Blessed by the Potato

Phew, 2020’s over (or almost over, as Scalzi makes a good point about the calendar not truly representing the essence of 2020).

What a dumpster fire of a year. I had huge plans going into the year: I was taking time off work to take care of my dad, which was going to leave me with so much free time to update the blog (not just post more, but re-brand or whatever), write a book or two or three… and just none of that happened. I didn’t even play any cool video games, as my brain seemed stuck in neutral and was just fine playing the classics again and again.

And speaking of the old brain working at half speed, I already whined about this. I said back in September that I thought I was doing a bit better. And I suppose that’s true, though I didn’t make much progress on the side quests. I started working the day job again in October, and that seems to be about my limit. I’m working from home (global pandemic and a non-essential worker whose usual desk is in a hospital hell yeah I’m working from home), which means I’m saving a good two, two-and-a-half hours every day on my horrific commute, so a small part of myself keeps saying I should have time to edit that podcast episode and actually release it, or write a book chapter, or get something done… but that’s not the proper baseline. I suppose my brain is doing a bit better than the middle part of 2020 if I can manage to not get fired, but that’s about all I’ve got right now.

Anyway, it’s over. I missed all the goals for 2020, time to feel sorry for myself. And most of what I wanted to accomplish was not physically impeded by the pandemic (or dad’s death), so the only excuse that provides is that I was sad and mopey.

But that’s hyperbole. (Fitting as the expression originated with Hyperbole and a Half) I mean, I fell way, way short of what I wanted for 2020: gaining back weight, making no progress on the books, etc., etc. But way short is not nothing.

After procrastinating for an embarrassingly long time (esp. as a personal finance guy), I finally wrote an updated will to include instructions for what should happen with my kid (and she’s only 8 so I procrastinated for less than a decade — victory!). Part of the issue was getting both parents to a lawyer in meatspace — a surely insurmountable problem that neither of us had the motivation or time to deal with at the same time. For 8 years running. Finally I decided to use an online service (I used legalwills.ca but I’m sure Willful works too if you have also been procrastinating). So hey, that’s done.

I updated the CPP calculator for 2021’s numbers (which I didn’t manage to do for 2020’s YMPE).

I think I have my dad’s estate mostly handled (there’s still the Smart car to sell, and one account left to close, plus all the tax filing — but mostly). [PS: anyone looking for a 2016 Smart Fortwo that’s been sitting in a garage for a year and a half?]

And I started learning to play the ukulele. That’s a big step because I’m not the least bit musical. I couldn’t carry a tune in a bucket, and often lose time clapping along to a song. Wayfare still stares in amazement when I practice: “It’s like watching a dog talk. It’s not something you ever expected to see.” So I guess that’s progress of some sort? I also put Duolingo on my phone and have been practicing my French (with a 253-day streak as of this posting!)

The big book idea was tentatively titled the Personal Finance Mission Binder and it was all about planning — especially around emergency funds and various disasters. It had a chapter on “Rules for Freaking Out” in the detailed outline (which was all pre-pandemic), which may have been handy to have finished earlier this spring (though who really knows, it may have been terrible). Even though I did absolutely nothing for it this year and missed out on the best possible timing for a book on that topic, I can cross it off my list now! Because after this nobody’s going to need a book on emergency funds or preparedness (and I’ll bet that 10 other authors are going to be inspired to write one).

And one thing I hadn’t actually had on my to-do list but wanted for a long time was to get another pet. My cat was a magical one, who didn’t set off Blueberry or Wayfare’s allergies, and we weren’t sure we’d ever find another like that. They seem to be less allergic to dogs, but dogs are work (one benefit of the pandemic is that all the good boys have found homes, but makes it hard for us to find a pet). Then Wayfare managed to find a cat who was looking for a new home. She was looking hard in the background and keeping it a total secret from me, and got ghosted a few times along the way. So just two days before Potatomas, this little big guy moved in, which is a pretty good way to end the year and start the new one:

I could start listing all the things I wanted to do and didn’t, all the terrible disasters of the year, the mismanagement of the pandemic, the things still on my whiteboard and getting a real good depressive funk going. Instead, I’ll just say that this was a real dumpster fire of a year, and I’ll console myself with knowing that I got just a little bit more than nothing done.

It was also a very weird year for the passage of time. At times it’s felt like March 233rd, with a kind of sameiness to the days that comes from making no progress on any projects and staying inside all the time. But time also seemed to fly by — I’d blink and it would be a week later (usually when thinking I might get X done by Y, only to find Y came and went without any noticeable progress on X). I can’t believe it’s already 2021.

I haven’t set any specific goals or resolutions for 2021 — starting from where we are, I just want to survive the damned year.

Though I suppose I can copy-paste a part of my 2020 list as a start:

• Write a book: Personal Finance Mission Binder Oh right, off the list because who needs that book now?
• Write a book: untitled kid’s book based on the bedtime story I told Blueberry that one time in the car
• Update a book: do a 3rd edition of the Value of Simple now that all-in-one funds are in the market and Tangerine has finally released their new lower-cost funds
• Create a new stand-alone site for the directory of fee-only planners.
• Get the band back together (which starts with me actually editing the episodes that are in the can, the can being my harddrive)
• Try to take over the world
• Get back in shape

That last one has proven hard. The “quarantine 15” snuck up on me gradually, then suddenly it was the “quarantine 19” which was fine because the rhyming structure was still there, but then it became the “quarantine I’m too afraid to step on the scale whoops now there’s something blocking the scale guess I won’t know until I move that thing in the spring” which doesn’t seem healthy. I know how I lost the weight the first time, but sticking to the plan has been a lot harder — partly because it’s harder to get the exercise in regularly, and partly because sticking to the diet has taken emotional energy I just don’t have most days. I’m still afraid to step on the scale, though I’m fairly certain I have managed to at least arrest the rise. I got Ring Fit Adventure for the Switch, which is providing a way to get some exercise in even if I don’t leave the house.

Anyway, farewell to a terrible year for nearly everyone. Be kind to yourselves looking back on what you may or may not have accomplished with your time — even if it felt like you should have had done more but did less. I know it’s hard for me to look back and not berate myself for wasting so much time, but that was 2020 for you.

Tangerine just released some new versions of its all-in-one mutual funds with lower fees. They have three flavours: 100% equities, 75-25, and 60-40. The new fees are 0.65%, which is competitive with robo-advisors (the actual MER will have to wait until a year has passed to be reported, but will likely be about 0.7%).

I’ve been waiting a long time for this news. It was over a year ago when they invited me to a survey about lower-cost versions of their funds and the future of their investment arm. I should note that it was a survey just as a regular customer — they didn’t hire me to consult. But, if you’re listening Tangerine, you could. I like consultant money. And the first thing I’d tell you is to not launch a new set of funds with a confusing “ETF” in the title, to just lower the fees on your existing funds. Yes, the funds all have names like “Equity Growth ETF Portfolio” even though they are not ETFs. (Though they are not the first bank to so confusingly name their mutual funds)

After a bit of confusion between announcing the funds in the fall and now, people with the old funds can finally move over to the new ones. And they made it super-easy to do: when you log into your investment account, there’s a great big “switch my portfolio” button. That’ll take you to a risk tolerance questionnaire, after which you can choose your new, lower-fee fund (or one of the old ones if you really want), and your funds will be moved over.

I’m glad it’s finally here, and gives people who have long been wringing their hands about sticking with Tangerine’s super-easy funds or switching to a robo-advisor a reason to stay. It may make Tangerine the killer choice for ease-of-use, especially in non-registered accounts. (Though if they could have shaved another 10 bp off the cost then they could have blown the robos out of the water)

However, I think I’ve read through all the documents on their site, and I can’t for the life of me find what they’re going to actually invest in. They mention an equity and fixed income split, and then a global equity index as the benchmark for the equity part. Does that mean there won’t be any home country bias in the new funds? They’re going to hold ETFs (possibly related party ones, which would likely mean the Scotia ones), but don’t spell out specifically which ones. I think Tangerine’s earned a fair bit of goodwill over the years, so for the moment I’m switching my portfolio there over to the new lower-cost funds to see how it goes, and trusting that whatever the specifics are that they’ll be fine, but some more easy to find details would have been nice (also, consulting money please).

As we approach another Potatomas [or just pass, if it takes me two weeks to post this], Blessed by the Potato has another anniversary, turning 22 this time.

Perhaps it’s time for a little refresh. Perhaps it’s long past time for a major refresh — sidebars and fixed-width columns are so 2006. And have you heard about SSL certificates? But we can’t just grab a new WordPress template, upload it, and hope it works.

No, we must start with some existential questions to better understand the purpose of the blog and why I do what I do so that we can better decide how to move forward together.

Why does BbtP exist? Why do I still blog after 22 years? I don’t really know, I’ve just always kind of done this. Ok those are too hard, let’s try something else.

Why do I have some ads, but don’t accept paid posts/native advertising? Do I even want to make money?

So hosting a blog costs money, usually (I suppose there are platforms that let you do it for free). But I do it with WordPress and an account at a web server company and a domain name and all that, and it costs money. I had a grand vision of not having to pay for my hobby of blogging and maybe even making some side income back when I started this. Hosting costs let’s say $150-200 CAD/yr for some round numbers. Google Ads has a $100 minimum threshold to hit before getting paid out, and IIRC it took me over 5 years to hit that the first time. I now make an average of $160/yr in advertising (not including affiliate income). Not a whole lot of side income, and indeed over the whole lifecyle of the blog I’m still in the red.

In addition to display ads, I have those referrals in the sidebar. The thing is, all but one of those don’t just round to zero — they are zero. I don’t think I’ve ever gotten a single payment from Passiv or the robo-advisors. Questrade is the most beneficial to users signing up (free money!) and also the only one actually earning its keep — I make roughly $200-250/yr from that program being featured there (though I don’t track the source and its also printed on the bookmarks I give out at talks). Which kind of raises a question: why have them there at all? I am very picky about which referral programs I put up, and think that they do benefit users as well as myself, but still I keep them explicitly over there in the zone where users immediately understand that it is advertising and not content. Even then, people occasionally question whether that affects my impartiality. Is $250/yr worth that? Eh, I’ll leave Questrade and Passiv for now, but now that I’m thinking about it I’ve taken down all the robo-advisor affiliate links.

Clearly, I’m not in this for the money. Should I be? I mean, that was the whole problem with grad school too, right?

If I was, one thing that we have to circle back to is why BbtP exists. More to the point, why that branding exists. It’s from an inside joke from when I was a teenager. I’m sure that the silly name and address (and possibly my silly writing style) is holding me back. That stuff shouldn’t matter — only the content should — but I’m pretty sure that it does anyway.

I really wanted to take some time in 2020 to sit down and re-think the whole site — whether (and how) to rebrand it, whether to split it into a more professional personal finance type site and a separate personal rant/update site. Whether to just mirror the PF content to the VoS site. Whether to delete a bunch of old posts and only keep a few of the tools and explainers. And of course to get a new theme. But the year was a massive dumpster fire. I’ll put up a separate post on that, but despite being locked at home in front of the computer with no day job for much of the year, I accomplished basically nothing.

Anyway, I’ve done nothing to the site (not even getting that SSL certificate going or changing the URL structure to include post titles in the permalinks), and now that I’m back working I may have missed my window to do anything major with it. So for now, it remains trapped in 2006. But the comments are open (even if it takes me two days on average to clear out what the spam filter catches), so by all means tell me how you think it should be revamped/rebranded/abandoned. Should I ditch the ads and get a Patreon pitch? (I am not liking that the previously unobtrusive banner ads have started including pop-ups) Or is that trend passe, and the thing to do now is to turn the site into a subscription newsletter on substack? Or are blogs themselves relics of another age, and I should shut it down entirely and just put 35-part rants on Twitter when I have something to say?

For a long time I was the only game in town when it came to a CPP calculator that included the CPP enhancements — important for planning purposes! [Note: I’ll point back to the article on the calculator and you can download it from there — if I provide a direct download link here I’ll forget to update it next year and I’ll get hatemail in the future]

Now there’s some alternatives. Doug Runchey (yes, the Doug Runchey who writes all the CPP calculation articles) has teamed up with David Field of Papyrus Planning to create a web-based CPP calculator. It can import data from your statement of contributions if you have that, or you can go ahead and enter data manually. We here at Blessed by the Potato Publishing know that as savvy consumers you have your choice of free-to-use calculators, and there are advantages to choosing Excel: the web-based one will throw an error if you enter earnings that are above the YMPE for each year, forcing you to go back and change. every. line. manually. And fill-down is handy when playing what-if scenarios e.g, for retiring early or re-training. However, some people don’t like spreadsheets (heathens, surely, who wouldn’t read this blog anyway), so it’s handy to have a web-based alternative.

Mine is based on years, while the underlying CPP calculation (and drop-outs) uses months, so I have some approximations there. I also approximate the weird way CPP calculates the maximum pension (based on the average of the last 5 years’ YMPE) to make it easier to use real dollars into the future. That sometimes gives me a few percentage points of difference with other calculators and the ground truth — I tried to future-proof it for estimating far into the future rather than making it more accurate for pensions available today. But there will be some difference — on the main page I put a caveat that it’s only accurate to about 5% (which should be good enough for planning purposes).

So let’s see how the two calculators stack up. I compared 3 scenarios: (all amounts are per year in today’s dollars)

Honestly, I thought the only differences would come from rounding drop-outs to full years and how I estimated inflation for the 5-year average pensionable earnings, and that the differences would likely have come to ~2%, so I was a touch surprised to see a few scenarios with greater differences. Still, all scenarios are within my 5% “good enough for planning purposes” margin of error (assuming that the real value would either be between our two estimates or that DRDF’s version is precise to the dollar). For long-term planning/what-if scenarios you probably have more uncertainty than that about time off work (like in say a pandemic), and if you’re close enough to need precision to the last dollar, then you may want to hire Doug to run a personalized calculation.

It’s also informative to compare the scenarios: the first two are the same set of earnings, just for different starting points. The difference in the amount of CPP the hypothetical people get is due to the CPP enhancements. The 35-year-old has almost their entire working career (since we don’t start them until 30 – 2016) in the enhanced CPP regime, while the 65-year-old finished just as the announcement was being made.

They also include a break-even graph, which is something I’m on the fence about.

I had the idea to add one in to my calculator a few versions ago, but there were two main problems with that: 1) it’s work and I’m short of time and kind of never want to have to dive into CPP calculations again, and 2) I’m afraid it’s terribly misleading. This deserves its own post (which has been in the works for years now and has been scooped (and done better) by MJoM and a recent paper by Bonnie-Jeanne MacDonald) but briefly, it’s a mistake to try to frame it as a decision where you want to get the most out of CPP in an expected value calculation. The point is not to be playing a game of you versus the government* where you die at 75 and go “ha! I took CPP early and WON! Screw you, government!” These break-even analyses frame it wrong and get you thinking about how long you’ll live (which we are really bad at estimating) and make a decision based on that.

CPP has enormous, unmatchable longevity insurance benefits. There, that’s the main point and why you shouldn’t get too hooked into these break-even calculations. Basically, you should always defer it to 70 unless you can’t because you need the money now (i.e., you don’t have the savings to live off of in the first place — which should cover those who would get GIS), or you have a specific diagnosis/severe risk factor that limits your life expectancy (not that your parents died young of something with weak inheritance [like getting hit by a car or having a heart attack] or that you can’t possibly imagine growing that old). Just saved myself another 3,000 word post.

Some people also frame it as spending more early vs later, which is wrong too. As Michael James puts it (though I can’t find the specific post to point to), delaying CPP to 70 lets him safely spend more of his savings now, knowing that the long term is taken care of by CPP — he gets to safely spend more throughout his retirement, including the early years by deferring CPP.

PS: Doug & David say when you sign up that they won’t spam you, and that’s mostly true. They look to have a script set up to send you messages for the 3 days after you sign up, but they’re not solicitations.

* – I have to credit Sandi Martin with coming up with this analogy.

As the title states, this is a question to all the smart BbtP readers out there — does anyone know much about captive insurance companies?

I came across the concept when looking into how a certain popular be-all robo-advisor was offering people a way to buy bitcoin. Now, without going on too much of a rant, bitcoin is stupid in large part because it’s stupidly hard to get and keep. There are huge barriers to entry to regular people, but it’s going up and people want to buy, so there are a whole host of businesses springing up to serve that market. There are companies that are buying bitcoin on their balance sheet¹, trusts that simply serve as publicly-traded securities that hold bitcoin, as well as a bunch of brokerage/exchange type services that range in professionalism from a group of basement-dwelling hackers cosplaying as investment bankers to groups with actual infrastructure and legal agreements.

There’s a huge trust problem with bitcoin (or crypto in general) — if you lose your keys, or get hacked, your coins are gone. If you die and forget to give your heirs the key (or let them know the coins exist in the first place), they’re lost forever. If you let someone else hold your coins and they get hacked (or fake their death and abscond with the money or whatever else might happen), then they’re gone, with no regulator to cry to reverse the transaction. For the most part, people don’t seem too worried about this — it’s a mania after all, you can’t sit around when there’s buying to do! As far as I’m aware, all of the more-convenient ways to access bitcoin trade at a premium, indicating that people want the convenience and are willing to pay for it (or can’t arbitrage it away).

So I checked out that be-all robo to see what all the fuss was about. And while bitcoin isn’t covered by CIPF, they say they’re insured. So if you click through the fine print, they’re using the services of an American company specializing in being a custodian and exchange for crypto. And they have a Bermuda-based captive insurer providing $200M of coverage, and that sounded weird to me. I don’t really know how captive insurers work — I could do a search and see that it’s when the insurer is wholly owned by the company taking out the insurance, which explains the name. But I don’t know how to answer the main question: do they actually have $200M in assets to backstop that insurance policy (or sufficient re-insurance)? Is there a Bermuda-based regulatory filing database like SEDAR?

Hopefully one of you knows.

1. I fully expect Tesla to announce they’re doing that or have been doing it all along and that’s the explanation for the interest income anomaly.