TFSAs are a great way to save!

TFSA’s are a great way to save for both long and short term. The Tax Free Savings Account is a hybrid between your RRSP and regular savings accounts.  That is because the money you put in to your TFSA has already been taxed, you do not get a tax refund when you put the money in, any growth does not get taxed and when you take money out, you do not pay any tax.  The trade off is an RRSP gives you tax back now, grows tax sheltered and you pay the tax when you take the money out.  If you can do without the tax break now, you will not pay tax in the future. Contributors tend to make common mistakes with TFSA’s. One is using the account to save for a child’s education. The registered education savings plan (RESP) is intended for this purpose – and has the added bonus of matching contributions by the government. Another common mistake is simply leaving contributions in a low-return savings account, rather than using investments that are likely to yield higher returns. However, investing directly in stocks in a relatively small-value account like most TFSA’s can lead to challenges when it comes to diversification. Mutual funds can often be a good solution to this problem. And while most individual investors may be able to choose an appropriate mutual fund on their own, a financial advisor will help ensure the funds meet your goals and time frame. Contact Debbie at www.mcwealthmanagement.ca or...

10 Ways to achieve Financial Success

10 Ways to achieve Financial Success for the Small Business Owner and Self Employed Whether you have been in business for fifteen years or fifteen days, you can achieve financial success. Getting there is usually not a matter of financial wizardry or luck but adhering to some basic principles. Here are ten ways to help you move closer to the financial dreams of your business: Set Objectives Pay yourself first Minimize Personal and Business debt Maximize your Retirement Saving options Diversify your investments Reduce your taxes Protect your dependents and business through life insurance Purchase adequate disability insurance Periodic reviews of your plan Avoid procrastination Many people put financial planning on the back burner until their early 50’s when panics sets in. At this point it is often too late! In the beginning of your business, develop the proper habits and the goals you set for achieving financial independence will be realized much more easily. To discuss these items and how they relate to you and your business, call MC Wealth Management...

The Retirement Plan

Planning for your retirement is a wise move at any age. While you probably won’t be as concerned with retirement planning in your twenties as you will be in your forties or fifties, it is never too early to start. Today, the average life expectancy for Canadians is about 85 years for women and 81 years for men. Since Canadians are living longer, it is important to start saving and planning ahead as soon as possible. Your retirement years may last as long as your working years, so you want to be sure you can spend them in relative comfort. Exactly how much you will need to save depends on the lifestyle you want for your golden years. If you wish to be able to travel or to winter in a warm climate, you will need additional retirement income. In general, you should aim to have 60% to 80% of your pre-retirement purchasing power during retirement. Where will my retirement Income come from? Canadians used to count on company pension plans plus the Canada Pension Plan/Quebec Pension Plan to provide for their retirement needs. Today, however, far more people are self-employed, and the annual CPP/QPP payout is only $8,500 or less depending on your income. So Canadians are having to assume increased responsibility for providing their retirement incomes. What are Registered Retirement Savings Plans? For most Canadians, a Registered Retirement Savings Plan (RRSP) is the cornerstone of their retirement strategy. Since 1957, Canadians have been able to shelter a portion of their earnings from taxation by investing them in RRSPs. The interest, capital gains and dividends generated by these...

Planning for Children’s Education

A college or university education is crucial to success in today’s job market and will be even more so in tomorrow’s. It is estimated that 65% of new jobs created within the next year will require a post-secondary degree. But while Canadian families are eager to give their children the benefit of higher education, tuition fees are increasing relentlessly. Four years of study at a typical Canadian university can cost around $16,000 for tuition and books. If a student lives away from home, the cost will be even higher. Start saving when they are young Children grow up quickly. All the more reason to start saving for their education when they’re still very young. If you begin early and invest on a regular basis, you can put the power of compound interest to work for your children. For example, a modest $200 a month in savings can grow to $60,000 by the end of 15 years (assuming an effective 7% annually rate of return). One way to plan for your children’s education is to set aside a specific portion of your savings for that purpose. Alternatively, you can create savings programs which are in your children’s names. These may include a Registered Education Savings Plan (RESP) and an in-trust account. Small amounts invested regularly can grow to a significant amount over time. An investment of just $200 each month can grow to $60,000 by the end of 15 years. What is an RESP? An RESP is a tax-sheltered investment plan specifically intended to help you pay for your children’s university or college education. You may contribute up to $5,000...

Registered Disability Savings Program

New savings tools help Canadians with disabilities and their families invest in their future In December 2008, the Government of Canada introduced the Registered Disability Savings Plan (RDSP), Canada Disability Savings Grant and Canada Disability Savings Bond to help Canadian’s with disabilities and their families save for the future. The RDSP is available to Canadian residents under the age of 60 who are eligible for the Disability Tax Credit, which is also known as the Disability Amount. People who are eligible, and the parents or guardians of eligible minors, can open an RDSP at one of several financial organizations across the country. There is no annual contribution limit to an RDSP. The lifetime contribution limit is $200,000. Friends and family can also contribute to a plan with written permission of the plan holder. Any investment income earned in the plan accumulates tax free, until money is withdrawn. The contribution deadline this year is December 31, 2010. To encourage savings, the Government of Canada introduced the Canada Disability Savings Grant and the Canada Disability Savings Bond. The Canada Disability Savings Grant is a matching grant that the Government deposits into the RDSP. Each year, the Government will match contributions made by paying up to $3 for every $1 paid into the plan, depending on the amount contributed and the beneficiary’s family income. The Government will deposit a maximum of $3,500 each year, with a lifetime limit of $70,000. Grants will be paid into the RDSP until the year the beneficiary turns 49 years old. For example If the beneficiary’s family income is less than or equal to $78,130*: a) The Government...

Understanding the ABC’s of RRSPs

(article courtesy of Fidelity Investments) Imagine, if you can, a scenario in which the Canadian government pays you almost half of the money you require to make the investment of your choice. A GIC or a hot stock — it’s your call. Then, when you’ve made money on that investment, be it through interest earned on the GIC, or the capital gain generated by the sale of your stock, the government tells you don’t have to pay tax on it. Keep the profits they say. No hitch. No hassles. Sound far-fetched? Not at all if you are among the one in three Canadians currently taking advantage of the federal government’s most generous form of tax relief — the Registered Retirement Savings Plan — commonly known as the RRSP. An RRSP is a government approved program that is designed to encourage Canadians to save for their retirement by providing powerful tax reduction options. The tax breaks come in two forms. The first is that once you set up an RRSP, the financial contributions you make are deductible from your taxable income. Taking an example from Gordon Pape’s 9 Low Risk Ways to Get (& Stay) Very Rich, this means that people in the middle tax bracket whose marginal combined federal/provincial tax rate is somewhere around 42%,(depending on which province you live in), would receive a tax refund of $2,100 on a contribution of $5,000. Therefore, the “real” cost of the investment is only $2900 but the full $5,000 is still working inside the plan. The second tax advantage resides in the sheltering of the income and capital gains that are...

What We Offer

“Why would I benefit from having a Financial Plan?” I like to think of Financial Planning in the following terms: One thing you need is money, it is what makes your goals and dreams a reality. The challenge is first to earn it and second to make it last long enough to cover your spending. You could compare Financial Planning to planning for a vacation and the same approach can be used for your trip through life. You decide on the goals and dreams you have for yourself and your family, you mentally schedule when you hope to achieve each of these and then you find the money to do them. The rewarding part of doing this process with a Professional Planner is that, rather than leaving the money to the end, we put the money part first. We write down those life long goals, we write down the mental schedule you have and we set out a realistic plan so the money will be available when you need it. Let me tell you about the services and products we offer: SERVICES Personal and Family Financial Planning Investment Analysis RRSP and Tax Planning Planning During your Retirement Years Education Savings Plans and Trusts Insurance Needs Analysis Disability and Critical Illness Insurance Analysis Estate Planning Home mortgage review PRODUCTS RRSPs, LIRAs, RRIFs, LIFs Term Deposits and GIC’s Mutual Funds Segregated Funds RESP’s Insurance: Life, Medical, Disability, Travel, Critical Illness Mortgages “Why should I use a Professional Financial Planner to manage my own finances?” The reason you work in the field you are in is because you are good at it,...