Main Menu

What can we do for you?

  • Identify the many Myths in the financial system, including the dream of “beating the market” through individual stock selection.
  • Identify the key factors to becoming better do-it-yourself investors AND identify those which are under your control, such as an optimum allocation of your investments across appropriate asset categories.
  • Accompany you each step of the way in the saving and investment process- see our User Guide.
  • Help self-investors to better control their costs, what Warren Buffett calls the financial system’s friction costs.
  • Help you better use your tax-exempt (RRSP) account.
  • Show you how to minimize your tax-related investment costs.
  • Give you access to information to help you better manage a portfolio intended to constitute an important source of retirement income.
  • Identify areas where the financial system does not adequately take into account the interests of independent investors.
  • Encourage reforms to the regulatory system.


Help us to help you become a better independent investor. Your comments are appreciated and welcomed on our commentaries or on any other aspect of the site- not only what you find but also how it is presented. In addition, we specifically ask for your input at various points throughout our site.

Stock Quotes

For more details on the choice and meaning of the symbols click here.
S&P;/TSX  13391.86 tooltip

Dow Jones  12422.86 tooltip

S&P500;  1341.13 tooltip

Dollar  0.981 tooltip

XIU.TO  78.75 tooltip

IVV  133.45 tooltip

EFA  71.76 tooltip

EEM  134.48 tooltip

XBB.TO  29.11 tooltip

Website : Get Symbol Info(s)...


Welcome to our site for the independent investor which was officially launched March 18, 2008. Become a member (it’s free) and enjoy full access to the site + receive on a preferred basis our newsletters. Our first newsletter commenting on TFSA's was emailed to members March 25. MEMBERS-PLEASE NOTE: Depending on your software and internet provider, it may be necessary for you to add This e-mail address is being protected from spam bots, you need JavaScript enabled to view it  to your list of safe contacts in your spam filters. Otherwise, you may not receive our newsletters. Our newsletters notify our members in priority of our commentaries on current events and other topics of interest. If you miss a newsletter, it will eventually be filed on the site at a later date under Information on the home page.

Investing in Corporate Bonds – The Example of Bell Canada

The basic decisions which you must take when managing your investments are actually fairly limited. The most important one is perhaps the appropriate Asset Allocation for your portfolio (in general, see the section Returns – Asset Allocation) between shares or equity (see the section Equity – In General), fixed income securities (see the section Fixed Income – In General) and other asset categories (see the section Alternative Investments – General). Once this allocation has been determined, a secondar debt portion of the portfolio? It is often tempting to invest in corporate bonds in order to seek out a better return comparery question arises. In which securities should you invest the fixed income od to government bonds, but is this an appropriate decision for independent or “do it yourself investors”? A recent transaction involving Bell Canada indicates the risk in this strategy.

For several months, a bidding auction took place with respect to the shares of BCE Inc. (the parent company of Bell Canada). At the time this text was written, the offer of a financial consortium lead by the Ontario Teachers’ Pension Fund for the shares by BCE Inc. had been approved by the board of directors of BCE Inc. If the offer is ultimately accepted by the shareholders of BCE Inc., they will realize an interesting gain over the price at which the shares have traded in the last several years. However, this transaction does not only create winners. As part of these types of transactions, the target company is typically required to assume large amounts of debt borrowed by the acquirer to pay the purchase price. As a result, and in anticipation of the forced assumption by Bell Canada of such debt, the market for Bell Canada bonds literally fell apart. Thus, between March and July 2007, existing long-term bonds of Bell Canada (example: the bonds with a maturity of March 2035) lost 23.90% of their value (Source: Michel Girard, La Presse, 07 07 2007, page 10, section Affaires; see also a comment of Durocher d’Addenda 2007, doc. 812). What is the lesson one should draw from this collapse?

There is only one reason to prefer corporate bonds over government bonds: the better return that one is looking to realize, typically in the order of 1% per year compared to Canadian Federal Government Bonds (see the section Fixed Income – Diversification – The case for corporate bonds). On the other hand, there is a whole series of disadvantages. Here are the most important reasons (for more on this question, see the section Fixed Income – Diversification- Lessons from the USA of our site). Firstly, market liquidity for corporate bonds is less than that for Canadian government bonds. As a result of this reduced liquidity, commissions and transaction costs to purchase or sell corporate bonds are higher for an independent or self investor. Secondly, the documentation for corporate bonds is more complex and more difficult to understand, and often guarantees less protection to the holder in the event of transactions involving a change in control of the borrower, such as the one involving Bell Canada. Thirdly, the higher returns on corporate bonds can be explained by the fact that part of the return of the corporate bond is similar to that of the return on an equity investment. In other words, you are taking more risk by purchasing a corporate bond in order to receive a higher return over a government bond. Logically, an investor should reduce the fixed equity portion of his portfolio to take into account that corporate bonds are riskier to include in one’s portfolio than government bonds.

All of these negative factors leave us skeptical as to whether “do it yourself investors” should invest in corporate bonds. It is less costly, the documentation is simpler, and the management of your asset allocation is easier (for more, see the section Return – Asset Allocation of our site) if you choose to limit yourself to government bonds. And by doing so, you can leave to your neighbor the pleasant (!) task of explaining his recent loss in Bell Canada corporate bonds.
Last Updated ( Monday, 26 November 2007 )
< Prev   Next >

No account yet? Register


Your efforts have paid off. You have ended up on a site which is focused on delivering investment information, not selling you financial services or products.

Our site is not associated with, and accepts no financing, advertising or other financial assistance from:
  • Banks
  • Insurance companies
  • Investment dealers or
  • Financial advisors.


  • Help you become a better independent self investor.
  • Be a source of free, objective, independent and unbiased investment information for self-investors.
  • Build on our past to earn the trust of Canadian and non-Canadian do-it-yourself investors. Our founder has several years experience with a securities regulatory agency and over a quarter century of experience with two blue chip Canadian securities issuers.
  • For more, see Who are we?

Learn more about us

  • Take 15 minutes to read the Summary.
  • To assess the credibility of our site. It’s the best investment decision you will make today.
  • The information on self investing is divided into 44 sections (and counting) which are organized under eleven main headings or topics. Click on Themes at the top of this page for a short summary of the information covered under all of the topics.
  • For a list of the sections under any particular theme, click on the name of that theme at the top of this page.

Who should visit our site?

  • You are an independent investor looking for investment information focused on the needs of  do-it-yourself investors.
  • You are a novice in investment matters, but are considering becoming more independent in your investing.
  • You trade in reliance on a financial advisor, but wish to better use his services, or perhaps understand the other alternative trading methods.
  • Perhaps you see self investing as a retirement project, or are merely curious about the world of investing.
  • Perhaps as a result of your professional activities (institutional investor, broker, professor or journalist), you seek access to a non-industry source of objective investment information.

We intend to regularly circulate by email newsletters to our members. To access our newsletter, click here.