Optimism #78 - September 19, 2024


Dear clients and friends,

A new record discrepancy for my Fortis gas bill.  $63.29 for $7.81 of actual gas. 
The total is 8.1 times the actual product consumed.  What a business. Glad we own it.

Again… this year I forgot the details of RESP withdrawals.  This is a repeat from a year ago. 

1.There are three parts - ask the account administrator for a current breakdown.
2.The income, the grant (these two form the PSE) and the principal (EAP).
3.The income and grant are taxable to the student, the principal is not.
4.The administrator suggested we take out the ‘free’ part first.  I disagree and suggest you divide the taxable amount (income + grant) by the number of school years left and roughly divide it.  My eldest daughter is in fourth year and younger one is in second year so there are 1 + 3 = 4 years left to pay for.
5.For mine, the income is $33,101 and the grant is $8,216 for a sum of $41,317.  I elected to draw ~$11,000 per kid from this part and the balance from the non-taxable part.
6.There is a limit of $5,000 which may be taken from the taxable part of the plan, but it only applies to the first 13 weeks of the first year of a multi-year program.
7.Consider moving extra funds out of the RESP into a TFSA and FHSA for the student.  Since both are fully tax free, it makes sense.

Insiders are buying at Maple Leaf foods and Northview Residential REIT to name a few.

There is plenty of good reading to be had recently.  I hope you find a useful gem.

The first article is a word of caution, from the New York Times about phony online Credit Unions with Ottawa addresses, with fake high interest savings accounts.

Second is from John Heinzl at the Globe, about how dividend stocks will do better as interest rates drop.  It’s been a terrific quarter so far.

The third is from Dan Hallet, a man I have long admired.  Early in my career he wrote about becoming a trusted advisor and not a salesperson.  It resonated with me and still does today.

There are new watered down bare trust rules.  Many of you reacted quickly to adhere for new rules sprung on us early in 2024, only to find them revised.  It’s been frustrating to say the least.  There is no paywall so here is a link.

Thanks for reading.  Have a wonderful September.
Derek Moran