Herman Ye

It's important to diversify globally. This is especially true for us up north. Canada only has a handful of public companies and these companies span very few sectors (finance and natural resources). Investing overseas does comes a cost. Taxes . Today we discuss foreign withholding tax and how we can properly manage it. What is Foreign Withholding Tax?  These are taxes for dividends paid by foreign companies to Canadians. The tax is withheld from your dividends behind the scenes so are often overlooked. A major oversight as they can put a heavy drag on performance if not managed. How Much Are These Taxes? The amount varies by country, typically ranging between 15% and 25%. Are These Taxes Recoverable? If the tax occurs in your non-registered account then you'll receive a tax credit that you can apply against your income. For dividends paid to your registered accounts (TFSA, RRSP, etc.), the tax is unrecoverable. How Can I Reduce My Taxes? Tax consequences ...

Stock buybacks have been in the hot seat. Companies of all shapes and sizes are facing criticism for their "excessive" buyback programs. Today we breakdown what buybacks are and if they're really as bad as people say. What is a Stock Buyback? A stock buyback is exactly what it sounds like. A company buys back  stock. Also referred to as a  shares repurchase . Done either by  tender offer or in the open market . A tender offer is a proposal to shareholders which outlines the number of shares a company is willing to buy and the price they are willing to buy for. Shareholders can either accept or decline. There's no obligation on their end. More commonly, a company will simply repurchase shares in the open market. Why Would a Company Buy Back Their Own Stock? When companies have excess cash, buybacks are a way to distribute wealth to their shareholders. Buybacks reduce the number of outstanding shares, driving prices up and increasing shareholder...

The Great Depression, Big Mistakes, and The Algebra of Happiness. I really enjoy reading and want to start sharing some of my favourites.

Historically, trading was expensive. Decades ago, Wall Street would charge hundreds for a single trade. With the rise of discount brokerages, fees have steadily come down. Now commission-free trading is the norm. Robinhood pioneered commission-free trading - but if they don't charge commissions, how do they make money? Freemium   Gold Robinhood like a lot of companies gives out their app for free (just take it!). This helps attracts more users and enables faster growth. The "free" part is only applicable to their base service. Robinhood also has a paid service, Robinhood Gold . Paying $5 a month unlocks features such as margin and after-hours trading. This two-tier model is known as "Freemium". Idle Money Most investors have a couple bucks laying around in their account. Robinhood takes advantage of your idle cash by investing it to earn interest. You don't earn much on a few dollars, but Robinhood has over 10M users. The idle cash adds up fas...

Leverage is powerful. It's even been argued that it should be a consideration for young investors . Given all the hype, buy-and-hold investors are trying to figure out how to get in on the action. ETFs are great, so would leveraged ETFs be even better? First, What Are Leveraged ETFs? Traditional ETFs look to match the returns of an index, leveraged ETFs look to amplify them. SPY , a traditional index ETF is designed to match the returns of the S&P 500, SPXL , a tripled levered ETF looks to 3X them! This is achieved through the use of debt and derivatives. The math to enable this is rather complicated and can leave you scratching your head. Long Term Leveraged Investing Over the long term, markets have historically returned about 10% a year. If we used a leveraged ETF, couldn't we get 30%? If this sounds too good to be true, because it is. ETFs like  SPXL  do provide 3X returns, but only for a single day. Leverage ETFs are rebalanced daily, mean...

“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.”  - Warren Buffett We all have a tendency to compare ourselves to others. We compare salaries, relationships, height. You name it, we compare it. It's natural to be competitive, to size each other up. It can even be healthy. Some people represent a higher standard that drives us to be better. Role models are important. However, without perspective, admiration can devolve into envy and discouragement. Seeing others succeed, especially those younger, can make you feel inadequate. You start to question your self-worth and your growth stalls. It's important to remember external comparisons are fundamentally flawed. People are too different to fairly compare. Those who have a higher net worth might come from a wealthy family. Those more physically impressive might have genetic gifts. Our starting lines var...

It goes without saying, Warren Buffet is a legendary investor. Even if you know nothing about investing, you know he's synonymous with success. A true household name. His track record speaks for itself. From 1965-2018, he led Berkshire Hathaway to annualized returns of ~ 20% . In contrast, the S&P 500 had average annual returns of  ~ 9% over this time. Beating the market by twofold is impressive, to do it for decades is unheard of. How Does He Do It? Buffet is a value investor. He spends a lot of time analyzing fundamentals, only investing in companies that meet his rigorous standards. Should I Pick Stocks Like Warren?  No. Despite his success, Buffet is a huge advocate of index investing. Why? Fees, Fees, Fees "A low-cost fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth."  Fees devour returns. I...

It's jarring to see your portfolio drop 30% in a few days. No matter how experienced an investor you are, nobody likes to lose money. In times like this, there's a lot of noise out there. Ranging from good advice to outright scams. No one can predict the future, but markets have been through the wringer. From famines to world wars, financial collapses to political scandals. Odds are we'll get through this too. Things will bounce back. Until then, here's a couple things you can do to weather the storm. Social Media Distancing A lot of folks are stuck at home, bored. It's easy to lose your day to endless scrolling. Constantly checking your feed isn't making anything better. It only adds to your anxiety and stress. Check in to stay responsibly informed and stop there. This will reduce your likelihood of getting emotional. Emotional trading is never good. Stick to the plan. Stop Checking Your Account The move to digital banking is great for investors. Fi...

You're new to investing, have done your homework and is ready to get started. You find a discount brokerage offering commission-free ETF purchases . Perfect! You'll save a ton on fees. You enter in your first order and to your dismay, a fee! ECN? What is this? I thought there were no fees? Commission-Free Doesn't Mean Free? There's a misconception that commission-free trading equals to no-fee trading. A commission  is the cost of facilitating and executing a trade. Commission-free still leaves room for other charges, such as foreign exchange fees and the lesser-known ECN fees. ECN Fee?  ECN stands for Electronic Communication Network . ECNs are intermediaries that match brokers to stock exchanges. ECNs charge on a per-share basis for their services, typically fractions of a penny. Some brokers pass these fees down to their clients, others just absorb them. When Do They Apply? ECN fees only apply to trades that "removes liquidity". A trade that re...

ETFs are widely acclaimed for their low fees. Equity ETFs charge an average MER of 0.40% , whereas equity mutual funds charge  1.5% - 2% . Many popular ETFs are even cheaper.  VOO allows you to own the entire  S&P 500 for only 0.03% . Talk about a bargain. How are ETFs able to charge so little?