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Tag: featured TFSAs

  • How to invest tax-free in a bitcoin ETF in Canada – MoneySense

    How to invest tax-free in a bitcoin ETF in Canada – MoneySense

    Investment Investment account Purchase price Sale price Gain Capital gains tax After-tax gains
    Bitcoin Non-registered $23,500 $61,000 $37,500 $3,750 $33,750
    Bitcoin ETF TFSA $23,500 $61,000 $37,500 $0 $37,500

    As you can see, in this hypothetical situation, gains for the tax-free bitcoin ETF come out ahead by $3,750, which is about 11% more than the after-tax gain on bitcoin.

    Canadian crypto ETFs 

    The table below lists all the crypto spot ETFs based in Canada. You can buy bitcoin ETFs (ETFs that invest entirely in BTC), ethereum or ether ETFs (those that invest entirely in ETH) or multi-crypto ETFs (those that invest in BTC and ETH). As of now, BTC and ETH are the only cryptocurrencies available through ETFs. (Figures are current as of Aug. 30, 2024.)

    ETF Ticker symbol Management expense ratio (MER) Assets under management
    (in Canadian dollars)
    Bitcoin ETFs
    Purpose Bitcoin ETF BTCC / BTCC.B 1.5% $2.1 billion
    CI Galaxy Bitcoin ETF BTCX.B 0.77% $724.7 million
    Fidelity Advantage Bitcoin ETF FBTC 0.69% $491.6 million
    3iQ Coinshares Bitcoin ETF BTCQ 1.75% $283 million
    Evolve Bitcoin ETF EBIT 0.75% $165.5 million
    Ethereum (ether) ETFs
    Purpose Ether ETF ETHH / ETHH.B 1.47%–1.49% $318.7 million
    CI Galaxy Ethereum ETF ETHX.B 0.77% $385 million
    Evolve Ether ETF ETHR 0.75% $55.2 million
    3iQ Ether Staking ETF ETHQ 1.97% $65.8 million
    Fidelity Advantage Ether ETF FETH 0.95% $18.7 million
    Multiple cryptocurrency ETFs
    Evolve Cryptocurrencies ETF ETC 0.85% $35.4 million
    CI Galaxy Multi-Crypto ETF CMCX.B 1.03% $3.7 million

    U.S. crypto ETFs: Should you invest?

    U.S.-based bitcoin ETFs have created quite a buzz in 2024. The Securities and Exchange Commission (SEC) approved the first one in January, almost three years after Purpose Investments launched Canada’s first spot bitcoin ETF. 

    Numerous American ETF providers now offer bitcoin ETFs, including big investment brands like BlackRock’s iShares, Fidelity and Invesco. Canadian investors can buy these ETFs, too, through their discount brokerage account—just like they would any U.S. stock or ETF. And, yes, these ETFs can be held in registered accounts like the TFSA or RRSP.

    Which is better: Canadian or U.S. ETFs? 

    Truth be told, there’s not much difference between the two. For instance, bitcoin ETFs in both countries hold the same underlying asset: bitcoin. Investors could make a decision based on their preferred parameters. 

    For example, you may pick the bitcoin ETF with the lowest management expense ratio (MER) or the highest assets under management (AUM), or you could look for the oldest fund—regardless of where it’s based. 

    If you go with a Canadian ETF, you could have more choices to make: Do you want a Canadian ETF that hedges its currency risk or one that doesn’t? Do you want to hold the ETF in U.S. dollars? The table below lays out the options for one example, the Purpose Bitcoin ETF. (Figures are current as of Sept. 13, 2024.)

    ETF (ticker symbol) Currency Currency hedge One-year return
    BTCC Canadian dollar Yes 117.94%
    BTCC.B Canadian dollar No 121.15%
    BTCC.U U.S. dollar No 120.88%

    In the right-hand column, you’ll notice there’s a difference in the ETFs’ one-year historical return, even though they all hold bitcoin as their underlying asset. This difference is because of the appreciation or depreciation of the currency in which the ETF holds its bitcoin. In this case, the non-hedged ETF delivered higher returns because it benefited from the appreciation of the U.S. dollar against the Canadian dollar. But there’s no way to have known this one year ago. Like all financial markets, the currency market is largely unpredictable.

    Aditya Nain

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  • Canadian banks earnings reports – MoneySense

    Canadian banks earnings reports – MoneySense

    While results outside the credit provisions looked better than expected, it wasn’t enough to outweigh concerns about the bank’s loan book, said Scotiabank analyst Meny Grauman in a note. “After a big credit-focused miss in Q2, the market was laser focused on credit heading into Q3 reporting, and it is unfortunate that this is where the issues are once again,” he said. “The bottom line is that fears that BMO is in fact the outlier of this credit cycle will continue to weigh on the shares.”

    Rising provisions drag on Scotiabank results, but bank sees levelling of stress

    The Bank of Nova Scotia saw third-quarter profits fall compared with a year ago as it boosted its provisions for bad loans, even as the bank says it’s seeing some levelling out of the financial stress on Canadian consumers. The bank reported Tuesday it had $1.05 billion set aside for bad loans in the quarter, up from $819 million a year earlier, but increasing only slightly from the $1.01 billion last quarter. The amount of impaired loans, the kind the bank doesn’t reasonably expect full repayment on, actually fell for Canadian banking in the third quarter compared with the second, to $338 million from $399 million.

    “I continue to be impressed by how resilient the Canadian consumer has been through this period, the trade-offs that they continue to make,” said Phil Thomas, chief risk officer at Scotiabank. The trend is clearly coming through on variable-rate mortgages, he said, which have also started to benefit from the Bank of Canada starting to cut rates. Scotia is also seeing a levelling-off in its auto loans, an area it’s been signalling as stressed for about a year, said Thomas.
    “I was really encouraged this quarter to see we’re finally stable as it relates to net write offs in that portfolio,” he said. “One quarter is not a trend, but I’m encouraged by what I’m seeing this quarter. And even as I look into next quarter, I see stability in these portfolios moving forward.”

    Scotiabank has a much smaller credit card portfolio than some other Canadian banks, but its unsecured credit line trend seems to no longer be getting worse, Thomas said. “I am super encouraged by the fact that this quarter, the levels of delinquency or any stress seem to be levelling off.”

    While stabilizing, higher loan loss provisions did weigh on profits that amounted to $1.91 billion or $1.41 per diluted share for the quarter ended July 31 compared with a profit of $2.19 billion or $1.70 per diluted share a year ago. On an adjusted basis, Scotiabank says it earned $1.63 per diluted share, down from an adjusted profit of $1.72 per diluted share in the same quarter last year. Analysts on average had expected Scotiabank to earn an adjusted profit of $1.62 per share for the quarter, according to to LSEG Data & Analytics. Revenue totalled $8.36 billion, up from $8.07 billion in the same quarter last year.

    Earlier in August, Scotiabank announced it would pay about USD$2.8 billion for a 14.9% stake in the U.S. bank KeyCorp in two stages. Some analysts have worried about the bank possibly devoting lots of cash to buy even more of the bank, but chief executive Scott Thomson said Tuesday that the deal was about getting increased exposure to the U.S. at a good price. “Our investment in KeyCorp represents a low cost low-risk approach to deploying capital in the U.S. banking market at a time when valuations are favourable and as the regulatory and competitive environment evolves.”

    TD Bank Group reports profits down 22% on anti-money laundering hit.

    TD Bank Group’s second-quarter profit fell 22% from last year as it booked costs related to a high-profile failure of its U.S. anti-money laundering program. The bank had warned of the $615-million initial charge it was taking in connection with its talks with U.S. regulators, allowing analysts to adjust projections that the bank then handily beat. “It was a strong quarter for TD with all of our businesses outperforming expectations,” said chief executive Bharat Masrani on an earnings call Thursday, after reiterating the bank’s mea culpa on its anti-money laundering controls. )

    Read the full article about TD’s earning report: Why is TD’s profit down?

    The Canadian Press

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  • 40 and no pension: What do you do? – MoneySense

    40 and no pension: What do you do? – MoneySense

    It’s not as big a problem as you might think. The key is to try to mimic the pay-yourself-first approach by setting up an automatic contribution to your registered retirement savings plan (RRSP) to coincide with your payday. A good rule of thumb to strive for is 10% of your gross income. Remember, in most cases the employees blessed with a defined-benefit pension are contributing around the same 10% rate (sometimes more) to their pension plan. You need to match those pensioners stride-for-stride.

    How much to save when you’re 40 and have no pension

    Let’s look at an example of pension-less Johnny, a late starter who prioritized buying a home at age 35 and has not saved a dime for retirement by age 40. Now Johnny is keen to get started and wants to contribute 10% of his $90,000-per-year gross income to invest for retirement.

    He does this for 25 years at an annual return of 6% and amasses nearly $500,000 by the time he turns 65.

    Source: getsmarteraboutmoney.ca

    Keep in mind this doesn’t take any future salary growth into account. For instance, if Johnny’s income increased by 3% annually, and his savings rate continued to be 10% of gross income, the dollar amount of his contributions would climb accordingly each year.

    This subtle change boosts Johnny’s RRSP balance to just over $700,000 at age 65.

    How government programs can help those without a pension

    A $700,000 RRSP—combined with expected benefits from the Canada Pension Plan (CPP) and Old Age Security (OAS)—is enough to maintain the same standard of living in retirement that Johnny enjoyed during his working years.

    That’s because when his mortgage is paid off, he’s no longer saving for retirement, and he can expect his tax rate to be much lower in retirement.

    40-year-old Johnny spends $40,000 per year, plus mortgage until the mortgage is fully paid off at age 60. Johnny retires at age 65 and continues spending $40,000 per year (inflation-adjusted) until age 95.

    CPP and OAS will add nearly $25,000 per year to Johnny’s annual income (in today’s dollars), if he takes his benefits at age 65. Both are guaranteed benefits that are paid for life and indexed to inflation. 

    Robb Engen, QAFP

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  • Cenovus Energy reports earnings for Q3, reaches debt reduction target – MoneySense

    Cenovus Energy reports earnings for Q3, reaches debt reduction target – MoneySense

    In July, after several years of prioritizing debt repayment, Cenovus reached its debt reduction target—bringing its total net debt to $4.0 billion. The milestone means Cenovus will no longer be regularly directing a portion of its cash flow towards its balance sheet, a development that frees up funds for other purposes.

    Cenovus’s plans for excess cash

    But McKenzie said the excess cash will be 100% returned to shareholders, most likely in the form of share buybacks, and won’t be used to embark on any new growth strategies or M&A opportunities.

    “It’s going to be good to run this business model at 100% shareholder returns going forward, and that’s really what we’re focused on today—just sticking to our knitting and executing on what’s in front of us, versus trying to take on new challenges or modifying strategies,” McKenzie told analysts and reporters.

    Cenovus earnings report highlights

    • Cenovus (CVE/TSX) reported second quarter earnings of $1 billion Thursday, up from $866 million in the same quarter last year. Earnings worked out to $0.53 per diluted share, up from $0.44 from last year.

    The company said its excess free funds flow in the quarter ending June 30 was $735 million, up from $505 million in the same quarter a year earlier. The company reported revenues of $14.9 billion for the second quarter, up from $12.2 billion for the same quarter last year.

    In the second quarter, Cenovus loaded its first vessels at the Westridge Marine Terminal in Vancouver following the successful startup of the Trans Mountain pipeline expansion, on which it is a major contracted shipper.

    Notes for the rest of 2024

    In light of strong year-to-date results, Cenovus revised its 2024 production forecast Thursday. The company now expects total upstream production of between 785,000 and 810,000 barrels of oil equivalent per day, up from a prior forecast of 770,000 to 810,000 boe/d.

    McKenzie said Cenovus is now nearly 90% finished construction the Narrows Lake tie-back at its Christina Lake oilsands site. The tie-back project is a 17-kilometre pipeline that connects the Narrows Lake reservoir to the Christina Lake main processing facility, and will result in up to 30,000 barrels per day of additional production from the site starting in late 2025. 

    The company also continues to work to improve performance at its U.S. refinery operations, which in recent years have been affected by unplanned outages and maintenance issues.

    The Canadian Press

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  • What happens when you can’t manage your investments anymore? – MoneySense

    What happens when you can’t manage your investments anymore? – MoneySense

    I try to picture 84-year-old me being told by my kids that it is time to hire a financial planner. I may not be so keen myself when the time comes. Maybe I should bookmark this column.

    I took over the management of my mother’s finances toward the end of her life. She seemed reluctant, but she knew it was time. I think she still saw me as her little boy even though thousands of clients and readers looked to me for advice that she was hesitant to take.

    Managing your own investments to save on fees

    If you expect to pay $35,000 a year on fees to invest in mutual funds, Laasya, I am speculating here, but you probably have somewhere between $1.5 million and $2 million of investments. Mutual fund management expense ratios (MERs) are embedded fees that are paid from the fund’s returns each year. They are about 2% on average but can range from under 0.5% for low-cost, passive index funds to 3% or more for segregated funds from insurance companies.

    If you have $1 million or more to invest, there are discretionary portfolio managers who use stocks and bonds or proprietary pooled funds who may charge 1% or less of your portfolio value. (Discretionary means the portfolio manager makes buy and sell decisions on your behalf.)

    You could certainly invest in exchange-traded funds (ETFs), and now there are plenty of simple asset-allocation ETFs (also known as all-in-one ETFs) that can be a one-stop shop for investors. Fees are in the 0.25% range.

    Why self-directed investing may not be the answer

    The problem with buying an ETF, Laasya, is that your kids are concerned about you investing on your own. And if they wanted to be self-directed investors, they probably would have offered to help you manage your investments. They did not. So, if you pull your investments to manage them yourself again, you may be putting your kids in an uncomfortable position, as they may potentially have to become DIY investors at some point if you’re unable to manage your own investments.

    Self-directed investing may seem easy to people who are comfortable doing it. But I remain convinced that some people will never be able to manage their own investments, no matter how simple it becomes.

    Have you considered a robo-advisor?

    I often joke with my wife that I am very good at a short list of things in the financial planning realm, but not much else. There are plenty of things that I could probably learn to do around my house or in other aspects of life that I have no interest in learning. I would rather pay an expert.

    Jason Heath, CFP

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