Using Credit Card Points Toward RRSPs Revisited

One year ago I wrote my first post on this blog. It was a simple little post about using reward points on RBC or National Bank credit cards toward RRSPs held with those banks. I don’t think anyone read that post for months.

Starting this past January, however, that first post of mine has seen a massive spike in traffic generated from search engines, as people think about making their RRSP contributions. I thought I would repost for those thinking of getting a start on this coming year’s contributions. Remember, by contributing earlier in the year, you have more time to compound your money on a tax deferred basis.


If you have a Royal Bank or National Bank of Canada credit card that accumulates points, you can redeem those points for much more than a new desk lamp.

While certain TD, Scotia, BMO and CIBC cards give “cash back” credit of 0.25% – 2% of your yearly spending, RBC and National Bank of Canada encourage saving and lowering debt with their point system by allowing those points to be redeemed for “financial rewards” coupons.

At RBC points can be redeemed for vouchers that can then be deposited into your Royal Bank RRSP, TFSA, or RESP account. If you hold your mortgage or line of credit with the bank, you could also apply your points to the principal of those loans.

Redemptions start at 12,000 points for a $100 voucher, and move in increments of $25 per 3000 points. At these numbers, and assuming 1 point per dollar charged, it works out to a bonus of 0.83% of your credit card spending.

National Bank of Canada cards work out to a little higher (0.91%) but have slightly different options. Like at RBC, points can be redeemed toward your National Bank RRSP or TFSA account, but they do not seem to have an RESP option.

Points can also be used to pay down your mortgage or other loans held at National Bank, and if you are a Quebec resident, they can even be used for a rebate on your car or home insurance.

Redemption starts at 11,000 points for $100, and can only be redeemed in amounts of $100 (ie. 11,000 points, 22,000 points etc.)

Though it’s too late to use your points for the 2010 tax year, you can redeem anytime and get a good start on this year’s contributions.

After a few years of compound interest, I’m sure that the tax sheltered cash will be worth a lot more than the frying pan you could have had.

Related Posts:
  1. Using Cash Back Cards Toward RRSPs etc.


The Salt Shaker: Winnie-ther-Pooh, Boomer mistakes, and Stock Market Mascots

Being a dad rocks! I’m sure there will be a lot of trying times to come, but the past couple months have been amazing as we get to know our little guy, and he gets to know us. Now that he’s smiling and talking up a storm, there is balance to the crying.

I’ve been reading Winnie the Pooh to him, and he seems to really enjoy it. I should say he seems to enjoy the rhythm of my voice. (If there is anything I learned from 1980s movies, it came from Three Men and a Baby: “It’s not what you say, but how you say it,” or something to that effect.) I couldn’t agree more.

As I get more and more used to my new parental role, I’m also starting to find some time to read a little more online (that isn’t baby related). Here are a few interesting things I’ve come across recently:


  1. Andrew Hallam says we can learn from the mistakes the Baby Boom has made.
  2. Money Smarts Blog give a good breakdown of the RRSP Home Buyers Plan.
  3. Larry MacDonald says the high Canadian dollar creates a good chance to invest in the U.S. … but wonders what to buy.
  4. Canadian Capitalist posts some highlights from the most recent Berkshire Hathaway annual report.
  5. Invest It Wisely had a guest post about South Korea.
  6. Investing Thesis has an interesting energy interview with a portfolio manager.
  7. Canadian Finance Blog talks about calculating your ACB.


  1. The Tokyo stock exchange, in a bid to attract young investors,  has a new mascot.
  2. Perhaps feeling like they’re missing out as they watched Goldman buy into Facebook… JP Morgan is trying to buy into Twitter.
  3. WSJ This Morning has a good list of jobs you should have by 30, and some lessons learned from each.


  1. Canadian Finance Carnival
  2. Canadian Personal Finance and Investing Carnival

Hope everyone has a great week!

Don’t Be Like Ol’ Jim

I’ve been reading “The Adventures of Huckleberry Finn” recently. Aside from being a great book in general, I stumbled across a great little bit of How Not to Invest, shall we say, in a conversation between Huck and Jim.

They are talking about being rich, and Jim says he was rich once. He had 14 dollars, but lost it all speculating.

“What did you speculate in, Jim?” Huck asks.

“Well, first I tackled stock.”

“What kind of stock?”

“Why, live stock – cattle.”

Jim says he paid 10 dollars for a cow, but that it soon died. He didn’t lose everything, mind you, as he sold the carcass for $1.10.

He still had about 5 dollars left, so he invested it with a “bank”. The bank was actually just a one-legged farm hand who promised 4 dollars interest at the end of the year for every dollar invested. Jim invests 5 dollars and is promised 35 dollars in one year’s time.

Jim figures the 35 dollars is a sure thing, so in order to “keep things moving” he decides to buy a boat for 35 dollars from his friend, Bob, on credit and promises to pay in a year.

It’s unclear if Jim planned to re-sell the boat and invest the proceeds in something else or what, but it is essentially moot, as the boat was stolen that night. The next day the one-legged farm hand announced that his “bank” had gone bust, leaving the investors with nothing.

If you’re keeping track, as Huck was, you will note that Jim still had 10 cents in cash. What did he do with it? He had a dream to give the 10 cents to his friend, Ballum, to invest for him, because Ballum is said to be lucky.

Ballum takes the money and gives it to the poor because he heard a preacher say that whoever gives to the poor is bound to get his money back a hundred times over.

Of course, no money ever came back to Jim, and he was left with zero. In fact, he is 35 dollars in the hole to Bob, but nothing is mentioned about that.

It isn’t surprising that Twain would insert some commentary on investing in his books. He is well-known to be a social commenter, and was a fantastically terrible investor (he apparently lost about the equivalent of 4 million in today’s dollars by investing in a typewriter that never came to market… he had to go on a 9 year speaking tour to regain his fortune).

What is somewhat surprising is how relevant his words still are today. There are, unfortunately, countless Jims in the world making investments in sickly stock and bad banks, countless Jims misusing credit, and countless Jims giving their money to managers based on past performance.

So don’t be like Jim. You never know where you’ll end up.

Making the Most of Your Charitable Donation

For many people, giving to charity is not only part of their moral code, but also a part of their overall financial plan. If we have the means to help others as well as ourselves, it can bring not only a sense of satisfaction, but can also be helpful to someone less fortunate. The tax deduction certainly doesn’t hurt.

Leaving the debate on altruism for another day, let’s look at the act of giving. The moment a donation is made, two of the above elements are met. We feel pride for having done something, and the government will recognize that act in the form of a reduced tax bill. The real question left unanswered, and probably the most important, is if your donation was able to help someone or not.

It is, of course, quite difficult to track your specific dollar, but there are some websites that can help to get an idea of how your donation will be used. If you give $100 to a charity, which in turn uses $30 of that for fund-raising, and another $25 to pay for administration and salaries, then you have to question if your donation was used effectively.

Charity Navigator has been a great tool for looking at American charities. It assigns a rating based on how effectively a charity uses the money it receives. There has been a lack of such a site in Canada.

While the Charities and Giving section of the CRA offers some good information, it is not necessarily easy to compare charities.

Starting last year, however, Money Sense magazine started The Charity 100, a list of the top charities in Canada. They set out criteria and graded the charities based on how effectively money was being used. It certainly isn’t as extensive as Charity Navigator, but it does offer a great starting point for Canadians trying to decide where their money will help the most.

Saving Money with Limit Orders

If you buy individual stocks for your portfolio, you might be familiar with limit orders. If you aren’t familiar with limit orders, you should be, as they are a great tool to ensure that you don’t pay too much, and can also be used to save money.

That majority of retail investors probably use either market orders or limit orders when they buy individual stocks. Market orders are simply orders to buy* at the best available price (which is usually the currently listed price). Problems can arise, however, if the price of the stock rises between when you hit “buy” and when the order is actually filled.

By using limit orders, you state the highest price that you are willing to pay for the security (ie. you set a limit on what you will spend). This means that if the price of the stock moves up you will not be hit with a higher than anticipated purchase price. You have given instructions that clearly state that you won’t pay more than a certain price.

I have seen recommendations to set the limit order price at the current market price, or slightly above the market price (say one or two cents) to ensure that you get your shares without paying too much. This is solid advice if you are happy with the current market price, and absolutely must have those shares. Personally, I usually use limit orders to wait for a better price.

Ninety-eight percent of the time I set my limit order to below the current market price and wait out the day to see if my order is filled. This system started because I dislike paying commission, and wanted to lower my purchase price in order to cover the cost. If, for example,  I must pay $9.95 in commission and want to buy 100 shares, I would place a limit order to ten cents below the market price. If the order goes through, I would have saved $10 on the stock purchase, which would equal out the commission cost.

Gradually, however, I started lowering my limit order to reflect what I was hoping to pay.

I recently bought 300 shares of a company I like and set my limit price to 25 cents below what the stock was trading. The stock dropped later in the day and my order was placed, saving me about $65 ($75 saving minus $9.95 commission) compared to if I had merely bought at the market price earlier in the day.

Using limit orders in this way means that you sometimes need to be patient. About a year ago it took me five trading days to buy the shares of a great company. The stock never fell to my offer price over the first four days. I got lucky on the fifth day, however, as the stock dropped significantly before I had placed my limit order. Because of that, I was able to buy into that business at an even lower price than I had been prepared to pay. Thank you Mr. Market!

Unfortunately, the down side to this method is that potential upside may be missed. Another wonderful business that I wanted to own was already very cheap in December 2009. I placed my limit order to cover the commission cost, but the stock went up… and up. I placed my limit orders diligently, but finally decided to abandon the idea as it continued to climb in January, and bought close to the market price. I missed out on about a week of upside, but have enjoyed the ride since. This is a situation where I should have bought at the market price in the beginning. Not because of hindsight, but because I already knew it was cheap, and I really liked the business. I let my emotion of “commission avoidance” get in the way.

So there are some pros and cons to making a limit order below market price, but I generally feel that the pros outweigh the cons. Regardless if you set your limit price at, above or below the market price, at least you know what you are paying.

*Limit orders can be used either to buy or to sell, but the examples in this post only consider buying a security.

Obtaining Your Canadian Credit Score

Long time readers will know that I request a free credit report by mail in about June, and pay for my online credit report and score in December of each year.

When I ordered my report and score this past December, I noticed that the sites of both Transunion and Equifax have become… labrynthesque, shall we say. It took me a good while to find the order forms that I was looking for, and I suspect that is because both companies want you to purchase their monthly monitoring option rather than the one time option. The monthly monitoring options were very easy to locate, by the way.

I feel most people would benefit from knowing their score on an annual or semi-annual basis, but would not suggest that the average person would need to know their credit score monthly.

  • At Transunion the one-time credit profile and score page can be found here and currently costs $22.90 (down considerably from the $30.85 I paid in 2009!!) Make sure you have the box checked to obtain your score.
  • At Equifax the one-time report and score can be found here and currently costs $23.95.

With both companies, you will only have online access to your score and report for one month, so it is a good idea to print out a hardcopy and save the file as a pdf.

Once you begin following your score over time, you can start to notice how your yearly activity affects your score. I rarely have hard-checks performed on my file, and pay my bill in full every month. This conservative use of credit has resulted in my score moving up about 1% per year. My score is quite high (2010 saw me improve to a score of 806 from 799 at Equifax, for example), so I think it takes more to move the needle. Someone with a lower score might see larger percentage increases after a year of good credit.

I am very interested to see my score this year, as I applied for a new credit card after I obtained my credit score… I’m looking forward to seeing where I go in 2011 as a result. I’ll have to wait until December to find out, however.

The following posts may also be of interest:

  1. A Primer to Credit Scores and Reports
  2. A Walk-through to Obtaining a Free Credit Report
  3. Checking Your Report for Errors
  4. Understanding Your Credit Report and Score (FCAC Site)

We’re Back… with a Giveaway

The Absence

It’s been a whirlwind three months. And they’ve been a great three months.

I took an unplanned (but understandable) break from blogging for a while due to the birth of our first son. He was born in mid-December, and is doing smashingly well. The last month of my wife’s pregnancy, and the first couple months of his life have found me without much Internet time, except for answering emails from family and friends, and looking up baby info. Somehow, diapers, dishes, laundry and back massages seemed to take priority.

I would like to give a special thank you shout-out to Arjun at Investing Thesis for sending me an email making sure I wasn’t on my deathbed. I appreciate the concern.

It’s still a pretty busy schedule, but I’m starting to get into a groove of managing my business and family. As such, I think it about time to add blogging back into the routine.

Things will probably still be sporadic, but I am aiming to get about two posts per week.

The Giveaway

Aside from teaching in the public school system, I run a growing and, in my terms, successful private teaching business. My students are from all walks of life, and a good number of them are working adults. I also have company classes where I go into a boardroom to teach employees business based communication.

Having this kind of student base means that I am gifted many schedules, day planners and calendars  each January. I have my one preferred schedule that I have been using for 5 years, so the majority of the items that I receive I pass along to others. This year I thought I would pass them onto you.

The Giveaway is simple. Just leave a comment below indicating that you would like to receive one, and I will contact you for address details. No bonus ballots for subscribing to the blog (though I would appreciate it) and no bonus ballots for linking to this post or adding me to your blogroll (though I would appreciate that as well).

As it is already February and I want to get these out, the giveaway is first come first serve. Feel free to indicate if you have a preferred prize. In total I have 12 items to give away. None of the companies are sponsoring this… it is merely that one or more of my students have a connection to the company in question.

They are (items crossed off have been claimed):

  1. A desk planner from BNP Paribus (European Bank) featuring daily planning from 7 a.m. to 9 p.m., some memo space, and a colour atlas in the back!
  2. A standing desk calendar from Otowa Electric Co. featuring beautiful colour photos of lightning.
  3. Two simple monthly desk calendars from Oracle Japan.
  4. A pocket schedule from Yuasa Tech Engineering Co., with a simple monthly design, memo pages and an address book.
  5. A pocket schedule from Kokusai AM (Japanese fund company) featuring monthly and daily scheduling space.
  6. A simple daily schedule from Mitsubishi Technos (machinery and equipment) featuring graph paper and address book. Japanese national holidays are written in English as well!
  7. A yearly and daily pocket schedule from Kajima Corporation (construction company).
  8. A yearly and daily pocket  schedule from Singapore Airlines featuring an index of all national holidays in the world!
  9. A monthly and daily pocket schedule from Mitsubishi UFJ (Japanese bank) including memo paper.
  10. A yearly and small daily schedule from BNP Paribas (European bank) including large memo area and address book.
  11. A monthly and daily pocket schedule from JR Kyushu (Japanese rail company) with memo pages, address book, and a map of the train routes of Kyushu!! (This is the schedule I’ve been using every year since 2007. I love the layout)

Remember, the majority of these items are in Japanese, but what a great conversation starter!!! Imagine whipping out your Kokusai AM schedule to set up a meeting, and your counterpart says “Where’s THAT schedule from?” Or imagine when someone sees the amazing photos of lightning from Otawa Electric on your desk, and you can say “Oh, yes. Quite nice, isn’t it. An acquaintance from Japan sent it to me.”

If it sounds like I’m touting the benefits, it’s because I am… I have a newborn, and need all the space I can get. 😉