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Monday, January 08, 2007

I need a Financial Advisor!

I'm having a financial crisis... (well, not really, but it's enough to have me stressin')
I have some stock options that are coming due (meaning expiring) in April of this year. Unfortunately my stock has taken a huge nose dive and since our Christmas party, has dropped between $8 to $10 CND.

My dilemna is, that if I pull out all the stocks that are expiring at the current price, I could potentially be loosing out on a capital gain of $4500CND. I would also be required to pay the income tax for the 2006 tax cycle (even at this low stock price, I'd still tack on a hefty total to my capital gains for 2006) Pulling these options out now is definitely not in my best interest.

I can do what is called "Tax Defering" (if you exercise stock options and hold the shares (buy them), you are eligible to defer all or a portion of the taxable benefit until you sell the shares you acquired from the stock options.) This means I would need to take out another loan in order to hold (buy) these shares, until such time that they are worth more on the market (as well, the taxes won't need to be paid till next year on the capital gains!) This loan would be manageable for me, and when the market becomes stable again, I would sell the shares I just bought, pay off the loan and hopefully make a nice profit as well. (I certainly do see our stock price rising up again!)

Anyone out there have some financial advice for me?


Blogger islandarts said...

Do the loan thing and don't fret about it... It's only money after all.

5:39 AM

Anonymous Anonymous said...

Hey Jess,
My advice is three fold...If you don't need the cash for debt or anything, you can pull out the stock option and re-invest the cash immediatly. One option is an RRSP (personally, I don't buy them, my own reasons)but it is a good way to shelter capital gains in that you get an instant rebate in taxes of upto 50% of monies spent. Another option is invest the value back into a blue chip stock that pays a high monthy divident. (General Electric, TDCanadatrust, HSBC, IBM, Coca-Cola etc...) The advantage here is that your money pays you a percent monthly on your stocks held. Thirdly, if you sell a curent holding and reinvest it into real estate within the current fiscal year, you do not pay capital gains on the money. The money is simply viewed as a roving investment of sorts, and not viewed as a liquid asset.

Double check all this info, I'm pretty sure of all of it, but double check
Hope it helps


7:12 AM


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