By now you have probably heard some information about the new Tax Free Savings Accounts available to Canadians either on the news or through TV commercials that are currently running. Maybe you have some questions, or are not sure what they are all about? Hopefully the information provided below will answer all of your questions and then some.
Until the year 2009, most Canadians will have held their savings in their RRSP, where they could claim a deduction on their contributions, while have the growth of the account go tax deferred until retirement or withdrawal. The newest savings vehicle available to Canadians is called a Tax-Free Savings Account (TFSA). Whether you are saving for the short term (0-5) years or for the longer term (6+) a TFSA could be a valuable addition to your financial plan. So what is it all about? Well here are some frequently asked questions and answers taken right from our own Government of Canada’s web site that will provide most of the information to bring you up to speed.
Q.1 What is the Tax-Free Savings Account (TFSA)?
A.1 The TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.
Q.2 Who would be eligible to open a TFSA?
A.2 Any individual (other than a trust) who is resident in Canada and 18 years of age or older would be eligible to establish a TFSA.
You would be able to open an account at most financial institutions such as Canadian trust companies, life insurance companies, banks, and credit unions (the same institutions that are currently eligible to issue a Registered Retirement Savings Plan). You would have to provide the issuer with your social insurance number when the account is opened. You would be permitted to hold more than one TFSA.
Q.3 When can I open a TFSA?
A.3 January 2009.
Q.4 How much can I contribute to the TFSA per year?
A.4 Each year you can contribute an amount up to your contribution room for the year. Your contribution room would be made up of three amounts:
1. Each year you would be allocated and allowed to contribute at least $5,000 (this annual amount will be indexed to inflation and rounded to the nearest $500 on a yearly basis). See also Q.14.
2. Any withdrawals made in the previous year would be added to the contribution room for the year.
3. Any unused contribution room from the previous year would be added to the contribution room for the year.
For example (assuming no indexing):
• In 2009 you would be allocated and allowed to contribute up to $5,000. If you only contribute $2,000, an amount of $3,000 would be carried forward to 2010.
• Your contribution room for 2010 would then be $5,000 plus $3,000, or $8,000.
• If in 2010, you do not contribute but decide to withdraw $1,000, your contribution room for 2011 would be $5,000, plus $8,000 (carried forward from 2010), plus the $1,000 withdrawn, or $14,000.
Q.5 If I don't have the money to invest in a given year, would I be able to use any unused contribution room in a future year?
A.5 Yes, there no limit on the number of years unused contribution room could be carried forward.
Q.6 What happens if I contribute more than my contribution room?
A.6 Excess contributions would be subject to tax of one per cent per month, for each month that the excess remains in the plan.
Q.7 Would there be any restrictions on withdrawals?
A.7 No, you could withdraw any amount in the account for any reason.
Q.8 Would contributions and withdrawals have any impact on my taxes and income-tested benefits?
A.8 No, contributions to a TFSA are not deductible in computing income for tax purposes, and no amount earned in or withdrawn from a TFSA would be included in computing income for tax purposes.
Withdrawals would not be taken into account in determining eligibility for income-tested benefits or credits delivered through the income tax system (for example, the Canada Child Tax Benefit, the Working Income Tax Benefit, the goods and services tax credit, and the age credit).
Furthermore, these amounts would not reduce other benefits that are based on the individual's income level, such as Old Age Security benefits, the Guaranteed Income Supplement, or Employment Insurance benefits.
Q.9 What kind of investments could I hold in my TFSA?
A.9 A TFSA would generally be permitted to hold the same investments as a registered retirement savings plan. This would include savings accounts, mutual funds, publicly traded securities, GICs, bonds, and certain shares of small business corporations.
Q.10 Is interest on money borrowed to invest in my TFSA tax-deductible?
A.10 No, interest on money borrowed to invest in a TFSA would not be deductible for tax purposes.
Q.11 Could I use my TFSA assets as security for a loan?
A.11 Yes, you could use the TFSA assets as security for a loan.
Q.12 If I provide funds to my spouse or common-law partner to invest in a TFSA, would the income earned in that account be attributed back to me?
A.12 No, the attribution rules would not apply to income earned in a TFSA where you provide funds to your spouse or common-law partner to take advantage of their TFSA contribution room.
Q.13 What happens if the account holder passes away?
A.13 Generally, earnings that accrue in the account after the account holder's death will be taxable, while those that accrued before death would remain exempt. However, it would be possible to maintain the tax-free status of the earnings if the account holder names his or her spouse or common-law partner as the successor account holder. Alternatively, the assets of the deceased's TFSA could be transferred to the TFSA of the surviving spouse or common-law partner without any impact on the survivor's existing contribution room.
Q.14 Could I still contribute to a TFSA if I become a non-resident of Canada?
A.14 If you become a non-resident, you would be allowed to maintain your TFSA, and you would not be taxed on any earnings in the account or on withdrawals; however, you would not be allowed to contribute, and no contribution room would accrue for any year throughout which you are a non-resident.
Q.15 What would happen if there was a breakdown of a marriage or a common-law partnership?
A.15 In such a situation, an amount could be transferred directly from one spouse or common-law partner's TFSA to the other's. The amount of the transfer would not affect either person's contribution room.
Q.16 How would I know what my TFSA contribution room is for a given tax year?
A.16 The CRA would determine TFSA contribution room (based on information provided by issuers) for each eligible individual who files an annual T1 individual income tax return. Individuals who have not filed returns for prior years (because for example, there was no tax payable) would be permitted to establish their entitlement to contribution room by filing a return for those years or by other means acceptable to the CRA.
Hopefully that will provide you with enough information to inquire about the TFSA with your Financial Advisor. Here at Algoma Financial, we can accept early applications now, and can provide you with advice and printed marketing material to help you make the best decision for your tax-free savings.
Friday, November 21, 2008
Monday, September 29, 2008
6 Principals to Help You Through The Economic Storm
Many of our clients have questions about the recent news regarding the U.S economy and the volatility in the world’s stock markets. These are very confusing and sometimes scary times, as financial institutions around the world are reacting to the biggest economic crisis in 80 years. There are not a lot of answers to be found about the short-term strength of the Canadian economy.
What we do know is that Canada’s lending practices are more regulated than those in the U.S. and because of this our economy and our financial institutions are doing significantly better than those in the US for the time being.
We also know that know that our economy is still growing (thanks mainly to our oil and gas exports), but may economists predict that Canada may experience a significant slow-down in the coming months should the U.S. enter a long recession.
Let’s always remember that the economy operates in a cycle, and periods of growth and recession are natural market forces.
In good times and in bad times, my golden rule when it comes to financial planning is not to let your emotions guide you in making important decisions about money. History shows us time and time again that fear and greed are the two biggest enemies to your financial health. It may be that a recovery for the stock markets are just around the corner and you will benefit from staying invested. But either way, it should be understood that those adhere to a disciplined process to handling their finances will come out ahead in the long-term.
These basic principals to proper financial planning have not changed in since Mankind began thinking about money. These principals will help you be successful in bullish and bearish times of our economy.
Here are 6 actions you can take today to make the most of your money:
1. Build a budget, reduce your debt & live beneath your means.
We’ve all heard of the importance of knowing how much money you have and what your expenses are. The basic fundamental of financial planning is to spend less than you make. When times are tough, it’s even more important to know where you are spending your money and making sure you make the most of every dollar you have.
This is also not the time to take on more debt. In fact, it may be a good idea to reduce your debt load as much as possible. Canada’s economy is usually 12-18 months behind the US., so take this time to reduce the amount of debt you are being charged interest on. With the inflation rate creeping up in Canada, it is likely that interest rates will follow.
Here at Algoma Financial and Manulife Securities we have some of the most sophisticated debt management tools and products available in Canada to help you reduce the cost of your debt.
2. Review your savings goal and stick to your savings and retirement plan.
Having an emergency fund is an important tool to any financial plan. One never knows when we might find ourselves in need of cash. Saving 3-6 months of income can help you, your family or your business weather troubled times. We can help you achieve such a fund using our Advantage Account with Manulife Bank. The account has no service fees, pays 2.9% interest, and it CDIC protected up to $100,000.
When it comes to your investments, our process will help you build a long-term investment plan. This program will help you set your investment goals, create a plan to achieve it, and help you keep track of your progress.
To ensure that you're saving enough money to achieve your investment goal, you need to check that your plan is on track at least once a year. We are committed to meet with our clients regularly to review your investment needs.
3. Assess your risk tolerance and your time horizon for your investments.
Once you know what you need to save, choose investments that match your risk tolerance and time horizon. Our Investment Needs Analysis will help you assess not only your tolerance for losing money, but your tolerance for not making enough money as well.
If your investment needs are long-term (over ten years before a child’s education, retirement etc.) you should not be overly concerned about the short-term volatility in your investment portfolio’s value. Our economy has weathered many financial storms in the past and the markets have always rewarded those who have the time-horizon and the discipline to stay committed to an investment plan.
4. Diversify, diversify, diversify.
With a mix of stock, bond and money market funds. Over the long term, almost all investments grow. But over the short term, a specific investment will go up and down depending on market conditions. All investments don't move the same way all the time. Some may go up while others lose money over the short term. By diversifying and choosing different types of investments, you can take advantage of the long term growth potential while reducing the short term volatility. Our process helps you determine the optimum asset allocation of investments to provide a diversified mix for each investment style.
5. Don't try to time the market.
Selling stock funds when a market is depressed means you are selling at a loss. Moving back into stock funds when the market begins to climb means you will likely miss out on the recovery. If you carefully chose your equities based on your risk tolerance, stick with them. They will not let you down in the long term.
6. Maintain the saving habit.
When you invest a specific sum at regular intervals, you benefit from the magic of compounding. And you reap the rewards of dollar cost averaging. When markets are down, the unit value of investments decreases. That means you can by more units for the same amount of money. When the markets start going up, as they inevitably do following a major decline, so will the value of your units.
If you have any concerns about your current financial situation or your investment plan, please don’t hesitate to contact us. With a review of your needs and current situation, and a commitment to these six basic principals of money management, we can help that you stay on course no matter what the economic conditions.
What we do know is that Canada’s lending practices are more regulated than those in the U.S. and because of this our economy and our financial institutions are doing significantly better than those in the US for the time being.
We also know that know that our economy is still growing (thanks mainly to our oil and gas exports), but may economists predict that Canada may experience a significant slow-down in the coming months should the U.S. enter a long recession.
Let’s always remember that the economy operates in a cycle, and periods of growth and recession are natural market forces.
In good times and in bad times, my golden rule when it comes to financial planning is not to let your emotions guide you in making important decisions about money. History shows us time and time again that fear and greed are the two biggest enemies to your financial health. It may be that a recovery for the stock markets are just around the corner and you will benefit from staying invested. But either way, it should be understood that those adhere to a disciplined process to handling their finances will come out ahead in the long-term.
These basic principals to proper financial planning have not changed in since Mankind began thinking about money. These principals will help you be successful in bullish and bearish times of our economy.
Here are 6 actions you can take today to make the most of your money:
1. Build a budget, reduce your debt & live beneath your means.
We’ve all heard of the importance of knowing how much money you have and what your expenses are. The basic fundamental of financial planning is to spend less than you make. When times are tough, it’s even more important to know where you are spending your money and making sure you make the most of every dollar you have.
This is also not the time to take on more debt. In fact, it may be a good idea to reduce your debt load as much as possible. Canada’s economy is usually 12-18 months behind the US., so take this time to reduce the amount of debt you are being charged interest on. With the inflation rate creeping up in Canada, it is likely that interest rates will follow.
Here at Algoma Financial and Manulife Securities we have some of the most sophisticated debt management tools and products available in Canada to help you reduce the cost of your debt.
2. Review your savings goal and stick to your savings and retirement plan.
Having an emergency fund is an important tool to any financial plan. One never knows when we might find ourselves in need of cash. Saving 3-6 months of income can help you, your family or your business weather troubled times. We can help you achieve such a fund using our Advantage Account with Manulife Bank. The account has no service fees, pays 2.9% interest, and it CDIC protected up to $100,000.
When it comes to your investments, our process will help you build a long-term investment plan. This program will help you set your investment goals, create a plan to achieve it, and help you keep track of your progress.
To ensure that you're saving enough money to achieve your investment goal, you need to check that your plan is on track at least once a year. We are committed to meet with our clients regularly to review your investment needs.
3. Assess your risk tolerance and your time horizon for your investments.
Once you know what you need to save, choose investments that match your risk tolerance and time horizon. Our Investment Needs Analysis will help you assess not only your tolerance for losing money, but your tolerance for not making enough money as well.
If your investment needs are long-term (over ten years before a child’s education, retirement etc.) you should not be overly concerned about the short-term volatility in your investment portfolio’s value. Our economy has weathered many financial storms in the past and the markets have always rewarded those who have the time-horizon and the discipline to stay committed to an investment plan.
4. Diversify, diversify, diversify.
With a mix of stock, bond and money market funds. Over the long term, almost all investments grow. But over the short term, a specific investment will go up and down depending on market conditions. All investments don't move the same way all the time. Some may go up while others lose money over the short term. By diversifying and choosing different types of investments, you can take advantage of the long term growth potential while reducing the short term volatility. Our process helps you determine the optimum asset allocation of investments to provide a diversified mix for each investment style.
5. Don't try to time the market.
Selling stock funds when a market is depressed means you are selling at a loss. Moving back into stock funds when the market begins to climb means you will likely miss out on the recovery. If you carefully chose your equities based on your risk tolerance, stick with them. They will not let you down in the long term.
6. Maintain the saving habit.
When you invest a specific sum at regular intervals, you benefit from the magic of compounding. And you reap the rewards of dollar cost averaging. When markets are down, the unit value of investments decreases. That means you can by more units for the same amount of money. When the markets start going up, as they inevitably do following a major decline, so will the value of your units.
If you have any concerns about your current financial situation or your investment plan, please don’t hesitate to contact us. With a review of your needs and current situation, and a commitment to these six basic principals of money management, we can help that you stay on course no matter what the economic conditions.
Monday, September 15, 2008
Canadian Banks "Safe and Sound" Amid Crisis
According the Superintendent of Financial Institutions in Canada, our banks are not subjected to the same concerns that those south of the border are dealing with. This is good news for investors in Canada. In the short-term the markets may be choppy, but Canada should continue to be a good place to invest. Here is the short-story below from Reuters:
OTTAWA (Reuters) - Canada's banking regulator said the country's financial institutions are healthy and it has no plans for special measures to help banks cope with the deepening crisis in world financial markets.
"No special action is planned in response to the announcements from the U.S. because the Canadian banking system is safe and sound," Rod Giles, spokesman for the Office of the Superintendent of Financial Institutions, told Reuters.
"Our institutions are well capitalized which helps them deal with the events taking place in the markets," he said.
(Reporting by Louise Egan; editing by Janet Guttsman)
OTTAWA (Reuters) - Canada's banking regulator said the country's financial institutions are healthy and it has no plans for special measures to help banks cope with the deepening crisis in world financial markets.
"No special action is planned in response to the announcements from the U.S. because the Canadian banking system is safe and sound," Rod Giles, spokesman for the Office of the Superintendent of Financial Institutions, told Reuters.
"Our institutions are well capitalized which helps them deal with the events taking place in the markets," he said.
(Reporting by Louise Egan; editing by Janet Guttsman)
Tuesday, August 26, 2008
What your children won't learn at school
In just a few days parents will getting their children ready for the beginning of a new school year. With all the excitement of what our youngsters ready-minds will be learning in their new grade, parents should be aware some basic life skills will never be taught in the classroom.
Currently, financial literacy (the basics of handling money responsibly) is not a subject covered by the schools in our province. This important topic is left to the responsibility of the parents. Our education system is designed to help our children be prepared to enter the workforce, but often, our young adults don't know how to handle their first paycheque responsibly and they are left to learn from their financial mistakes.
According to a recent article in the Globe and Mail, the average child between the ages of eight and 13 is exposed to some 40,000 commercials per year. With so many commercials vying for your child’s attention, it’s almost never too early to teach your child about responsible money management.
According to an article published online by the B.C. Council for Families (BCCF), “By far, most of what children learn about money concepts comes from what they observe their parents doing,.”
Age-appropriate information and exercises
Start teaching your child about money when they first begin asking about it, often around the age of three or four, says the BCCF. The concept of money is a bit abstract for most preschoolers, but you can make it easier to understand by giving them an allowance.
“Since kids at this age need to see and touch their money, start by giving it to them all in coin, and to start with, the same coin,” says the BCCF. A good exercise for kids this age is to decorate three jars or cans, then label them with symbols that stand for: Spend, Save, and Share. Their coins go into the three jars in proportions that depend on the money values you want to teach.
By the early elementary school years, kids are getting into more “hard-core consumerism,” says the BCCF, so this is a good time to talk to them about how to make good choices. Help them open a savings account and talk about longer-term savings goals. During the late elementary years, sit down together to create a budget that includes spending, sharing and long-term saving.
When your children are in high school age, consider introducing them to what your family expenses really look like, says the BCCF. “Give them some real insight by having them make all the deposits and write all the cheques for a month. Show them how to reconcile a bank statement and talk about why you choose to pay things at certain times.”
For fun and information
You and your children might have fun with the money exercises and games on these websites — and learn something while you’re at it:
* www.younginvestor.com is a website for parents, teachers and children of all ages with educational exercises
* http://www.kidsmoney.org/ is a website in six languages offering articles, games and exercises for kids and parents
Handling money is a skill that every child should learn. Don't be afraid to talk to your children about the subject. With all the pressure kids have today to live up to a certain lifestyle from the advertising they are subjected too, it's important that they can distinguish between the fantasy they see on TV, the movies and the internet and the reality we all face as adults.
Currently, financial literacy (the basics of handling money responsibly) is not a subject covered by the schools in our province. This important topic is left to the responsibility of the parents. Our education system is designed to help our children be prepared to enter the workforce, but often, our young adults don't know how to handle their first paycheque responsibly and they are left to learn from their financial mistakes.
According to a recent article in the Globe and Mail, the average child between the ages of eight and 13 is exposed to some 40,000 commercials per year. With so many commercials vying for your child’s attention, it’s almost never too early to teach your child about responsible money management.
According to an article published online by the B.C. Council for Families (BCCF), “By far, most of what children learn about money concepts comes from what they observe their parents doing,.”
Age-appropriate information and exercises
Start teaching your child about money when they first begin asking about it, often around the age of three or four, says the BCCF. The concept of money is a bit abstract for most preschoolers, but you can make it easier to understand by giving them an allowance.
“Since kids at this age need to see and touch their money, start by giving it to them all in coin, and to start with, the same coin,” says the BCCF. A good exercise for kids this age is to decorate three jars or cans, then label them with symbols that stand for: Spend, Save, and Share. Their coins go into the three jars in proportions that depend on the money values you want to teach.
By the early elementary school years, kids are getting into more “hard-core consumerism,” says the BCCF, so this is a good time to talk to them about how to make good choices. Help them open a savings account and talk about longer-term savings goals. During the late elementary years, sit down together to create a budget that includes spending, sharing and long-term saving.
When your children are in high school age, consider introducing them to what your family expenses really look like, says the BCCF. “Give them some real insight by having them make all the deposits and write all the cheques for a month. Show them how to reconcile a bank statement and talk about why you choose to pay things at certain times.”
For fun and information
You and your children might have fun with the money exercises and games on these websites — and learn something while you’re at it:
* www.younginvestor.com is a website for parents, teachers and children of all ages with educational exercises
* http://www.kidsmoney.org/ is a website in six languages offering articles, games and exercises for kids and parents
Handling money is a skill that every child should learn. Don't be afraid to talk to your children about the subject. With all the pressure kids have today to live up to a certain lifestyle from the advertising they are subjected too, it's important that they can distinguish between the fantasy they see on TV, the movies and the internet and the reality we all face as adults.
Friday, June 27, 2008
Be prepared to share more information about yourself with financial institutions
The world continues to change since the terrorist attacks of 9/11. The Canadian Government has released significant new amendments to the ‘Proceeds of Crime (Money Laundering) and Terrorist Financing Act effective June 23rd, 2008 which brings the act in line with international standards.
These new amendments to the Act will require financial institutions (banks, investment dealers, and insurance companies etc.) to collect more information on their clients and be more prudent in monitoring client transaction than ever before. Also, be prepared for you financial advisor to ask a lot more questions about your intentions with your money.
Under the new amendments, all financial institutions have an additional obligation to report ‘suspicious transactions’ to the government. If a financial advisor, finds that a client is attempting to request a suspicious transactions (whether or not the transaction is completed), he or she must now file a report with the Financial Transactions and Reports Analysis Centre of Canada.
Further, it is now an Advisor’s duty to understand where your money came from and have an idea of what your purposes are with the money. To be honest, a client does not have to be too specific here. It is acceptable, for example, to tell an advisor, the money comes from your wages and you are saving for retirement.
Also, your financial institutions will have a responsibility to prove their clients identities. Even if you have been dealing with the same person for years, be prepared to provide at least one copy of picture ID for new transactions.
Another new responsibility your advisor or broker will have is to ask if your money is coming from, or being used for, a third person. If you are making an investment for another individual, you will have to answer questions about this person, and your relationship with them. Signatures from the third party may also be necessary in some situations.
Your advisor or broker will also have to know if you or someone from your immediate family has worked for any level of provincial or federal government, including embassies or if you have political exposure to foreign persons.
The act sets out penalties and sanctions against firms that don’t comply with these regulations, so there is no doubt that these new changes will effect all of our financial transactions.
As Investment Professionals, we understand the reasons behind the new regulations and we want to help the government prevent illegal money from entering the system. However, these new requirements will cause more paperwork for everyone in the industry, more frustration for the average investors and at the end of the day will probably raise the costs of doing business for the vast majority of honest consumers. Unfortunately, those that want to break the law will probably find others ways around these regulations.
These new amendments to the Act will require financial institutions (banks, investment dealers, and insurance companies etc.) to collect more information on their clients and be more prudent in monitoring client transaction than ever before. Also, be prepared for you financial advisor to ask a lot more questions about your intentions with your money.
Under the new amendments, all financial institutions have an additional obligation to report ‘suspicious transactions’ to the government. If a financial advisor, finds that a client is attempting to request a suspicious transactions (whether or not the transaction is completed), he or she must now file a report with the Financial Transactions and Reports Analysis Centre of Canada.
Further, it is now an Advisor’s duty to understand where your money came from and have an idea of what your purposes are with the money. To be honest, a client does not have to be too specific here. It is acceptable, for example, to tell an advisor, the money comes from your wages and you are saving for retirement.
Also, your financial institutions will have a responsibility to prove their clients identities. Even if you have been dealing with the same person for years, be prepared to provide at least one copy of picture ID for new transactions.
Another new responsibility your advisor or broker will have is to ask if your money is coming from, or being used for, a third person. If you are making an investment for another individual, you will have to answer questions about this person, and your relationship with them. Signatures from the third party may also be necessary in some situations.
Your advisor or broker will also have to know if you or someone from your immediate family has worked for any level of provincial or federal government, including embassies or if you have political exposure to foreign persons.
The act sets out penalties and sanctions against firms that don’t comply with these regulations, so there is no doubt that these new changes will effect all of our financial transactions.
As Investment Professionals, we understand the reasons behind the new regulations and we want to help the government prevent illegal money from entering the system. However, these new requirements will cause more paperwork for everyone in the industry, more frustration for the average investors and at the end of the day will probably raise the costs of doing business for the vast majority of honest consumers. Unfortunately, those that want to break the law will probably find others ways around these regulations.
Tuesday, May 27, 2008
What To Do With That Tax Refund?
We thought this would be a timely article given the season. For advice on your specific situation, please don't hesitate to give us a call.
This article is courtesy of www.advisor.ca
What to do with the tax refund?
May 23, 2008 | Mark Noble
All that tax-planning work is now paying off and your client's rebate cheque is likely in the mail. The issue now is what to do with it. A popular answer is to pay off the mortgage.
BMO Financial has released some statistics that make a strong case for paying down the mortgage before doing anything else with the tax refund. According to John Turner, director of mortgage sales for BMO, a $1,400 investment now at the beginning of a 25-year mortgage could save a client as much as $38,000 in future interest payments.
"Typically with a mortgage amortized over 25 years, if we use the simple example of $200,000 at a 6% fixed rate, the interest accumulated over that amortization period would be $184,000," Turner says. "According to Revenue Canada, the average income tax refund this year is $1,400. If that's applied to the mortgage, it will save about $38,000 in interest costs over the life of the mortgage, and at the same time reduce amortization."
Debt reduction is obviously not an investment return; still, there are few investments that guarantee to put that type of money in a client's pocket. A refund could also be deployed to pay down higher interest debts on loans or credit cards, but Turner notes the amortization period of the mortgage makes it highly compelling to pay off as early as possible — even it if means carrying higher-interest debt on other things.
"Loans and credit cards tend to have the highest interest rates, but those amortizations are shorter," he says. "Depending on how the payment situation is, it may make more sense to put it towards the mortgage because of the amortization. In terms of total interest costs, right at the beginning of the mortgage is the best time to pay it down, because the sooner you can pay down the mortgage or increase your payment, clearly the more interest you'll save over the life of the mortgage."
David Phipps, a CFP and senior financial advisor with Assante in Ottawa, says debt-repayment should factor high on deployment of the refund, but he generally believes higher-interest debt should be tackled first.
"Sometimes these things are so obvious you kind of feel like an idiot even mentioning them, but I would say an excellent use of tax refund is to reduce debt. You should start with the debt that has the highest interest rate," he says. "It doesn't make sense to put the money against the mortgage if you have $1,000 debt on your credit card that never gets paid off."
Phipps stresses it's important to consider the specific circumstances of the client before definitively deciding to pay off the debt first.
"Assuming they have RRSP contribution room and assuming a reasonable rate of return in the RRSP, they are probably better to take that money and put it in their RRSP because so many Canadians have not fully used their contribution room," he says. "If you've got somebody who has fully maxed out their RRSP room, the next best thing to do with it is to pay down some debt. If a person has significant RRSP contribution room and if the contributions are reducing tax at a high marginal tax rateit makes sense to put money in the RRSP rather than pay down debt."
Phipps determines which type of debt to pay off first by considering whether it's tax-deductible or not. A home equity line of credit being redeployed for investment purposes would not rank as high as a traditional mortgage where the interest is non-tax-deductible.
"You shrink your liabilities in the following order: non-tax-deductible debt at the highest interest rate, non-tax-deductible at the lowest interest rate and finally tax-deductible debt," he says. "Home equity line of credit they borrowed to purchase an investment so that the interest is tax-deductible is not the first place you've got to pay it down, because having tax deductible debt alters the after-tax cost of the loan."
Fellow Ottawa-based CFP Diane Koven says there is no surefire answer as to whether it's better to invest the refund or pay down debt. She tends to favour the latter purely for the reason that it gives her clients peace of mind.
"There is no way to know what is better until you're looking back from years ahead, from when you did the calculations. You can't really know in advance what is going to be better in a dollars and cents way," she says. "Usually it turns out that there is not a tremendous difference or none at all. The main thing that tips the scale is the psychological aspect. Paying down the mortgage makes people feel more secure."
Koven attempts to bridge the two schools of thought by insisting her clients maximize their RRSP contributions and then use the income tax refund to pay down the mortgage.
"When you get the refund, you'll contribute to the mortgage. It feels good. You can sleep easier when you've done it. It no longer becomes an either/or situation. You've accomplished both, you're taking care of the future from both angles and you don't really feel like you're second-guessing yourself," she says.
Peter Ficek, a Calgary-based CFP, agrees that psychology factors heavily into the decision to use the refund against the mortgage.
"When it comes to paying down the mortgage versus RRSP decisions, most people reduce their planning to the flip of a coin," he says. "If the decision is to pay down the mortgage on a principal residence, people think the decision is a personal one and view it in a qualitative context, as in 'would they sleep better at night with a paid-down mortgage or with a retirement pension?'"
Ficek says because of the emotional nature of the decision, this is a classic situation where the objective advice of a financial planner is needed.
"Seek out a qualified planner and sit down and go over the quantitative and qualitative issues rather than just doing the flip of the coin," he says. "A mortgage broker is going to tell you to pay down the mortgage and an RRSP salesman is going to tell you to pay down the RRSP. A financial planner is going to make a decision by looking at the client's goals and objectives."
This article is courtesy of www.advisor.ca
What to do with the tax refund?
May 23, 2008 | Mark Noble
All that tax-planning work is now paying off and your client's rebate cheque is likely in the mail. The issue now is what to do with it. A popular answer is to pay off the mortgage.
BMO Financial has released some statistics that make a strong case for paying down the mortgage before doing anything else with the tax refund. According to John Turner, director of mortgage sales for BMO, a $1,400 investment now at the beginning of a 25-year mortgage could save a client as much as $38,000 in future interest payments.
"Typically with a mortgage amortized over 25 years, if we use the simple example of $200,000 at a 6% fixed rate, the interest accumulated over that amortization period would be $184,000," Turner says. "According to Revenue Canada, the average income tax refund this year is $1,400. If that's applied to the mortgage, it will save about $38,000 in interest costs over the life of the mortgage, and at the same time reduce amortization."
Debt reduction is obviously not an investment return; still, there are few investments that guarantee to put that type of money in a client's pocket. A refund could also be deployed to pay down higher interest debts on loans or credit cards, but Turner notes the amortization period of the mortgage makes it highly compelling to pay off as early as possible — even it if means carrying higher-interest debt on other things.
"Loans and credit cards tend to have the highest interest rates, but those amortizations are shorter," he says. "Depending on how the payment situation is, it may make more sense to put it towards the mortgage because of the amortization. In terms of total interest costs, right at the beginning of the mortgage is the best time to pay it down, because the sooner you can pay down the mortgage or increase your payment, clearly the more interest you'll save over the life of the mortgage."
David Phipps, a CFP and senior financial advisor with Assante in Ottawa, says debt-repayment should factor high on deployment of the refund, but he generally believes higher-interest debt should be tackled first.
"Sometimes these things are so obvious you kind of feel like an idiot even mentioning them, but I would say an excellent use of tax refund is to reduce debt. You should start with the debt that has the highest interest rate," he says. "It doesn't make sense to put the money against the mortgage if you have $1,000 debt on your credit card that never gets paid off."
Phipps stresses it's important to consider the specific circumstances of the client before definitively deciding to pay off the debt first.
"Assuming they have RRSP contribution room and assuming a reasonable rate of return in the RRSP, they are probably better to take that money and put it in their RRSP because so many Canadians have not fully used their contribution room," he says. "If you've got somebody who has fully maxed out their RRSP room, the next best thing to do with it is to pay down some debt. If a person has significant RRSP contribution room and if the contributions are reducing tax at a high marginal tax rateit makes sense to put money in the RRSP rather than pay down debt."
Phipps determines which type of debt to pay off first by considering whether it's tax-deductible or not. A home equity line of credit being redeployed for investment purposes would not rank as high as a traditional mortgage where the interest is non-tax-deductible.
"You shrink your liabilities in the following order: non-tax-deductible debt at the highest interest rate, non-tax-deductible at the lowest interest rate and finally tax-deductible debt," he says. "Home equity line of credit they borrowed to purchase an investment so that the interest is tax-deductible is not the first place you've got to pay it down, because having tax deductible debt alters the after-tax cost of the loan."
Fellow Ottawa-based CFP Diane Koven says there is no surefire answer as to whether it's better to invest the refund or pay down debt. She tends to favour the latter purely for the reason that it gives her clients peace of mind.
"There is no way to know what is better until you're looking back from years ahead, from when you did the calculations. You can't really know in advance what is going to be better in a dollars and cents way," she says. "Usually it turns out that there is not a tremendous difference or none at all. The main thing that tips the scale is the psychological aspect. Paying down the mortgage makes people feel more secure."
Koven attempts to bridge the two schools of thought by insisting her clients maximize their RRSP contributions and then use the income tax refund to pay down the mortgage.
"When you get the refund, you'll contribute to the mortgage. It feels good. You can sleep easier when you've done it. It no longer becomes an either/or situation. You've accomplished both, you're taking care of the future from both angles and you don't really feel like you're second-guessing yourself," she says.
Peter Ficek, a Calgary-based CFP, agrees that psychology factors heavily into the decision to use the refund against the mortgage.
"When it comes to paying down the mortgage versus RRSP decisions, most people reduce their planning to the flip of a coin," he says. "If the decision is to pay down the mortgage on a principal residence, people think the decision is a personal one and view it in a qualitative context, as in 'would they sleep better at night with a paid-down mortgage or with a retirement pension?'"
Ficek says because of the emotional nature of the decision, this is a classic situation where the objective advice of a financial planner is needed.
"Seek out a qualified planner and sit down and go over the quantitative and qualitative issues rather than just doing the flip of the coin," he says. "A mortgage broker is going to tell you to pay down the mortgage and an RRSP salesman is going to tell you to pay down the RRSP. A financial planner is going to make a decision by looking at the client's goals and objectives."
Thursday, May 1, 2008
Simplify Your Banking - Simplify Your Life
Everybody seems to have a fast-paced, needed-it yesterday lifestyle these days. Does the simple life still exist? Sure. And the good news is that when it comes to your valuable time, routine changes can free up precious hours and days. Some simplifications, like how you bank, can save both time and money.
Consider the financial and personal lifestyles of people in their mid-30s to early-50s. Their careers are demanding but fulfilling. They are able to afford things they struggled to get before. Still, they are stretched in every direction. They have full social calendars, and participate in their kids' schedules as well – whether those kids are joining every extracurricular activity imaginable, embarking on a university degree, enjoying “financially assisted” independent living or getting married. Many people in this age group also have parents who require more support and assistance as they grow older.
For this “sandwich” generation, the challenge is managing the present while keeping an eye to the future. They need to spend wisely, putting aside enough money to provide tomorrow's income while meeting their current obligations. A financial plan is important, and a trusted advisor can also help people change their banking and day-to-day finances.
THE WAY WE BANK TODAY
To save minutes in bank line-ups, many people have become self-serve bankers. However, an expanding range of financial transactions (such as debits, cheques, pre-authorized payments and transfers among accounts) is making the job more complex. Many Canadians have a chequing account to manage daily expenses. Income goes into the account, while bills, mortgage payments and other monthly expensesflow back out. If there is anything left over at the end of the month, the money may be invested or put away in a “high-interest” savings account for a rainy day, emergency or vacation.
Many also have mortgages for their home and perhaps cottage. Loans or lines of credit (sometimes based on home equity) can be arranged for larger expenses, such as new cars, furniture or home renovations. And, of course, there are also credit cards that may provide benefits at a particular store, offer convenience or earn reward points.
SPAGHETTI PLATE MANAGEMENT
The bottom line is that, on average, Canadians likely have eight or nine separate banking products from two or more financial institutions. Sometimes, you may find yourself playing one product against another. For example, you might write a cheque on your chequing account to reduce a credit card balance, only to discover that you need to transfer funds from a savings account because payday is still two days away. Furthermore, you may use a credit card for smaller purchases because you're not sure there is enough money in your chequing account. In fact, the management of so many different cards, debts and accounts can be such an onerous accounting process that it has been referred to as “spaghetti plate” banking. People often devote so much time and effort to untangling their finances that they resign themselves to muddling their way through. But the problems don't stop there.
DIVERSIFICATION OF DEBT
It's safe to assume that each product has its own set of administrative costs built into the pricing. Each product also has a different interest rate attached to it, based on the risk of defaulting payment to the lender or the benefit to the user. For example, credit cards often carry an interest rate of 18 per cent or higher because they are unsecured debt. In other words, there's a greater risk a cardholder will not repay the balance because the debt isn't tied to a specific security. Credit cards may also be subject to higher rates because they can be susceptible to fraud. A mortgage, on the other hand, is secured by the property (i.e., the lender can force the sale of the home to recoup the money), so mortgages often offer the lowest rate around. Professor Moshe Milevsky of York University conducted a study in 2005 that looked at the way Canadians manage their debt. His conclusions and recommendations were very clear: the strategies people use are costing them time and money.
He observed that Canadians diversify their debt by “space” (spreading debt over several different products) and by “time.” In other words, because of the way people bank, they delay paying off debt even though sufficient money sits idle in their accounts. So they end up paying more in interest costs than necessary.
CONSOLIDATION OF DEBTS AND ASSETS
Professor Milevsky's advice is to eliminate as many banking products as possible by consolidating debts and making better use of short-term, non-registered assets. For instance, if you can eliminate non-secured credit cards, personal loans, car loans and lines of credit and wrap them all into a single secured loan, such as a mortgage, you could significantly reduce the amount of money you're currently spending servicing the debt at higher interest rates. As a simple example, if you had a $2,000 credit card debt attracting an 18 per cent interest rate and a personal loan of $8,000 at 7.5 per cent, your monthly interest costs would be roughly $80. If that debt were consolidated into a line of credit at six per cent, the monthly interest cost would be $50 - that's a reduction in cost of almost 40 per cent! Multiplied over time and larger loan amounts, this one change in how you manage your finances could save you thousands.
Milevsky also suggests that there is a more effective way to manage money than having special-purpose savings accounts. Even if your savings are earning three per cent interest, he advocates applying that money against your debt. The interest earned on your savings account is taxable, but using it to pay down your debt means everything you save goes straight into your pocket. How does this work? Taxes will reduce your savings account earnings, but reducing a debt that is charging six per cent means a six per cent after-tax benefit to you. Why would someone want to use all their short-term assets to pay down their debt? Well, if you're using a line of credit, you can always take that money back out if you need it. Instead of having money sitting idly around earning virtually nothing in pre-tax dollars, you can apply it against debt and save some real money, until you need to use it.
THE IDEAL SOLUTION
Imagine the possible savings if you were able to combine all your debts into a lower interest rate product (such as a secured line of credit), but could also make that line of credit your chequing account. If every deposit into this account reduced your level of debt, then why not flow your income through the account as well?
That's exactly what “all-in-one” accounts are designed for. An all-in-one account offers a host of advantages:
* It eliminates “spaghetti plate” banking, thereby reducing your banking time and effort
* It offers the potential to significantly reduce interest costs
* It provides a way to maximize the benefit of every dollar you have
* It gives you increased flexibility in monthly payments now, instead of meeting fixed monthly obligations, you have the option to pay interest only, if you like
* It simplifies your financial life – just one account to worry about and a clear picture of your financial situation, while every banking receipt gives you a snapshot of your finances.
Life can be exciting, chaotic and sometimes exhausting. That's why it makes sense to find ways to streamline your activities and reduce the demands on your time and money. A good place to start is by simplifying your banking. Not only can a few easy steps save you time, money and effort today, but this approach can go a long way to helping you get out of debt faster. And that's the first step towards sound retirement planning.
Content provided courtesy of Manulife Investments
© Copyright of this article is held by The Manufacturers Life Insurance Company (Manulife Financial). You are free to make copies of this article and to distribute it, either in paper form or electronically, as long as you do not change or remove any part of this work. All other uses are prohibited.
Consider the financial and personal lifestyles of people in their mid-30s to early-50s. Their careers are demanding but fulfilling. They are able to afford things they struggled to get before. Still, they are stretched in every direction. They have full social calendars, and participate in their kids' schedules as well – whether those kids are joining every extracurricular activity imaginable, embarking on a university degree, enjoying “financially assisted” independent living or getting married. Many people in this age group also have parents who require more support and assistance as they grow older.
For this “sandwich” generation, the challenge is managing the present while keeping an eye to the future. They need to spend wisely, putting aside enough money to provide tomorrow's income while meeting their current obligations. A financial plan is important, and a trusted advisor can also help people change their banking and day-to-day finances.
THE WAY WE BANK TODAY
To save minutes in bank line-ups, many people have become self-serve bankers. However, an expanding range of financial transactions (such as debits, cheques, pre-authorized payments and transfers among accounts) is making the job more complex. Many Canadians have a chequing account to manage daily expenses. Income goes into the account, while bills, mortgage payments and other monthly expensesflow back out. If there is anything left over at the end of the month, the money may be invested or put away in a “high-interest” savings account for a rainy day, emergency or vacation.
Many also have mortgages for their home and perhaps cottage. Loans or lines of credit (sometimes based on home equity) can be arranged for larger expenses, such as new cars, furniture or home renovations. And, of course, there are also credit cards that may provide benefits at a particular store, offer convenience or earn reward points.
SPAGHETTI PLATE MANAGEMENT
The bottom line is that, on average, Canadians likely have eight or nine separate banking products from two or more financial institutions. Sometimes, you may find yourself playing one product against another. For example, you might write a cheque on your chequing account to reduce a credit card balance, only to discover that you need to transfer funds from a savings account because payday is still two days away. Furthermore, you may use a credit card for smaller purchases because you're not sure there is enough money in your chequing account. In fact, the management of so many different cards, debts and accounts can be such an onerous accounting process that it has been referred to as “spaghetti plate” banking. People often devote so much time and effort to untangling their finances that they resign themselves to muddling their way through. But the problems don't stop there.
DIVERSIFICATION OF DEBT
It's safe to assume that each product has its own set of administrative costs built into the pricing. Each product also has a different interest rate attached to it, based on the risk of defaulting payment to the lender or the benefit to the user. For example, credit cards often carry an interest rate of 18 per cent or higher because they are unsecured debt. In other words, there's a greater risk a cardholder will not repay the balance because the debt isn't tied to a specific security. Credit cards may also be subject to higher rates because they can be susceptible to fraud. A mortgage, on the other hand, is secured by the property (i.e., the lender can force the sale of the home to recoup the money), so mortgages often offer the lowest rate around. Professor Moshe Milevsky of York University conducted a study in 2005 that looked at the way Canadians manage their debt. His conclusions and recommendations were very clear: the strategies people use are costing them time and money.
He observed that Canadians diversify their debt by “space” (spreading debt over several different products) and by “time.” In other words, because of the way people bank, they delay paying off debt even though sufficient money sits idle in their accounts. So they end up paying more in interest costs than necessary.
CONSOLIDATION OF DEBTS AND ASSETS
Professor Milevsky's advice is to eliminate as many banking products as possible by consolidating debts and making better use of short-term, non-registered assets. For instance, if you can eliminate non-secured credit cards, personal loans, car loans and lines of credit and wrap them all into a single secured loan, such as a mortgage, you could significantly reduce the amount of money you're currently spending servicing the debt at higher interest rates. As a simple example, if you had a $2,000 credit card debt attracting an 18 per cent interest rate and a personal loan of $8,000 at 7.5 per cent, your monthly interest costs would be roughly $80. If that debt were consolidated into a line of credit at six per cent, the monthly interest cost would be $50 - that's a reduction in cost of almost 40 per cent! Multiplied over time and larger loan amounts, this one change in how you manage your finances could save you thousands.
Milevsky also suggests that there is a more effective way to manage money than having special-purpose savings accounts. Even if your savings are earning three per cent interest, he advocates applying that money against your debt. The interest earned on your savings account is taxable, but using it to pay down your debt means everything you save goes straight into your pocket. How does this work? Taxes will reduce your savings account earnings, but reducing a debt that is charging six per cent means a six per cent after-tax benefit to you. Why would someone want to use all their short-term assets to pay down their debt? Well, if you're using a line of credit, you can always take that money back out if you need it. Instead of having money sitting idly around earning virtually nothing in pre-tax dollars, you can apply it against debt and save some real money, until you need to use it.
THE IDEAL SOLUTION
Imagine the possible savings if you were able to combine all your debts into a lower interest rate product (such as a secured line of credit), but could also make that line of credit your chequing account. If every deposit into this account reduced your level of debt, then why not flow your income through the account as well?
That's exactly what “all-in-one” accounts are designed for. An all-in-one account offers a host of advantages:
* It eliminates “spaghetti plate” banking, thereby reducing your banking time and effort
* It offers the potential to significantly reduce interest costs
* It provides a way to maximize the benefit of every dollar you have
* It gives you increased flexibility in monthly payments now, instead of meeting fixed monthly obligations, you have the option to pay interest only, if you like
* It simplifies your financial life – just one account to worry about and a clear picture of your financial situation, while every banking receipt gives you a snapshot of your finances.
Life can be exciting, chaotic and sometimes exhausting. That's why it makes sense to find ways to streamline your activities and reduce the demands on your time and money. A good place to start is by simplifying your banking. Not only can a few easy steps save you time, money and effort today, but this approach can go a long way to helping you get out of debt faster. And that's the first step towards sound retirement planning.
Content provided courtesy of Manulife Investments
© Copyright of this article is held by The Manufacturers Life Insurance Company (Manulife Financial). You are free to make copies of this article and to distribute it, either in paper form or electronically, as long as you do not change or remove any part of this work. All other uses are prohibited.
Monday, March 3, 2008
The Budget brings new tax-savings math: RRSPs vs TFSA
From morningstar.ca – March 3, 2008
Last week's federal budget centrepiece was the Tax-Free Savings Account (TFSA), giving investors a new vehicle to save on taxes. As previously reported, the TFSA is scheduled to make its debut in 2009, allowing maximum contributions of up to $5,000 a year.
Although a TFSA is very different from an RRSP, each of these accounts holds an after-tax advantage in returns over a non-registered account. Everyone who is 18 years old and over will be able to contribute to a TFSA, and if you are eligible to make RRSP contributions it will generally be to your advantage to contribute to both.
That, of course, depends on having the money available. According to a national BMO Financial Group/Leger poll released on Feb. 27, more than half of Canadians are not making an RSP contribution this year.
Realistically, for a large number of Canadians who won't be able to contribute to both a TFSA and an RRSP, the question becomes: Which one of the two will leave me further ahead?
To illustrate the differences between the TFSA, RRSP and non-registered savings, the Finance Department created a table comparing the three according to one scenario. The example used a $1,000 one-time contribution, held for 20 years by an individual with a 40% marginal tax rate. The assumed return, implying a very conservatively managed portfolio, was a compound annual 5.5%.
The RRSP investor jumps out to an early lead, since there is a tax deduction that leaves this account with the full $1,000 to invest. The TFSA and non-registered accounts, by contrast, start out with only $600, since they must make their contributions with after-tax dollars.
Both the TFSA and the RRSP accounts enable income to accumulate tax free, while the holder of the non-registered account gets hit with income tax each year. The RRSP extends its lead, since it started out with a larger amount, while the TSFA ranks second and the non-registered account lags.
By the end of 20 years, the value of the net contribution plus investment income has reached $1,751 for the TFSA, $2,918 for the RRSP, and only $1,307 for the non-registered account. (The government's example for the non-registered account assumes a tax rate of 28% on investment income, based on portfolio returns that are assumed to be composed of 30% capital gains, 30% Canadian dividends and 40% interest.)
The great equalizer between the TSFA and the RRSP account occurs at the time of withdrawal. The value of the TSFA remains at $1,751, since no taxes are payable on withdrawal of either the original TFSA contribution or any capital gains, dividends or interest earned.
But the $2,918 RRSP is taxable at the highest marginal tax rate at the time of withdrawal, which works out to a tax hit of $1,167. This leaves the RRSP holder with after-tax proceeds of $1,751, thereby finishing in a dead heat with the TFSA holder. (The non-registered account finishes last with $1,307.)
The key variable is how the tax rate at the time of withdrawal compares to the tax rate at the time of the contribution. Here are the three scenarios, and how they may affect your choice of account:
• If the two rates are identical, as in the hypothetical example cited in this article, the TFSA and the RRSP are equally effective tax-savings alternatives.
• If the tax rate at the time of withdrawal is lower than at the time of contribution, the RRSP is the better choice.
• If the tax rate at the time of withdrawal is higher than at the time of contribution, the advantage goes to the TFSA.
In other personal-finance related developments in the budget, there were several changes affecting life-income funds (LIFs) and registered education savings plans (RESPs).
LIFs are locked-in pension accounts. They hold assets that are transferred from a registered pension plan to an individual who would prefer to manage his or her own account rather than remain in the pension plan. LIFs can be created, for instance, when individuals are laid off from an employer.
The budget provides much increased flexibility for LIF holders to gain access to their assets. Individuals who are 55 years or older, and with LIF holdings of up to $22,450, will be able to wind up their accounts and have the option of transferring the assets to an RRSP or a registered retirement income fund (RRIF).
Those 55 and older are also entitled to a one-time conversion of up to 50% of their LIF holdings into an RRSP or RRIF, with no maximum withdrawal limits.
In addition, all individuals facing financial hardship (such as low income, disabilities or medical costs), will be entitled to unlock up to $22,450 from their LIFs.
As for RESPs, the budget proposed changes in the time limits and age limits. The maximum number of contribution years will be increased to 31 years, up from 21 years. The lifetime contribution limit remains at $50,000.
The deadline for terminating an RESP will be extended to the year that includes the 35th anniversary of the plan, up from the current 25th anniversary. If the beneficiary qualifies for the disability tax credit, the deadline is extended to the 40th anniversary year, up from the 30th year.
In terms of age limits, no contributions can currently be made in family plans for beneficiaries who are 21 or older. The budget calls for raising this age threshold to 31 years old.
Last week's federal budget centrepiece was the Tax-Free Savings Account (TFSA), giving investors a new vehicle to save on taxes. As previously reported, the TFSA is scheduled to make its debut in 2009, allowing maximum contributions of up to $5,000 a year.
Although a TFSA is very different from an RRSP, each of these accounts holds an after-tax advantage in returns over a non-registered account. Everyone who is 18 years old and over will be able to contribute to a TFSA, and if you are eligible to make RRSP contributions it will generally be to your advantage to contribute to both.
That, of course, depends on having the money available. According to a national BMO Financial Group/Leger poll released on Feb. 27, more than half of Canadians are not making an RSP contribution this year.
Realistically, for a large number of Canadians who won't be able to contribute to both a TFSA and an RRSP, the question becomes: Which one of the two will leave me further ahead?
To illustrate the differences between the TFSA, RRSP and non-registered savings, the Finance Department created a table comparing the three according to one scenario. The example used a $1,000 one-time contribution, held for 20 years by an individual with a 40% marginal tax rate. The assumed return, implying a very conservatively managed portfolio, was a compound annual 5.5%.
The RRSP investor jumps out to an early lead, since there is a tax deduction that leaves this account with the full $1,000 to invest. The TFSA and non-registered accounts, by contrast, start out with only $600, since they must make their contributions with after-tax dollars.
Both the TFSA and the RRSP accounts enable income to accumulate tax free, while the holder of the non-registered account gets hit with income tax each year. The RRSP extends its lead, since it started out with a larger amount, while the TSFA ranks second and the non-registered account lags.
By the end of 20 years, the value of the net contribution plus investment income has reached $1,751 for the TFSA, $2,918 for the RRSP, and only $1,307 for the non-registered account. (The government's example for the non-registered account assumes a tax rate of 28% on investment income, based on portfolio returns that are assumed to be composed of 30% capital gains, 30% Canadian dividends and 40% interest.)
The great equalizer between the TSFA and the RRSP account occurs at the time of withdrawal. The value of the TSFA remains at $1,751, since no taxes are payable on withdrawal of either the original TFSA contribution or any capital gains, dividends or interest earned.
But the $2,918 RRSP is taxable at the highest marginal tax rate at the time of withdrawal, which works out to a tax hit of $1,167. This leaves the RRSP holder with after-tax proceeds of $1,751, thereby finishing in a dead heat with the TFSA holder. (The non-registered account finishes last with $1,307.)
The key variable is how the tax rate at the time of withdrawal compares to the tax rate at the time of the contribution. Here are the three scenarios, and how they may affect your choice of account:
• If the two rates are identical, as in the hypothetical example cited in this article, the TFSA and the RRSP are equally effective tax-savings alternatives.
• If the tax rate at the time of withdrawal is lower than at the time of contribution, the RRSP is the better choice.
• If the tax rate at the time of withdrawal is higher than at the time of contribution, the advantage goes to the TFSA.
In other personal-finance related developments in the budget, there were several changes affecting life-income funds (LIFs) and registered education savings plans (RESPs).
LIFs are locked-in pension accounts. They hold assets that are transferred from a registered pension plan to an individual who would prefer to manage his or her own account rather than remain in the pension plan. LIFs can be created, for instance, when individuals are laid off from an employer.
The budget provides much increased flexibility for LIF holders to gain access to their assets. Individuals who are 55 years or older, and with LIF holdings of up to $22,450, will be able to wind up their accounts and have the option of transferring the assets to an RRSP or a registered retirement income fund (RRIF).
Those 55 and older are also entitled to a one-time conversion of up to 50% of their LIF holdings into an RRSP or RRIF, with no maximum withdrawal limits.
In addition, all individuals facing financial hardship (such as low income, disabilities or medical costs), will be entitled to unlock up to $22,450 from their LIFs.
As for RESPs, the budget proposed changes in the time limits and age limits. The maximum number of contribution years will be increased to 31 years, up from 21 years. The lifetime contribution limit remains at $50,000.
The deadline for terminating an RESP will be extended to the year that includes the 35th anniversary of the plan, up from the current 25th anniversary. If the beneficiary qualifies for the disability tax credit, the deadline is extended to the 40th anniversary year, up from the 30th year.
In terms of age limits, no contributions can currently be made in family plans for beneficiaries who are 21 or older. The budget calls for raising this age threshold to 31 years old.
Do You Want Insurance With That?
Recently, CBC’s Marketplace ran a story on the pitfalls of purchasing mortgage and creditor insurance and we thought this would be a perfect opportunity to highlight the benefits of arranging your own life and health insurance plans in order to protect yourself and your loved ones.
When you are approved for a mortgage, credit card or line of credit, your lender will offer to sell you insurance to pay off these debts in case of a death or disability. This offer may seem convenient, but you should be aware of many factors before saying ‘yes’ to these coverages.
Most of us will agree that it is important not to leave your loved ones with outstanding debts in the case of a premature death or disability, but mortgage or creditor insurance plans offered by the banks and lenders are not always the best option.
When you purchase mortgage insurance you are actually joining a group insurance policy owned by the lender. Though this may seem like the easiest way to get the coverage that you want, but there are many disadvantages.
With mortgage insurance, the lender is beneficiary on the plan there are no further provision to protect your family. There is very little flexibility with the coverage. Your lender will insure you only for the amount of your debts. You cannot alter, renew or convert the plan.
Should you happen to move to another lender in the future, or sometimes even renegotiate with your current lender, the policy is not transferable. This means you will have to reapply for the insurance coverage and pay premiums based on a higher age, or you may not qualify for coverage at all should your health change.
Also, since creditor insurance is provided through a group plan, you pay the same rate for the coverage as everybody else. You are not rewarded for looking after your health or with some plans, even being a non-smoker.
Another important fact is that your premiums and benefits are not guaranteed. Your lender can change or cancel the policy at any time. Also, your premiums remain the same while your benefit will be reduced as you pay-off your mortgage.
There have also been many documented cases where mortgage insurance claims have been denied due to non-discloser by the clients, even after years of paying premiums for coverage mortgage clients thought were in place the whole time.
With so many gaps in creditor insurance polices, most Canadians will want better guarantees and greater choice. It should also be noted that most lending officers and mortgage brokers don’t even hold an insurance license. Quite frankly it makes sense to speak with an insurance professional about mortgage insurance.
Financial advisors that hold an insurance license have a process in place to help you purchase the right amount and right type of insurance.
Their recommendations will put you in control of your insurance plan. You will own the policy, you can make changes to the plan when necessary, and your loved ones are the beneficiaries—not the bank. If circumstance change, the beneficiary can choose to use the money for other needs instead of paying the mortgage off automatically.
Term life insurance is more affordable and will meet most people’s needs. But you also have the option of choosing permanent insurance like whole life or universal life plans, as well as personal disability or critical illness insurance as well.
A personally plan will have important guarantees and cannot be canceled. If you decide to shop around for better mortgage rates, your insurance plan is portable and will stay in force even if your move to another lender. Also, the insurance benefit will not decrease like mortgage insurance.
You should be aware that when you arrange a mortgage, the lender may ask you to purchase insurance, but you have the right to shop for the plan that meets your needs.
So before you say ‘yes’ to creditor insurance talk with an insurance professional to find out how you can better insure your debts.
When you are approved for a mortgage, credit card or line of credit, your lender will offer to sell you insurance to pay off these debts in case of a death or disability. This offer may seem convenient, but you should be aware of many factors before saying ‘yes’ to these coverages.
Most of us will agree that it is important not to leave your loved ones with outstanding debts in the case of a premature death or disability, but mortgage or creditor insurance plans offered by the banks and lenders are not always the best option.
When you purchase mortgage insurance you are actually joining a group insurance policy owned by the lender. Though this may seem like the easiest way to get the coverage that you want, but there are many disadvantages.
With mortgage insurance, the lender is beneficiary on the plan there are no further provision to protect your family. There is very little flexibility with the coverage. Your lender will insure you only for the amount of your debts. You cannot alter, renew or convert the plan.
Should you happen to move to another lender in the future, or sometimes even renegotiate with your current lender, the policy is not transferable. This means you will have to reapply for the insurance coverage and pay premiums based on a higher age, or you may not qualify for coverage at all should your health change.
Also, since creditor insurance is provided through a group plan, you pay the same rate for the coverage as everybody else. You are not rewarded for looking after your health or with some plans, even being a non-smoker.
Another important fact is that your premiums and benefits are not guaranteed. Your lender can change or cancel the policy at any time. Also, your premiums remain the same while your benefit will be reduced as you pay-off your mortgage.
There have also been many documented cases where mortgage insurance claims have been denied due to non-discloser by the clients, even after years of paying premiums for coverage mortgage clients thought were in place the whole time.
With so many gaps in creditor insurance polices, most Canadians will want better guarantees and greater choice. It should also be noted that most lending officers and mortgage brokers don’t even hold an insurance license. Quite frankly it makes sense to speak with an insurance professional about mortgage insurance.
Financial advisors that hold an insurance license have a process in place to help you purchase the right amount and right type of insurance.
Their recommendations will put you in control of your insurance plan. You will own the policy, you can make changes to the plan when necessary, and your loved ones are the beneficiaries—not the bank. If circumstance change, the beneficiary can choose to use the money for other needs instead of paying the mortgage off automatically.
Term life insurance is more affordable and will meet most people’s needs. But you also have the option of choosing permanent insurance like whole life or universal life plans, as well as personal disability or critical illness insurance as well.
A personally plan will have important guarantees and cannot be canceled. If you decide to shop around for better mortgage rates, your insurance plan is portable and will stay in force even if your move to another lender. Also, the insurance benefit will not decrease like mortgage insurance.
You should be aware that when you arrange a mortgage, the lender may ask you to purchase insurance, but you have the right to shop for the plan that meets your needs.
So before you say ‘yes’ to creditor insurance talk with an insurance professional to find out how you can better insure your debts.
Wednesday, February 13, 2008
Why An RRSP? – Deadline is Feb 29th!
A REGISTERED RETIREMENT SAVINGS PLAN (RRSP) PROVIDES ONE OF THE FEW ways in which Canadians can shelter their income from taxes. Still, the vast majority of Canadians don’t take full advantage of their RRSP eligibility. According to Statistics Canada, less than one in five Canadians contributed to an RRSP in 2002. And the amount they contributed represented only about nine per cent of the total room available.
We often hear people say that “I don’t like RRSP’s” or that they are “not good to invest in.” But when you look at the big picture, the math is clear, for most Canadians, there is no better place to save for your retirement. Where else can a person earning $60,000 a year, paying income taxes at a rate of 40 per cent, put away $10,000 and get a $4,000 gift in return?
Not only do you get an immediate deduction from your annual tax bill,
but your investment within an RRSP grows tax deferred. And when you reach the age of 71 and have to convert your plan to another tax-deferred investment vehicle such as a registered retirement income fund (RRIF), only the money you withdraw is subject to income tax. The rest remains within the tax-free environment until you need it. The key is pay less in taxes during retirement than you were paying while you were working.
The federal government introduced RRSP’s in Canada in 1957 to encourage Canadians to save for retirement. Before RRSP’s, only individuals who belonged to employer-sponsored registered pension plans could deduct pension contributions from their taxable income. Several legislative changes have occurred over the decades that have encouraged larger RRSP contributions. Today, annual RRSP room is a calculation of 18% of your earned income minus a “pension adjustment” up to a maximum of $19,000 as of this year (it will be $20,000 next year). If that is not used up it is carried forward and added to next year’s room. A section on your Notice of Assessment you receive back from the government when you submit your income tax will outline what RRSP contribution room you currently have.
In today’s modern work environment, many people do not have the option to join in a company pension plan. As companies cut back on their pension plans, people have fewer opportunities to help them save for retirement. It’s crucial that people put something away to supplement their income in their retirement years. RRSPs are an excellent option to save for retirement.
Another misconception that we often see is the client who is looking to “buy an RRSP?” It’s important to understand that RRSPs are not something you can actually buy or invest in, but rather a name or title given to any type of investments such as a GIC’s, mutual funds, stocks or bonds, that is held within the plan. You can hold the exact same investments ‘outside’ your RRSP in a non-registered plan, but you will not get tax deduction or tax deferred growth. Think of an RRSP as a tax-saving box that you put your investment into. In a future article, we will touch on the different tax consequences of money held ‘outside’ your RRSPs.
For now however, if you have an RRSP, you have until February 29 to “top it up” to save on your 2007 tax return. But if you don’t have one, make it your month to start! Don’t be afraid to look for professional advice on what investments you should hold inside your RRSP….this decision will have the biggest impact on your retirement savings.
For most people easiest way to contribute to your RRSP is by arranging for automatic monthly withdrawals throughout the year rather than investing a single lump sum. Paying your self first is an old principle but very practical and easy to do, and has many benefits along the way. Some day you will want to retire, plan for it.
We often hear people say that “I don’t like RRSP’s” or that they are “not good to invest in.” But when you look at the big picture, the math is clear, for most Canadians, there is no better place to save for your retirement. Where else can a person earning $60,000 a year, paying income taxes at a rate of 40 per cent, put away $10,000 and get a $4,000 gift in return?
Not only do you get an immediate deduction from your annual tax bill,
but your investment within an RRSP grows tax deferred. And when you reach the age of 71 and have to convert your plan to another tax-deferred investment vehicle such as a registered retirement income fund (RRIF), only the money you withdraw is subject to income tax. The rest remains within the tax-free environment until you need it. The key is pay less in taxes during retirement than you were paying while you were working.
The federal government introduced RRSP’s in Canada in 1957 to encourage Canadians to save for retirement. Before RRSP’s, only individuals who belonged to employer-sponsored registered pension plans could deduct pension contributions from their taxable income. Several legislative changes have occurred over the decades that have encouraged larger RRSP contributions. Today, annual RRSP room is a calculation of 18% of your earned income minus a “pension adjustment” up to a maximum of $19,000 as of this year (it will be $20,000 next year). If that is not used up it is carried forward and added to next year’s room. A section on your Notice of Assessment you receive back from the government when you submit your income tax will outline what RRSP contribution room you currently have.
In today’s modern work environment, many people do not have the option to join in a company pension plan. As companies cut back on their pension plans, people have fewer opportunities to help them save for retirement. It’s crucial that people put something away to supplement their income in their retirement years. RRSPs are an excellent option to save for retirement.
Another misconception that we often see is the client who is looking to “buy an RRSP?” It’s important to understand that RRSPs are not something you can actually buy or invest in, but rather a name or title given to any type of investments such as a GIC’s, mutual funds, stocks or bonds, that is held within the plan. You can hold the exact same investments ‘outside’ your RRSP in a non-registered plan, but you will not get tax deduction or tax deferred growth. Think of an RRSP as a tax-saving box that you put your investment into. In a future article, we will touch on the different tax consequences of money held ‘outside’ your RRSPs.
For now however, if you have an RRSP, you have until February 29 to “top it up” to save on your 2007 tax return. But if you don’t have one, make it your month to start! Don’t be afraid to look for professional advice on what investments you should hold inside your RRSP….this decision will have the biggest impact on your retirement savings.
For most people easiest way to contribute to your RRSP is by arranging for automatic monthly withdrawals throughout the year rather than investing a single lump sum. Paying your self first is an old principle but very practical and easy to do, and has many benefits along the way. Some day you will want to retire, plan for it.
Wednesday, January 23, 2008
Our commentary now covered in Soonews.ca
You can now find our continuing commentary on financial planning in Soonews.ca under the blog section. Visit www.soonews.ca for more info.
Our content to Soonews.ca will compliment the articles that we post here. We are very excited for this new avenue to bring timely financial advice to Saultites and would like to thank Karen Johns, Craig Huckerby and all of the hard working staff at Soonews.ca for the opportunity.
Our content to Soonews.ca will compliment the articles that we post here. We are very excited for this new avenue to bring timely financial advice to Saultites and would like to thank Karen Johns, Craig Huckerby and all of the hard working staff at Soonews.ca for the opportunity.
Monday, January 21, 2008
Don't Sell Quality - Article from The Globe and Mail
No doubt you are aware of the recent stock market declines. We came across a great article today in the Globe and Mail that we would like to share with you. It sums up nicely our position on long term investing through a 'Bear Market'.
The most important aspect of any investment plan is to ensure that your investment choices meet your time horizon and risk tolerance. If you would like a review of your current investment portfolio, please don't hesitate to call and make an appointment.
This is no time to sell quality
Rob Carrick
Monday, January 21, 2008
Beware the one-two punch of plunging stock markets.
Not only do they decimate your portfolio, but they also lure you into making bad investing decisions that help ease your short-term anxiety but then hurt you in the long term. That's how it is that investors sell perfectly good stocks and mutual funds, buy principal-protected investments and make other mistakes with lasting repercussions.
Selling quality right now is probably the worst error you can get fooled into making by a plunging stock market. The rationale here of protecting your money against further losses makes sense, especially because it's hard to imagine there aren't more bad days ahead for the market.
But what comes after that? If you sell today you'll have your money languishing in money market funds, where returns are on the decline because of falling interest rates. You'll eventually get an itch to find something with a higher return and, quite likely, you'll end up in the stock market again. By then, stocks will have jumped from their lows and you'll be buying at elevated prices.
Some people, amateur and professional, get lucky timing their moves in and out of the market. The masses get it wrong and thus end up in a cycle of selling low and buying high that robs of them of returns and extracts unnecessary fees and commissions.
Another mistake is to give up on the risks of the stock market and instead buy guaranteed investments like principal-protected notes or segregated funds. The appeal of these investments is obvious – you get exposure to stocks with no risk of losing money in down markets like we're seeing today. The problem is with the cost of the guarantee – it cuts into returns so deeply that it's simply not a good value.
Buying guaranteed investments at times like now make less sense than usual because the stock markets have already lost a lot of ground. They may fall further, but savvy investors know that the current decline is setting up the next move up for the markets. Sellers of guaranteed products will make out like bandits when stocks rebound. Investors, not so much.
With registered retirement savings plan season just about here, gun-shy investors are poised to make yet another mistake, which is failing to make an RRSP contribution. If a plunging stock market is freaking you out, invest your RRSP money in a high-interest savings account until the dust settles and then move into a long-term investment when you can.
The best move would be to take your RRSP money and put it into the highest quality, most beaten down stocks or funds you can find. But one step at a time.
© The Globe and Mail
The most important aspect of any investment plan is to ensure that your investment choices meet your time horizon and risk tolerance. If you would like a review of your current investment portfolio, please don't hesitate to call and make an appointment.
This is no time to sell quality
Rob Carrick
Monday, January 21, 2008
Beware the one-two punch of plunging stock markets.
Not only do they decimate your portfolio, but they also lure you into making bad investing decisions that help ease your short-term anxiety but then hurt you in the long term. That's how it is that investors sell perfectly good stocks and mutual funds, buy principal-protected investments and make other mistakes with lasting repercussions.
Selling quality right now is probably the worst error you can get fooled into making by a plunging stock market. The rationale here of protecting your money against further losses makes sense, especially because it's hard to imagine there aren't more bad days ahead for the market.
But what comes after that? If you sell today you'll have your money languishing in money market funds, where returns are on the decline because of falling interest rates. You'll eventually get an itch to find something with a higher return and, quite likely, you'll end up in the stock market again. By then, stocks will have jumped from their lows and you'll be buying at elevated prices.
Some people, amateur and professional, get lucky timing their moves in and out of the market. The masses get it wrong and thus end up in a cycle of selling low and buying high that robs of them of returns and extracts unnecessary fees and commissions.
Another mistake is to give up on the risks of the stock market and instead buy guaranteed investments like principal-protected notes or segregated funds. The appeal of these investments is obvious – you get exposure to stocks with no risk of losing money in down markets like we're seeing today. The problem is with the cost of the guarantee – it cuts into returns so deeply that it's simply not a good value.
Buying guaranteed investments at times like now make less sense than usual because the stock markets have already lost a lot of ground. They may fall further, but savvy investors know that the current decline is setting up the next move up for the markets. Sellers of guaranteed products will make out like bandits when stocks rebound. Investors, not so much.
With registered retirement savings plan season just about here, gun-shy investors are poised to make yet another mistake, which is failing to make an RRSP contribution. If a plunging stock market is freaking you out, invest your RRSP money in a high-interest savings account until the dust settles and then move into a long-term investment when you can.
The best move would be to take your RRSP money and put it into the highest quality, most beaten down stocks or funds you can find. But one step at a time.
© The Globe and Mail
Wednesday, January 16, 2008
Staying Focused
With the recent volatility in the markets, it can be easy to lose sight of your long-term financial goals. That's why we encourage all of our clients to meet with us on a regular basis to review the financial plans we have made together. Goals and needs can change quickly and it is important that your plan remains focused and adaptable.
It's important to also understand what's happening in the markets and how these changes can affect your plan Our most important goal when working with together is to make sure your time-horizon (the amount of time your investments can stay invested before your need to make withdraws),your risk-tolerance and portfolio diversification strategies are kept up to date.
While we take the time this time of year to contemplate our future financial goals (like your RRSP contribution for this year for example), we would like to leave you with a short presentation on investing through the natural cycles of the financial markets and how to separate our emotions from guiding us toward the wrong investment decisions.
We look forward to meeting with each of you in the near future to ensure that your financial plans stay on track. Please don't hesitate to call and book a meeting.
Kevin Lamour & Ellen MacDougall
It's important to also understand what's happening in the markets and how these changes can affect your plan Our most important goal when working with together is to make sure your time-horizon (the amount of time your investments can stay invested before your need to make withdraws),your risk-tolerance and portfolio diversification strategies are kept up to date.
While we take the time this time of year to contemplate our future financial goals (like your RRSP contribution for this year for example), we would like to leave you with a short presentation on investing through the natural cycles of the financial markets and how to separate our emotions from guiding us toward the wrong investment decisions.
We look forward to meeting with each of you in the near future to ensure that your financial plans stay on track. Please don't hesitate to call and book a meeting.
Kevin Lamour & Ellen MacDougall
2007 in Review
As we begin a New Year, we would like to thank you for choosing us as your financial planning firm. We appreciate your trust and the business that comes with it. This time of year is a good opportunity to look back and put things into context. Here's a quick review of the more important financial events that occurred in 2007:
The Markets
At the beginning of 2007, the S&P/TSX Composite Index was sitting at around 12,923 points. For the first seven months of the year, the index was, for the most part, climbing and even broke the 14,000 barrier for the first time on Friday, May 11.
The strong performance was halted at the end of July, when the credit crisis first began to make itself known. Soon America's sub-prime woes, coupled with asset-backed commercial paper problems, sent markets around the world into turmoil. By August 8, just two weeks after the TSX dropped below 14,000 for the first time in weeks, it had lost nearly 600 points.
Since then, the index has been extremely volatile, dropping below 13,000 in mid-August, climbing back up to almost 14,600 at the end of October and landing at 13,467 on November 23. How the index — and world markets for that matter — will fare in the next month and through next year is anyone's guess, but investors can expect a bumpy ride to say the least.
Budget 2007
In March, the Conservative government presented its 2007 budget. For the most part, Finance Minister Jim Flaherty introduced a number of tax savings for families, including removing the Registered Education Savings Plan's annual contribution limit and introducing a new Registered Disability Savings Plan.
The government also implemented a child tax credit of $2,000 per child under 18, and the spousal penalty was phased out.
While there were a number of other tax savings in March, the government revealed even more tax relief in an October mini-budget, including a further 1% GST cut to come into effect January 1, 2008. As well, the government upped the basic personal amount to $9,600, effective January 1, and the lowest personal income tax rate was reduced from 15.5% to 15%.
Should you have any questions about how these or other recent events might affect you, I'd be happy to schedule a time to either speak with you on the telephone or sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them. A referral is a wonderful present, and I'd like to thank everyone who gave me one over the past twelve months.
Best wishes for health, happiness and continued financial success in the New Year!
Kevin Lamour & Ellen MacDougall
The Markets
At the beginning of 2007, the S&P/TSX Composite Index was sitting at around 12,923 points. For the first seven months of the year, the index was, for the most part, climbing and even broke the 14,000 barrier for the first time on Friday, May 11.
The strong performance was halted at the end of July, when the credit crisis first began to make itself known. Soon America's sub-prime woes, coupled with asset-backed commercial paper problems, sent markets around the world into turmoil. By August 8, just two weeks after the TSX dropped below 14,000 for the first time in weeks, it had lost nearly 600 points.
Since then, the index has been extremely volatile, dropping below 13,000 in mid-August, climbing back up to almost 14,600 at the end of October and landing at 13,467 on November 23. How the index — and world markets for that matter — will fare in the next month and through next year is anyone's guess, but investors can expect a bumpy ride to say the least.
Budget 2007
In March, the Conservative government presented its 2007 budget. For the most part, Finance Minister Jim Flaherty introduced a number of tax savings for families, including removing the Registered Education Savings Plan's annual contribution limit and introducing a new Registered Disability Savings Plan.
The government also implemented a child tax credit of $2,000 per child under 18, and the spousal penalty was phased out.
While there were a number of other tax savings in March, the government revealed even more tax relief in an October mini-budget, including a further 1% GST cut to come into effect January 1, 2008. As well, the government upped the basic personal amount to $9,600, effective January 1, and the lowest personal income tax rate was reduced from 15.5% to 15%.
Should you have any questions about how these or other recent events might affect you, I'd be happy to schedule a time to either speak with you on the telephone or sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them. A referral is a wonderful present, and I'd like to thank everyone who gave me one over the past twelve months.
Best wishes for health, happiness and continued financial success in the New Year!
Kevin Lamour & Ellen MacDougall
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