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Investing

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Maybe you’re sitting there looking through credit card statements and bank transactions wondering how the heck you got yourself into this financial mess. Or maybe you think you’re on the right track but not quite sure what you need to work on next. Today I’m going to break your finances down for you into 10 steps, so you have a coherent plan (and a fun little infographic) to follow. The system is straightforward, but I’m not going to tell you it will be easy. Paying off debt, saving money and applying for insurance require you to do some work and might make you feel a little guilty about how much money you spend on fro-yo (or coffee, or avocados, or speeding tickets). For that, I’m sorry (only a little though), but I promise that once you’ve made it through each of these ten steps (especially the last one), you’ll be…

Life is anything but predictable, and sometimes a curveball will come flying out of nowhere. Maybe you’re coasting along quite nicely when, all of a sudden, your furnace bites the dust or your dog swallows a tennis ball and needs emergency surgery. Whatever it is, you are now stuck with a big bill and aren’t sure how you’re going to cover the cost. The question you might be asking yourself is whether or not you should consider withdrawing money from your RRSP. Short answer…No. Don’t worry, I’m not going to just assume you’ll accept the short answer so, long answer time. The biggest problem with pulling money out of your RRSP is the tax. Every time you withdraw money from your RRSP, the government requires withholding tax be taken off by your financial institution, and it is no small amount. For withdrawals less than $5,000 you will have to pay 10%…

You’re going along, living your life, and then all of sudden something happens, and you find yourself with extra income you weren’t prepared for. This can occur for a variety of reasons, some great (bonus from work) some horrible (a loved one passing away). Whatever it is though, you should take the time to plan your best course of action and know any tax consequences that might be coming your way. Inheritance Let’s get the hardest one out of the way first. If you are getting an inheritance it means that someone close to you has passed away, so not only are you dealing with grief but now you need to figure out what to do with this money. In Canada, there is no inheritance tax. This means that if you are a beneficiary of an estate, you won’t have to pay tax on the amount you receive. The estate…

RRSP’s can be a valuable tool when saving for retirement, not only do they give you a tax refund when you contribute, they also allow your money to grow tax-free until you withdraw it. I’ve talked more about the details of RRSP’s both here and here. As a quick recap, every year that you work you earn contribution room. The amount works out to 18% of your annual income up to a maximum amount set by the government; for 2017 it is $26,010. If you don’t use your room, it does carry-over for future use. To figure out how much room you have you can look to your most recent notice of assessment, it will be listed on there, or you can log in to your CRA online access. You might think you have tons of room available but keep in mind that if you are contributing to a pension…

Many people have a negative impression of the financial industry, and of financial advisors in particular. But how bad is the situation? There have been numerous reports circulating recently (examples can be found here and here) about people getting scammed by high fees and improper sales tactics at their financial institutions. There are things you can do to help protect your assets. Popularity of Robo-Advisors You may have heard about robo-advisors or discount brokerages. Both are becoming increasingly popular because of the significantly lower fees. I’m not here to dissuade you from going that route. In fact, both are really good options for a lot of people. The one big downside is that you don’t get the advice. A good financial advisor can help guide your money decisions and may save you money in the long run. Yes, it will be cheaper, but if you don’t really know what you’re doing,…

RRSP’s become a popular topic in February as the annual deadline approaches. With all the hype I thought it would be the perfect time to check-in and go through the ins and out of retirement savings plans and figure out if it’s worth making a contribution. Everybody knows that RRSP’s are for retirement, but it’s important to understand their advantages and disadvantages before you dump all your savings into one. There are times in your life when contributing to an RRSP is the right answer, but other times when you should look for another option. Let’s get into it and figure out if an RRSP is right for you this year. Contribution Limits Each year you are allowed to contribute 18% of the previous years earned income, up to a maximum amount set by CRA. For 2016 that maximum was $25,370. You don’t lose your RRSP room, so if…

Investing can be terrifying…seriously! And investing for beginners even more so. I’ve been working in finance for a while, and the actual picking and choosing of investments has never been (and likely will never be) my thing. Need to know the ins and outs of RRSP’s, TFSA’s, pensions, whatever….I’m your girl. But want to chat analyst reports and company fundamentals, and you can keep on walking past my office door. Here comes the but though….investing is important, and if you really want to hit your long-term saving goals then you better go and make it your bff (or at least an acquaintance). Saving up your hard earned dollars is amazing but leaving it sitting in a bank account (even a high interest one) is not help you hit your goals. You need to get those funds in the market and working for you. The longer your time frame, the more…

I’ve been a little MIA lately so first off let me apologize for that! December is always a busy month, and we are hosting Christmas this year which means I’ve got a long list of things to do before next weekend. I was also flattened by a bad cold last week and am just now feeling human again. Basically, I’ve had zero motivation to do anything but lie on the couch and watch Law & Order SVU on Netflix. Enough for my excuses, let’s get to a real post! There’s a pretty good chance you’ve never heard of CRM2, but if you’re an investor, you should familiarize yourself with the basics to avoid any confusion when you get some weird statements in the New Year. Let’s first get the acronym out of the way (finance people sure love a good (bad) acronym); CRM2 stands for the ‘Client Relationship Model part…

I’ve talked on the blog about RESP’s before (you can find that here), but one thing I haven’t discussed is whether or not you should do your RESP saving through one of those Group RESP programs that are floating around. Short answer…not so much, but let’s talk about why. The basic premise (aka the sales pitch) actually sounds pretty good. You invest your money with a whole bunch of other parents who have children born in the same year, and you’ll get a share of the investment when your kid ends up in post-secondary. The perk comes from any kids who don’t go on to university and therefore forfeit their share of the profits for everyone else to split. Hopefully, that’s not your kid 😉 Those extra shares mean a higher overall return for the beneficiaries who do go to school but without any added risk. Sounds too good to…

You’ve probably heard (over and over again) that you should start saving for retirement as early as possible but do you actually know why? It’s a little thing called compounding interest, and it will make a BIG difference in the amount of money you can save up in the long run. Let’s take a look at why this is the case. The basic theory behind compounding is that the more dollars you have available the more growth can happen, as long you are getting positive returns. Why is this? Well, as long as your funds are growing there will be more of them to move into the next year, and that means there are more dollars for interest to do its work on. Let’s take a look at this in action, we’re going to start off with an easy example that uses only a one time deposit. The formulas below…