Earlier this year in April I started a swing trade which included some Suncor stocks. I mentioned how it was an undervalued company and how the stock will likely make a comeback 🙂 So I bought 100 shares at $28 each. Well I just heard on the news that Warren Buffett also bought some Suncor shares for his holding company Berkshire Hathaway 🙂 Hey, maybe… just MAYBE.. he reads my blog and that’s what gave him the idea to invest in Suncor as well (^_-) Hi Warren 🙂 I’m a big fan!
Buffett had picked up 17,800,000 shares of Suncor 😯 When the oracle of Omaha is confident enough to put over $500 million into a company, you know it’s a good investment 😎 Right now Suncor is the only Canadian holding inside Birkshire. Yay, go oil sands! Represent Canada! I”m not sure what price Buffett paid for his SU shares, but I managed to get mine around when the stock bottomed, so this could mean I’m a better investor than Warren Buffett 😆 Or I just got lucky I suppose. But now I’m faced with a dilemma. I was planning to sell my swing trade when I made $1,000 from it, which I have now. The stock climbed to $35/share today. But now that the world knows Suncor is in Berkshire Hathaway’s portfolio there may be increased global interest in this company. Selling when Warren Buffett is buying may not be smart 😕
Eventually though I will have to sell and most likely make a nice profit from it. But one drawback of making money through any kind of investing is those darn taxes on dividends, interest, etc (>.<) Here’s a simple tip to save butt-loads on investment taxes. Before you invest, give the money to someone else in a lower tax bracket whom you trust, and invest the money under his or her name instead of yours 😀
Right now for example, my dividend income is taxed at between 6% and 12% according to my tax calc 🙁 But if I had a kid who was 18 or older, I can give him the money to invest and if he’s not actively making more than $40,000 a year, he won’t pay any taxes on the dividends he receives 😀 Giving money away is perfectly legal. And no tax for the receiver because it’s a gift ^_^ So if you have elderly parents who aren’t making a large income anymore, you can put your investment capital into their account and let THEM claim any dividends or capital gains realized on it 🙂 Nursing homes are pretty expensive these days. If you have to take care of them financially, why not save your family some taxes 😀
This is good advice if you trust the person who’s name you are investing in (i.e. a spouse or child) but for non-US readers it is important to check the tax treatment of investment income for minors – here in Australia minors pay 66% tax on investment income over $417/y (drops to 46% after $1307/y investment income) as a way of discouraging people structuring their assets under minors who otherwise would be paying minimal if any tax.
I couldn’t agree more with you. When you’re investing in someone’s name, it’s indispensable that you know them very well.
I third this sentiment. Trust is huge, especially for a long term strategy like income tax shifting. This would make the most sense between spouses but other than that you really have to know someone well, or else who knows what could happen. Like many financial plans there is risk involved, and the risk here is trust.
Helpful tip Financial Independence 🙂 I alluded to that but didn’t explain it well enough. I think that’s fair what Australia is doing. Adults shouldn’t be able to shelter taxes under minors. We have a similar system here in Canada where if someone gave money to their kids under 18 years old, the investment income generated from it would be taxed to the original giver. Every country is different so for sure people should check with their own government 😉
In the US, there actually is a gift tax. The exclusion is currently $14K, I think. Amounts over that would be taxed.
Thanks for the info. I didn’t know the US has a gift tax. I’m actually surprised that Canada doesn’t have one lol. Lots of parents up here help to pay for their kid’s down payment on their first home which is almost always over $14,000. Some of the more spoiled kids get a brand new car after graduation or getting married, also from mom and dad 🙂 It’s curious Canadians often complain that we get taxed so much compared to Americans, but in some cases we pay less like Canada doesn’t have an estate tax either for example, so passing down wealth through generations is lest costly.
NOT QUITE > You need to be very careful passing money through family. There are taxes involved. I make no income, but my wife does. In this case if she wants me to invest money, she needs to “lend” me money at a very basic interest rate, I think when I last looked it was 1.0% for family loans. Secondly when gifting money to kids you need to make sure it is not the parents transferring the money, but other family so not to confuse the gift with what really should be a deemed a loan. Yes there are many who pass money freely amongst family, but they are actually breaking the Cdn tax rules in doing so, and as long as they are not audited, no issues…
If things have changed great, and someone let me know, but when dealing with family you still need to be careful as CRA always find a way to get their cut – Cheer.
That’s a helpful link, thanks 🙂 I’m no tax expert but it sounds like giving money to family members may be more complicated than I originally thought. I know the CRA doesn’t mind parents giving their adult children money for tuition, investment to make income to absorb their deductions, and for retirement plans. Mom and dad can make the maximum deductible contributions to their kid’s RRSP for example. But I’m glad you brought up that passing money to a spouse can be a different situation. In some cases, it seems to be a gray area but it’s probably good to be on the cautionary side when dealing with the government :0)
I think you meant kids RESP’s vs. kids RRSP’s. RESP’s are slightly different than RRSP’s, in that I as a parent/grandparent can put money into an RRSP, that will eventually be taxed in the child’s name. I’m no tax expert either, but over time I’ve learned about those areas in tax law that affect what I do – Cheers.
Good call on Suncor. You picked it up at a better price than I. I got 180 shares at an average cost of $30.25. If I sell I could make about $1000 in capital gains. I’m going to hold this one and hope for modest dividend increases and gradual capital gains. If it goes up to $40 that’s another grand. I had purchased Bank of America back when it was $6 and it’s now at $14. I’m still holding that one despite gains. Sticking to the same motto for Suncor.
Both SU and BAC are held by myself as well lol. I think Warren Buffett also has them both. Definitely great long term holds.
My top tip is don’t spend more than you earn.
Great tip Mags 🙂 We all need to save to prepare for the future.