Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

What the CRA already knows or may learn about your crypto portfolio

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Image via Unsplash: Bermix Studio

By Anna Malazhavaya

Special to the Financial Independence Hub

For better or for worse, cryptocurrencies have gained popularity, at least in part, due to their anonymity. As the industry develops and tries to shake the “crypto-is-for-criminals” reputation from its early days, the anonymity in certain areas fades.

Know Your Client requirements at crypto exchanges have become quite sophisticated. News reports keep appearing about popular crypto exchanges, such as Coinsquare in Canada and Coinbase in the United States, handing information about their account holders to local tax authorities.

The price of Bitcoin has more than tripled in the last four months. As lucky crypto investors consider whether to HODL (Hold On for Dear Life) or sell, they can be certain the taxman is watching. When can information about your crypto investments and earnings become available to the Canada Revenue Agency? Here are a few examples.

1.) If you are audited, the CRA auditor can get access to your crypto exchange account

 If you are audited by the CRA for any reason, the auditor may come across a crypto exchange purchase on your bank or credit card statement. If so,  expect follow-up questions from the auditor. If the auditor asks about your assets, you must disclose all your assets, including your crypto portfolio. Lying to the CRA is never a good idea and can lead to criminal charges.

The CRA has the power to compel third parties, including currency exchanges, to disclose information related to your crypto account activity through a so-called Requirement for Information (“RFI”). If a crypto exchange receives such RFI, they must either comply with it, dispute it at the Federal Court, or face criminal charges. Most Canadian-based exchanges will promptly release your information to the CRA.

2.) Even if you are not currently audited, the CRA may get access to your crypto exchange account as part of a so-called “unnamed persons” RFI

In some cases, the CRA can ask the Federal Court for an order to compel third parties to disclose information on a group of “unnamed persons” if the group is “ascertainable” and the purpose of the request is to verify the tax compliance of these taxpayers. A recent example of the CRA successfully exercising this power was a Federal Court order compelling Home Depot to disclose information about the accounts of its commercial customers. It appears that the CRA won’t hesitate to use this power when dealing with crypto exchanges.

In September of last year the CRA filed an application in Federal Court seeking an order to compel Coinsquare Ltd., a popular Toronto-based digital asset exchange, to disclose activity of  its clients. All its clients. And all the way back to 2013, no less. Coinsquare disputed the application arguing that the group was not “ascertainable” and that the CRA engaged in a “fishing expedition” invading the taxpayers’ privacy.

On March 23, 2021, in its blog post, Coinsquare announced that it reached an agreement with the CRA for an order, whereby only a portion of accounts would be disclosed to the CRA on or before April 6, 2021. Coinsquare would produce to the CRA information on accounts valued at  $20,000 CDN or more on December 31 in the years 2014 through 2020, along with 16,500 of the largest client accounts by trading volume during those periods.

3.) Proceeds of Sale of Cryptocurrency can be visible to the CRA

Whether or not you used a popular crypto exchange platform to sell or spend your cryptocurrency, the CRA may question the source of proceeds (traditional currency or assets purchased with cryptocurrency) you received in exchange. If you are audited, your reported taxable income should be consistent with that large deposit in your bank account or that late-model Tesla parked in your driveway. If the CRA finds a discrepancy, the consequences can be very serious.

4.) Crypto investments are only anonymous while your crypto address is not linked to your name. But if the CRA makes the connection, look out

Using the same crypto address for sending and receiving some types of cryptocurrency is like writing under the same pseudonym. If anyone ever connects your real identity to the pseudonym, all you ever published under the pseudonym will then be linked to you. Continue Reading…

The MoneySense ETF All Stars 2021

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MoneySense has just published the 9th edition of the ETF All Stars, 2021 edition. As you can read in the  overview, this amounts to the Pandemic Recovery edition. The full package is available online here. Below we summarize the main picks by category: click on the highlighted headline [in red] for each category to go to the full MoneySense commentary as well as the accompanying charts showing ETF names, ticker symbols, fees and general description.

We again had eight panelists: the same as last year, except that regular Hub contributor Mark Seed of My Own Advisor replaced departing Dave Nugent. The format consists of the eight experts “voting” on which funds to retain and which to replace, with five out of eight votes carrying the day. (I get involved only if there is a 4-4 tie.)

Since our philosophy is to retain as many earlier picks as possible — provided they still meet our criteria of broad diversification and low cost — we ended up with 52 picks this year, just two more than in 2020: 44 selections were agreed-upon winners, plus there were 8 Desert Island picks (see below).

However, there were more new additions than that might suggest, since we also dropped a few ETFs from last year, notably in the ESG and Low Volatility categories.

Canadian Equities

All five Canadian equity ETFs return: VCN, XIC, HXT, ZCN and ZLB (see the chart at MoneySense for full ETF names). However, no new funds were added: We considered adding five new names but none attracted the five-vote majority necessary.

Remember that Canadian stocks are also amply represented in the One-Decision Asset Allocation ETFs discussed below.

US equities

The panel opted to retain all seven of our 2020 U.S.-equity ETF picks, while (finally!) adding two technology ETFs and a Vanguard all-cap total market fund (VUN), for a total of ten. That makes for a crowded category but after all the US is the biggest single geographic market in the world and investors have certainly been rewarded for being there in recent years: especially in 2020.

Returning picks are XUU, iShares’ US Total Market ETF; and three low-cost plays on the S&P500 index: VFV and VSP from Vanguard, and BMO’s ZSP. There was also the returning Desert Island pick from PWL’s Cameron Passmore: Avantis US Small Cap Value ETF [AVUV.]

International and Global equities

The panel retained six of the eight international or global ETF All-stars from 2020: two from iShares (XAW and XEF), three from Vanguard (VXC, VEE and VIU) and BMO’s low-volatility pick ZLI. Two other new picks introduced in the 2020 edition didn’t make the cut this time: iShares Edge MSCI Min Vol Global Index ETF (XMW, 0.48%), and CI First Asset MSCI World Low Risk Weighted ETF (Unhedged, ticker: RWW/B).  There was also a new international Desert Island pick from PWL’s Ben Felix: Avantis International Small Cap Index Fund (AVDV).

Fixed Income

While our panel as a whole continues to take a “stay with the program” approach to its fixed-income All-Star picks, we did cut back slightly on the number of Bond ETFs this year.  Only six of the eight previous fixed-income All-star picks returned: ZAG, VAB, VSB, ZDB, XSB and VGAB. One added last year, TLT, did not return, and long-time pick BXF also did not make the cut in 2021. Continue Reading…

A discussion about Value and Small-cap Factors with Avantis Investors’ CIO Dr. Eduardo Repetto

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Avantis Investors’ CIO Dr. Eduardo Repetto (Link to YouTube clip is in text below)

Over the years, I’ve encountered several financial advisors who liked to use the mutual funds of Dimensional Fund Advisors or DFA, which was founded by alumni of the University of Chicago and based on research on the long-term return premiums offered by small-cap and Value stocks around the world. Even today I own a DFA International Equity fund that was a legacy of my time with a fee-only advisor: that’s generally the requirement for accessing DFA funds.

So I was intrigued when certified financial planner Mike Bayer [CFP, CIM, FCSI) asked me to help him interview two senior executives of Avantis Investors (a unit of American Century Investments) which for the past 18 months has been marketing Avantis ETFs, which take a similar approach with small-cap and value factors and are more accessible to do-it-yourself investors who can buy the ETFs at discount brokerages, just like any other ETF.

Regular readers of the MoneySense ETF All-Stars may recognize the name Avantis. As you can see here, the Avantis US Small Cap ETF [AVUV] was a Desert Island pick of PWL Capital’s Ben Felix and Cameron Passmore. We are about to publish the 2021 edition and as mentioned in the video interview also linked below, that pick is back along with another Avantis selection, which you can learn by watching the video.  In addition, Felix has just released a 15-minute video covering Avantis: https://youtu.be/jKWbW7Wgm0w

In the end, possibly influenced by the arrival of Avantis, DFA itself brought out three of its own ETFs: https://us.dimensional.com/etfs

Bios

Dr. Eduardo Repetto is Chief Investment Officer of Avantis Investors. Previously he was Co-Chief Executive Officer and Co-Chief Investment Officer of Dimensional Fund Advisors. He earned a Ph.D. degree in Aeronautics from the California Institute of Technology, an MSc degree in Engineering from Brown University, and a Diploma de Honor in Civil Engineering from the Universidad de Buenos Aires.

Phil McInnis is also a DFA alumnus, where he was Head of Portfolio Solutions. Today he is director of investments at Avantis Investors®, responsible for marketing content development surrounding Avantis’ investment approach.

Mike Bayer, CFP, CIM, FCSI, is a Toronto-based financial planner with Strategic Analysis Capital Management and blogger at Free Speech Media.

Highlights from the transcript

So without further ado, here is a link to the full interview, which runs almost an hour. However, you can click on a “transcript” link within YouTube, for those who prefer reading and skimming. Below are some highlights:

Continue Reading…

How to stay safe while trading Cryptocurrencies

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Collection from different coins of crypto currency: ethereum, litecoin, bitcoin, monero, ripple.

By Emily Roberts

For the Financial Independence Hub

When you’re doing any kind of business online, we don’t need to tell you that security is paramount. While the security measures that software creators and the makers of our computers, tablets and phones are getting more sophisticated with each passing day, the techniques and scams used by cybercriminals are only matching them every step of the way.

Over the course of the last twelve months, we have all had to be even more careful as the crooks have taken advantage of the fact that people all over the world have had to conduct all their business online, and the cybercrime figures have skyrocketed.

Trading cryptocurrency is just like any other online activity involving money: you need to be extremely careful about the security measures you’re taking and any potential risks that you’re incurring. Here are a few tips to help you stay safe:

Make sure you have a Cold Wallet

If you are just getting into trading crypto then you may not be familiar with the phrases “hot wallet” or “cold wallet.” Simply put, a cold wallet is a place where you can store your currency offline, such as a drive or USB that you can disconnect. We do understand that this may seem like a slight case of overkill if you’re confident in the security measures installed on your device, but it’s always better to be safe than sorry, isn’t it?

Make sure you research and double check your leads

Things can move awfully fast in crypto, and just as in any other online trading, it can be tempting to jump on what seems like a good thing before anyone else gets there. However, you need to remember that this is an incredibly volatile market and if something seems like it’s too good to be true, then it may well be. Continue Reading…

A complete B2B SEO strategy for 2021

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Photo courtesy of Pixabay.com

By Mike Khorev

Special to the Financial Independence Hub

What exactly is B2B SEO?

B2B SEO strategy comprises digital marketing tactics that aim to help B2B [Business To Business] websites to rank high for certain keywords and terms in search engines like Bing and Google. Unlike optimization for B2C [Business To Consumer], B2B optimization strategies focus on phrases and terms that key decision-makers in a company actively search for at work. This can include managers, team leads, CEOs, CTO, etc.

Why Does It Matter in 2021?

B2B SEO matters in 2021 because it’s the only form of marketing that yields compounded traffic over time coupled with long-term results. 

Here’s why: Any page holding top 10 rankings in Google carries an average age of over 2 years. It’s hard to think of any other distribution and marketing channel that can generate traffic for multiple years.

Here’s another reason: Over 53% of all website traffic across different industries is organic. For the B2B industry, the figures are even promising. Organic searches generate twice the revenue than social media or email marketing for B2B businesses. 

How B2B SEO actually works

At the heart of B2B SEO lies keyword research and understanding customer problems. After that, you have to understand 3 different parts of SEO for B2B industries: 

  • The first one is on-page SEO, which includes optimization of the site page with useful content. It also includes adding headings, title tags, meta descriptions, URLs, alt text, etc.
  • Off-page SEO focuses on link building and securing website authority.
  • Technical SEO helps with the crawling and indexing of a site by search engines. It works on the architecture of the website.

B2B SEO Strategy in 2021

Proper Keyword Research

At this point, you have to figure different queries across different stages of the sales process that people at managerial positions are using to search for similar businesses like yours. 

To get help with keyword research, you can use SEMrush. It will give you information about your target buyer persona and what kind of keywords they are using to find solutions to their pain points.

You must work on finding the most important keywords that align perfectly with different phases of a sales funnel.

In case you have trouble finding the right set of keywords to act as a starting point for your B2B research, asking these questions might help you: 

  • What problems are my target personas facing?
  • Where are they looking for the solution to their pain points?
  • How can you come up with a viable solution?
  • What are the key features of your service/product?
  • Which keywords are your competitors for organic traffic generation?

Find Top-of-the-Funnel Topics

The top-of-the-funnel topics are the most general topics that a broad range of users are searching for. As you reach the narrow end of the sales funnel, the range of topics also keeps getting smaller and narrower.

If you’re doing B2B digital marketing, it’s important that you strategically pick and write about the top of the funnel topics. These topics and keywords get several-fold search traffic than the bottom-of-the-funnel topics. If you write about the latter your outreach will be limited. Continue Reading…