December 16, 2007

Give Your Greatest Gift

We had a deluge of snow in Toronto today. Estimates range from 20-30 cm before drifting. Since it's Sunday, there are no closures of schools or offices. Monday looks like a normal day. At least I got to use our snowblower. Twice.

I also helped shovel a retired neighbour's driveway. This was much more useful than giving him a shovel or a cup of hot cocoa. Often, we take the easy way out, giving a material gift.

"Thanks for the ball, dad, come on let's play. Can you teach me to throw?"
I said, "Not today,
I got a lot to do."
He said, "That's ok."

--- Harry Chapin,
Cats In The Cradle
Give Yourself
You are the best gift you can give. Granted, this is tough to explain to a kid dreaming of a Wii or iPod.

When I give, I give myself. --- Walt Whitman

The greatest gift is a portion of thyself. --- Ralph Waldo Emerson

The greatest gift you can give another is the purity of your attention. --- Richard Moss

The first great gift we can bestow on others is a good example. --- Thomas Morell
No one can outspend us when we give time and attention. Not even a billionaire.

Get Yourself
When giving, don't forget to give yourself to yourself too.
The greatest gift that you can give yourself is a little bit of your own attention. --- Anthony J. D'Angelo
This is my final post of the year. Thank you, dear readers, for giving me your precious attention, week after week.

All the best to you and yours during the holidays.
May your 2008 be really great!

Photo by room929

December 9, 2007

Protecting Against Identity Theft

What I did in my youth is hundreds of times easier today. Technology breeds crime. --- Frank Abagnale

In Stealing Your Life, Frank Abagnale discusses identity theft. His autobiography, Catch Me If You Can, became a Steven Spielberg movie starring Leonardo DiCaprio. Abagnale also wrote The Art Of The Steal about protecting yourself against fraud.

Cheery topics indeed. Stealing Your Life is less entertaining than the earlier books because it's closer to our lives. Also, we've heard the messages before. The content has an American slant and there's more "product placement" (a particular pen for writing cheques) and endorsements (e.g., a particular paper shredder).

Don't Leave Home With Them
For identity theft, our two most important pieces of identification are our
  1. Social Insurance Number
  2. birth certificate.
Fortunately, there's no reason to carry either around with us. Very few places legitimately need to know. Unfortunately, too many of us carry such vital identification with us and share it too easily.

Don't Use Your Debit Card
Use a credit card rather than a debit card. Once money's been taken out of your bank account, it's tough to convince your bank that you weren't negligent. After all, the debit card is supposed to be in your physical possession and only you have the PIN. Right?

The Federal Trade Commission estimates that fixing your credit costs $1,200 US and 175 hours of your time.
If you make it easy for people to steal from you, they will. ---Frank Abagnale
I'm now reluctant to use my credit card in restaurants and other places where my card leaves my sight. There's not much choice unless you want to carry extra cash. As a precaution, I use my backup credit card.

Earlier, I wrote about your credit report. Abagnale recommends a regular review to make sure nothing's amiss. He points out that credit agencies are businesses. They do not take responsibility for ensuring the accuracy of the records they hold. Different agencies can have different information about you.

You can get your credit report by mail for free or pay to see it online.

Who Can You Trust?
Abagnale gives examples of unexpected identity theft
  • by payroll staff (have access to your SIN, address, banking information, etc)
  • by parents (taking out credit cards in the names of their kids)
It's too really sad when you can't even trust family. Thieves are getting younger too. Abagnale gives an example of a child charging prescriptions to a parent's card. Age? Less than a month old ;)


December 2, 2007

The Ideal Investments for Tax-Free Growth

Arrange your investments so that the ones which would attract the most tax are held inside your RRSP. ---
The advice above comes from a retired husband/wife team that owned and operated a small business. One is a retired professional accountant. With, their goal is to be "a reference site for easy to understand tax, financial, and related information." That's commendable.

They say: "Interest income (t-bills, GICs, bonds, etc.) and dividends from foreign corporations attract the most income tax, because the total amount is included in taxable income. Thus, if you want to hold this type of investment, it should be held inside the RRSP."

You've probably heard this advice before. Even so, you may have mutual funds inside your RRSP and GICs outside. Maybe you want liquidity. Maybe you want the maximum growth in your RRSP. Maybe you want short term investments outside. People have different reasons. This post isn't about the psychology of investing.

An Overlooked Place For Tax-free Growth
You can also put your most taxed investments into universal life insurance, an option you lose if you "buy term and invest the difference". As with an RRSP, the growth is tax-free until withdrawn. Like a Guaranteed Interest Certificate (GIC), you have a choice of terms --- often 1-5 years or longer. These investment choices are usually called Guaranteed Interest Accounts (GIAs), to distinguish them from GICs.

I couldn't find a nice online comparison for you. There are plans that guarantee minimum interest rates of 4%. How's that for tax-free growth?