New posts

How much do you know about financial independence?

Oct. 7, 2015, 6:50 a.m.
Posts: 18128
Joined: Oct. 28, 2003

Questrade, really? My co-worker was talking about Questrade so I checked their site out, to me it screams ripoff. I mean even their name sounds cheesy?

I got the same vibe, and prefer to have my long term holdings with a long term institute. However, Questrade is quite popular with the online DIY crowd. Free ETF purchases, but I'm sure there will be a catch when you want to cash out.

http://www.moneysense.ca/invest/canadas-best-discount-brokerages-2015/

Shit, sorry, that article is for subscribers only.

Oct. 7, 2015, 11:42 a.m.
Posts: 1686
Joined: July 11, 2014

Questrade, really? My co-worker was talking about Questrade so I checked their site out, to me it screams ripoff. I mean even their name sounds cheesy?

Nope, it's legit. I haven't used it but have heard of lower service levels than other online brokerages. I use CIBC, they lowered prices on trades to $6.95 flat fee a year or two back and I assume all the big banks have followed by now. I am very low volume on transactions anyway since I'm an ETF only long-term guy.

re: credit card rewards, the wife and I purchase absolutely everything on VISA (RBC Avion) for the points. I will buy a $1 pack of gum with my card if I can. We never carry a balance and just use a prime rate LOC if we don't have free cash flow to cover the bill. The key here is obviously having a robust family budget/forecast so you know exactly how much is spent where, and how you are paying for it as well as how much you are saving/investing/earning returns. This requires a bit of effort.

Oct. 7, 2015, 11:48 a.m.
Posts: 7707
Joined: Sept. 11, 2003

Not always the best strategy. If you have a low- or no-fee card with points or cashback, then maximize purchases on the card. Pay everything you can with the card to accumulate points/$$.

The point is not cashback, but to not spend money frivolously. You may be an exception, but for many people a lot of frivolous spending ends up on the credit card ("That's OK, I get cash back"). Its also harder to stay on budget if things get charged to plastic. With cash (btw, the real stuff, not debit card), there is a bigger disincentive (and often physical impediment - ie no cash in your wallet) to spend if your monthly-[HTML_REMOVED]weekly-[HTML_REMOVED]daily cash flow can't carry the cost.

Oct. 7, 2015, 12:18 p.m.
Posts: 272
Joined: May 11, 2005

Questrade, really? My co-worker was talking about Questrade so I checked their site out, to me it screams ripoff. I mean even their name sounds cheesy?

Been using it for 7 years. Lowest fees out there. covered by CIPF.
http://www.milliondollarjourney.com/review-canadian-discount-brokerages.htm
http://www.questrade.com/legal/member_iiroc_cipf
http://www.cipf.ca/Public/CIPFCoverage/CoveragePolicy.aspx

Oct. 7, 2015, 12:20 p.m.
Posts: 272
Joined: May 11, 2005

My credit card points are paying for trips to Europe this December. Just make sure you pay the credit card off each month and you'll be fine. If you can't do this then don't have a credit card. Simple.

Oct. 8, 2015, 10:53 a.m.
Posts: 1686
Joined: July 11, 2014

My credit card points are paying for trips to Europe this December. Just make sure you pay the credit card off each month and you'll be fine. If you can't do this then don't have a credit card. Simple.

Agreed, but I think this is a legit issue for a lot of folks, especially those not financially minded. These are the people you see on those personal finance TV shows with $50k CC debt. There are tools to help this if one is proactive (i.e. recording transactions as they occur in software, not waiting for monthly statements before realizing they blew the budget). But for some, cash/debit system is the way to go. Whatever allows one to stay on budget and meet their financial goals is what one should do.

Oct. 8, 2015, 11:01 a.m.
Posts: 712
Joined: Aug. 10, 2010

My credit card points are paying for trips to Europe this December. Just make sure you pay the credit card off each month and you'll be fine. If you can't do this then don't have a credit card. Simple.

My points just brought an espresso machine. What you say is true it is a shame their isn't more financial literacy so that people know what the credit card companies are allowed to do.

Shredding hypothetical gnarr

Oct. 8, 2015, 11:31 a.m.
Posts: 955
Joined: Oct. 23, 2006

The almost universal use of credit cards has a cost to the businesses that accept them, and they have built that cost back into the price you pay. You can either subsidize everyone else to use them, or you can get on board with it and get that money back in your pocket. I prefer to use a cashback card personally, since it's cash I'm losing to hidden fees. I switched to BMO Black recently and you get 1.75% back on everything, plus you get other benefits like free roadside assistance, travel insurance, double warranty and 90 days insurance on purchases.

The other benefit is you are less likely to pay ATM charges, or excess banking transaction charges

Oct. 8, 2015, 11:44 a.m.
Posts: 15221
Joined: Nov. 20, 2002

You can get the bank to automagicaly pay off your full visa bill every month

I don't spend that much money so I don't think the points thing does much for me and mostly I have a bunch of cash kicking around

Oct. 8, 2015, 12:56 p.m.
Posts: 6947
Joined: Feb. 24, 2017

BMO. I have a black (coloured) air miles Mastercard. I use it for 90% of all purchases. I'm rolling in air miles and use them for 2 to 3 flights within Canada every year.

Stuff we didn't have to pay for because of Air Miles (2 credit cards, exclusive for all spending but mortgage):

-Fancypants kitchen stand mixer/meat grinder/food processor (all in one!)
-rotating composter
-a dozen Whistler ski tickets
-vacuum cleaner
-magazine subscriptions
-flight to Ottawa for two
-two way radios

But best of all, $600 of Investorline vouchers that now give a 2.9% dividend and tax free capital gains.

However, I refuse to pay a penny in fees or any interest to a credit card.

My points just brought an espresso machine. What you say is true it is a shame their isn't more financial literacy so that people know what the credit card companies are allowed to do.

Rewoga, heckler and clarkee - you're making me cry a little inside because of what you're leaving on the table. Please go burn your Air Miles cards. They are awful.

When it comes to rewards, you can either get cash back (e.g. MBNA world elite), flight rewards or goods (e.g. gift certificates and products).

Cash back is usually the best deal for people because it's simple and requires no math.

Flight rewards can be worth it if you know how to redeem them properly.

Let's go through some examples:

Flight Rewards
At best, you can fly YVR to YYZ for 4k airmiles and earn 1 mile/$10 spend (premium BMO card). This requires you to spend $40k. You can boost that slightly by keeping on top of Safeway specials.

Compare that to other programs:

Aeroplan
It can suck. Availability is not great, but it's still the best program in Canada overall. I generally redeem for business class seats because that's where the real value is at, but let's look at a typical economy redemption.
With an aeroplan visa and ideal spend (e.g. gas, groceries), you'd need 25k miles to fly YVR to YYZ. Best case scenario spend is 1.5miles/$1 = $16,666 spend.
With an Amex, best case scenario is 2pts/dollar for a $12.5k spend.

On top of this, you need to spend about $140 or so in taxes and fuel surcharges. Airmiles will charge taxes, but not fuel surcharges. You're still way better off even if Airmiles charged $0 to redeem.

Cashback
If you don't want to deal with that hassle, then use a straight up 2% cash back card.
* Assuming a ticket price of $700, your minimum spend is $35k.

Goods
Redeeming air miles (or any points) for products or gift certificates is 99.999% guaranteed to be a waste of points.

Gift Cards
Let's say you redeem for a gift card at 95 miles for a $10 gift card. To earn 95 miles with a free card, you need to spend $1900. Your return is $10/$1900 = 0.5%
If you earn 95 miles with a premium card, then you need to spend $950 to get a $10 gift card. Your effective return is 1.1%

Products
Here's a sample product:

This vacuum cleaner is 2,310 miles. To get that you need to spend between $23,100 and $46,200.
https://www.airmiles.ca/arrow/RewardsProductDetails?productId=prod2094495

It's valued at $299.99 + tax = $335
http://www.shop.ca/c/electrolux-access-t8-hepa-bagless-canister-vacuum-EL4071A-22518078

Your return is then between 0.73% and 1.45%.

Bonus: Annual fee or not to annual fee
Let's use a simple example. You can earn 1% cash back with no annual fee or 2% cash back with an $89 annual fee.

If you spend $8900 or less, go for the 1% cash back card.

If you spend $8901 or more, you are leaving money on the table by not getting the 2% cash back card.

At $8900, you will receive $89 at 1% or $178 AT 2% (minus $89 fee)= $89.

If you spend $20k, your return at 1% is $200. At 2% it's $311 ($400 - $89 fee).

My photos | Green Avocado

Life's tough, it's even tougher if you're stupid.

Guns kill people just like pens cause spelling mistakes, cars create drunk drivers and spoons create fat people.

PM me to learn how to use credit card bonuses to fly for free.

Oct. 8, 2015, 7:36 p.m.
Posts: 272
Joined: May 11, 2005

My points just brought an espresso machine. What you say is true it is a shame their isn't more financial literacy so that people know what the credit card companies are allowed to do.

Basic finances and investing should be taught in school. The conspiracists say it's not taught for a reason…

Oct. 8, 2015, 11:45 p.m.
Posts: 15523
Joined: Dec. 30, 2002

My points just brought an espresso machine. What you say is true it is a shame their isn't more financial literacy so that people know what the credit card companies are allowed to do.

When I took the LLQP (life insurance) seminar, my first thought about 2 hours into it is this should be mandatory in high school. And like Jr High time frame, Grade 9/10.

protect tom mcdonald at all costs

Oct. 8, 2015, 11:48 p.m.
Posts: 15523
Joined: Dec. 30, 2002

Basic finances and investing should be taught in school. The conspiracists say it's not taught for a reason…

Sort of like if you look at DB (deutchebank) right now, you may want to make some adjustments based on that and the similarities to Lehman circa 2008.

But for the most part, most people have no idea how a bank in Germany possibly defaulting could affect them. Myself is more or less included other than I have no exposure other than how exposed my bank and its tie's are.

protect tom mcdonald at all costs

Oct. 9, 2015, 11:23 a.m.
Posts: 1686
Joined: July 11, 2014

Rewoga, heckler and clarkee - you're making me cry a little inside because of what you're leaving on the table. Please go burn your Air Miles cards. They are awful.

When it comes to rewards, you can either get cash back (e.g. MBNA world elite), flight rewards or goods (e.g. gift certificates and products).

Cash back is usually the best deal for people because it's simple and requires no math.

Flight rewards can be worth it if you know how to redeem them properly.

We've been using RBC Avion for about 6 years now (wife and I both have a card on same account) and use it for absolutely everything.

The reward rate on flights is 2-2.3% ignoring bonus points opportunities. I.e. spend $65,000 and get a $1,300 pre-taxes Europe flight.

The nice thing with Avion is there are no stupid seat restrictions like Aeroplan/Aerogold. As long as you book two weeks in advance you are good to go. You can also use it on gift cards and other stuff but I've always used it on flights.

Downsides:
- You have to pay the taxes on flights
- If you are good at finding seat sales, you often will not need the max redemption value (i.e. I can find return Europe flights on KLM/BA seat sales out of YVR for under $1,300 pre-tax) which means your reward level is lower since 65,000 points are used regardless. However, if you need to book something 2-4 weeks out the redemption values are usually high enough.

Annual cost is $170 (for two cards), this will be waived once we move all our banking to RBC. We've never paid a cent in interest.

Cashback cards are interesting and I need to look into them. Between the two of us and reimbursable business expenses we are spending about $80k annually on the cards.

Oct. 9, 2015, 12:49 p.m.
Posts: 15523
Joined: Dec. 30, 2002

The reward rate on flights is 2-2.3% ignoring bonus points opportunities. I.e. spend $65,000 and get a $1,300 pre-taxes Europe flight.

Why not save $61,000 and just buy two tickets?

protect tom mcdonald at all costs

Forum jump: