Good morning. It turns out Btchcoin isn't all that original. Watch this clip as Big Bang Theory's Raj Koothrappali (Kunal Nayyar) covers his mouth in shock after he slips up and pronounces Bitcoin as "Btchcoin" in a blooper.
We imagine it's similar to the reaction ("Huh? Did I hear that right?") you get when you tell your pals what our newsletter is called 😉 Thank you to our reader, Meagen, for sharing this clip with us!
In this edition:
🍿 Cinemas in the red
📈 The 411 on TFSAs
— Vindhya Kolluru, Editor
Movie theatre chain AMC goes APE sh*t
Movie theatre chains are having an underwhelming summer, not just because of box office numbers. Summer is normally one of the busiest seasons for the industry, yet even with blockbusters such as Top Gun: Maverick and Elvis and Minions: The Rise of Gru topping the charts this summer, investors are losing confidence in movie theatre chains.
What's happening: Debt is the talk of the town. AMC (the world's third-largest movie theatre chain) has issued preferred shares to raise money to settle a large pile of debt, while Cineworld (the world's second-largest movie theatre chain) is considering going bankrupt to restructure its debt. Several meme stocks, including AMC, fell this week in volatile trading after UK-based movie theatre operator Cineworld warned that it might go bankrupt.
Why it matters: Pre-Covid, Cineworld attempted to buy our very own Toronto-based Cineplex, but later bailed in June 2020 due to y’know...a worldwide pandemic. Cineplex sued and was awarded $1.24 billion in damages, which is now in the appeals process. If Cineworld declares bankruptcy, some of this money would help pay the amount owed to Cineplex.
Meanwhile, AMC began issuing preferred shares (which began trading on the New York Stock Exchange under "APE") to pay down $10 billion in debt, which, similar to Cineworld, has struggled to come back from the pandemic. Preferred shares are normally issued when a company is in distress, so most retail investors might not be familiar with them.
- Preferred shares 101: Preferred shares function like a mix between a stock and bond, offering the pricing stability of a bond and guaranteed dividends of a share. Companies often issue them to raise capital. However, that means, unlike common stock, a preferred shareholder would not benefit from price appreciation (or depreciation) and would have no voting rights. So while it sounds fancier than pleb common stock, a preferred share isn’t typically the best financial option for investors.
Zoom Out: Globally, movie theatre chains are still struggling to bounce back after the pandemic. Between streaming service competition and historic inflation, theatres are taking a hit. Although attendance and box office revenue is up from last year, just 174 box-office films have been released so far this summer, down ~60% from 2019. While the future of Cineworld is uncertain, it should serve as a warning to other chains to innovate or face a similar fate.
— Sabrina Dotsch
On our radar
- Toronto-based Jombone, a company that helps businesses hire and manage temporary workers, raised $3.3 million in seed funding. Garima Sahdev is the COO and co-founder of the startup, which was launched in 2018.
- Three Canadian women-led startups have been selected to participate in Google's Women Founders accelerator. The founders of the companies — social brokerage Blossom Social, AI-based emotional awareness platform Emaww and healthcare platform MedEssist — will participate in a 10-week technical training bootcamp.
How to start investing in a TFSA
The 411 dishes, well, the 411 on a personal finance topic you need to know by cutting through the jargon and empowering you to take control of your finances. Have a topic you want us to tackle? Let us know!
In between soothing clips of Emily Mariko putting together a delicious meal and productive 5-to-9 routines, I've come across TikToks about the misconceptions around tax-free savings accounts (TFSAs), or registered accounts that help you make money, sans tax. The biggest misconception is that a TFSA is just a savings account (even though that's what its name suggests 🙃): You can hold investments in a TFSA, and withdraw the interest and dividends you earn from these investments at any time.
Okay, so you can invest through your TFSA?! You can hold cash, guaranteed investment certificates (GICs), stocks, bonds, exchange-traded funds (ETFs) and / or mutual funds in a TFSA. Each has its own risk tolerance, from GICs with their promised returns to ETFs which can follow particular stock exchanges if you choose. Stocks tend to be more volatile, and bonds respond to interest rates. So, you would need to consider how able you are to deal with fluctuations. (A certified financial planner would be able to help advise.)
What are some pros of a TFSA? Because withdrawals aren't taxed, it’s a good option for both long- (like your first home) and short-term (like a rainy day fund) savings goals. It’s flexible in that you can manage how and when you contribute as well as make withdrawals.
What are the cons of a TFSA? The tax savings aren’t immediate. So, you won’t pay less taxes when you contribute to a TFSA like you would with, say, a registered retirement savings plan (RRSP). If you over contribute, then you will have to pay a penalty of 1% of what you over contributed for every month that money is in your account—there is no grace period.
What should someone who is investing in a TFSA for the first time consider?
- Do I only want to earn interest on my savings, or do I want more growth? I think the obvious answer is yes for many, so consider making your TFSA an investment account in which you want to hold equities, especially those that pay dividends or interest.
- When will I need access to money from my TFSA? This will help you determine if you have long- or short-term goals. The sooner you want that money, the lower the risk you will want to take. The more time you have, the more likely you are willing to ride out the fluctuations and see longer growth returns.
- What is my TFSA limit? Your age, how much you’ve already put into a TFSA and previous withdrawals will help you determine how much money you can put into your TFSA and ultimately what investments you can buy within the account. (Find out how much you can put in your TFSA using this calculator.)
The bottom line: Sorting out your investment strategy is probably the last thing on your mind as inflation erodes the value of your hard-earned cash — a recent survey by Angus Reid found that 19% of Canadians are either deferring or pausing investing in their RRSPs and TFSAs. But don't discount the math ✨magic✨ of compound interest.
To read the rest of our chat with Hannam, click here.
— Vindhya Kolluru
Other things we read and we liked
⛽️ This feature on the role that oil and gas companies play in Canada's school system is a must-read.
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