Weekly wrap: Over-taxed rich, starving on bond yields, and the hazards of experts

Tim Cestnick (Twitter.com)

A week after his Globe & Mail article, Overtaxing the Rich: A Cautionary Tale, attracted widespread attention, Scotiabank tax guru Tim Cestnick has followed up with Overtaxing the Rich: Canada’s Tax Debate rages on.

In the original piece, Cestnick floated a colourful parable that suggested the rich are more than paying their share, to the benefit of those less fortunate. But if those with the highest incomes are pushed too far beyond the 50% rate, they may be inclined to leave, making the circumstances of those further down the pyramid that much worse.

With 650 comments and counting, it’s no hyperbole in this case to say there’s a true debate that’s raging here. And with an election coming up this fall, it’s safe to say this topic won’t be going away any time soon. The new higher TFSA limits are certainly a major element of this debate. No surprise that we at the Hub favour the new higher limits and I’d be surprised if Tim Cestnick or any of his well-heeled clients feels any differently.

The Bond dilemma

Meanwhile, rich or not and highly taxed or not, it continues to be a struggle finding yield at today’s paltry levels of interest rates, which of course are fully taxed outside registered accounts. This was one of several themes I picked up at a recent ETF and mutual fund conference in Chicago. Here’s my column in Motley Fool Canada on this topic, titled Caution Ahead: Why Bonds May Soon Become Much Harder to Manage.

In a similar vein, The Daily Reckoning’s Bill Bonner warned this week that Bonds are No Longer a Safe Haven. I guess that leaves cash or stocks.

Cash & Kerry

Kerry Taylor, creator of the SquawkFox blog, recently landed a new writing gig with the Globe & Mail, cleverly titled Cash & Kerry. One of her first pieces was entitled House Hunting: Here’s what a million bucks buys you.

Helen Mirren: Findependence is Freedom

In a recent online piece, actress Helen Mirren is quoted as declaring that Financial Independence is Freedom.  “The most important thing we can teach our daughters is to gain financial independence.” Meanwhile, from the Reach Financial Independence site comes this blog about dividend reinvestment plans, entitled Don’t leave your financial future to the experts.

Of course in a long bull market like the one we’ve been in, it’s easy to delude yourself that you don’t need any outside experts. In the Wall Street Journal this weekend, Jonathan Clements recounts the Seven Lies Investors Tell Themselves.

Meanwhile, in a profile of a retired do-it-yourself investor, the New York Times describes The Risks and Rewards of Self-Managing Investment Portfolios.

The Perfect ETF?

On Wednesday, the Globe ran a Bloomberg article entitled Why this Vanguard ETF is almost perfect.

The 10-minute rule

Here’s something I’ve not seen before: The 10-minute Rule with Money, which appeared this week on @bigcajanman’s Canadian Personal Finance blog. It’s a time management trick that involves doing manageable short tasks first, somewhat like the title of financial planner Frank Wiginton’s book, How to Eat an Elephant. (One Bite at a Time.)

Identity theft, Wrongful dismissal

Finally, in the realm of threats to Findependence come these two items:

Protecting what wealth you’ve built can be threatened by Identity Theft. The Making Sense of Cents blog asks whether you could be the next victim. The Retirement Redux site asks the question that often follows a wrongful dismissal: How long do you have to look for another job?


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