Investing in Technology Companies: Prepare for a Roller Coaster Ride

Not sure what it's like to invest in technology companies? Here are a few facts:

• If you invested $5,000 in Apple on April 11, 2003, your investment would now be worth $340,906.50 as of February 27, 2013. A 5800% increase. However, since September you would have watched your Apple investment decrease 38% from its peak.
• If you invested $100,000 in RIM (Blackberry) on July 20, 2007, your investment would now be worth $5,729.59 as of February 27, 2013. A 94% decline.
• In many cases, you can watch your investment go down to 0.

Be careful what you wish for. Technology stocks aren't always the romance they are made out to be.

Canadian Bank Stocks Always a Great Option

If you're someone that is looking for higher returns than what your bank offers in Savings Accounts or GICs, you may have looked into the stock market. However, the potential volatility may have turned you the other direction. Look no further than the Canadian Banks.

Unlike banks in the USA, Canadian banks are moderately regulated, making them much more risk adverse. However, they continue to grow; most recently by taking advantage of the weaker economy by completing international acquisitions. Essentially, the Canadian banks are "taking advantage" of the opportunities that are presenting themselves from other banks not recovering as quickly from the recession. Bank of Nova Scotia has most recently purchased a 51% stake in Columbian bank, Banco Colpatria Red Multibanca Colpatria SA. The acquisition totalled around 1-billion dollars. They are also waiting on China's approval to purchase nearly 20% of Bank of Guangzhou for 719-million dollars. 

The Canadian banks have demonstrated resilience from market volatility, with most yielding over 30% over the past 3 years. They also offer very attractive dividends between 3.65% and 4.55% per year.

If you're willing to look outside of standard investments like GICs and Savings accounts, don't be afraid of the stock market. You can always take a cautious step in.

Tips for Canadians Investing in the U.S. Stock Market

I have been self-investing in the U.S. stock market in recent years, and it’s not as simple as it may seem. The purchase process may be similar to that of the Canadian market, but there are vital factors to be aware of. If you’re interested in purchasing stocks on the U.S. market, here are some basic tips that I recommend you take note of:

Currency Exchange:

If your funds are in Canadian currency, you will have to convert the funds to U.S. currency. However, your financial institution / stock brokerage service will likely charge approximately 2.5 cents on the dollar. In other words, you will incur about a 2.5% fee on your original investment. You will incur the same fee when you sell your investment if you want to have the funds converted back to Canadian dollars. As a result, you will lose approximately 5% of your original investment just for investing on the U.S. market. To put that into perspective, if your plan is to invest for one year, and you earn a 7% return, you really only made about 2%.

Dividend Withholding Tax:

When investing in U.S. dividend stocks, your dividend payout will be subject to approximately 30% withholding tax. However, if you contact your stock brokerage service and fill out a W8-BEN form to prove you’re a Canadian citizen, you can lower the withholding tax to 15%. You can get the withholding tax back through the Foreign non-business tax credit.

Registered Accounts:

Some brokerage services allow you to invest in RRSP and TFSA accounts with U.S. stocks. However, you are unable to retrieve the 15% dividend withholding tax if they are under the TFSA umbrella.

The U.S. stock market definitely gives investors more stock options, however be aware about what I mentioned above. Specifically, if you are a "small-time" investor, the currency exchange can be a major issue. If you have any questions, leave a comment below. Happy investing!

5 Tips to Help you Pay off your Student Debt

I know I know, there’s not really a simple answer. But there are a few things you can keep in mind if you are fresh out of school with that student debt lingering over your head.

1. Attack highest interest debt first: If you have other debt besides student debt, pay that down first - assuming it's at a higher interest rate. Especially if you have that dreaded Credit Card debt where you’re owing 20% interest.

2. Is your debt with OSAP?: See if you qualify for the “Cap on Debt” program. The program ensures you only owe back $7,300 per standard 2 term academic year.

3. Consolidate if you need to: If you are feeling overwhelmed with debt beyond just your student debt, speak with a financial advisor at your local branch. They may be able to consolidate your debt together and give you a simple payment structure that will work for your budget.

4. Don’t let it get out of control: Coming up with a plan to deal with debt today is better than letting it get out of your control tomorrow. Deal with it today.

5. Budget: Once you’ve discovered how much you can pay down per month on your debt – stick to it. Don’t spend money you don’t have. To learn how to budget as a student, visit A Student’s Guide to Spending.

I know none of the options are that appealing (besides the Cap on Debt program), but you can do it. And it’s better to attack the debt now than deal with an even worse situation later.