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Transfer Value... buying an annuity?

dapaterson

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Berkshire pays 2.97% dividend right now. Foreign income, so it doesn't get preferential income tax treatment.

Bank of Nova Scotia pays 4.35% dividend right now. Canadian, so it's eligible for the dividend tax credit.

Toss it in a registered account, make it a DRIP and while your adjusted cost base will slowly creep up, so too will your effective dividend rate, as Canadian banks are well regulated and regularly increase their dividend rates.

Note that one potential pitfall with Canadian dividends is that the gross-up of the dividend tax credit may reduce old age security through the high income claw back because of the mechanism of the gross up.

 

Humphrey Bogart

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If I took the TV I would have a fixed income portion to try to reduce volatility. Not saying 40% of my portfolio would be government bonds but 20 equity stocks is aggressive for me. Ack that power Corp and Brookfield has many holdings. Keeping it ton just Canada makes me nervous too. At that point might as well just buy Berkshire and call it a day.
Agreed plus you're missing out on a lot of potential economic activity elsewhere, the Canadian economy is after all, only 2% of the Global economy.

For taxes though, if you invest in American Stocks, you will pay a withholding tax on dividends that the IRS will automatically take from you, unless you put it in an RRSP.


Berkshire pays 2.97% dividend right now. Foreign income, so it doesn't get preferential income tax treatment.

Bank of Nova Scotia pays 4.35% dividend right now. Canadian, so it's eligible for the dividend tax credit.

Toss it in a registered account, make it a DRIP and while your adjusted cost base will slowly creep up, so too will your effective dividend rate, as Canadian banks are well regulated and regularly increase their dividend rates.

Note that one potential pitfall with Canadian dividends is that the gross-up of the dividend tax credit may reduce old age security through the high income claw back because of the mechanism of the gross up.


Berkshire Hathaway actually doesn't pay a dividend. They never have and won't, the company instead prefers to reinvest the cash but Berkshire does regularly conduct share buybacks which increase the value of the stock.


Interestingly, 45% of Bill Gates personal portfolio is tied up in Berkshire Hathaway.


Other big holdings of his are Waste Management, Caterpillar, Walmart and CN Rail.
 

ballz

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If you have a Strategy and a Plan then work towards executing it and doing what you think is best for your own situation. A lot of people will tell you it won't work and it may not but it most definitely won't work if you don't try.

I would need a whole 'nother thread to talk about this strange human tendency. Suffice to say, I fully agree and my advice for people is the same... the hell with 'em, go swing for the fences.

Seriously, there's a weird psychological phenomenon with humans that seems to see people who have "settled" with their lot in life discouraging others from going after more, or that in order to "fit in" you should abandon your ambitions.... that there is something "uncool" about getting after it.... when you outgrow the insecurity to fit in and just get after it, it's something that really frees you.

"Maybe you could get what would really be good for you. Well, why don't you? Well, because you don't try...."

 
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Messerschmitt

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More confounding factors: 20 years ago pay rates were materially less, meaning the TV would also have been materially less; and over half the initial TV would have been taxable in the hands of the recipient, so needs to be discounted for initial taxes before investing.
less than 50% actually.

Half of TV is tax free and locked. The other half that would be taxable can be reduced with all the RRSP room + taken next tax year when you have 0 income (unless you itch to start working again, but personally I would definitely take 1-2 years off and travel the world).

Another tactic with TV is to sell everything before reaching 65. That way depending how your investments went, you should sit on several millions + get OAS + GIS if you don't have any income. Start drawing CPP at 60 too to lower CPP and boost GIS.
 

dapaterson

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Tax deferred, not tax free.

And the attribution of the TV to LIRA and cash is not a simple 50/50 split, it's dictated by the ITA.

For a CFSA pension, the sheltered amount will be 9x your annual benefit at age 65 (reduced for CPP combination, but not increased for indexing). The balance will be taxable in your hands.

Given the relatively generous pension provisions of the CFSA, you are unlikely to have significant contribution room to shelter the cash amount.
 
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