Inflation & Your Financial Health
To truly appreciate the role that inflation plays in your ability to build assets and achieve financial freedom one has to consider the role of its dance partner: purchasing power. You can’t have one without the other! Most people spend very little time contemplating the concept of purchasing power or the role it plays […]
Choosing the Right Life Insurance
Making the right choices for protecting you and your loved ones in the case of a premature death comes down to understanding some basic principles and rules of thumb. The first is that the name is all wrong; life insurance does not help you, it helps to protect the standard of living and lifestyle of […]
The Retirement Dilemma: Part 2
In our previous article, we looked at how seniors generally wish to invest their money to feel safe while in reality their expenses rise throughout their retirement years as the cost of various services, such as hydro and property taxes, typically increase annually. ( See graph at bottom ) Your choices are to either […]
Welcome to RRSP Season !
It is that time of year again when attention turns to RRSPs and tax planning. This year’s contribution deadline is March 3rd, 2014 if you want to deduct the contribution against your 2013 income tax return. The purpose for making an RRSP contribution, from a financial strategy perspective, is to build savings and assets […]
The Retirement Dilemma: Part 1
In the mid – 1960s conventional wisdom or motherhood for retirement planning said that you should take all of your investments and put them into government bonds or fixed income type products. The thinking was that you could not afford to take any ‘risk’ in your retirement years. Thus it was believed that guaranteed investing […]
The Inheritance Twist
There are many Baby Boomers who are anticipating hitting the jackpot via inheritances in the coming years as a solution to their own financial planning needs. We have heard many media reports about the tidal wave of money expected to move between the generations over the next 15 years or so estimated to be upwards […]
What is a ‘Stock Market’ Anyway?
Imagine it is late Monday afternoon and you are wrapping up your day at a large pension plan, as you stretch, your elbow hits the sell button on the keyboard. The board lot (100 shares) of a large Canadian telephone company is quickly bought for $20 and is the closing price as the final trade […]
TFSA Time Bomb!
The Tax-Free Savings Account (TFSA) was introduced in 2009 as a new way for Canadians to build assets and wealth on a tax-advantaged basis. Any capital gains, dividends or interest income are tax-free upon redemption from the account. The initial contribution amount was $5,000 with annual increases of $5,000. This has been increased to $5,500 […]
Investing vs. Trading
In the last article we defined investing as buying an ownership stake in companies who are profitable today and whose profits are expected to rise over time. Trading is any other form of managing your money which may or may not take into account corporate profits as part of the decision-making process. Trading, which […]
Business Adaptation Mechanism
There is a concept in biology about the ability of organisms to adapt to changes in the environment. This adaptation process increases the odds of survival for organisms under stress due to environmental changes. A similar mechanism exists in finance that allows economic organizations, otherwise known as companies, to survive and thrive in changing or […]
You’ve retired. Now What?
Canadians are living longer, healthier lives. According to Statistics Canada (2017), the average life expectancy is 80 years for men and 84 years for women. This means your retirement years may almost equal your working ones. Family therapist Rhonda Katz suggests taking some time before retirement to identify what you find enjoyable in life and […]
Asset Building Strategies
In the last article Sue had a capital shortfall of $400,000 in order to support her desired retirement lifestyle. This amount will vary for each individual and will be larger or smaller depending upon your income, age and ability to save money as a percentage of your earned income. Broadly speaking there are only […]
How to Pay Less Tax With Life Insurance
Ray had thought of his life insurance purely as a protection plan. The anti-avoidance rules and general restriction of tax benefits applicable to most shelters prompted him to take a new look at his life insurance for tax deferral as well. A type of policy, called Universal Life, separates the cost of insurance and […]
Integrated Investment Management Can Save Taxes
High net worth investors are now sitting back and enjoying the summer weather, breathing a sigh of relief now that they are done with their annual tax filings. The work involved in assembling all of the relevant tax information is made more complicated by the fact they often deal with several investment firms. U.S. […]
Volatile Economy = Investor Fatigue
Investors are becoming increasingly exhausted trying to follow the seemingly never-ending bad global economic news. Overseas markets have put a strain on Canada even though we are more stable, economically, than most other countries in the world. Crystal balls are in short supply resulting in increased skepticism and general feeling of Is this downturn […]
Financial Resolutions for 2013
Give your finances a boost this new year. Here is a list of financial resolutions to help you become better off at the end of the coming twelve months: Eliminate personal debt. – Brad and Angie had fallen into the very common habit of buying lots of ‘stuff’ with their credit cards and soon […]
Home Ownership Can Be Less Taxing Than You Think
Front lawns across Canada are sprouting For Sale signs. That this annual phenomena occurs at about the same time as the tax refund season may be purely coincidental. Understanding the financial incentives for home ownership available in the Income Tax Act may save you thousands when buying a home. Home Buyer’s Tax Credit: First […]
RRSPs & TFSAs – What’s the Difference?
Tax Free Savings Accounts (TFSAs) were introduced in 2009 and they seem to be struggling to catch on. Registered Retirement Savings Plans (RRSPs), however, have been around for over fifty years and attract billions of dollars of deposits each year. If you are serious about saving for your future, it is important to know the […]
An Ideal Opportunity to Improve Your Cash Flow
With so many doom & gloom news headlines, it is refreshing to know Canadians can still get very low fixed rate mortgages. A recent Financial Post article (March 9, 2012) explains that with big banks competing strongly for new mortgage business, now is a great time for Canadians to refinance their mortgages to improve personal […]
Government Benefits Can Boost Retirement Income
In a 2010 report to the Minister of Finance, it was found that approximately 160,000 Canadian seniors were not aware of the full range of benefits they were entitled to in their retirement years. In fact, nearly $1 billion in retirement benefits from the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed […]
TFSAs: Flexible Wealth Building Strategy
The Tax-Free Savings Account (TFSA) was introduced in the February 2008 Federal Budget and became available January 1, 2009. It is touted by the Government of Canada as ‘the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).’ The Canada Revenue Agency (CRA) draws a distinction between […]
RDSP offers a bonus
Starting in 2008, the Registered Disability Savings Plan (RDSP), which is open to Canadians who qualify for the disability tax credit, offers a tremendous bonus to those who are eligible. The RDSP is a savings plan that you contribute to after-tax, with earnings and growth accumulating tax-deferred. The maximum amount that you can invest […]
The Income Tax Bond
Don, 65, and Marie, 63, are about to retire. They have accumulated about $500,000 in their RRSPs and own their home, free and clear. They want to leave as much as possible to their two children. Don and Marie realize that the value of their home should pass tax-free to their children and know their […]
Mortgage Rules Tightened
In an effort to crack down on speculators and to discourage people from taking on too much debt, Ottawa is tightening mortgage rules again. These new rules are expected to take effect April 19, 2010. There is growing concern that the housing market in Canada may be overheating. Finance Minister Jim Flaherty stresses that […]
Tax-Free Savings Plans
When Sophia first heard the term Tax-Free Savings Account (TFSA), the first thing that came to her mind was a low- or no-interest account at a bank. She soon learned that just about every investment option available to her in an RRSP is also available to her in a TFSA plan. Glenn, 58, is […]
Can You Spot a Ponzi Scheme?
On June 29, 2009, Bernard Lawrence ‘Bernie’ Madoff was sentenced to 150 years in prison for perpetrating what has been called ‘the largest investment fraud in Wall Street history.’ Actual losses have been estimated at $64.8 billion by prosecutors. Apparently, Madoff admitted to his sons that his company, Bernard L. Madoff Investment Securities LLC, was […]
Proposed Changes to the Canada Pension Plan
On May 25, 2009 Finance Canada announced some proposed changes to how Canada Pension Plan will work. If approved, the changes will take effect over a period of time from 2011 to 2016, so they will affect anyone planning to retire after 2010. Below is a brief summary of some of the most […]
Is a Reverse Mortgage the Way to Go?
Ralph and Louise have seen the TV commercials featuring Gordon Pape, the financial author, as the spokesman for Canadian Home Income Plan Corp. (CHIP) reverse mortgages. They were wondering if it would be a good way to go to help ease their current financial situation. A reverse mortgage is simply an advance on the […]
Cooler heads will prevail
The newspaper headlines read: ‘Roller coaster stock markets have investors feeling queasy’ (The Globe and Mail; ‘The stock market crash: History repeating itself?’ (The Calgary Herald); ‘Uncertainty continues to pummel stock markets’ (Sudbury Star); ‘The next market boom may be a lifetime away’ (Financial Times). Interestingly enough, these headlines are from November 2002. One year […]
Great Depression 2.0?
It’s been a long and volatile quarter in the financial world. Markets are taking most investors on a wild and sometimes frightening ride, the news about corporate failures and bailouts is confusing and the economic news is almost certainly disheartening. As some in the media eagerly seek to assign blame for the current stock […]
