Weekly Wrap: ORPP gets flak, investors watch weights, the worst form of debt

Ontario premier Kathleen Wynne (Twitter.com)

First an apology that there was no weekly wrap last weekend because of a long weekend I took up in cottage country. Summer is fast fading!

This week the big macroeconomic story was China’s devaluation and the consequent negative impact on global markets. Probably the least confusing and most insightful analysis of this story was in The Economist, titled The Devaluation of the Yuan: The Battle of Midpoint.

On the retirement front in this country, the controversial story was the Ontario Government’s unveiling of the details of the much-loathed ORPP, or Ontario Retirement Pension Plan. This appears to becoming an election issue as the animosity between Stephen Harper and Ontario premier Kathleen Wynne heats up. We did weigh in with a recap on the Hub, which you can find here.

Note the references to two studies that came out hours before the official ORPP announcement, providing a little grist for the mill for both fans and foes of the plan. My own take on this will be in an upcoming Motley Fool blog but the main critiques of the ORPP — and there were many — are summarized below.

10 reasons ORPP should be T-ORPP-EDOED

First, the University of Calgary’s Jack Mintz weighed in with ten reasons why ORPP should be killed. He had plenty of company in the media. Along similar lines was the Post’s Robyn Urback, which bore the tongue-in-cheek headline of Kathleen Wynne doubles down on pension plan that will cost TBD and solve (insert). And one piece argued the ORPP, like the Ontario Health Premium before it, is nothing but another job-killing payroll tax: Ontario’s pension tax.

The initial news report from the Globe & Mail attracted almost 600 comments about the ORPP last I looked: Harper slams Ontario pension plan after Wynne reveals new details. Back at the Post, Andrew Coyne observed that it was Hard to make new Ontario pension plan look like anything but an unneeded tax. Then on Friday, one of the National Post’s lead editorials slammed it as An unsustainable pension plan.

Remind us again, who actually wants this plan, apart from power-hungry politicians wishing to stay in office?

FP: Equal Weighting ETFs; Books with extreme views on Asset Allocation

My monthly ETF column at the Financial Post looked at equal-weighting strategies for exchange-traded funds and also sported a cute headline for which I can take no credit: Why fund investors should watch their weights.  And in the weekend Financial Post we reviewed two books with polar opposite views of the market and investment strategies: Two Extremes: Stick with Stocks or shun ‘complex instruments’ designed to make other people rich.

Motley Fool: Going global with ADRs; TSX-V doldrums

This week, I also wrote a blog for the Motley Fool on ADRs, aka American Depositary Receipts: Build a global portfolio with ADRs. And while it’s behind a paywall, on Friday Motley Fool’s Stock Advisor Canada ran a special report by me titled The Ups and mostly Downs of Investing on the TSX Venture Exchange. This link provides a discount to the service, but here are the first few sentences:

You know a sector is terminally depressed when makers of exchange-traded funds (ETFs) shut down index products tracking that sector. Such is the case with the TSX Venture Index and the decision on June 18 by BlackRock Canada to shutter its iShares S&P/TSX Venture Index ETF (TSX: XVX). The ETF would have been four years old had it reached September 13, but is to be delisted “on or about” August 27.

If you had bought $10,000 worth of XVX at inception on Sept. 13, 2011, your investment would have been more than cut in half to $4,334 as of March 31, 2015, according to the most recent fact sheet published on BlackRock’s website. That’s a compounded 3-year loss of 34.5% — and minus 21% since inception.

The irony is that critics of the sector argue several hundred names on the Venture Index should also be delisted, but for various reasons this article will look at, relatively few have been.

The worst way to get out of debt

From Club Thrifty comes this cautionary tale about consolidation loans: Introducing, The Worst Way to Get Out of Debt. Eliminate debt with another debt of almost 30%? Sheessh! That way madness lies, not Findependence!

Frugalwoods site on Financial Independence

Via Twitter, I discovered another site devoted to Financial Independence and Simple Living: Frugalwoods.com. It’s all about “Extreme Frugality” (here at the Hub we use the term Guerrilla Frugality) and Early Retirement (we call that Early Findependence!). Different terms, similar concepts. Try for example this Frugalwoods piece from earlier in the year: The Privilege of Pursuing Financial Independence.

Is your marriage financially fit?

Over at the Retire by 40 site, the question being posed is Do You Have a Financially Fit Marriage? One suggestion is a monthly Finance meeting once the kids are asleep, accompanied by wine no less. That strikes me as way too often but hey, if it works, go for it.

And on the topic of living happily ever after till death do us part, how long do you think you should keep your tax returns and back-up material? I always thought the magic number was seven years, but according to the Wandering Tax Pro blog (in the U.S.), the answer is “Forever.” See One Reason You Should Keep Your Tax Returns Forever.