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Wednesday, May 18, 2022

I do not qualified for National Bank Direct Brokerage's Fully-Paid Securities Lending Program

Yesterday, my stock portfolios registered some nice gains. My non-registered portfolio closed yesterday session at $146,706.65, my US portfolio at $4,993.99, my RRSP portfolio - stocks only - at $64,962.85, and my TFSA portfolio at $124,323.39. Unfortunately, today, it was a whole different story. Luckily, the TSX is still in the 20,000 points, at least for now... My non-registered portfolio closed today session at $145,528.24, my US portfolio at $4,755.62, my RRSP portfolio - stocks only - at $64,224.70, and my TFSA portfolio at $121,973.04.

Yesterday morning, I place a quick call to National Bank Direct Brokerage to find out if my non-registered portfolio qualified for their Fully-Paid Securities Lending Program. Unfortunately, because of my margin debt, I do not qualify for their securities lending program, which was strange for me because while listening to their little YouTube video, I was really under the impression that my non-registered portfolio did actually qualify for the Fully-Paid Securities Lending Program, even if I had a margin debt, but it seems it's not the case. Anyway, I will check that again a bit later. Regulations change from time to time, maybe I will be qualified one day, who knows. 

Currently, my margin debt is of $45,342.32. On the date of yesterday, my "buying power" left on my margin is at a good $51,582.62. Eventually, I could sell some investments that I hold in my TFSA portfolio to pay off my margin debt, but it's not something I will do anytime soon, especially now that stocks are trading so low. Another possible option was to transfer some of my non-registered stocks over to another separate non-registered account with National Bank Direct Brokerage, but that would have cut off the value of my margin, and it is simply not a good option for me at this time.

This morning at BNN's The Open, viewer learns that inflation was near a 30-year high... This came with no surprise and is not good news. It seems like ranking interest rates hasn't been done aggressively enough by the Bank of Canada to beat inflation. It's interesting that the US is having the exact same problem as us right now, and other countries in the world as well. For the UK, it's been announced that the inflation was at a 40-year high...

Personally, I really feel the effect of inflation, and it's no fun. The gas prices are super high here in New Brunswick. In a place like New Brunswick, you cannot really save on gas, unless you don't do anywhere and limit your traveling to the strict minimum. It's hard to do because you really need to have a car around here. My mom was at the grocery store the other day and she saw a roast at $30... Generally speaking, I find that the price for grocery items is generally higher than what I pay in Montreal, but these days, it's higher than I have ever seen before and it's a bit scary.  

I am getting paid this Friday, and I was thinking about investing in some Canadian Imperial Bank Of Commerce (CM) stocks. Even high-quality bank stocks, like CM, BNS, RY, and TD - basically all of them react quite badly when the TSX is being turned upside down like it is now. Chances are that Canadian Imperial Bank Of Commerce (CM) will trade again lower tomorrow, I am actually pretty sure of that. I may invest in a bit of CM stocks tomorrow, will see.

It's hard to see my net worth value going down and all that, but there are some good opportunities right now on the TSX. No need to invest in extravagant stocks, the simple the better. Since the market is so volatile, no need to rush, you can invest little by little - but only when the stocks you have an eye on are trading down. Currently, my dividend income made in my non-registered and TFSA combined make a bit over of an equivalent of $777 per month. Trust me when I say I will buy all the dividend stocks I possibly can to increase my dividend income. BCE is still super appealing to me.


Anonymous said...

Love your blog - long time lurker. I'm not with National Bank, but was intrigued by this program so looked more into it. Looks great - free money! - but there's one twist that might prevent me from participating. From what I understand from this website ( you do get paid your dividends etc. - but the aren't really a dividend, just that the broker has to pay you the same amount as the dividend normally would. Apparently this has tax consequences - I expect this could mean you'd lose the dividend tax credit for the lent securities. Anyway, I haven't researched any further but just wanted to point out that potential drawback to the program.

Anonymous 2 said...

I am part of a similar program at Interactive Brokers. Anonymous is right, the dividend may be taxed as interest income instead of dividend income - although with Interactive Brokers, they try to get your actual shares back when the dividend is paid, so you will not have this. But they can't guarantee it. Also, the amount of extra income you get is very small. It is probably not worth it.

Sunny said...

Thanks for reading.

It's hard to find info on that program. If they tax dividends differently while being on that program, it's quite a turn-off.
It seems like I am not missing on much at this time.


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