Tuesday, February 26, 2008

Canadian Tax-Free Savings Account

The Conservatives delivered the Government of Canada 2008 Budget today and one of the major surprises was the introduction of a tax-free savings account.

The new Tax-Free Savings Account is "a flexible savings vehicle that allows Canadians to contribute up to $5,000 a year to the account. Investment income, including capital gains, earned within the account will not be taxed and withdrawals will be tax-free."

How will the Tax-Free Savings Account Work?

  • Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.

  • Contributions will not be deductible.

  • Capital gains and other investment income earned in a TFSA will not be taxed.

  • Withdrawals will be tax-free.

  • Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.

  • Withdrawals will create contribution room for future savings.

  • Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.

  • Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.

  • The $5,000 annual contribution limit will be indexed to inflation in $500 increments.
You can read more about the specific details of the proposed Tax-Free Savings Account (TFSA) in Chapter 3 and Annex 4 of the Budget 2008 document.

Although I would have preferred a higher contribution limit, this is a great step forward.
Next step: Tax-free capital gains :)

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Wednesday, February 20, 2008

Agnico-Eagle's Ascending Triangle?

After making the mistake of selling my remaining Agnico-Eagle Mines (AEM-T) shares last year, and missing the big swing up since then, I entered back into AEM today after it broke through its resistance yesterday.

Once again, I entered my position at a higher price than I would have liked on the day but based on the ascending triangle (that I think I recognized properly), this stock hopefully has some upside in the months to come if gold continues its gallop to $1000 and beyond.

After the market closed today, AEM reported record fourth quarter results.

Agnico-Eagle finished the day at:
(AEM-T) $67.93 +0.93 (1.39%)
(AEM-NYSE) $66.77 +1.36 (2.08%)

According to Kitco, Gold closed with a Bid of 944.00 and Ask of 944.80 (+16.30, +1.76% for the day).

Sunday, February 17, 2008

Follow Up on the Last TSX Index Rebalancing

Back on November 3rd, I posted an article on the upcoming TSX Index rebalancing and the likely candidates for addition and removal.

Like I had mentioned back then, I had always wondered what kind of performance boost a stock gets when it's added to an index.

Some Key Dates to Keep in Mind:

November 2, 2007: National Post's FP Trading Desk publishes Yin Luo's predictions
December 14, 2007 : Standard & Poor's Announces Changes in S&P/TSX Canadian Indices
December 24, 2007: Changes Come Into Effect

So let's have a look at the five additions and their performance since mid-October 2007:

Aecon Group Inc. (ARE)
Allen-Vanguard Corporation (VRS)
Gold Eagle Mines Ltd. (GEA)
High River Gold Mines Ltd. (HRG)
Jazz Air Income Fund (JAZ.UN)

Aecon Group Inc. (ARE)

Gold Eagle Mines Ltd. (GEA)

High River Gold Mines Ltd. (HRG)

Jazz Air Income Fund (JAZ.UN)

Allen-Vanguard Corporation (VRS)

Many things can influence a stock and this example was only one instance so this was definitely not a scientific experiment so I'll let you come up with your own conclusion on the influence of having your stock added to the Index.

Saturday, February 16, 2008

Canadian School Ratings

The Fraser Institute recently rated Canada's schools. The downloadable school report cards include detailed tables for each school that show how it has done in academics over a number of years.

Now some may object to the methodology used for the rankings and question their validity but they might come in handy for your real estate investments. After all, having a top-ranked school in your neighbourhood can't hurt the resale value of your home.

Sunday, February 10, 2008

Get a Free Extra Computer

I just came across a web site that offers an interesting piece of software that promises to turn one computer into two by turn your dual-monitor PC into a two-user PC using free software from Userful. The basic concept of this program is based on the fact that your computer is rarely used to its full potential so instead of wasting resources on multiple computers, why not use one computer to its full potential.

Being a single guy, I personally have no need for such software (at the moment) but the premise is so simple yet powerful at the same time that it's worth a mention for those of you who need to share your computer with others.

According to their web site:

Share your PC, worry free: Have friends or relatives visiting and don't want them messing up your PC? This live CD is the perfect solution. Not only does it give the equivalent of an extra fully-functioning PC, it also ensures that your personal files are kept private and that no viruses or other malware are accidentally installed by your guests. Need an extra computer but don't have the space money or energy to or don't want to maintain one?

The World's Greenest Computer: This free CD is limited to 2 users, but using Userful's commercial software products can create up to 10 independent workstations from a single standard PC box. This software is being used around the world in schools, libraries, hotels, and other businesses and has provided huge savings on desktop computing costs by reducing the number of computer boxes that need to be purchased and maintained. Userful is quickly becoming the standard for green computing worldwide. Attaching 10 monitors, mice and keyboards to a single computer reduces CO2 emissions by up to 15 tons per year per system and reduces electronic waste by up to 80%.

Q. What kind of computer can I use?

A. Most standard PCs will work with the Live CD. If you wish to try the two-station features, you need a computer with 2 monitors connected, using a dual-head video card (two video ports on the same card), and an extra USB keyboard and mouse.

I haven't tried the software so I can't personally recommend it but if you have the necessary equipment and are thinking of purchasing another computer at home or at the office, you might want to try this program first to see if it will be suitable for your needs.

Saturday, February 9, 2008

Euro Savings Accounts for Canadians

With the growing trend of people shying away from US-denominated currency, it comes as no surprise that the big Canadian banks have started to jump onboard.

Earlier this week, The Bank of Nova Scotia announced that it has become the first major Canadian-based bank to offer Euro-denominated savings accounts. I doubt that the other banks will be far behind.

According to Scotiabank's web site:
The Scotia Euro Daily Interest Savings Account is a savings account denominated in Euros that allows you to deposit and withdraw Euros at your branch without the need to convert them to or from Canadian dollars.

It should be noted that ABM, telephone and Internet banking services, direct payment transactions, bill payments, cheque-writing privileges and overdraft protection are not allowed on this account; only teller assisted debit and withdrawal transactions conducted at your branch of account are allowed on this account.

Scotiabank also states that a deposit to the Scotia Euro Daily Interest Savings Account does not constitute a deposit that is insured under the Canada Deposit Insurance Corporation (CDIC) Act.

For those interested in having some exposure to the Euro or simply want an account to store those valuable Euros in between trips overseas, you might want to visit your local Scotiabank branch for more information.

While on the topic, HSBC Bank Canada, a division of United Kingdom-based HSBC Holdings PLC, has apparently offered a euro-denominated savings account for years so they might also be worth a look for those of you interested.

Chinese Factories to Close?

With the Beijing Olympics just a few months away, I recently heard on the news that the Chinese government may order construction sites and factories in Beijing to stop work ahead of the Olympics to counter the high levels of air pollution in the city.

If this actually happens, it could create a temporary dent in China's commodity needs and create a great buying opportunity for the astute investor.