Financial Freedom is a Journey - FFJ Portfolio

The purpose of this brief post is to disclose the FFJ Portfolio adjustments I have made before capital gains tax changes arrive in Canada. In addition, I disclose the purchase of additional CME Group (CME) shares.

On April 16, 2024, the Canadian federal government proposed an increase to the capital gains inclusion rate as part of the 2024 federal budget (see Government of Canada website). The changes are to be effective on June 25 with the federal government having very recently introduced a motion to change capital gains taxes.

This video provides an easy to comprehend explanation of some of the proposed changes.

According to the Canadian federal government, the changes will impact a very small percentage of Canadians. This is why some are calling the proposed changes a 'Wealth Tax'.

The time frame in which the changes are to come into effect, gives Canadians very little time to prepare. This has upset a segment of the Canadian population the federal government should least want to upset.

It is bad enough that a number of highly educated Canadians with an entrepreneurial spirit have become disenchanted with the direction Canada is headed and are leaving, or are planning to leave, for more 'business friendly' jurisdictions. The proposed capital gains tax changes only exacerbates the 'brain drain'.

Given the recent turn of events, we held extensive discussions with our tax professionals. Following their recommendations, we sold ALL the shares held in 'Side' account #8 within the FFJ Portfolio. This has triggered taxable capital gains which we will need to report on our 2024 tax returns. The potential outcomes of taking no action, however, were less favorable.

In addition, we also transferred shares in 'Side' account #6 to a new 'Core' account.

In several previous posts, I have stated that my outlook on the future of the Canadian economy has soured. I have, therefore, made a concerted effort to dramatically reduce my exposure to Canadian companies. Going forward, the FFJ Portfolio will be very different from the FFJ Portfolio of the past.

Final Thoughts

The Canadian federal government's proposed increase to the capital gains inclusion rate led us to revisit our estate plans. If you think the proposed changes could impact you, I urge you to seek professional advice as soon as possible if you have not already done so as June 25 is fast approaching.

On June 5, I sold 340 CME shares from 'Side' account #8 @ ~$201.65. CME enables clients to trade futures, options, cash and over-the-counter (OTC) products, optimize portfolios, and analyze data which provides market participants worldwide the ability to efficiently manage risk and capture opportunities.

I am in no rush to deploy the cash raised from the recent sales of securities, however, I continue to expect a growing need to manage risk and volatility; CME's May 2024 market statistics set a new average daily volume record of 26 million contracts for the month. Since I consider its shares to currently be fairly valued, I purchased 400 CME shares through the 'Side' account #8 @ ~$198/share on June 10; I have another 461 shares in a 'Core' account for a total of 861 shares.

I wish you much success on your journey to financial freedom!

Note: Please send any feedback, corrections, or questions to [email protected].

Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.

I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.