Posts by Preet

Podcast episode 4: Big Cajun Man talks about working surviving 18 rounds of layoffs at Nortel, and more

Posted by Preet on May 18, 2012 | 0 comments

If you follow me on twitter (@preetbanerjee), you’ll know that I decided to start a new podcast. I was trying to find some Canadian-content personal finance and business news podcasts but either I didn’t look hard enough, or most have stopped production because I couldn’t find anything. So I decided to start one up (again).

Mostly Money Mostly Canadian Episode 4

This week’s episode is now available on iTunes (You have to click through to “view in iTunes”). You can also just use the embedded player or MP3 download below.

This week:

• Big Cajun Man, author of CanajunFinances.com, is this week’s guest. We focus on his perspective on Nortel as a “grunt” who worked there through the rise and fall, and as a survivor of about 18 rounds of layoffs!
• Quick update on Greece – they can’t form a proper government and it’s freaking people out
• Explaining what the heck The Volcker Rule and Glass-Steagall is
• The Facebook IPO
• The Skeleton run at Whistler – what does is sound like to hurtle down an ice track, face first a few inches off the ice? I have a recording of it.

Ratings on iTunes are appreciated :)

If you enjoy the podcast, please use the iTunes link to give it a rating (or even a review) if you have an iTunes account. The first three episodes both hit #1 in Business as well as in Investing – thank you!

Interested in being a guest?

If you would like to be a guest on the show, drop me a line at preet@preetbanerjee.com. Investors, advisors, fund managers, bloggers, whomever. Remember, it’s “mostly money” which means sometimes it won’t be about money.

Podcast Episode 3: Top real estate analyst weighs in on Canadian housing. And Darth Vader.

Posted by Preet on May 10, 2012 | 0 comments

If you follow me on twitter (@preetbanerjee), you’ll know that I decided to start a new podcast. I was trying to find some Canadian-content personal finance and business news podcasts but either I didn’t look hard enough, or most have stopped production because I couldn’t find anything. So I decided to start one up (again).

Mostly Money Mostly Canadian Episode 3

Remember: This is an R-rated podcast. You’ve been warned! ;)

This week’s episode is now available on iTunes (Click here to subscribe). You can also just use the embedded player or MP3 download below.

This week:

• MBA and eMBA program return on investment
• Do kids have it tougher now than their parents?
• NEW SEGMENT: Fortune cookie wisdom with a Sith Lord. Yep: Darth Vader weighs in on first time home buying.
• INTERVIEW: Ben Rabidoux (www.TheEconomicAnalyst.com) is a top real estate analyst who pulls no punches about what’s what in Canadian housing today
• Did you work for free on the Leap Day this year?

Ratings on iTunes are appreciated :)

If you enjoy the podcast, please use the iTunes link to give it a rating (or even a review) if you have an iTunes account. The first two episodes both hit #1 in Business as well as in Investing – thank you!

Interested in being a guest?

If you would like to be a guest on the show, drop me a line at preet@preetbanerjee.com. Investors, advisors, fund managers, bloggers, whomever. Remember, it’s “mostly money” which means sometimes it won’t be about money.

Stop smoking or blow up a Porsche?

Posted by Preet on May 9, 2012 | 2 comments

As a teenager, I remember seeing a commercial which showed a smoker blowing up a Porsche 911 cabriolet as a high-impact visualization of the opportunity cost of smoking from an economic point of view. What a bunch of hog wash. They should have blown up a few more Porsches to make it realistic.

According to the Smoking and Health Action Foundation, the average carton of cigarettes costs between $70.18 and $106.09 depending on the province or territory you live in. If we average those extremes, we end up with a cost approaching 45 cents per cigarette since a carton contains 200 cigarettes.

I’ll make some simple assumptions for my own high-impact analysis: our smoker starts smoking a pack a day at 15, pays $9.00 for a pack, and the long term, after-inflation rate of return of a moderately aggressive portfolio that they could have directed their money to is 3%. That works out to over $375,000 of opportunity cost in today’s dollars by the time he or she reaches 65.

If you want to play with the variables, you can download a copy of the “cost of smoking calculator” here. If you want to figure out the value with today’s purchasing power of a dollar, just subtract an estimate of the long term inflation rate from the portfolio’s annualized rate of return.

But even this analysis is too simple. What other costs do you incur as a smoker that you wouldn’t if you were smoke-free? How about insurance premiums. Not only does life insurance cost more because your risk of dying is higher, even your home insurance costs more because you are more likely to set your house on fire.

Your home value can be affected too. Either you take a hit on the home’s value for smelling like smoke, or you spend money getting rid of the smell for when you put it on the market. Ditto for your car. We haven’t even discussed health costs which not only affect you financially, but more importantly, physically.

They say quitting smoking is harder than quitting heroin. Well, I say blowing up a flat-six powered German automobile is sacrilege, and you could effectively being blowing up a small fleet of them the longer you smoke.

Mostly Money, Mostly Canadian Episode 2 featuring CanadianCouchPotato.com

Posted by Preet on May 3, 2012 | 11 comments

Episode 2 of the new podcast is now up on iTunes.

*If you like the podcast, I would appreciate a rating and/or a review in iTunes! :)

For those who don’t have an iTunes account, you can use the flash player below to stream the episode on any flash-enabled computer.

This week’s guest was Dan Bortolotti, writer of CanadianCouchPotato.com. We discussed how he became to be an index investing guru and how investors have a hard time calculating their personal rates of return.

Podcast is ready: “Mostly Money Mostly Canadian” now on iTunes

Posted by Preet on Apr 30, 2012 | 3 comments

If you follow me on twitter (@preetbanerjee), you’ll know that I decided to start a new podcast. I was trying to find some Canadian-content personal finance and business news podcasts but either I didn’t look hard enough, or most have stopped production because I couldn’t find anything. So I decided to start one up (again).

Mostly Money Mostly Canadian

After consulting the twittersphere, I decided on the title of Mostly Money Mostly Canadian. The format is still evolving, but it will include personal finance and business news issues in a light manner, interviews, and off topic content as well.

Here’s the description from iTunes:

Mostly Money, Mostly Canadian is a personal finance and light business news podcast for average Canadians. It’s a light hearted look into what is important about managing your personal finances and what some of the business headlines really mean. Interviews, jokes, education, and no intimidation. It’s mostly about money, and mostly Canadian, but sometimes things get off topic. Like fast cars, fatty foods, movies, science, and more. Basically it’ll cover whatever random thoughts are going through Preet’s head. This podcast is rated R for occasional foul language and as a pre-emptive warning to those with pickles up their ass.

The first episode came in a bit longer (27 minutes) than I had targeted. I’m hoping to keep it at 15 – 20 minutes per week on average. I’ll need a few weeks to get into a good rhythm and to tweak the format of the show, same as any new endeavour. :)

Interested in being a guest?

If you would like to be a guest on the show, drop me a line at preet@preetbanerjee.com. Investors, advisors, fund managers, bloggers, whomever. Remember, it’s “mostly money” which means sometimes it won’t be about money.

Subscribe to the podcast on iTunes (free)

You can subscribe to the podcast on iTunes here: http://itunes.apple.com/ca/podcast/mostly-money-mostly-canadian/id523360095

(You can also just listen by using the flash player at the bottom of this post.)

Central banker avoiding answering any questions about rate hikes (Comedic Video)

Posted by Preet on Apr 25, 2012 | 1 comment

I love the Aussie comedy duo of Clarke and Dawe. Here’s a 2 minute video of them hamming up a pretend interview of Australia’s central banker (like Canada’s Mark Carney) being asked about interest rate hikes. Enjoy!

(If you can’t see the video, click here)

The Lifelong Learning Plan (LLP)

Posted by Preet on Apr 24, 2012 | 2 comments

A victim of a company layoff asked me if she should use the Lifelong Learning Plan provision of RRSPs to pay for tuition when going back to school on a full time basis. I immediately responded that few people use that program, and she might not want to either.

The Lifelong Learning Plan is very similar to the much more popular Home Buyer’s Plan. Instead of taking an interest free loan from your RRSP to assist in purchasing your first home, the Lifelong Learning Plan, or LLP, is used to assist you in going to (or going back to) school. You can also use it to finance the education of a spouse or common-law partner.

Under the LLP program, you can withdraw up to $10,000 from your RRSP per year if you meet the following conditions:

1. You are enrolled, or have received an offer to enrol before March of the following year, at a designated educational institution.
2. The program you are taking is a “qualifying education program”.
3. You are enrolled on a full-time basis.

If you meet these conditions, then you do not have to pay tax on these withdrawals under the LLP program. As long as you pay the funds back to your RRSP over a period of ten years following eligibility of the program, you will never have paid interest or tax to access this money.

Normally, any money taken from your RRSP is treated as ordinary income and taxed at your Marginal Tax Rate. So for example, if you earn $150,000 in 2012 then you fall into the highest tax bracket and according to Ernst & Young’s 2012 personal tax calculator that means you are paying anywhere between 39 and 48.22 cents per dollar withdrawn depending on which province you live in. But how many people earn $150,000 per year when enrolled in school on a full time basis?

If you’ve lost your job, your income is very low. Let’s assume you have absolutely no income, not even employment insurance benefits. If you took out $10,000 from your RRSP you would have virtually no tax to pay. When making the RRSP withdrawal from your financial institution they would withhold tax and remit it to the Canada Revenue Agency (CRA) on your behalf, but once you filed your taxes for that year you would get back whatever was withheld.

By simply deregistering funds from your RRSP in a low income year, you could end up paying very little in tax because you are in a low tax bracket. (“Deregistering” means making a withdrawal that is treated like ordinary income.) You would not need to qualify the withdrawal by checking on the status of the education institution or program, and you could study part-time if you wanted to as well. You have much more flexibility.

Even better news: once you graduate and hopefully start earning more money, you can catch up on your RRSP contributions and perhaps collect some sizable refunds. In contrast, you wouldn’t receive any tax savings for repayments under the LLP program.

If you are considering the LLP program, run through a forecast of your income and taxes before making any decisions. Everyone’s situation is different, but few end up using the Lifelong Learning Plan*.

*Statistics Canada reports that from 1992 (program inception) to 2004, 1.4 million Canadians aged 25 to 64 withdrew $14.2 billion under the Home Buyer’s Plan compared to 49,000 Canadians aged 25 to 64 who withdrew $363 million under the Lifelong Learning Plan from 1999 (program inception) to 2004.

This content originally appeared in my Globe and Mail column.