Talk Personal Finance – December 2014

Welcome to the first Talk Personal Finance post!

Starting from this month onwards, I would be providing a monthly update on my progress towards financial freedom.

What I plan on doing with these updates is to just document what I have planned for the month and the steps I would be taking to reach my financial goals. I would also be talking about a variety of topics in personal finance that I am currently going through in my journey.

Here is what’s up for this month:

Oil and Energy Stocks Continue to Tank

If you have been following the market, you may have noticed that the energy sector has reached a new low. All my holdings in this sector have taken a huge hit and it has left me wondering whether recovery is in the near future.

With this unpredictable downwind in play, I have taken the initiative to purchase some shares at hopefully a really good bargain:

  • 30 Shares of Husky Energy Inc. @ 24.40
  • 25 Shares of Canadian Oil Sands LTD. @ 15.00

RRSP Account vs. Paying Off Debt

I have also just decided to open up an RRSP account with TD bank. Especially now that my Tax-free savings account is almost at its maximum, I would need another way to shelter my savings from taxes.

Although the initial plan was to start paying off my student loans before contributing to my RRSP, I have concluded that the latter option may be more worthwhile.

Currently, I am in a somewhat high tax bracket making contribution to my RRSP the better option. Additionally, growing the RRSP account would eventually be more beneficial down the line as the capital gains would surpass the interest rate and I would be able to make use of the Home Buyers Plan.

At the present moment, my RRSP is configured to mutual funds but I am in the process of converting it into an E-Series account with TD bank. I will also be applying for an RRSP QuesTrade account should I decide to hold equities instead of funds.

Sticking To My Own Bank

One of the most attractive products offered by RBC is the waiving of the annual fee for maintaining an RRSP account.

As I went to the bank to inquire further about this product, I have come to realized how difficult it is to open a normal chequing account. On top of that, I was grilled about my employment just to apply for a no fee low limit credit card. I was definitely not impressed by their customer service.

It got to the point where I thought to myself that enough was enough and that I should just stick to my own bank where I already have a connection with. I walked out of the bank, went to TD and opened an RRSP mutual fund account there instead.

My First Mistake in my TFSA Investment

While I was managing my portfolio the other day, I have realized that my account has been subjected to something called the withholding tax.

Upon further investigation, I have discovered that a withholding tax will be deducted from my US equities that pay a dividend. Although the amount charged is minimal right now, the amount will add up to a significant value as my portfolio becomes bigger.

One way around this withholding tax is to invest in companies that focus on capital gains instead of dividends. Even so, this may be an issue because I am currently focusing on dividend growth.

Despite my love for US equities, I will be forced to slowly transition foreign stocks out of my TFSA and into my RRSP account instead.

Is My Public Service Job Worth It?

Lastly, like always, there is always one post in every month where I just ramble on about my employment. Not because I want to but because I simply I can’t help it. Why?

If you don’t already know, I am sort of a workaholic. I work close to 50 hours a week and the job has taken quite a toll on my physical and mental health. I always look forward to my days off and I consistently wonder when I will just hand in my resignation letter.

With that being said, the income is pretty generous and I have too many financial goals that will require funding. That is why I am sticking it out (for now). In any case, I am getting tired of complaining about my employment and I will try to refrain from doing so in the future. : )

That’s it for now. Have any comments?

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4 Responses to “Talk Personal Finance – December 2014”
  1. Henry - Living At Home December 2, 2014
    • Jeff December 2, 2014
  2. B December 4, 2014
    • Jeff December 5, 2014

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