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Investing

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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 haveĀ 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 šŸ˜‰ 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…

Save, spend or pay off debt? Where do you start when you’re finances are a bit of a mess, and you are determined to get back on track? It can be completely overwhelming trying to get started, and I think that’s why so many people delay taking that first step or fall back on bad habits after a setback. What you should know though, is that it really doesn’t need to be complicated. Yes, turning around your financial health will be tough and you’ll have to make some sacrifices, but the actual system is straightforward. There are a lot of parts when it comes to personal finance but don’t get distracted (or overwhelmed) by all the different types of investments or styles of investing. When you’re just getting started you want to focus on the basics…paying off debt and having a solid base of savings. Everything else will fall into…

February means RRSP season, and if you already have an RRSP somewhere it’s very likely that you’ve been receiving someĀ communication promoting RRSP loans and all the wonderful things they can do for you! Let’s talk about this and figure out if taking out an RRSP loan is actually something that will be beneficial to you. First off, it’s still a loan, and you’re going to have to pay off the principal and interest. Sure, you’ll get a beefed up amount on your tax return, but there’s really only a few circumstances where it’s actually worthwhile. As we’ve discussed before, RRSP’s are the most beneficial when you make contributions in your highest possible tax bracket and then withdraw the funds in when you’re in the lowest possible tax bracket. That means that if you’re just starting out in your career and will potentially be earning way bigger bucks down the road,…

Who out there currently invests in a TFSA? Ideally, everyone has their hand raised, but I know that’s not the case. Maybe you’re still catching up on debt repayment or have been focusing on RRSP’s instead. In today’s post, I’m going to talk about why TFSA’s are so great and hopefully even convince a few of you to open one. The government introduced TFSA’s in 2009 as an alternative to RRSP’s and as a way to encourage Canadians to save more. Anyone who is over 18 and a Canadian citizen can open a TFSA. Most financial institutions will offer them so you can go to your local bank or get in touch with your existing financial advisor. The big perk of the TFSA is that the money you deposit can grow tax-freeĀ inside the account. Usually, if you were to invest in the same funds outside of a TFSA, you would…

Mutual funds are still incredibly popular in the investment world, and I’m sure many of you have at least a portion of yourĀ investment portfolio in funds (I do). As of May 2017, there was $1,428 billion of assets under management in mutual funds. There’s some hate against mutual funds in the finance community but, in my opinion, they can be a good option, especially for beginner investors or those who are not willing to put in the time researching other options themselves. Think of a mutual fund as a collection of other investments such as stocks and bonds. Most funds will have a specific mandate that they follow that will limit them to a specific risk tolerance or market sector; for example, you’ll get funds that are based in Canadian equities, US small cap companies, corporate bonds, or dividend generating investments.Ā The fund will be run by a fund manager who…