This has been a wonderful year. We have witnessed history in the making with the election in the US of Barack and here in Canada with the Coalition government. Its been a great year for some and tragic for others.  I witnessed large instutitions such as Bear Sterns, Wachovia, Washington Mutual, Merrill Lynch all vanish before my eyes. There were many days where we had triple digit declines in the DOW and TSX and my RRSP and Pensions lost 40%. Will this end? I hope so, and look forward to 2009.

I wish every a safe and wonderful Christmas season. I will be in sunny Florida to board a Royal Carribean Cruise. Cheers.

If you follow these rules, you will find the lowest hotel rates:

1. Use consolidators for research and planning

Use travel sites such as Travelocity, Expedia, itravel2000 to search for hotels which fit your needs, location, price range. They now have great tools and maps for research and planning. These sites are also known as consolidators and they charge a higher price if you booked it directly with the hotel.

2. Call the hotel directly

Visit the hotels own website and find their phone number and give them a call. They usually have the most current price over the phone. Be sure to call the local number and not their 1-800 number.

3. Extra discounts for members

Many hotels will give discounts to CAA and AAA members online or ask about member discounts over the phone.

4. Avoid Fridays, Saturdays and Holidays

Hotels charge based on demand and you will see the price on Fridays, Saturdays and special occasions such as Holidays increase by double or even triple the regular prices. Try to avoid these days or holidays when planning your trip or vacation.

1. The Tax Free Savings Account lets you invest while not being taxed on interest or investment earnings.
2. You can contribute a maximum of $5000 a year.
3. You can have more than one Tax Free Savings Account and you can also have Tax Free Savings Accounts with more than one financial institution.
4. You don’t have to pay any tax on money you take out of your Tax Free Savings Account, and withdrawals from your Tax Free Savings Account don’t affect your ability to qualify for Federal benefits like the Child Tax Benefit, Guaranteed Income Supplement, Old Age Security benefits, Age credit, or Goods and Services Tax credit.
5. You’ll be able to open savings accounts, GIC’s and mutual funds tax-free.
6. Money you put into your Tax Free Savings Account will not be deducted from your income on your tax return.
7. When you file your tax return each year, the government will determine your remaining available Tax Free Savings Account contribution limit for the coming year.
8. If you take money out of your Tax Free Savings Account, you don’t lose the contribution room. You get it back in the following year. If you don’t make the maximum contribution you don’t lose the contribution room. The unused contribution room gets carried over to the following year. There is no limit to how much or how long contribution room can be carried forward.
9. You can open a Tax Free Savings Account if you are 18 years of age and a Canadian resident.
10. The Tax Free Savings Account comes to Canada January 1, 2009.

In the last 3 months, the TSX has lost 32% and I have witnessed my RRSP portfolios lose 12% of its value. The financial crisis has spread from the US to around the globe as central banks attempt to pump liquidity into the banking system. It is not a good time for risky investments such as Mutual Funds. Currently I’m looking to saving my money in Savings Accounts, GICs and the upcoming TFSA.

ING just couldnt wait until Jan 1st 2009 to start their TSFA. From Oct 4th to December 31st, any interest earned within that time period will be doubled and automatically moved into a TSFA. Their current rate is 3.0%.

Visit their site for more information http://www.ingdirect.ca/en/save-invest/tfsa/index.html

I took a big step this week with my girlfriend by opening up a joint savings account with PC Financial. I had previously attempted to open the account online but received a message to come in person to a pavilion. The pavilions are located in various Fortinos across the country. It took about 30 minutes for all the paperwork and you will be given 2 hours to activate your card.

I recommened PC Financial at 3.05% interest on an account with more then $1,000 and for a limited time 3.75% for any deposits made until the end of November.

Interest rates from the big banks:

RBC  High Interest eSavings Account - 2.75%, no minimum

TD Canada Trust Guaranteed Investment Account - 2.25%, $5,000 minimum

CIBC  Bonus Savings Account - 2.25%, $5,000 minimum

Scotia Bank Money Master High Interest Savings Account - 2.25%, $5,000 minimum

Yesterday the investment banking firm Bear Sterns stock fell 47% and I learned an advanced investing technique called shorting. Most people buy a stock in the hopes that the value will increase in the long run, on the flip side when an investor goes short they are anticipating the value to decline.

The basic idea of shorting is to borrow shares of a stock from a broker , selling it immediately then buying the same number of shares back. If the price at which the shares were bought back is lower then the price at which they were borrowed, the investor profits from the difference.

Here is an example:

You borrow 10 shares of company ABC at $50. You immediately sell the shares at 10 x $50 = $500. The price of the stock falls to $40 a week later and you decide to cover, so you buy back, 10 x $40 = 400. You just made $100 in profit by shorting.

It sounds easy enough but it is risky, very risky. There could be the case where you tried to short a stock only to see that the price kept on rising. At some point you will have to cover the number of shares you originally borrowed.

Here is an example:

You borrow 10 shares of company ABC at $50. You immediately sell the shares at 10 x $50 = $500. The price of the stock rises to $70 a week later and you decide to cover, so you buy back, 10 x $70 = 700. You just lost $300 by shorting.

So be careful when shorting because you are playing with money you dont have. In the next article I will discuss other aspects of this technique.

The announcement of Visa going public on March 19th of this month is probably the biggest buzz in the industry at the moment.

Visa is considered as the world’s leader in retail electronic payments service, I myself have a CIBC Visa Select card . Visa cards are accepted in more than 170 countries around the world. Visa does not lend money but rather charge a service fee to merchants for using their network. The company was originally called Visa International Service Association.

I had been watching for Visa’s IPO since early 2007 after Mastercard went public and finally in late 2007 they started to restructure and merge Visa Canada, Visa International, and Visa U.S.A. a into what is now called Visa Inc.

Offer Overview

• Issuer: Visa Inc.
• Ticker Symbol: “V” on the NYSE
• Shares Offered 406 Million Class A shares
• Price Range $37.00 to $42.00
• Dividend $0.105 per share. Quarterly starting June 2008 (roughly 1% yield)

Disclaimer: I am not a financial advisor and therefore am not recommending to buy any stocks discussed.

Why VISA IPO is attractive:

• Plastic will replace paper (cash and checks) in the near future. Developing countries such as China and India will soon be a slave to plastic just like us.
• Entry barriers into this business is very high.
• Visa has a very strong brand and will continue to experience growth in emerging markets such as Asia. The brand is as strong as MacDonalds, Sony, Coca Cola Company, Mercedes Benz.
• I believe John Patridge (Visa COO) is on the right track with such ideas as: Visa Gift Card, Card to Card transfers, ECommerce Solutions and Mobile transactions
• Double digit year to year growth in revenue

Update - According to Goldman Sachs the IPO has been moved ahead to Tuesday the 18th

Tax season is upon us and I hope to help you in choosing the right software solution. Filing taxes online through Netfile is definitely the better way, you save on cost and you receive your tax refund sooner ( in 10 days I believe). In order to file your taxes online with the CRA you will need Netfile certified software and all your documents such as T4, T4A. When looking for tax return software there are a few things I specifically look for:

• Number of returns allowed (CRA allows a maximum of 20)
• Tips/guide for additional deductions
• Wizard to walk through the whole filing process

This year my top 3 choices is UFile, QuickTax and StudioTax.

Ufile By Dr. Tax.English Futureshop Only

UFile

My taxes last year was filed using UFile by Dr Tax Software Inc., the software was easy to install and the wizard was very helpful and informative. You basically follow the 5 steps at the very top and then fill out the Netfile form and attach the .tax file created by UFile. Be sure to have your 4 digit Access Code ready when filing with Netfile.

This year I believe UFile has a new feature called MaxBack Refund Analyzer to automatically calculate and ensure you have maximized your entitled refund. If your net income is more then $25,000, you are allowed 8 returns and 16 with UFile Plus. Support is only available through email with the normal version and Ufile Plus also provides additional phone support.

Screenshot

QuickTax

This is the most widely used tax preparation software, however this year users are very upset that Intuit has reduced the number of returns to only 2. There are 3 versions for personal income tax returns, Basic, Standard and Platinum. The Basic version does not have support for RRSPs and spousal/dependant credits so I suggest at least purchase the Standard version. The prices for QuickTax is much higher then UFile. I have not used this personally myself so I recommend reading reviews on Amazon.ca.
Screenshot

StudioTax

StudioTax was created by 2 developers from Ottawa and is available for download for free from their website. Be generous and do make a donation. I tried it out myself this evening, the file was only 5.5 mb and easy to setup (please note you will need .NET Framework 2.0 installed before setup). The walk through wizard and interface is just awful, there are many bugs and spelling mistakes. The software calculated my refund correctly but I did not submit to Netfile. Support is only available through email. I think this software is a great solution for those who are on a budget.

Screenshot

In conclusion, my pick would be UFile which I intend on picking up at Futureshop for $19.99. Happy filing everyone!

On my rainy drive home tonight, I was concerned when I heard news that it was surveyed that 50% of Canadians will not be contributing to their RRSP’s this year. I believe the common fear is that there is going to be a recession in the US and that stocks are losing value, which is true. However, this is actually a good thing, it means we are able to purchase RRSP Mutual Fund units at a much lower price.

Earlier this morning I waited outside of my CIBC until it opened and borrowed 3 grand to contribute to my RRSP. Now why would I put so much money into a retirement savings plan?  RRSP’s is the best way for taxpayers to defer tax. Let me illustrate a quick example, if you contributed $10,000 and then borrowed $6,667, so now you have $16,667 and your marginal tax rate is 40%, your tax return for your contributions will be 6,667!

Heres a list of the 2007 Ontario Marginal Tax rates:

• first $35,488 21.05%
• over $35,488 up to $37,178 24.15%
• over $37,178 up to $62,485 31.15%
• over $62,485 up to $70,976 32.98%
• over $70,976 up to $73,625 35.39%
• over $73,625 up to $74,357 39,41%
• over $74,357 up to $120,887 43.41%
• over $120,887 46.41%

The deadline to contribute to your RRSP’s is tomorrow, I urge everyone to take advantage of this great tax brake.