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Know your customers and your competition

It almost seems so obvious that businesses should know who their customers are. In the real world, many small businesses can get to know their customers’ buying habits and taste, and they even might get to be on a first name basis with them. As companies get bigger, they don’t see customers per se, they see statistics about their customers, such as what gender they are, where they live, what kinds of products are they buying and at what times. Big or small, it pays to know who your customers are and what they want so that, as a great trader (read: middle man or middle woman), you can more effectively exchange your goods for your customer’s cash. An interesting ‘quirk’ of the stock market is that your customer can also be your competitor.

Even though knowing exactly who your customer is just as crucial for the do-it-yourself investor as it is for any other business, the reality of online trading makes this infinitely more challenging. Your “customers” are just numbers and letters on a screen. You have no idea on who they are or what their buying habits are. All you really see are share prices either rising or falling, and from there you can infer that there is either increasing interest in a stock or decreasing interest at any particular price on any given day. And as unsatisfying as that is, millions of people around the world base their stock trading decisions simply on what they are inferring from movements in stock prices. What separates the great traders from the rest of the herd is the understanding what their customers are looking for.

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The Mighty TFSA

Tax Free Savings Accounts (TFSA)

Many of you are probably familiar with the saying: “the only sure things in life are death and taxes.” Well, as of January 2009 there’s been a little ray of hope as far as those taxes are concerned. In February of 2008 the Canadian Minister of Finance (Jim Flaherty) announced a new program would start in 2009 that would forever change how Canadians can choose to save their hard-earned money.

Before the TFSA was introduced, if you saved or invested your money(the money you would have already been taxed on) you would then go on to be charged more taxes if those savings or investments made money. Many Canadians felt that they were being punished despite trying to do the right thing by saving or investing. While many of those same rules are still in place, the reason a TFSA is so innovative is because it gives Canadians an option to save and grow their money without having to pay any taxes on it. Sounds like a great option to us.

What is a TFSA exactly?

A TFSA is a special type of account that enables Canadians to grow the money in the account tax-free. Whether the money is in cash or is invested in allowable products (such as stocks or GIC’s) any money made within a TFSA account will not be taxed. For example, when most people saved money in a bank they generally put the money is a savings account. Aside from keeping the money safe, there was the added bonus of gaining some interest for parking your money there. The consequence of earning some interest is that it can be taxed as income by the government. In a TFSA, however, any money earned in the TFSA is not taxable by the Canadian government – ever.

How it works?

Most large Canadian banks as well discount brokerage firms offer a TFSA. Opening a TFSA is generally as simple as opening any other account at these institutions. In order to qualify for getting a TFSA however you have to meet the following criteria:

  1. You have to be a Canadian resident
  2. You have to have a Social Insurance Number
  3. You have to be 18 years of age or older

The government has set a limit on the amount of money you are able to contribute into your TFSA in any one year. In the first year of the program (2009) the amount was set at $5000 and every subsequent year this amount increases according to the inflation rate.

The good news is that you are able to carry forward any unused contribution room to future years so even though you might not have opened a TFSA in 2009, you have accrued the contribution room since that time. The CRA will provide the contribution room figure on your income tax statement (called the Notice of Assessment).

To help understand better how a TFSA works, let’s walk through an example. Suppose you had $1000 to save in the first year (2009) and you decided to put that $1000 into a TFSA. Your contribution limit for the year was $5000 but since you only used up $1000, you’re left with $4000 of extra room for that year. As of January 1st the following year your contribution room would increase by $5000 plus any unused contribution room from the prior years ($4000) bringing your grand total of contribution room to $9000. The exact amount of contribution actually is slightly more than $5000 each year because of inflation. Your personal amount can be found on your tax return or via Canada Revenue Agency’s “my Account” website [] .

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Discount Broker Deals & Promotions – As of January 30th 2012

Here are the current promotions and deals listed at the discount brokerages:


Company Brief Description Details Link Deadline
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc none none
Open and fund a new RSP account with a minimum of $25,000 and get 150 free stock trades. RSP Promo Feb. 29, 2012
Open and fund a new margin, registered or TFSA account with a minimum of $1,000 and get 10 free stock trades. RSP Promo Feb. 29, 2012
Move your brokerage account to Questrade and they’ll cover the transfer-out fee. Transfer Fee Promo none
Maximize your returns. Get up to 1% (or more) of your mutual fund value rebated back to you. Mutual Fund Rebate Promo none
Open a NEW Scotia iTRADE® account (New Account) before March 1, 2012 and fund the New Account by March 31, 2012 with either CAD $50,000-$99,999 in assets or more than CAD $100,000 in assets and receive either $150 cash or $250 cash or the commissions on 100 trades (maximum value of rebate $999.99) New Account Promo Mar. 31, 2012
Transfer your account to Qtrade Investor before March 31, 2012 and they will pay you up to $125 to cover your transfer fees*. New Account Promo Mar. 31, 2012
Open a new account with $25,000 before March 31, 2012 and receive 150 trades free. (Applies to the first 150 trades placed within 60 days of account opening at a maximum of $6.49 per trade with a total maximum value of $973) New Account Promo Mar. 31, 2012
Virtual Brokers will cover transfer fees from your transferring institution to a maximum of $150 per account. This offer is only applicable to accounts opened with at least $25,000 in equity before March 31, 2012. Transfer Fee Promo Mar. 31, 2012
Open your account today and for every $10,000 you invest between January 4 and March 1, 2012 you’ll be entered for a chance to win a $1000 prize offered daily*. Plus, get $250 cash back for investing $100,000 or get $650 cash back for investing $250,000 ** Enter promo code WIN2012 when you open your account. New Account Promo Mar. 1, 2012
Transfer a value of $50,000 or more to your Disnat account (from a non Desjardins account) and receive $300 and free access to their GPS portfolio management tool for a year. Money will be deposited to your account within 30 days of your completed transfer. They will reimburse any transfer fees charged by the transferring firm (up to $150 per account). GPS Promo Limited Time Offer