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(P&I) Dad & Susan & Sam

May 13, 2015
Susan and her son.

Susan and her son.

Drama. Susan is Dad’s daughter and she has an advanced degree in Fine Arts from the University of Toronto and is making about $30,000 per year as an apprentice at one of the top public relations firms; she’s also raising her son, Sam, now aged five, after she dumped the “hockey player” that she never married and who plays video games all day and likes the Toronto Maple Leafs; the child support payments are only $200 per month and daycare costs are about $200 per week.

Dad, on the other hand, is aged 73 and getting the full Canada Pension ($12,900 per year) and he also elected to retire his RRIF ($600,000) at the mandatory rate of $30,000 per year (5% starting in 2012) and increasing thereafter; we agreed to run the RRIF for him by arrangement with his bank (which is the Trustee) and to avoid problems of investment eligibility (under the Rules), we’ve restricted it to the S&P TSX 60 companies in the (B)-class.

The bank officials couldn’t grasp the meaning of 100% capital safety, 100% liquidity, and a hopeful but not necessarily guaranteed return above the rate of inflation and they tried very hard to sell Dad a life annuity at 5% or one of their income funds in his best interests (sic) – we found that when it comes to taking control of our money the banks seem to think that it’s their money too (The Globe & Mail, May 8, 2015, Widower with sizable savings faced with tax-related quandary).

In any case, the value of the RRIF is now growing faster than he can take money out of it at the mandatory minimum rate and he would really like to help Susan and her son while he’s still living; when he dies (hopefully not too soon), the RRIF will go to her anyway but its value will be reduced by the tax payable (about 44%) and it’s beyond reason (he says) that he should have to die before she’s “rich” and then also have to pay that much tax on his money – he can’t take it with him and if he gets sick there’s OHIP to take care of him and that’s an insurance that he paid-for all his life as a self-employed business person.

Thank You, Canada!

It’s usually thought that we need a few million dollars to retire comfortably; but that’s not true. After a lifetime of cutting everybody’s hair but his own (“Dad” was our barber and he cut our hair for more than thirty years), he had only $600,000 in his RRSP but we ran it for him as a (B)-class portfolio (a Perpetual Bond™) and after three years, Dad became a millionaire this year and he has more time and money to spend than he feels like spending and because of his gifts to Susan, she’s well on the way to becoming a millionaire too.

We’ve rounded the numbers (and made some immaterial simplifications) but Dad’s and Susan’s situation were as follows until we made some changes in 2012 in how they use their money:

Susan made $30,000 in 2009 and she’s been getting a raise every year of between 5% and 10% but she still hasn’t had enough money to spare to contribute to her TFSA, RRSP, or the RESP for her son and it doesn’t look like that can change.

Dad, on the other hand, wishes that he could have started the “retirement business” much sooner and if we hadn’t made some changes in how we dealt with the funds, he would have been paying more tax on his income in retirement than he ever paid when he was working; please see Exhibit 1 below and click on it and again to make it larger as required.

Exhibit 1: Dad & Susan & Sam

Figure 1.1: (B)(N) Dad & Susan & Sam - Risk Price Chart

Figure 1.1: (B)(N) Dad & Susan & Sam – Risk Price Chart

Dad and his grandson

Dad and his grandson

For more information on the Free Market Yield and the terms that we have used above, please see our Posts “(P&I) The Dismal Equation (Ecclesiastes 9:1)” and “(B)(N) S&P 100 Volatility Risk and The Full Moon” and “(B)(N) NASDAQ 100 Volatility and The Stone Bunnies“ and for an introduction to The Barometer “(B)(N) What’s A Girl To Do” or “(P&I) The Swiss Franc Debacle“.

And for more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.


We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to


Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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