041 – Is your ROI all that matters?

How much time do you spend analyzing investments? Do you even know how? There’s always more to learn, and we all need to recognize our own bias and blindside. We’re sharing how we do our due diligence and discuss what matters for different investments. Here in the FI Garage, we’re all on the path to FI, however, we consider the RE part optional. #FIRE

Beers – [0:30]
Money Mechanic’s Holiday Season Advertising Giveaway – [6:15]

Assessing Investment Decisions [9:40]

GAMBLE! [10:00]

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  1. Hey guys, thanks for another good episode.

    I just recently got back into FI content and was excited to hear about the RetailInvestor.org’s nitty-gritty about RRSP’s.

    Looking for your thoughts on this. I thought the site was interesting and had some good information. But to me the comparisons of the RRSP and TFSA weren’t realistic in that the writer always assumed the contribution credit (aka tax refund) is reinvested. Then goes on to say it doesn’t matter if you spend it or not. Contributions are after-tax, so you cant add the contribution credit to it unless when you get the refund you add it. Did I miss something here?

    Also, my conspiracy/credibility detector goes off off when I see comments like how this information was sent to industry players to disprove the sites logic and math. This came off to me as “this person is right” and the industry is wrong (conspiracy thinking). Some of it was overly confident given my initial thought that the comparisons don’t represent life.

    1. Hey Sterling, Thanks for listening to the show. There is a lot to digest on Retail investor. I think I know what you’re referring to in the nitty-gritty article. I read it as $5000 contributed to the RRSP is equal to $3500 in the TFSA. Contribution credit is irrelevant because the cash is after tax, the credit just makes it pre-tax. So they’re equal. If you re-invest the CC you are just using it to cover the future taxes. Maybe I’m not quite understanding your question.

      I didn’t get the conspiracy vibe. I thought that the writer was highlighting that the ‘common’ assumptions held by the industry can be proved wrong with the math. What I really learned from it all was that the only benefit of the RRSP is in the tax arbitrage. Without that people are just fooling themselves into thinking their money is growing tax free. Maybe I should reach out to the author and get them on the pod! Cheers, MM

      1. My takeaway was that the real benefit of the RRSP was the tax-free growth and that the tax arbitrage is ambiguous. Probably worth reading again.

        I do agree though, I didn’t get the feeling the writer was doing anything more than expressing frustration that there is potentially misinformation being propagated.

      2. Thanks Mechanic/Economist for the replies. Keep up the great work on the show!

        I think I’m too ingrained in the “old way” of RRSP thinking that the author rebukes. 🙂 I’ll have to give it another (3rd) read through.

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