core S&P US Total Mkt ETF
XUU
16.95
3.02
7.95
15.49
12.56
11.28
11.62
Blockchain Technologies ETF
HBLK
51.43
15.91
23.55
13.64
2.10
10.76
-
iShares S&P/TSX Global Gold ETF
XGD
4.15
3.05
-9.63
22.55
-8.95
10.74
5.17
FHI.B
-2.12
2.03
0.41
10.36
11.61
10.72
-
FLUS
14.65
3.20
6.87
14.71
11.80
10.65
-
MULC.B
12.93
3.98
6.11
17.57
12.38
10.64
-
CI HlthCr GntsCovCll ETFUnH
Franklin US Large Cap Mltfct Index ETF
Manulife Multifactor US Lrg Cap ETF UnH
BMO Equal Weight Utilities ETF
ZUT
0.49
0.57
-5.03
-15.66
3.86
10.47
7.58
Mackenzie US Large Cap Equity ETF CAD H
QAH
21.15
3.10
10.64
13.53
12.43
10.43
-
iShares Global Water ETF Comm
CWW
9.62
3.30
3.23
11.79
10.80
10.31
7.82
Evolve Innovation ETF
EDGE
24.66
5.20
13.66
6.02
6.83
10.23
-
Dynamic Active Canadian Dividend ETF
DXC
7.31
1.67
0.55
6.29
14.29
10.21
-
FT AlphaDEX US Industrials Sector ETF
FHG
15.28
3.11
9.22
20.79
16.46
9.96
-
Invesco S&P 500 Equal Weight ETF CAD
EQL
7.67
2.65
4.00
10.48
14.15
9.93
-
LIFE.B
-0.53
-0.01
-3.51
7.61
7.46
9.67
-
Evolve Global Healthcare Enh YldETFUnHdg
BMO MSCI India ESG Leaders ETF
ZID
2.87
2.26
4.73
6.62
17.31
9.64
8.56
AGF Systematic US Equity ETF
QUS
12.88
3.91
6.14
12.38
9.86
9.64
-
Vanguard US Dividend Apprec ETF CAD-H
VGH
9.74
2.24
5.46
8.75
11.18
9.63
9.96
iShares Gold Bullion ETF (Non-Hedged)
CGL.C
4.76
1.80
-3.97
14.03
-1.23
9.62
4.42
iShares S&P/TSX Capped Cnsmr Stpls ETF
XST
-0.05
-2.44
-7.38
3.65
8.88
9.58
13.08
Evolve Automobile Innovation ETF H
CARS
25.13
10.37
28.47
-9.75
4.67
9.58
-
iShares Silver Bullion ETF (Non-Hedged)
SVR.C
1.12
9.62
-2.69
34.57
-0.37
9.57
-
BMO MSCI Europe Hi Qual Hdgd to CAD ETF
ZEQ
13.53
0.87
0.50
10.19
11.97
9.57
9.45
iShares Japan Fundamental ETF CADH
Comm
CJP
29.69
2.51
15.49
28.96
23.99
9.11
1.93
Evolve Global Healthcare Enh Yld ETF Hdg
LIFE
1.26
-0.61
-1.49
3.96
8.21
9.10
-
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