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Author: srmc Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1189  
Subject: Foreign content Date: 3/10/2000 8:59 PM
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Apologies if this has been covered. I recently purchased a U.S. stock within my SD/RSP which accounts for about 22% of my relatively small portfolio.

My question is if I am very fortunate and the stock does well what happens if all of a sudden it accounts for 35% of my portfolio. What are the consequences? Would I have to increase my Canadian content to kep pace or is it based on my breakdown at the time of purchase.

Any help would be appreciated.

Steve
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Author: tallships Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 455 of 1189
Subject: Re: Foreign content Date: 3/10/2000 10:06 PM
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Foreign content is determined by the book value of your equities. Book value is the value paid when you bought it.
What you have to watch out for is if your Cdn stocks drop in value and you sell them to buy something else Cdn, then the book value of your Cdn stuff may drop below the minimum 75% requirement (or inversely, putting your foreign content above 25% even though you didn't make a trade in foreign stocks.)

Currently you are okay as long as you don't sell anything. Hope this helps.

tallships

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Author: croptop One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 460 of 1189
Subject: Re: Foreign content Date: 3/14/2000 8:16 AM
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My question is if I am very fortunate and the stock does well what happens if all of a sudden it accounts for 35% of my portfolio. What are the consequences? Would I have to increase my Canadian content to kep pace or is it based on my breakdown at the time of purchase.

There are no consequences. Your foreign content limit is calculated based on the book value (the price you paid) of your portfolio.

John

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Author: boib One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 463 of 1189
Subject: Re: Foreign content Date: 3/18/2000 6:35 PM
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My question is if I am very fortunate and the stock does well what happens if all of a sudden it accounts for 35% of my portfolio. What are the consequences? Would I have to increase my Canadian content to kep pace or is it based on my breakdown at the time of purchase.

You will be alright as long as you don't sell the stock. The way I understand what happens is once you sell the stock the procedes are converted back to Canadian funds and the 20% is recalculated on the new balance.

So if your original mix was $20,000 US and $80,000 Canadian and the US increased to $35,000, if you sold you would only be able to reinvest 20% 0f $115,000 or $23,000 in Foriegn content. Plus the fact that if you don't ask they may get you on the spread converting to and from US dollars.

One thing in your favor is that we now have 25% FC allowed.

I asked Action Direct if it was possible to set up an US side to a self directed RSP to get away from this but was told no way.

Foolishly

Boib.


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Author: mgarland Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 464 of 1189
Subject: Re: Foreign content Date: 3/19/2000 4:54 PM
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Foreign content is based on "book value" (i.e., stock price at time of purchse) and is limited (currently) to 20% of the total RRSP book value.

HOWEVER, if you have a labour-fund (such as Crocus) in your RRSP, then you can have a higher foreign content. For every dollar invested in a labour fund, you can have up to three dollars (Canadian equivalent) in foreign content - TO A MAXIMUM OF 40% of the total book value of the RRSP portfolio.

That's how Rev. Canada explained it to me. I'm not sure how the new regulations will impact this rule.



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Author: IKan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 465 of 1189
Subject: Re: Foreign content Date: 3/19/2000 5:46 PM
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Foreign content is based on "book value" (i.e., stock price at time of purchse) and is limited (currently) to 20% of the total RRSP book value.

mgarland,

As of January 01, 2000 the new RSP foreign content limit is 25%. It is to increase to 30% in the year 2001. Per the new budget released a few weeks ago.

IKan

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