The right things

Do you support Ukraine?

This blog does. The world’s a worse, riskier place when we stand back and let one country invade another for economic and ego reasons. The Ukraine war has cost hundreds of billions, killed tens of thousands of combatants and civilians, set back the goal of climate justice by at least a decade and is daily the scene of state-sponsored terrorism as Russian pounds the population into cold, dark, hungry desperation.

It’s a financial, human disaster. Putin is a dipstick. And you can do something about it.

Got a spare hundred bucks? Then consider investing in the new issue of Ukraine Sovereignty Bonds.

This is a triple-A rated, five-year bond issue from the Government of Canada that will allow you, me, your neighbour and your BIL to support the people of that broken country. Money will be spent buying fuel for homes and also repairing the electrical grid which Russian missiles have been deliberately shattering. The bonds are risk-free, guaranteed by Ottawa and they’ll be paying a competitive interest rates (to be announced, but at least 3.3%). Interest will be distributed twice a year.

The funds will flow to Ukriane via the International Monetary Fund (IMF) and will help to fund basic services. There is a single maturity date – August 24th, 2027 – which just happens to coincide with Ukrainian Independence Day. The bonds can be held inside a registered account (like a RRSP or TFSA), as well as non-registered investment accounts, and will be available to retail investors for a limited time only. The securities will be issued by the end of the month, and are available through investment dealers.

Be proud that Canada is the first country outside of Ukraine to float a bond in support of those folks, and of the principals of democratic rule and sovereignty. Full marks to Trudeau for this one. If you gave money to the truckers last year to support ‘freedom’ in the freest country, consider atoning here. This is a real cause.

After peeing away $130 million of client funds on a corrupt, mismanaged, Ponzi crypto exchange, the outfit managing the retirement assets of Ontario teachers is trying to save face.

It’s not working.

“We are disappointed with the outcome of this investment, take all losses seriously and will use this experience to further strengthen our approach,” said the OTPP in a statement which also admitted the entire amount invested now has a new value. Zero.

“Recent reports suggest potential fraud conducted at FTX which is deeply concerning for all parties,” the pension plan said. “We fully support the efforts of regulators and others to review the risks and causes of failure for this business.” Of course, teachers would be excused for asking what level of due diligence the fund managers went through before throwing all this cash at a cool crypto thingy. As FTX unravels, it appears billions of dollars have evaporated, disappeared, been stolen or squandered. The exchange was unregulated and constituted extreme risk.

The plan’s defence? This money is just a small fraction of the $242 billion the fund administers. So what’s the fuss? (By the way, Quebec’s huge Caisse pension fund recently wrote off its entire $150 million investment in another crypto pooch, Celsius Network.)

The optics of this are awful. People with a fiduciary duty failed. If my colleagues had put clients’ personal retirement money into an asset like this – especially without their knowledge or permission – the securities regulator would have them hanging from a high place by their private parts.

What a wake-up call. Clowns.

If you dislike tax, you will love this. The TFSA contribution level for 2023 moves up to $6,500 and the maximum amount that can be stuffed into an RRSP shoots past $30,000 for the first time.

Everybody should have at least a tax-free savings account. In fact, millions of us do. But an incredible 90% of Canadians fail to dump in the whole amount on an annual basis. Worse, in excess of 80% of the money contributed goes into “high-yield” savings accounts and comatose GICs. And scads of people consider their TFSAs to be short-term repositories for shoe or vacation money. Sad.

Remember that payments derived from a TFSA can support you in retirement with none of it considered taxable income. No effect on old age pogey. No pushing you into a higher tax bracket (as RRIF income can do).

As of next year a couple with two stuffed tax-free accounts will have $176,000. If that grows for two decades at an average of 7% (consistent with balanced portfolio returns for the last few decades), it becomes $700,000, even without additional contributions. That would provide a monthly supplement of about $3,500 – doubling the CP and OAS that most people collect, while adding nada in tax.

Do it.

About the picture: “Long time reader, first time writer,” says Kayla, in Northern Alberta. “My fiancé and I both work in the business and read your blog every day for our daily dose of sanity-preserving perspective, and also the caustic wit and quality pet photos (I was going for tasteful MSU, did I succeed?) Anyway, here is our boy Max, about to turn 6. We tried for a while to keep him from napping on the couch but finally gave up and started putting a sheet down to try and contain the dog hair. He enjoys fetching balls in the backyard and snoozing with his chew toys before promptly tearing them to literal shreds. Here he is with his latest victim.  Thanks for all your wisdom. Keep roasting the haters and being yo bad self.”