Quotations by Eric Tyson

Money is not the first - or even the second - priority in happy people's lives. Your health, relationships with family and friends, career satisfaction, and fulfilling interests are more significant. That's not to say that it's okay to ignore or give insufficient attention to your personal finances and associated decisions. [2019] - Eric Tyson

For the purpose of determining your OAS benefits, you may be able to add the years you lived in another country - assuming you contributed to its social security system - to the years you've resided in Canada. This is a result of social security agreements Canada has with a number of other countries. [2019] - Eric Tyson

When you evaluate the cost of a product or service, think in terms of total, long-term costs. People who sell particular products and services may initially appear to have your best interests at heart when they steer you towards something that isn't costly. However, you may be in for a rude awakening when you discover the ongoing service, maintenance, and other fees you face in the years ahead. Sometimes, paying a reasonable amount more upfront for a high-quality product or service ends up saving you money in the long run. [2019] - Eric Tyson

In grocery stores, you can often find name brands and store brands for the same product sitting in close proximity to one another. On reading the label, you can see that the products may, in fact, be identical, and the only difference between the two products is that the name-brand costs more (because of the branding and associated advertising and marketing). [2019] - Eric Tyson

If you have to take certain drugs on an ongoing basis and pay for them out of pocket, ordering through a mail-order company can bring down your costs and help make refilling your prescriptions more convenient. Also, inquire about generic version of drugs. [2019] - Eric Tyson

In the long run, you save money with a higher deductible, even when factoring in the potential for greater out-of-pocket costs to you when you do have a claim. Insurance should protect you from economic disaster. Don't get carried away with a really high deductible, which can cause financial hardship if you have a claim and lack savings. [2019] - Eric Tyson

Check out "Tax Planning For You and Your Family" prepared by KPMG and published by Thomson Carswell for easy-to-understand, digestible explanations and advice. Another accounting firm, Raymond Chabot Grant Thornton, also has a helpful "Tax Planning Guide", which you can download at https://www.rcgt.com/en/. StudioTax, available at www.studiotax.com for free, regardless of your income level, is a great, easy-to-use program. TurboTax and H&R Block Tax Software are also programs that we've reviewed and rated as very good. The CRA's website (www.cra-arc.gc.ca) is among the better tax websites, believe it or not. [2019] - Eric Tyson

Buying futures isn't much different from blowing $10,000 at the craps tables in Vegas. Futures prices depend on short-term, highly volatile price movements. As with gambling, you occasionally win when the market moves the right way at the right time. But in the long run, you're gonna lose. In fact, you can lose it all. Options are as risky as futures. With options, you're betting on the short-term movements of a specific security. The only real use that you may (if ever) have for these derivatives is to hedge (e.g. using put options allows you to postpone selling your stock without exposing yourself to the risk of a falling stock price). [2019] - Eric Tyson

Subtract your age from 110 (120 if you want to be aggressive; 100 to be more conservative) and invest the resulting percentage in stocks. You then invest the remaining amount in bonds. Consider allocating a percentage or your stock-fund money to overseas investments (a combination of U.S. and international stock funds) - at least 20 percent for play-it-safe investors, 25-35 percent for middle-of-the-road investors, and as much as 35-50 percent for aggressive investors. [2019] - Eric Tyson

With dollar-cost averaging (DCA), you invest your money in equal chunks on a set, regular schedule - such as once a month - into a diversified group of longer-term investments. The attraction of DCA is that it allows you to ease into riskier investments instead of jumping in all at once. The flip side of DCA is that when your investment of choice appreciates in value, you may wish that you had invested your money faster. DCA is most valuable when the money you want to invest represents a large portion of your total assets and you can stick to a schedule. [2019] - Eric Tyson

The value of a bond generally moves in the opposite direction of the change in interest rates. For example, if you're holding a bond issued at 5 percent and rates on similar bonds increase to 7 percent, your 5 percent bond will decrease in value. (Why would anyone want to buy your bond at the price you paid if it yields just 5 percent and 7 percent can be obtained elsewhere?) [2019] - Eric Tyson

You can usually beat the interest rate on shorter-term GICs (those that mature within a year or so) with the best high-interest savings accounts or money-market funds, which offer complete liquidity without any penalty. [2019] - Eric Tyson

Hedge funds are privately managed funds for wealthier investors and are generally riskier than a typical mutual fund. The fees can be steep - typically 20% of the hedge fund's annual returns, as well as annual management fee of 1% or so. They're also generally illiquid - there are usually lockup periods, and it can still be difficult to get your money back out later when needed. We generally don't recommend them. [2019] - Eric Tyson

An often-overlooked drawback to investing in real estate is that you earn no tax benefits while you're accumulating your down payment. Registered retirement plans give you an immediate tax deduction as you contributed money to them. If you haven't exhausted your tax-deductible contributions to these accounts, consider doing so before chasing after investment real estate. [2019] - Eric Tyson

When you want to invest in precious metals as a hedge against inflation, your best option is to do so through mutual funds or ETFs. Don't purchase precious-metal futures (they are short-term gambles). We also recommend staying away from firms and shops that sell coins and bullion (bars of gold or silver). Even if you can find a legitimate firm (not an easy task), the cost of storing and insuring gold and silver is quite costly. You won't get good value for your money - markups can be substantial. [2019] - Eric Tyson

Here are the lowest-cost providers of index funds and ETFs: 1) BlackRock, whose funds go by the iShares name (www.blackrock.com/ca) 2) Horizons Exchange Traded Funds (www.horizonsetfs.com) 3) TD e-Series Funds (www.td.com) 4) Vanguard (www.vanguardcanada.ca) [2019] - Eric Tyson

Although you can close out your RRSP earlier than the year in which you celebrate your 71st birthday, the best strategy for most people is to leave your RRSP intact for as long as you're allowed. This is almost always the case if you decide to turn it into an RRIF. If you choose to go the annuity route, collapsing your plan a year or two early can make sense. If interest rates are relatively high, closing your plan out early may make sense if it allows you to lock in a higher-than-average return. [2019] - Eric Tyson

RRIFs are usually a good choice if you enjoy managing your money, have an indexed company pension plan that guarantees you a basic level of income, and don't immediately need to start drawing on your funds. Another advantage of RRIFs is that you can convert them to an annuity at any time. Annuities are usually best when you have small retirement savings that absolutely need to last a number of years (especially if you're young and your family has a history of living a long time) and must have the peace of mind that comes with knowing just how much you have to live on. [2019] - Eric Tyson

Contributing to an annuity may make sense if you've exhausted contributions to RRSPs and employer-sponsored and self-employed plans and you expect to leave the money compounding in the annuity for at least 15 years. It typically takes this long for the benefits of tax-deferred compounding to outweigh the higher annuity fees and treatment of withdrawn annuity earnings at the higher ordinary income-tax rates. If you're close to or are actually in retirement, tax-friendly investments made outside of registered retirement plans are preferable. [2019] - Eric Tyson

High-interest savings are generally a better choice than money-market funds. Unlike money-market funds, high-interest savings account don't require a minimum deposit, nor do you have to worry ab out getting dinged with commissions, charges, or fees for withdrawing your money within a certain time frame. Another big plus is that, unlike a money-market fund, you can access your money quickly as long as your money has been in the account the required number of days. [2019] - Eric Tyson