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Your questions keep coming, so here are some answers to your recent queries.

Get out of bonds?

Q - I just read your “I’m getting out of bonds” column. My 80-year-old father has a decent chunk of his investments in a non-registered account with a robo-advisor, in their conservative portfolio (30-per-cent equity/70-per-cent fixed), where of course the bond holdings have tanked over 20 per cent since he started investing with them in Summer 2020. Thankfully my father is not dependent on these investments to meet his day-to-day expenses.

You are suggesting that you are getting out of bonds, but in my father’s case this would result in significant capital losses and also of course eliminate the opportunity to recoup his bond fund losses over the months/years ahead. Do you think he should just stay the course and wait this out? If you have any advice would love to hear! – Neil P.

A – Every case is different. There us no “one-size-fits-all” when it comes to investing. I should point out however that “waiting it out” is a questionable strategy for someone who is 80 years old. Your dad is more likely to recover his losses more quickly in a conservative stock portfolio of banks, utilities, and telecoms.

That said, your dad is not relying on the cash flow from these investments so whether he sells or not isn’t an urgent issue. But he needs to be aware that his bond losses are likely to get worse before they improve. If that doesn’t worry him, fine. But if it does, priority should be given to his peace of mind. – G.P.

Tech ETFs

Q - In a recent column, you mentioned the Invesco S&P 500 Equal Weight Technology ETF (RYT-A), a U.S. ETF. Is there an equivalent ETF on the TSX? – Ian B.

A - There are none with exactly the same parameters as RYT but there are some Canadian high-tech options to consider – some good, some questionable.

There’s the iShares S&P/TSX Capped Information Technology Index ETF (XIT-T) but it only invests in Canadian tech stocks and is hugely overweighted to Shopify Inc. (almost 29 per cent of the portfolio) and Constellation Software Inc..

The BMO Covered Call Technology ETF (ZWT-T) does hold U.S. stocks but it’s barely a year old so we don’t have any history with which to work. As well, the covered call aspect enhances distributions but limits capital gains. BMO also has a series of innovation ETFs, but these are very specialized.

The CI Tech Giants Covered Call ETF (TXF-T) operates in much the same way as ZWT but has a longer history. Most of the portfolio (92%) is in U.S. stocks. The fund was launched in October 2011 and has an average annual gain of 15.4% since inception.

The Harvest Tech Achievers Growth and Income ETF (HTA-T) invests in 20 large cap tech stocks including Apple, Alphabet, and Microsoft. It also employs a covered call strategy. The fund was launched in 2015 and has generated an average annual return of 16.4% since inception.

I do not recommend the iShares entry because of its heavy overweighting in just two stocks. The three covered call tech funds are worth a look but remember the covered call strategy will limit capital gains. - G.P.

Collapsing RRSPs

Q - Is it better to divest individual and spousal RRSPs before 70 or convert to a RRIF? – Louisa M.

A – By “divest” I assume you mean withdraw the assets and collapse the plans. If that’s your intent, my question is why? Unless there is a compelling reason to withdraw funds, I have always advocated tax-sheltering as much of your money as possible.

There could be a reason to cash out the plans if the income would compromise your eligibility for the Guaranteed Income Supplement or expose you to the Old Age Security clawback. But you could be paying a hefty tax price for the RRSP withdrawals. Think it through carefully.

By the way, a RRIF doesn’t need to opened before Dec. 31 of the year you turn 71. – G.P.

U.S. stocks in TFSA

Q – I understand that dividends paid by a U.S. stock in a TFSA are taxable because the U.S. doesn’t recognize the Canadian TFSA as a tax-free account. If I sell shares of a U..S stock inside my TFSA that has accrued a capital gain, am I taxed on the capital gain? – Colin G.

A – No. Capital gains are not affected by this rule. The reason there is a 15-per-cent withholding tax on U.S. dividends is that Washington does not recognize a TFSA as a retirement account. Dividends paid to RRSPs, RRIFs, and LIFs are not taxed. – G.P.

Spousal RRSP

Q - I’m 67 years old, retired, and have a self-directed RRSP, and a self-directed spousal RRSP, with the same brokerage.

My wife set up the spousal plan for me. She has not contributed to it for many years, and there are no plans to do so in the future. Both plans earn dividends and will be converted to RRIFs in the year I turn 71.

The regular RRSP earns enough dividends to cover the minimum RRIF withdrawal amount, while the spousal plan does not.

To avoid having to sell investments in the spousal RRSP to meet the minimum withdrawal requirement, I’m considering combining the two plans now, to ensure enough dividends are earned each year to cover the minimum RRIF withdrawal amount.

Do you see any problem with this? – George R.

A – There should be no problem. RRSPs can be combined if they have the same annuitant. That appears to apply here – you’re the annuitant of your personal plan as well as the spousal plan your wife created. The attribution rules do not apply since she has not contributed to the plan in the past three years. – G.P.

One-time gain

Q - I’m retired, and l live off my Old Age Security, Canada Pension Plan, and dividend income. Total income of approximately $50,000. I have a second property in Florida and will be selling it this year for a net gain (after costs) of approximately $200,000. This one-time capital gain will result in my income increasing to $150,000 for the 2022 tax year ($200k x 50% + $50k). My question is, what is the impact on my OAS for 2022 and thereafter? Is there any way to avoid the clawback, since this is a one-time event? – F.G.

A - For starters, you won’t see any impact this year because your 2021 tax return will not be affected by the sale. The capital gain will show up on your 2022 tax filing. This will affect your OAS payments from July 2023 to June 2024 and, based on the numbers you provided, will likely result in the full amount of OAS being clawed back during that period.

Since you know your 2023 income will be lower, I suggest you complete Form T1213(OAS), titled Request to Reduce Old Age Security Recovery Tax at Source. You’ll find the form here. - G.P.

DRIP benefits

Q - Why do articles comparing individual stock ownership benefits compared to mutual funds/ETF ownership not mention DRIP benefits of reinvesting dividends?

I consider DRIP benefits to be the opposite of MERs paid on mutual funds or ETFs – which I understand do not pass on DRIP benefits to unit holders?

I love using reinvested dividends to purchase shares at a 3 to 5 per cent discount. I am paid to be a shareholder instead of paying to own a fund.

These DRIP benefits add up over the years as they also compound.

Am I looking at DRIP benefits properly? – Kim C.

A – Yes, you are correct. Dividend Reinvestment Plans are an excellent way to build your share position in a company. Not all companies offer them, however. You can find a list of those that do here.

Many of these give shareholders offer a price discount on DRIP purchases, which can be as high as five per cent (e.g., Agnico Eagle, Calfrac, Crescent Point Energy).

Some ETFs and closed-end funds also offer DRIP programs. Ask your broker for a list. – G.P.

If you have a money question you’d like answered, send it to me at and write Globe Question on the subject line. I can’t promise a personal response but I’ll answer as many questions as possible in this space.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to

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