The Estate Bond

Growing your estate without undue market risk and taxes

Often we see older investors shift gears near retirement and beyond.  Many become risk adverse and move their assets into fixed income type investments.  Unfortunately this often results in the assets being exposed to higher rates of income tax and lower rates of return – never a good combination.

Or maybe the older investor cannot fully enjoy their retirement years for fear of spending their children’s inheritance.

The Estate Bond financial planning strategy presents a solution to both of these problems. Read more

TFSA or RRSP?

One of the most common investment questions Canadians ask themselves today is, “Which is better, TFSA or RRSP”?

Here’s the good news – it doesn’t have to be an either or choice.  Why not do both? Below are the features of both plans to help you understand the differences.

 

Tax Free Savings Account (TFSA) 

  • Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income.  There is no maximum age for contribution.
  • Maximum contribution is $5,500 per year starting in 2013 ($5,000 per year for the period of 2009-2012).  The contribution must be made by December 31st.
  • There is carry forward room for each year in which the maximum contribution was not made.
  • The deposit is not tax deductible, but the funds accumulate with no income tax payable on growth.
  • Withdrawals may be made at any time on an income tax-free basis.  Withdrawals create additional deposit room commencing in the year after withdrawal.

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Segregated Funds: Investing With A Safety Net

Investing today is not for the faint of heart.  Fortunately for Canadians, segregated fund products offered by many life insurance companies provide a safety net for nervous investors.

Segregated Fund products present some interesting opportunities for people looking to get more security in their investment portfolios without sacrificing their potential for growth.

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Keys to Becoming a Prudent Investor

As the equity markets rebound and more stable returns reappear, it is a good time to review and consider what it means to be a prudent investor.  If the past several years have taught us anything it’s that in times of unpredictable financial markets, rational and savvy investment decisions often get lost in the fear and panic of the moment.   Following these few key points could help you avoid making bad investment decisions in the future:

  • Understand Your Investments:  It’s safe to say that if you are putting your money into something you don’t understand, you are at risk.  This doesn’t mean you have to be an expert in what you are investing in, but you should at least be aware enough to fully recognize the opportunity and the risk. Be skeptical when appropriate but do so rationally and seek out information from those who may be more in the know than you. Read more

How Much Risk Can You Tolerate? Part 3 of 3

Over the past two months we have examined some of the risks that challenge most of us.  It is almost impossible to avoid risk entirely. Knowing where the pitfalls lie and planning for them will certainly help.  You might, however, want to consider shifting the risk to someone else, like a life insurance company.  Life insurance companies are in the risk business and they have products and services that can assist you in dealing with risk.  Some of these are as follows:

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How Much Risk Can You Tolerate? Part 1 of 3

Will Rogers, the American humorist, when talking about the investment schemes in North America at the time, said “I am less concerned with the return on my money, than I am with the return of my money”. Will was aware of the truth that the higher the potential rates of return on an investment, the greater chance of loss.

The dictionary defines risk as the exposure of someone or something valued to danger, harm or loss. If that something of value is your financial security the question is “How much risk can you tolerate?” The answer to this question for each of us depends on a number of different factors. A few of these are: Read more

A New Year’s Resolution You Shouldn’t Break – Saving For Retirement!

Many of us set New Year’s resolutions for ourselves and often those resolutions have to do with finances. January is the month we say, “Ok, this year I am going to save more and spend less”. This article won’t tell you how to spend less, but it will outline two government sponsored programs available to help you save for retirement or even just a rainy day! Of course these are not the only vehicles you can accumulate money with – those include anything from putting dollars under the mattress to the most sophisticated tax shelter schemes – but these two are the most popular.

Tax Free Savings Accounts (TFSA)

This is the new kid on the block established by the government as of January 1, 2009. Canadian residents age 18 or older could contribute up to $5,000 into a TFSA. The funds would grow tax free and although there is no tax deduction for the contribution, withdrawals can be made at any time without paying tax. Also, there is no earned income requirement for an individual to contribute. For those years where no contribution is made, it can be made in later years. Any withdrawals can be paid back in addition to current contributions. Be careful not to do this in the same year as the money was withdrawn so as to avoid a tax penalty for over payment. Read more