Jun 292020
 

Transaction codes

Over the years I have seen many different types of activities in my bank accounts. But sometimes I don’t know what the transaction codes mean. And I’m left scratching my head as to what I’m being paid or charged for.

transaction codes can be difficult to understand sometimes.

So to make life easier I’ve compiled a list of account actions with the different abbreviations and what they represent. Most of these transaction codes will apply to TD Canada Trust and Direct Investing accounts. I don’t know if other institutions use the same bank codes but they will probably look similar. 🙂

Use Ctrl+F to find a specific code.

  • ACCT BAL REBATE – Account balance rebate
  • BUY – Buying a security.
  • COB DIS CREDIT – Cost of Borrowing credit for over charging
  • CONVER – A security in the portfolio underwent a corporate action in which it was exchanged for another security.
  • CSHLIEU – Cash was awarded for partial shares in a corporate action in which shares of a new security were exchanged or when a split has taken place.
  • CXLSELL – Original sell trade was cancelled due to a system error.
  • CXLBUY – Original buy trade was cancelled due to a system error.
  • CXLDIV – Dividend payout was cancelled due to a system error.
  • CXLINT or CXLINTBND – Interest paid on a bond was cancelled due to a system error.
  • CXLINTCRD – Interest received for cash held in a portfolio was cancelled due to a system error.
  • CXLINTDEB – Interest paid on a margin loan was cancelled due to a system error.
  • DIV – A dividend was paid.
  • DIVFRG – Foreign dividend earned.
  • DIVSPL – A stock held in your portfolio split or new shares have been added to the portfolio.
  • DRIP – Shares or units bought using the dividend re-investment plan
  • EXCH – Exchange of securities.
  • FEE Fee or carrying charge applied.
  • INT –  Interest on a security has been paid.
  • INTBND – Interest has been paid on a bond in the portfolio.
  • INTCRD – Interest was received for cash held in your portfolio.
  • INTUS – Interest earned in US dollars.
  • INTDEB – Interest was paid on a margin loan.
  • LQD – A liquidation of a security has taken place.
  • MERGER – Company merged with another company and has a new ticker symbol. Both symbols will be listed.
  • NRT – Non-resident tax.
  • PRNCPL – Security has been redeemed for cash.
  • REDEEM – Security has been redeemed for cash.
  • REVSPLT – A stock in your portfolio experienced a reverse split.
  • SELL – A security in the portfolio was sold.
  • SEND E-TFR – Sending an E-Transfer to someone.
  • SHORT COVER – Closing of a short position by covering the short.
  • SHORT SELL – A short position was opened and stocks were short sold.
  • SPNOFF – A spinoff of a parent company has taken place. Look for shares of a new security.
  • STK EX – The ticker symbol, CUSIP, or the company name changed for a security that was in your portfolio.
  • TENDER – A security has been redeemed for cash.
  • TXPDDV – Tax paid dividend. A cash transfer that can include dividends, interest, capital gains distribution or return of capital where no additional taxes will be paid by you. This is common for Canadian ETFs or income trusts.
  • TSF FR – Transfer from.
  • TFR-IN – Transfer into an account.
  • TFROUT – Transfer out from account.
  • WBD –  Transfer in of money from another account – usually the description will include TSF FR (account number.)
  • WHTX02 – Withholding tax from a U.S. stock or other security.

 

Keep in mind that these banking codes may be different than what will ultimately appear on your year-end tax slip. Sometimes banks and brokerages use default designations for convenience and may vary from the tax documents they send to you and the CRA. Whether you are using WebBroker or another online service make sure to ask a representative if you are unsure of any activities in your account.

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Mar 162020
 

Opportunity for the well prepared

Well it’s finally happened. The record breaking 11 year long bull market has come to a screeching halt as stocks tumbled more than 30% in the fastest pace ever recorded. Last Thursday the TSX dropped 12% in a single day, the most in recorded history. But this should come as no surprise if you’re an avid reader of this blog. We saw this coming miles away. 😀

I began warning fellow investors two years ago explaining the early signs of an economic downturn. But since there were no red flags I didn’t expect an immediate market correction. Here’s an excerpt from that 2018 post.

Playing a strong defense game

So how did I prepare? Well last summer in 2019 I shared my thoughts on which asset classes would likely perform relatively well in a low interest rate environment. I wrote that adding defensive investments would make a lot of sense going into 2020.

So I had called out bonds, real estate, and precious metals as good assets to have, at least in the short to medium term. This is partly why I started to look for a rental apartment to purchase last fall.

Finally I warned readers several months ago of 10 signs that an economic downturn was just around the corner. My suggestion was not to sell everything and wait for the crash to happen, but instead to rebalance and reduce market risk. Here’s the final paragraph from that post.

planning ahead can protect the downside

Which brings us to the present. Both Canadian and U.S. stock markets are down about 20% year to date. Oof. 🙁

It’s a good thing we had time to prepare for this downturn since the signs were plenty and hard to miss.

So let’s see how my prediction and planning paid off so far. 🙂

  • As of writing this post gold is up 7.5% so far this year in $CAD.
  • Bonds have done well. The iShares Canadian Universe Bond ETF (XBB.TO) has returned +2% year to date.
  • Real estate is on the rise. We can use the Canadian Apartment Properties REIT (CAR.UN) as a proxy for residential real estate in Canada. This REIT has gone up 4% year to date. Personally, my new real estate purchase is earning me 6.25% a year in net rental income, after all expenses. Furthermore, the median rent price in the city of my new condo is up 15% this year. 🙂

As I said last year, governments will go deeper into debt, print more money, and all of this will benefit holders of bonds, precious metals, and real estate. Owning these types of assets – which I have about $500K in right now – will add stability to a portfolio during a major stock market correction. The key is to use economic data to align my investments in order to limit downside risks. 🙂

 

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Apr 032017
 

When Long Term Planning Works Out

Thanks to my recent investment in Lending Loop I am now making an additional $2,000 per year of interest income. This brings my total passive income to $24,000 per year. Sweet peaches and cream! 😀 Here’s a breakdown.

  • $9,000 dividends
  • $9,000 rent
  • $6,000 interest

Passive income is the best kind of income for 3 important reasons:

  1. It’s stable and requires no effort from the investor.
  2. It has the capability to be tax efficient, eg: by earning it inside a tax advantaged account.
  3. It’s inflation protected. eg: My current passive income from dividends, rent, and interest would all increase under inflationary pressure.

But it takes time to build up $24,000 of annual investment income. Rome wasn’t built in a day, and neither is passive income. It took me about 9 years of saving and investing to reach this milestone. Dividend income was my first passive income stream and it’s starting to really pay off now. 🙂 Many other bloggers are using this popular strategy for early retirement as well.

My current level of passive income by itself is still not enough for me to live on. However, my projection is to grow my passive income by $3,000 per year over the next 5 years so I will be financially independent when I’m 35 years old in 2022, making about $40,000 per year from my investments. 😀

Increasing my passive income by $3,000 a year is actually easier than it sounds due to my special circumstance. I have 3 lucky advantages that most people my age don’t have.

  1. I have over $1,000,000 of investments under my control. Dividend growth stocks increase payments to shareholders over time. Land tends to appreciate in value and extract higher rental income in the long run. Through inflation this $1,000,000 asset portfolio will grow by an estimated 2% a year to keep up with the cost of living. This works out to $20,000 of annual appreciation. We can easily convert any tangible asset into a perpetual passive revenue stream by using the 4% rule. Therefore, I can expect my passive income to increase by $800 by next year simply by continuing to hold $1+ million of productive assets. ($20,000 x 4%)
  2. I do not spend the $24,000 of passive income I currently make. So all of it can go back into buying more investments. $24,000 will generate about 5% of income for me with a combination of high yield income securities and dividend stocks. So that’s another $1,200 of newly created passive income for me to look forward to by next year. ($24,000 x 5%)
  3. Tax efficiency. Nearly all my dividend producing investments qualify for the federal dividend tax credit so I effectively pay only 6% tax on the income they produce. My rental income is offset by my mortgage interest so I pay less than 4% tax on this rental income. As I’ve written about in the past my profits are kept low. Nearly all my other passive income are sheltered in my RRSP and TFSAs, which accounts for more than $150,000 worth of stocks, bonds, mortgages, and other interest producing assets. This means I pay minimal tax on the $24,000 passive income I make.

Due to the 1st and 2nd reasons in the above list, my passive income should grow organically by $2,000 every year without me injecting any new capital into the portfolio. The remaining $1,000 of passive income (to make up my $3,000 increase per year) will come from savings. With an expected 5% income rate I will need to save $20,000 per year on average to make this happen. I think that’s a reasonable goal for me. 🙂

This whole plan all started in 2008. I’m just following through with it now and adding small changes as things move along. What truly amazes me is the fact that my passive income has now reached a point where it is growing at a faster rate than my active income. There is no way I can sustainably increase my salary and wages by $3,000 every year without sacrificing my health and risk getting burnt out. But my passive income can. 😀 This is why investing becomes more effective the longer one does it.

 

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $700
  • Freelance = $800
  • Dividends = $700
  • Interest = $100
  • SolarShare bonds = $500
*Discretionary Spending:
  • Fun = $500
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,097,900 total (+9,500)
  • Cash = $2,200 (+700)
  • Canadian stocks = $145,700 (+7500)
  • U.S. stocks = $90,100 (-700)
  • U.K. stocks = $19,600 (+300)
  • RRSP = $76,400 (+1500)
  • Mortgage Funds = $30,800 (+200)
  • Peer-to-Peer Lending = $20,300 (+200)
  • SolarShare Bonds = $9,800 (-200)
  • Home = $270,000
  • Farms = $433,000
  • Debts: = $495,200 total (+800)
  • Mortgage = $184,300 (-500)
  • Farm Loans = $190,300 (-600)
  • Margin Loans = $62,800 (+3200)
  • TD Line of Credit = $14,800  (-600)
  • CIBC Line of Credit = $26,500 (-500)
  • HELOC = $16,500 (-200)

*December Total Net Worth = $602,700 (+$8,700 / +1.5%)
All numbers above are in $CDN. 

I got my first SolarShare bond payment! This is the first of 30 total payments I will receive over the next 15 years.

Much like black holes, climate change can really suck. 😄 I invested in SolarShare last year because I wanted to make the world a greener place and earn a profit while doing it. 😀

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Feb 032015
 

Nobody likes to pay banking fees. But most monthly service charges can be waived if we sign up for additional accounts/services, or keep the minimum monthly balance in the account. (eg: maintain at least $1,500 in a Bank of Montreal chequing account to waive the $4 fee.)

15-02-bank-fees-bmo-bank

My personal account is with TD Canada Trust, which charges $3.95/month unless a minimum balance of $1,500 is held in the account at all times. But sitting on unused money can be a waste of capital. 😕 So 3 years ago I introduced an alternative solution to deal with those pesky bank fees. Rather than pay the bank to hold my money, I made the bank pay me instead! 😉

Hedge Bank Fees with Bank Stocks

Here’s what I did in a nutshell.

  1. Transfer the $1,500 from my chequing acct to my brokerage acct and use it all to buy TD shares (38 in today’s shares)
  2. Receive dividend payments every quarter as a TD Bank shareholder
  3. Use said dividends to pay for the $3.95 monthly service fee associated with my chequing account

(see my original post from February 2012 for more details.)

Since it’s been a few years I thought I’d post an update to show how my strategy has turned out so far.

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Nov 062014
 

How Midterm Elections Affect the Stock Market

Imagine if you knew an investment strategy where the historical odds are almost 100% in your favor! 😀 Well here’s how. 🙂 Since 1942 there has been 18 midterm elections, not counting the one that just happened earlier this week. Every single time the S&P 500 has gone up after one year following each of those elections. The average stock market gain over the 12 month period following all 18 elections was 16%. 🙂 If we only look at what happened after just 6 months following the midterm elections, once again 18 out of 18 times the S&P 500 rallied, and on average by 15%. Chart below for details. (source)

14-11-midterm-election-stock-performance

As we can see, the chart shows the percentage change of the stock market index after 3 months, 6 months, and 12 months following each midterm election. The only negative change is after the 3 month period following the 2002 midterm when the S&P 500 dropped 8.7% as shown in brackets. Every other time the stock market has gone up. 🙂 This indicator has been very consistent because regardless of which party wins in the house or the senate the results of a midterm election adds certainty to the political landscape. And certainty gives confidence to the financial markets. 🙂

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