The Star and Twitter 

Thanks to Ellen Roseman for mentioning Million Dollar Journey on her Toronto Star article regarding discount brokerages.  It's funny that she mentions the controversial comments in the Questrade thread.

Do you use Twitter?  I joined a little while ago, but just recently took a closer look at it.  I'm still not sure if I understand the whole purpose.  Anyways, if you like, you can follow my twitter profile here.

Weekend Reading 

The MoneyGardener writes about using the UCCB to pay for the RESP contributions in his article "The Smart RESP". 

Brip Blap asks are american kids stupid about personal finance?

The Financial Blogger talks about the TAMTA technique (try, analyze, modify, try again) in his series about how to create alternative sources of income. 

Money Smart Life asks what's your financial weakness?  I asked the same question in my article "when are you not frugal?" 

Canadian Capitalist writes about his top 3 investing mistakes.

The Digerati Life has an impressive article on 20 ways to earn more and spend less.  Are you a spender, frugalist or a capitalist?  Personally, I lean towards being a capitalist. 

Gather Little By Little hosted this weeks Carnival of Personal Finance.  MDJ submitted the article "The Best Time to Start is Now". 

Lazy Man and Money reports that money DOES buy happiness.  You'll have to read the article to see his rationale. 

The Sun's Financial Diary tells us about 4 new actively managed ETF's from PowerShares. 

Quest for Four Pillars writes about people living above their means in the article "A Decent Lifestyle".

My Dollar Plan goes off the typical personal finance path by asking us "do you back up your financial data?" 

Generation X Finance slams Yahoo for advertising home equity line of credit use as cash. 

Thicken My Wallet has a great article on What the Boss Thinks.  The article goes on to explain what TMW expects in, and considers, a good employee. 

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Continuing on from my post about "The best time to start is now", I'm going to expand on the concept with the KISS principle. 

The KISS principle is something that I "try" to live my life by.  No, it's not about kissing girls (or is it?), KISS in this case stands for "Keep It Simple Stupid".  Finances, or even life in general, is much easier and efficient if you keep it simple.

Peter, from Plan Your Escape, left a comment indicating that the best way to manage your finances is to keep everything simple.  Here it is again:

I think one of the things that prevents people from getting started with improving their finances is spending too much time trying to figure out the "best" or "optimum" thing to do. They get caught up in calculations and complex strategies to try to shave a tiny bit off their debt or to squeeze an extra 0.5% return out of their investments over 20 years.

For most people it's much better to just do "something" and (like you say) do it now. Anything at all to get them headed in the right direction is better than agonizing over whether you'd be slightly better off buying or renting, or contributing to an RRSP or a TFSA, or investing in fund X versus fund Y.

Just start saving, paying off your debt, reducing expenses and worry about the complicated stuff later.

Then GatesVP adds:

If you're new to this and you've decided to turn your financial life around, just pick the worst financial offender in your life and fix it up. Rinse and repeat. Expect to be at it for a year or two, especially if you have a complex life with kids and cars and mortgages and two jobs and credit card debt. 

So like the readers mentioned above, if you have a money problem, hack at it one at a time.  If you have analysis paralysis (as I often do), if the choices will achieve close to the same result, dive into one option.  The key, I believe, is to do something and to keep it as simple as possible. 

photo credit: kartik_mistry

7 Comments

How to calculate your adjusted cost base (ACB). There was a comment left on the “How Capital Gains Tax Works” article about how to calculate your capital gains when you make multiple stock purchases at different prices over the years.

The key is to go back into your records and find the transaction details to do an adjusted cost base calculation. After figuring out the ACB, calculating capital gains are pretty straight forward from there.

For example:

• May 2006: bought 100 shares of xyz @ $50
• Jan 2007: bought 200 shares of xyz @ $60
• Dec 2007: sold 100 shares of xyz @ $75
• Assume trade commissions are $10 each (see the discount brokerage comparison)

What is your capital gain?

First you need to figure out your average buy price or Adjusted Cost Base (ACB) or Cost Basis of the stock.

• ACB = (Total Cost + Commissions)/Total Number of Shares Owned
• ACB = [(100 x $50) + (200 x $60) + 20]/ 300
• ACB = $56.74 / share

Next we’ll calculate the Capital Gain (loss) of the transaction:

• Capital Gain (loss) = (Sell Price - ACB) x number of shares sold - commissions
• Capital Gain = ($75 - $56.74) x 100 - $10 = $1,816
• Capital Gains Tax = Capital Gains x 50% x Marginal Rate
  

A fairly straight forward but necessary calculation if you trade stocks in your non-registered account. I think the easiest way to do these calculations is either through a program like MS Money, Quicken, or through a simple spreadsheet to track your trades.

If you have a portfolio tracking spreadsheet that you would like to share, please contact me.

Note that the calculations and explanation above is done by an amateur. Please do your own due diligence or contact a tax professional for your own situation.

photo credit: tompagenet

17 Comments