Risk tolerance and investment balance | Page 4 | General financial discussion | Discussion forum

I disagree, Doug, re intentionally keeping your income low, etc - if you qualify by the rules/laws, you qualify. If the politicians intended the test to be based on net worth instead of annual income they presumably would have enacted laws to that effect, so one could equally assume the politicians intended that it's just fine to plan your way around the rules by keeping assets while keeping income low. I do agree, however, that if the rules/laws aren't working anymore as society intends they ought to be changed in law.

The problem with dealing with nice ideas like "ethical fraud" is that they're a matter of opinion, no way we'd all agree on where the line is drawn in each case, so that's why our (and our fi's) only responsibilities involve adhering to the law. Lots of advice on this site, for example, re how to do tax planning, how to invest and save in the most tax-efficient way. We all accept that tax avoidance (i.e. making investment moves in accord with the laws) for our advantage is fine, even desirable, whereas tax evasion, as it's illegal, is not ok.

You're right about me not claiming GIS, though - that's for old people!

Agree totally, discuss, define, debate, change laws, etc, all you want. But at the end of the day what's right and wrong is a matter of opinion, so codifying into law crystallizes it for everyone and allows us to operate on a daily basis without endless negotiation for every person in every single circumstance. And then everybody's mad because we're all being treated differently. Plus you've anarchy.

And here we are talking about operating a business (e.g. should a bank give every customer a personalized interest rate on their gic based on customer's income level and needs?), economy or society, and the theory of rule of law is to ensure that everyone, peasant or noble, ought to be treated equally.

I agree, Doug, the meaning of old is flexible as we age and is highly subjective. Plus some folks are climbing mountains at advanced ages while others can barely get around, so I guess we have some control over how old we feel. But I have no RIFs, not old enough for that, I was just saying that in retrospect I wouldn't do the RRSP thing again. As far as my kids, they're all out on their own - one son is in his low-30s and even though he owns his own house (outright, no mortgage) a 7-minute walk away he likes to show up at supper time to partake of my generosity. Luckily for me his work takes him far away for weeks at a time, I always look forward to that! (And I'm keeping a rough tab and thinking of adjusting his inheritance accordingly so that all feel they are treated fairly - wish I could be there to see them all have a laugh about that one!)

Doug said

Oh, didn't realize he lives on his own in his own place but comes over to your place for supper. You'd actually adjust any inheritance based on "extra meals" that you're feeding him!? LOL, wow, sorry, to each his own, but I just look at that (and I'm sure your wife does, too!) as enjoying great family together, camaraderie and fellowship. Good times!

Edit: Oh, was that sarcasm? I don't get that sometimes. 😉

Cheers,
Doug  

My grandfather had a step-daughter and grandsons that used him as an ATM. He was always happy to help....for years, 20,50, 100 at a time. In his will, he specifically left them out as they had "already benefited" from his life, and divided the remainder of his estate between the remaining heirs. Wasn't much left, but was it fair? Groceries are a fair chunk of any budget.

Not sure. Like I said, there wasn't much left. Wasn't much good will from those who were expecting more. I'm sure they came out ahead in the long run though.

Doug, don't worry, I was just kidding, it's kind of a good-natured family joke amongst us all. And this son has made it clear that if his parents get unable to look after ourselves we're to move in with him when the time comes - not sure I'll take him up on it but that's what family is about to me, to help each other out when really needed and not keep a ledger. My wife strongly feels all kids should be treated and inherit equally (I don't really have a strong view because I see negatives no matter what course of action you take) so that's the way it'll go. At least any ill will (hopefully there won't be any) among those we leave behind won't have been caused by us.

Bill said
Doug, don't worry, I was just kidding, it's kind of a good-natured family joke amongst us all. And this son has made it clear that if his parents get unable to look after ourselves we're to move in with him when the time comes - not sure I'll take him up on it but that's what family is about to me, to help each other out when really needed and not keep a ledger. My wife strongly feels all kids should be treated and inherit equally (I don't really have a strong view because I see negatives no matter what course of action you take) so that's the way it'll go. At least any ill will (hopefully there won't be any) among those we leave behind won't have been caused by us.  

I'm the same way as your son. In part because I live with my parents currently, I've promised my parents that if they ever need an "instant liquidity event" from their house, I'll buy the current house in which we live, at fair market value and likely based on either the average or median of two appraisals (to protect my sister's potential economic interest), and they can live here rent free if they want and pay only for their food (for which they said wouldn't be a problem and added they might even pay a nominal rent amount). 🙂

In terms of your wife's view, I generally agree with that but if a parent has significant financial assets that they never touch and lives very modestly/frugally and has a surplus of free cash flow from their monthly pensions every month and helps out a son or daughter on occasion based only on that surplus free cash flow, I'm a bit more ambivalent like you in that regard in terms of not keeping a ledger. For instance my grandpa (my mom's dad) helped my mom's sister with one of her mortgage payments every month for a couple years (or so) while she was battling her (now former) employer, a city-owned water and electrical utility in the City of Edmonton, in a disability dispute. As he'd told me many times, from all of his government and private pensions, he basically "nets" (of income taxes) "about $100 per day" but probably only spends "$30-40 per day" (in all of his expenses from utilities, satellite TV, telephone, insurance and food, etc.). My mom always took the view that he should be subtracting the assistance he provided her sister and I agreed with her, more or less, but on the same or other hand, it's not a big deal either way because he could just as easily have been spending that on himself rather than adding to his savings. 🙂

In general, I think people worry about such matters too much.

Cheers,
Doug

Kids, even adult ones, have a very sharp eye (and memory) for detecting even a tiny evidence of favouritism to siblings by parents, e.g. your mom's reaction, Doug, to her sister getting financial help from dad. And because parents will often assist the children who most need help the end result is they often "punish" ambition and self-sufficiency and "reward" indifference and dependency - usually the opposite of what you're trying to accomplish! Ergo my view that the less anyone else knows about my finances the better, and the better the chance no-one is mad at me. As Rick indicates, if it's not one minefield it's another!

Righand said
I didn't read the complete thread so I don't know if this has been discussed before but I have about 20% of my portfolio in P-2 rated minimum reset preferreds.

Example CU.PR.I paying 4.5% at par. It's too late to buy it now but my average is $ 24.70 share. They reset at GOC 5yr. + 3.69% but the minimum is 4.5%

Of course they could slip below par again but I don't really care because I'm only interested in the income.
If they are redeeemed I'll have to find something else.

Am I missing something ?  

Rate reset preferred shares are ideal in a rising rate environment when rates (continue to) rise. In the event that rates drop again, the market value of your preferreds will likely take a hit.

I'm attracted to preferreds for similar reasons, the only caveats I would add are:

• There is generally no guarantee or obligation for the company to "call" the shares at their par value, though I agree with you looking for preferreds trading at a discount to "par"
• As a result of the first point above, you may have liquidity problems should you need to sell them, both in terms of higher than normal "bid/ask" spreads but, more importantly, with your preferreds trading at a discount to where you purchased them so you may incur a capital loss

Generally, though, they are a good instrument for the long-term. My only concern is that upon death, my heirs (should there be any) may want to sell them at inopportune times rather than wait for their share price to go up and actually have a capital gain. I'm wondering what administrative costs there are to setting up some sort of trust if I acted as each of the "grantor," "beneficiary" and "trustee"? That way, they could endure after my death. 🙂

Philosophical question: Aside from giving everything away to registered charities, what are one's options post-death in terms of beneficiaries when one has no children and their siblings have no children (and thus, no direct nieces and nephews)? I have a few first cousins, some older than me, and lots of second cousins and even more first cousins once removed but, really, I'm racking my brain (Loonie, is that right or should I've used "wracking"?) trying to come up with options besides "registered charities" and various levels of "government". 🙂

Cheers,
Doug