We live in the information age and yet in certain industries the information gap between the buyer and seller remains a mystery. The financial industry attempted to rectify the problem by introducing CRM2, which discloses how much investors pay advisors and their firms – and expressing those fees in dollars rather than as a percentage of assets. The new regulations shockingly don’t capture all the fees – only the trailer fee is revealed in dollars, while the rest of the expense ratio remains hidden – but it’s a start.

This week a federal court ruled that real estate agents must make home sales data public. That includes sales figures, pending sales, and broker commissions, which are not currently disclosed. The Competition Bureau first brought this complaint forward in 2011, alleging that the Toronto Real Estate Board (TREB) prevented competition and stifled digital innovation by prohibiting its realtor members from posting sales data on their websites.

TREB vowed to continue the fight (of course!), saying disclosing sales data violates consumer privacy. What’s at stake, though, is greater access of information for consumers as well as greater competition in an industry starving for low-cost online solutions for buying and selling a home.

Meanwhile, CREA, which represents more than 100,000 real estate agents across the country, is lobbying the federal government to change the Home Buyers’ Plan rules to allow parents to each withdraw the maximum amount ($25,000) from their own RRSPs for their children to purchase or build a home.

Wow.

Josh Gordon, an assistant professor at Simon Fraser University’s School of Public Policy, says this is “a remarkably stupid idea:”

“One of the dumbest ideas I’ve heard in the housing debate.” The policy change would only fuel demand for real estate, he says. With more access to funds, buyers are able to pay more for homes, driving up prices and exacerbating the very problem CREA purports to address. “You’re just allowing people to take on more debt, meaning they can bid more for the same house.”

Next up: Let’s have a go at car dealers to disclose the true cost of a vehicle so we can all avoid the painful negotiating dance when buying our next car.

This Week’s Recap:

On Monday I closed out Financial Literacy Month with 10 financial lessons to share with friends.

On Wednesday Marie gave you a year-end financial planning checklist to consider,

And on Friday we opened up the mailbag and answered a reader question about holding bond funds in a rising rate environment.

Many thanks to the Globe and Mail’s Rob Carrick for highlighting the year-end financial planning checklist in his Carrick on Money newsletter.

Jeers to this financial planning firm for blatantly ripping off my mom’s year-end financial planning checklist and publishing it as their own:

Here’s a company called WEALTHplan ripping off my mom’s year-end financial checklist article. Great service you are providing to your clients through our original work 😐 pic.twitter.com/5SDkJ2nJtF

— Boomer and Echo (@BoomerandEcho) December 1, 2017

Shameful.

Weekend Reading:

Just embrace passive management already. Some advice from Eugene Fama, the father of efficient markets.

Rob Carrick and Doug Hoyes talk about when it’s okay to break the first commandment of personal finance:

Jason Heath explains why making RRSP withdrawals to pay off a line of credit debt could be double trouble.

Who doesn’t love sales? There’s just one problem: they lead us to make dumb choices. A great excerpt from Dan Ariely’s new book, Dollars and Sense.

Jonathan Clements shares a timely tale: Imagine an idealized chart that summarizes our finances over the course of our lives. What would the chart look like? 

The three months of Bill VanGorder’s retirement were among the longest of his career. Why more Canadians work past 65.

So is this the new retirement era? Let’s have a moment of silence for the late, great dream of early retirement.

In their own words: “I’m scared to death of the cost of living as a senior.”

“Even though I planned my post-retirement financial affairs with great thought, I am still surprised how much more expensive it is,” says a man, 70, from Goderich, Ont.”

Target benefit pension plans. Here’s what Bill Morneau’s pension bill could mean for your retirement.

The best time to start CPP – if you don’t know when you will die.

Should you delay taking CPP and OAS? Michael James offers a thorough analysis to help you decide.

Google Finance is shutting down and Million Dollar Journey blogger Frugal Trader offers two alternatives for tracking stocks.

Jason Heath explains how to evaluate the investments in your Group Savings Plan at work.

Department stores were once temples of commerce and hubs of cultural activity. But rising competition, then the internet, rendered them irrelevant. #RIPSears

Finally, a monster expose by the Globe and Mail’s Kathy Tomlinson reveals how doctors are taking in millions of dollars a year by putting their names to accident injury reports for the insurance industry.

Enjoy the rest of your weekend, everyone!

Q. The Bank of Canada has raised its interest rate a couple of times so far and there may be more hikes in the near future. I own a bond mutual fund in my RRSP and I had been told I should dump it before interest rates go up, but I’ve held on so far. Do you think it’s time to sell my bond fund? I’m not sure how this works.

I know it’s disconcerting to see your bond fund lose value, but that’s not a good reason to abandon it.

Why do bonds lose value when interest rates increase?

If you bought a new issue bond for $10,000 with a coupon rate of 2% you will receive $200 every year until the bond matures. If the interest rate for a similar bond rose to 3%, there wouldn’t be any consequences to you if you held on to it until maturity (as long as the issuer didn’t default). You would still get your $200 payments and the full $10,000 at the end of the term (although you’d have a loss of purchasing power because rising interest rates usually mean an increase in inflation).

But, what if for some reason you wanted to sell your bond in the secondary market. No one will want to buy your piddly 2% bond when they could get 3%. You have to sweeten the deal by reducing the bond price, so the yield would be comparable. Say you sold your bond for $9,650 (the actual market value will depend on such things as your interest rate, current interest rate and the length of the term remaining) – $350 will be a capital loss to you.

Bond mutual funds and ETFs hold multiple bonds of different types and terms depending on the fund’s mandate. When interest rates rise the unit price of the fund will fall in price, reflecting the market value of the underlying bonds – but the coupon rates don’t change so the total value includes your interest payments. Gradually, as older bonds get sold at maturity and are replaced with newer, higher-yielding bonds, the distributions will increase.

The total annual return isn’t going to show up on your investment statement. You have to visit the website and click on the “performance” tab. You will see that the total return includes price changes and reinvested interest payments.

That being said, even if interest rates do continue to rise your bond funds probably will give negative returns even when accounting for interest payments. However, you need to remember why you invested in the bond fund to begin with.

The fixed income portion reduces the overall volatility of your whole portfolio. And, this is also the opportunity to rebalance and buy more at the lower price and reap the benefits of future higher yields.

December often zooms by when you’re busy buying gifts, baking cookies, attending parties, and shovelling snow. It may be tempting to just enjoy the holiday season, but the last month of the year is also a good time to think about year-end financial planning.

Luckily, you have plenty of time between now and the end of the year to take any action that is required.

Here are 10 things to consider to start the new year in good financial shape.

Year-End Financial Planning Checklist

1. Schedule an appointment with your financial planner or advisor

The end of the year is a good time for a financial checkup. A financial planner can help your look ahead and prioritize your goals for the coming year. A year-end portfolio review can identify any areas that need attention and ensures your monthly savings is still in line with your future needs.

If you turned 71 this year give yourself plenty of time to switch your RRSP to a RRIF before December 31. You also have only until the end of December to make your final RRSP contribution.

2. Spousal RRSP contributions

If you are investing in a spousal RRSP, make the contribution in December as opposed to January or February to help get around the 3-year attribution rules.

Investing in a spousal RRSP in December 2018 means you might be able to take money out of the spousal RRSP in January 2021. Deferring the contribution by only one month to 2019 means that you must wait an extra year (January 2022) before you can withdraw the money to avoid attribution of income. A one-month difference in the contribution date can make a year’s difference in how the withdrawal is taxed.

Note that a contribution to a spousal plan in future years will extend the attribution dates. Attribution is based on the latest contribution to any spousal plan.

3. Contribute to a RESP

Unlike the RRSP deadline, which is 60 days after the end of the year, the RESP deadline is December 31.

If you have not maximized RESP contributions in past years, you can catch up one year at a time. There is no annual contribution limit for an RESP but there is a lifetime limit of $50,000 per child. On that basis, you could contribute $5,000 to the RESP and get $1,000 of the CESG if you are catching up from previous years. You could contribute more than $5,000 but you would not get more than the $1,000 CESG.

An RESP contribution would make a perfect Christmas gift this holiday season.

4. Make charitable donations

If you are planning on making charitable donations, make sure you make them before the end of December so that you can take the tax deduction on your 2018 tax return. Instead of donating cash, you might want to think about whether to donate appreciated securities. Not only will you get a receipt for the fair market value, but you pay no capital gains tax on that appreciation.

5. Use up FSA money

If you have a flexible spending account for health care at your workplace, see if you can order new glasses or schedule that dental work you’ve been putting off. Otherwise you’ll lose any unused funds once we ring in the new year.

6. Consider postponing ETF or mutual fund purchases

If you have a taxable investment account, consider putting off buying investments such as ETFs or mutual funds that make year-end taxable distributions. Why own an investment for one month and be dinged with a full years’ worth of taxable income?

And, since year-end distributions tend to lower the price, you could also consider making your RRSP and TFSA contributions early in January.

7. Make TFSA withdrawals

If you were planning on making a TFSA withdrawal in the next few months, consider making the withdrawal before the end the year. If you make the withdrawal in December, you could recontribute that amount as early as January 1, 2019. But if you waited until January to make the withdrawal, you won’t get the contribution room back until January 1, 2020.

8. Defer income and accelerate expenses

Income that arrives in 2018 is taxable in 2018, so in some instances, it might make sense to delay that income to delay the tax bill. This is a good strategy for a small business owner, but a lot of corporations can be flexible on this issue and they might be willing to pay a bonus on the first of the year.

However, if you will likely see a tax increase in 2019, you would be better off taking the income before December 31.

9. Stay current on tax breaks

Tax breaks can change from year to year so it’s important to stay current. For instance, the Working Income Tax Benefit is now the Canada Workers Benefit. The changes mean that if you are single and earn $15,000 or less in 2019 you may earn an extra $500 per year. In the past you had to check a box on your return to apply, but this is no longer the case. You will now be automatically enrolled.

Long gone are credits for children’s fitness and arts programs, textbooks, and public transit. If you factored in these credits on your TD1 make sure you update the form for next year.

10. Organize your medical receipts

One of the more time-consuming tax entries is your medical expenses. Rather than assembling dozens of individual receipts, ask for an annual printout that details both the total cost of your prescriptions and your own out-of-pocket expenses. Most pharmacies offer this service. The earlier you ask the better if your pharmacy is a busy one.

Don’t forget other regular health practitioners such as physiotherapists. They can give you a print-out, too.