Category: Cheapskates

people exchanging money in cantor

Retirement Portfolio is now USD-free

RobHLeave a comment

On September 4th, I sold my last units of DLR1 within my RRIF account and completed my multi-month activity of kicking USD out of retirement portfolio. I ended up doing this about 3 months faster than I anticipated, but that’s because Questrade offered a free two-month trial for Questrade Plus, which included as many free journaling activities2 as you wished during the trial. And since I’m a cheapskate, I figured saving the journaling fees was worth me upping the pace of my USD to CAD conversions.

I asked Claude to take a look at the various gambits I undertook3 and evaluate them. Claude was quite upbeat:

  • Claude calculated an effective blended rate of 1.39946.
  • Claude said I beat the spot rate by roughly +0.15% overall
  • And, as expected, Claude assessed that every single gambit landed within a few basis points of the spot market, much better than what Questrade would have charged me (1.5% or so).

So now, here’s what my various account types look like, in terms of assets. There’s no USD listed ETFs anymore. Here’s what the three kinds of accounts look like.

Let’s recap the major changes, per account type.

Non-Registered accounts

I’m always a bit reluctant to mess around with non-registered accounts since making trades here inevitably lead to capital gains. But the impact in the end was pretty minor.

There’s actually three separate accounts being considered here. Two are legacy investment accounts that have long-term holdings. The other is my so-called “cash cushion” account that is an integral part of my decumulation strategy, called “VPW”. You can read about the mechanics of it here.

So for the cash cushion, I had to get rid of ICSH in favour of ZMMK. I’m giving up roughly 1.2% in annual return by doing this, but I figure at some point the Bank of Canada and the US Federal Reserve will get closer in terms of their interest rates. This had a minor capital gain impact, which was as expected. Both ICSH and ZMMK keep a pretty stable price point (around $50/unit) and pay out monthly.

The bigger issue was getting rid of SCHF from my non-registered holdings, which I had held for a very long time. Selling that was going to trigger a large capital gain that I hadn’t accounted for in my tax calculations. The solution I came up with was pretty nifty, if I do say so myself. SCHF in my model is largely “International Equity” so clearly I was going to have to replace that international equity contribution somewhere. I ended up replacing SCHF with VCN (a Canadian equity holding) and replacing XIC (a slightly different Canadian equity holding than VCN) with VFV in the TFSA account. In essence, I moved my international equity stake out of my non-registered accounts and put it in the TFSA instead.

By buying VCN (a new fund for me) in my non-registered account, I reset the ACB of that fund so selling units a few months from now shouldn’t really attract too much in the way of capital gains. In fact, the first month4 I sold VCN to pay my monthly salary, I took a small loss. So my tax planning should also stay intact.

TFSA accounts

There were no USD assets in my TFSA to begin with, so no changes were needed on that account. I had to do some asset class shifting here while maintaining 100% equity allocation in the TFSA. As mentioned above, XIC (Canadian Equity) was dismissed from the TFSA, and replaced with VIU (which is international equity).

I do have a small desire to covert the TFSA into a custom index (a Questrade feature) to save a bit on the MER imposed by XEQT here. I may yet do this. It will expand the number of ETFs in these accounts since I’ll need to decompose XEQT into its constituent components. This is again a case of me adding complexity in order to save a few bucks…But don’t I owe it to my readership to give it a try?

RRIF accounts

Mainly, the RRIF accounts replaced AOA with XGRO and ICSH with ZST. But since XGRO holds a lot less US Equity than AOA did, the AOA to XGRO conversion wasn’t exact. I had to replace some of the AOA with a US Equity holding (VFV). I chose to use ZST instead of ZMMK in the RRIF for two reasons:

  • I wanted a different ETF in my RRIF as compared to my non-registered. This helps me avoid CRA superficial loss rules.
  • ZST is ever so slightly riskier than ZMMK, which is fine, since the cash position in the RRIF is much more static than the cash position in my non-registered account.

The way ahead

Getting rid of USD assets has simplified my portfolio and my workflow thinking. I no longer have to worry about USD/CAD exchange rates, and my need to use Norbert’s Gambit should be over. It also opens up my universe to other DIY brokers. I’ve been a fan of Wealthsimple, but couldn’t use them for my RRIF accounts since they contained USD assets. Now I can consider Wealthsimple for all my investing needs5.

Working through the mechanics of slowly moving my assets to an all CAD lineup has caused me to probably spend way more time than is healthy looking at my portfolio and making trades. This should come to an end — with DRIP set up across all registered accounts6, the holdings should be more or less on autopilot with only monthly checkins to make sure my asset allocations haven’t drifted too far from my targets.

I’ve updated my posts that talk about ETF all stars and the “Magnificent Seven” ETFs as well, for reference.

  1. Selling DLR is the last step of a Norbert’s Gambit when you’re converting USD to CAD. You can read about the gambit on Questrade here. ↩︎
  2. “Journaling” is the step that turns units of DLR.u (which are priced in USD) into units of DLR (which are priced in CAD). If you’re not a Questrade Plus subscriber, journaling costs $9.95 plus HST every time you do it on Questrade. ↩︎
  3. Ok, not all of them — Claude only connects to the accounts I own, and not those of my spouse. And the last trades haven’t settled yet, so the one I did on September 4th wasn’t showing up in my transaction history. I don’t expect the story is too different if I include the gambits I ran in my spouse’s RRIF account. ↩︎
  4. After making sure 30 days had passed in order to avoid a “superficial loss” in CRA’s parlance. ↩︎
  5. And if they offer a promotional offer that throws free money my way, I’d seriously consider switching brokers again. ↩︎
  6. I don’t use DRIP in non-registered accounts because non-registered transactions need to be logged for adjusted cost base adjustments; I’d prefer to keep these fully under my control to minimize the number of transactions. I don’t mind carrying a bit of cash in non-registered accounts in order to avoid excess trades. ↩︎

clear glass jar with silver coins

CAA Cheapskate

RobHLeave a comment

I’ve been a CAA member for a while (actually, it was my spouse who first signed up and I’ve been on the family plan ever since). Most people think of CAA as someone you can call if you have a car breakdown12, and that’s certainly a good bit of insurance, but they also have other good deals that maybe you were not aware of. I found these by navigating to my local site (CAA North and East Ontario).

Discounted Gas at Shell

Including your CAA membership number at Shell stations reduces the price of fuel by 3¢ a litre. That’s really easy to do if you use the Shell app on your phone, since you can link it right there.

Deals on Rogers services (wireless, internet)

I just discovered this myself while researching this article. There’s more-than-decent deals on wireless services (not as good as Fizz mobile, my cheapskate provider of choice) but $35/month for 85G of data and Canada-wide unlimited talk and text is a nice offer. There’s also offers that give you good deals on home internet and television services. Paired with my Rogers Red credit card, things are even better!

Deals on Insurance

I found cheap contents insurance for my parents’ retirement home unit through CAA. They were fast and efficient at getting it all set up. You can check it out at https://caaneo.ca/insurance/property-insurance/tenant-insurance/.

Deals on … Museums?

For the Ottawa crowd, CAA offers 25% discounts on the Ingenium museums. These include the very kid-friendly Science and Technology museum, the Agriculture Museum and the Aviation and Space museum. I didn’t know that either: https://caaneo.ca/rewards/partners/ingenium/.

If you’re already spending on a CAA membership, you might as well maximize your return on that investment. What’s your best CAA discount? Let me know at comments@moneyengineer.ca!

  1. Although patience is a good idea. Supply of CAA tow trucks seems to outstrip demand! ↩︎
  2. They also offer bike breakdown service: https://caaneo.ca/automotive/bike-assist/ ↩︎
self check out area in warehouse store

Saving money on flights with Costco

RobHLeave a comment

Costco is often thought as the place to get ridiculously sized jars of mustard or toilet paper on the cheap. Both of these things are still true. But one easy travel hack that is offered to Costco members can easily pay for the cost of a membership1 in short order, and that is their gift card offer for flights on Porter Airlines and Air Canada.

For $449.99, you can buy a gift card on either airline that is worth $500 in flight credit. My math says that’s an instant $50 (and one cent) off without hardly trying.

And you don’t even have to fight for a parking spot at your local warehouse — both of these gift cards can be purchased entirely online, with an e-gift card arriving in your inbox (in my experience) within minutes2.

There are a few things to watch out for, though:

  • They are not refundable; on the plus side, they don’t expire, either
  • You can only buy four Air Canada gift cards every 2 weeks3
  • You can only buy 5 Porter cards at a time
  • You can only use two methods of payment for any one Air Canada reservation. This effectively means either (a) you can only use one gift card for your reservation or (b) you can use two gift cards, but then the total cost of your reservation needs to be below $1000
  • Air Canada gift cards are not valid at the airport, but Porter cards are.
  • If you use a Porter card at the airport, then the value of the gift card has to be greater than whatever it is you’re trying to buy. You can’t split payment between a gift card and a credit card.
  1. Basic membership is $65 annually and gets you two memberships for people at the same address ↩︎
  2. Product notes claim up to 24 hours for delivery, but I’ve not experienced that myself ↩︎
  3. “while supplies last” is also added to the text on the web. I don’t think these e-gift cards take up much warehouse space, but I could be wrong…. ↩︎

MyACB: A new ACB Tool

RobHLeave a comment

ACB stands for “Adjusted Cost Base”, and is something you need to care about if you have non-registered stocks/ETFs that you buy and sell. If you don’t track your ACB, you can’t calculate the capital gains and losses for a given asset sale.

“But that’s what the T5008 is for, isn’t it?”

Theoretically, yes, but online brokers are notoriously sloppy with tracking ACB and hence your T5008 may not track capital gains properly. Some common reasons why this is are:

  • You hold the same asset at multiple brokers (or even within multiple accounts at the same broker). The CRA doesn’t care where you own the asset, they only care that you own the asset. No matter how many ways and in how many accounts the asset is sliced, CRA considers there to be only one ACB for all of them.
  • You move the asset from one broker to another and the ACB gets set incorrectly by the receiving broker
  • Your asset is priced in USD and your broker is using a different FX rate from you1
  • Your asset delivers a return of captial (RoC for short) which lowers your ACB (and increases future capital gains); your broker may or may not track this on your behalf
  • Your asset reinvests dividends into the fund (this sounds the same as a DRIP, but it isn’t — it’s commonly known as a “phantom distribution”). This increases your ACB.
  • Your asset undergoes a share split or share merge.

For these reasons, I don’t trust T5008s, and I track my own ACB. In Tools I Use I mention the ACB tool I use; it’s the one I have been using for many years now, namely Adjusted Cost Base. (Before that I think I used an Excel template…which I converted to ClarisWorks format, but I digress…)

I use the free version of Adjusted Cost Base because it suits my needs, and I wasn’t aware of a reasonable alternative, and I’m a cheapskate. But it seems there is one now — MyACB. I gave MyACB a quick spin this week, here’s how it compares to Adjusted Cost Base, both in “Free” mode:

User InterfacePortfolios Automated FX Automated RoC and phantom distributions Import from other sourcesPay models
Adjusted Cost Base Not pretty; subscription eliminates ads– two; 5 with subscriptionNoNo, requires subscriptionNo, requires subscription$49/year
MyACB Pretty– one; 5 with family subscription,
100 with “pro” subscription 		YesFor one asset only; more assets require subscriptionYes$29/year for family

$99/year for pro2

User Interface

Adjusted Cost Base won’t win any graphic design awards3. The design is functional but not at all modern looking. MyACB looks like a modern website. Dark mode? Check. Logical layout? Check. And at present, MyACB is ad-free4.

One big thing MyACB does better than Adjusted Cost Base is its support for editing portfolios, specifically related to deleting symbols. It’s far too easy to accidently trash an in-use symbol in Adjusted Cost Base. MyACB makes it very clear how destructive your desired action will be and asks for a specific and impossible-to-click-too-fast confirmation!

Portfolios

Tracking ACB for me means tracking it in my account, my spouse’s account, and our joint account. So that’s three portfolios. And I try to hold different assets in different portfolios to avoid raising the CRA’s ire.

Anyway, my three portfolios exceed the “free” capacity of both products; I get around the restriction by having my spouse have her own Adjusted Cost Base account to track her portfolio. Not a big deal, just a minor inconvenience. With MyACB it would be a bit trickier.

Once nice thing that MyACB does here is support for a “Group” of portfolios. This allows for a user to have multiple portfolios at multiple brokers to keep an eye on superficial losses. I wasn’t able to test this function, since MyACB is limited to one portfolio in the free version. But I can see it as being useful. (In my case, as an Adjusted Cost Base user, I just merge all my transactions across multiple accounts into one portfolio and achieve the same result. The MyACB model is cleaner and more useful).

Automated FX

Since I trade in both USD and CAD, I need to know what the CAD<->USD exchange rate is on day of settlement5. If you only hold CAD-denominated assets, then this won’t matter to you.

Here the free version of MyACB wins hands down. MyACB will do FX calculations for you by looking up the FX rate on the day of settlement. This is a something Adjusted Cost Base makes you enter manually.

Automated RoC and phantom distributions

ETFs have a habit of using these means of distributing money to their unit holders. I’m no tax accountant, but you can read all about these weird distributions over on both of the websites

Both tools offer support for these, no issue there. I’ve been tracking these distributions in Adjusted Cost Base for years.

MyACB adds a small teaser in the free version that allows you to automatically add these transactions for any ONE asset in your portfolio6. So if your non-registered account has one asset, this might be construed as useful. For me, and my 10 different non-registered assets, it’s merely an effort to entice me to pony up and pay for the family version of MyACB. Anyway, I tried it out and it performs as advertised, and is an exceedingly useful feature, but in the free version, it’s really just a way to kick the tires for most of us.

But compared to the free version of Adjusted Cost Base, one thing missing is support for multiple portfolios. Adjusted Cost Base’s free version supports two portfolios. I actually need three portfolios: one for my account, one for my spouse’s account, and one for our joint account. To get around that restriction, my spouse tracks her portfolio in her own Adjusted Cost Base account.

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Import from other sources

Adjusted cost base doesn’t offer this in their free version, but it’s in the subscription version.

MyACB allows this in the free version, not too surprising, since it’s the new kid in town. The feature seems well thought out, and includes contributions from others (“schemas”) to save you time in figuring out how to map fields to MyACB.

I did try to do an export from Adjusted Cost Base to MyACB and ran into a few problems:

  • The way splits are modelled in the two platforms is different. MyACB puts the split ratio in a dedicated field, whereas Adjusted Cost Base puts in two places — once in the Transaction field and once in the Shares field. A bit of Google Sheets post-processing can fix this, but this may be a problem for a user less familiar with string manipulations.
  • In MyACB, the ticker symbol is mandatory, whereas in Adjusted Cost Base it isn’t.
  • Adjusted Cost Base doesn’t call out the currency used, just the exchange rate, and a “yes/no” if it’s a foreign currency transaction. MyACB stores the currency “kind” (e.g. USD, EUR etc). Again, a minor difference, but one that requires some thought as to how to covert one to the other.

Am I switching?

For the moment, no. Adjusted Cost Base meets my needs, and it would require some work for me to move to MyACB. To get the most out of the switch, I would have to pony up for a family plan given the portfolio limitations in MyACB’s free version. If you’re just starting out in getting help with your ACB tracking, either tool will meet your needs. MyACB has some nice features in the free version (automatic FX lookups, transaction importing) that warrant giving it a close look.

What do you think? Let me know at comments@moneyengineer.ca!

  1. There’s more than one acceptable way to do this. What I do is find the Bank of Canada rate on the settlement date and use that. ↩︎
  2. “Tax pros” is an assumption on my part. I don’t see how even the most dedicated DIYer has a need for 100 portfolios… ↩︎
  3. I see that the top hat guy for Adjusted Cost Base’s logo has had a makeover; he looks a little less scary and seems to have given up cigars. ↩︎
  4. I do respect the need for content creators and developers to be compensated somehow for the work they do. The ads on Adjusted Cost Base are quite prominent and can be quite distracting. ↩︎
  5. You track your ACB in Canadian dollars, always. And you convert each transaction — buy or sell — to CAD. ↩︎
  6. The UI to do this is a bit (uncharacteristically) clunky, in my view — you can only import one year of transactions at a time, which gets tedious pretty quickly. ↩︎

Wealthsimple: Tax mini-review

RobHLeave a comment

Ah, Tax Season. No surprise — I do my own taxes. I have been the “tax man” for many years, filling out taxes for me and my spouse, my parents (when they were alive), my mother-in-law…

For many years, I used TurboTax as my go-to software, taking advantage of the annual discount rate offered to CIBC customers. I include this research should any of you (a) bank with CIBC and (b) use TurboTax (which used to be called QuickTax).

Anyway, I don’t use TurboTax anymore. TurboTax had a nasty bug a few tax seasons ago related to Final Returns (I was filling out my late father’s final tax return) and after spending several hours with support, who ultimately admitted there was some bug, advised me to direct a call to the developer line and explain the problem to them — from scratch — I was less than impressed. And this after enduring yet another price increase (usually hidden as “upgrades” to do simple tasks, like add capital gains) I decided to look elsewhere for my tax filing needs.

I think it was a Rob Carrick column1 that advised me that upstart Wealthsimple offered tax software which was free2. As a certified cheapskate, “free” was certainly a price I could get behind. And so I gave it a try a few years ago.

I think Wealthsimple uses Tax as a loss-leader to get you started on their platform. It certainly worked that way for me. I started using just Tax, then added a prepaid Mastercard (no-fee FX), then added an RRSP/RRIF account (to get a new laptop), now a few savings accounts, investment account, Wealthsimple Visa card….

Anyway, you might be dubious about a free product, but it works great. It supports everything you would expect including auto-fill, eFile, saving information across tax years so you don’t have to type excessively, support for joint filing with your spouse…I’ll note that my tax needs are relatively simple: T4s, T5s, T3s, plenty of non-registered stock sales that generate capital gains and losses…Compared to QuickTax, Wealthsimple Tax is a little less user-friendly but a little easier to skip around. It didn’t take long for me to find my way around.

The hidden cost? You have to setup a login with an email address, and this will generate Wealthsimple marketing emails, which may or may not be welcome3. The Recommendations section includes helpful tips aka upsell opportunities like opening a TFSA to avoid paying tax on bank interest. But to me, it’s a fair trade.

  1. Mr. Carrick now has a Substack too. Retirement for him I guess means “doing the same stuff I did before without deadlines”, which is good news for the DIY investor. ↩︎
  2. Wealthsimple added Tax to their lineup back in 2019 with the acquisition of SimpleTax, a product some of you may know…? ↩︎
  3. I do like their Monday newsletter called TLDR. ↩︎