Create a lasting legacy with a smooth transfer of ownership. A family cottage is a place of cherished memories, where children, and maybe even grandchildren, have grown, swum and played under the stars. As owners grow older, they may begin to think about handing it down to their loved ones. Early planning can help avoid conflict, reduce taxes and ensure the cottage remains in the family for the next generation – and possibly for generations to come. Begin the dialogue There’s a special kind of lifestyle that goes with owning a cottage. S’mores, swimming and lounging on the deck go hand in hand with bugs, mice and never-ending repairs. There are costs for maintenance and taxes, and family sch

How to Transfer Money to the Next Generation in a Tax Advantaged Manner Combining the growth opportunities of an investment fund with the potential security of an insurance contract. A segregated fund (seg fund) is an investment, a type of insurance product, and estate planning tool all in one. Here’s a quick rundown of the basics. A seg fund is a type of investment that lets you participate in the markets. Like mutual funds, seg funds pool investors’ money together. Pooling creates economies of scale to give you investment opportunities that might not be available to you as an individual investor. Seg fund products also have an insurance component and are formally referred to as individua

What you need to know about RRSP withdrawals So far we’ve covered opening an RRSP and the ins-and-outs of RRSP contributions. Now, let’s turn our attention to RRSP withdrawals. Did you know…. 1. If you make a withdrawal from an RRSP, you don’t receive the full amount. This is because a withholding tax is deducted from your withdrawal amount. The withholding tax rate that is applied depends on the amount requested to be withdrawn and which province you reside in. 2. Withdrawals are taxed as income. A T4RSP will be issued in the amount of the withdrawal requested and must be included on your tax return for that tax year. 3. If the withdrawal is from a spousal plan, the contributor may have to

An insurance-based investment that for some, is a perfect fit. The financial world uses a language that can be confusing for people who don’t have a deep understanding of investing. It can be more difficult when it comes to a particular product they may have heard of, but don’t have a firm grasp on its intent or how it works. Segregated funds are a unique kind of investment product and getting acquainted with a few key terms can help boost your knowledge. Segregated fund contract: A pool of investments held by an insurance company and managed separately from its other investments. A segregated fund contract combines the growth potential offered by a broad range of investment funds with the u

Testing your knowledge about RRSP contributions How much do you know about Registered Retirement Savings Plans (RRSPs)? Previously, we covered what you need to know before opening an RRSP. Read on to test your knowledge about RRSP contributions. 1. The contribution deadline for the 2018 tax year is March 1, 2019 23:59 (local time). Unlike RESPs and TFSAs, where the contributions have to be made by December 31. 2. Contributions made in the first 60 days of the year can be applied to either tax year. In other words, contributions made during the first 60 days of 2019 (up to and including March 1, 2019) can be applied against income earned in either the 2018 or 2019 taxation year. 3. The contri

One of the best ways to maximize your savings is to take advantage of tax-sheltered plans. If you held an investment outside of a tax-deferred plan, you are required to report the following income on your Canadian income tax return: Distributions in the form of interest, dividends or capital gains paid to you by any fund, including those reinvested Gains (or losses) realized when selling or redeeming units or shares of your fund (except conversions of different series of the same Class or reclassifications of different series of the same Fund or Portfolio) On the other hand, distributions on funds held in a tax-sheltered plan – such as a Registered Retirement Savings Plan (RRSP), a Registere

What you need to know before opening an RRSP You probably know that a Registered Retirement Saving Plan (RRSP) helps you save for retirement. But how much do you know about RRSPs? Read on to test your knowledge. 1. An RRSP is not an investment. It’s an investment account that can hold a variety of investments including GICs, mutual funds, stocks, bonds and ETFs. 2. You need to have filed an income tax return to open an RRSP. The requirements for opening an RRSP include having filed an income tax return the previous year and declared earned income. This creates the contribution room for your RRSP. The amount of your contribution room is provided on your Notice of Assessment from the Canada Re

Portfolio managers (also known as investment managers) use various styles and approaches when managing money. Here we examine two well-known methods – fundamental and quantitative. Fundamental investing A portfolio manager who bases their investment decisions on fundamental analysis will attempt to determine a security’s intrinsic value by examining factors that could affect its price. Many focus on aspects that are qualitative and subjective in nature in order to get an “edge”. There are two approaches to performing fundamental analysis: Top-down. The analysis begins by looking at the “big picture” and examining the broader market, sector, or industry, before narrowing down to a specific se

Education Savings: What happens to the money in an RESP if the child doesn’t go to college or university? Many Canadians fear they’ll lose all the money in their RESP if the child doesn’t to university or college. That is not the case if you have an Individual or Family RESP. Note: Those offered by “scholarship plans” work differently and each plan will have its own rules and restrictions. If the beneficiary delays post-secondary education The money invested can simply continue to grow tax-sheltered as the RESP can remain open for 35 years. If the beneficiary decides not to pursue post-secondary education As the subscriber of an Individual or Family RESP, you have several options, including:

Understanding alternative investments In an ever-evolving and increasingly complex market environment, investors are actively seeking out opportunities to diversify their sources of return away from traditional equity and fixed income investments. Alternative investments can be fundamental building blocks for a well-constructed portfolio and key components in helping investors achieve their goals. However, because of the wide spectrum of approaches, differing objectives and varying levels of risk within each category of liquid alternative funds, investors should carefully research their investment options, and understand the unique objective and strategy of each fund to ensure they achieve t

December can be a time of reflection, when we look back at the previous year and recognize achievements and hopefully don’t dwell too much on what could have been done better. And while we don’t want to add to your never-ending to-do list, here are the top 5 items that could help make sure your financial matters are set up for 2020. 1. Beneficiaries Have you designated beneficiaries for all your accounts? The beneficiary is the person or entity that will receive the proceeds from your account when you die. By naming a beneficiary, you eliminate any doubt as to whom you want your money to go. If you haven’t specified one, the default is your estate – and there could be significant delays and

Providing a better understanding of your investments Distributions are payments from a mutual fund to the investor and can derive from multiple sources, such as income and capital gains realized from securities held within the underlying funds, as well as return of capital. Components of a distribution may consist of: Dividends – Income earned on Canadian and foreign equities. Interest – Income derived primarily from fixed-income products such as bonds, GICs and cash equivalents. Realized Capital Gains – The gain received when an investment is sold at a higher price than purchased at. Return of Capital – Occurs when a mutual fund “returns” a portion of the money you invested in the fund, typ

Taking the worry out of what-if. The sudden emergence of the COVID-19 pandemic has affected people’s lives in unexpected, if not unimaginable, ways. When Canadians suddenly needed to assess their ability to protect themselves and their loved ones against a serious health threat, many realized how unprepared they were for the effect it would have on their finances, lifestyle, relationships and employment, not to mention their general health and well-being. At times like this, people think, “What happens if I’m not prepared?” Global emergencies aside, unexpected circumstances, such as an illness or injury, can impact your income and the lifestyle you’re accustomed to. If that illness or injury

During the holiday season, it can be very tempting to overspend – especially if you’re looking for last-minute gifts. Here are five tips to help you spend reasonably so you don’t have regrets – or large amounts of long-term debt – in the new year: 1. Create a spending strategy You might think it goes against the spirit of the season, but planning a budget that carefully considers who receives gifts and how much you’ll spend on them is a smart way to manage your expenses. Using debit or cash when possible also helps avoid the shock of huge credit card bills. 2. Secret Santa, One and Done, etc. Whatever you call it, many people who are watching their spending or simply don’t like mass consumer

In this series of articles, we discuss how investing in real estate over equities is not as black and white as many people would believe. Today, we’re examining the potential risks of using your home to fund your retirement. Given how house prices have risen and how much of the monthly budget is taken up by a mortgage payment, it’s understandable how Canadians have come to this decision. But what else do you need to take into account? #1: Household debt Funding your retirement with your home assumes that your house is paid off before. However, a recent survey found that 20% of Canadian retirees are still making mortgage payments.3 How would you handle these payments when you don’t have the s

How will you pay for a post-secondary education? A report earlier this year estimated that one year of post-secondary education in Canada costs approximately $19,500 – including tuition, accommodation, transportation, food and other expenses. Assuming a 3% rate of inflation, that equates to $33,1972 in 2036 (18 years from now). How will you pay? Here are your options – how much you pay is up to you Option # 1: Pay Now Invest a lump sum of $48,655 today Growing at a hypothetical average annual rate of return of 6% = $138,877 in 18 years. Option #2: Pay monthly Invest $325/month in a Registered Education Savings Plan (RESP) Contributions made to an RESP grow tax free until the funds are withdr

Today there’s no shortage of information available about the markets and plenty of people ready to share their opinions with you. So how do you begin to make sense of it all, figure out what to do with your money and put your personal financial plan into action? Just as you would seek professional help with your health, consulting a professional can make all the difference. Investors who work with a financial advisor have a net worth 4.2 times higher than those who go it alone. Source: IFIC, The Value of Advice Report, 2012. A financial advisor can play an important role in your investment future. Through every life-stage and during specific events, he or she can help you define your goals a

The claims for medical expenses incurred for travel and modifying your home can be quite lucrative, but you’ll need to know what documentation to keep, because these are two areas that can attract the tax auditor. Here’s what you need to know: Travel Expenses for Medical Reasons Taxpayers who must travel 40 km or more to receive medical services not available in their community can claim the cost of such travel as the patient, and for one attendant. If the taxpayer is required to travel more than 80 km from their place of residence, then travel expenses may also include hotel and meal costs. Actual receipts can be used for costs of travel, including gas, hotel and meals. Alternatively, vehic

Exchange-traded funds (ETFs) were first introduced to Canadian investors nearly 30 years ago, with traditional ETFs being passively managed, simply mirroring a particular index. The ETF market has matured since then, offering a wide variety of options from active to passive and covering all asset classes from equity to fixed income, alternatives and portfolio solutions. Yet, despite the growth of ETFs, they continue to be a misunderstood investment. Here we dispel the top four myths we’ve encountered: Myth #1 – All ETFs passively track an index Fact: As of June 2018, 222 of the 612 ETFs offered on the Canadian market were actively managed – only 24 fewer funds than the passive, market cap-we

It’s better to give than receive. But after all that holiday giving, now the credit card bills are starting to come in. If looking at your credit card statement is something you now dread, consider these tips for managing your debt. 1. If you don’t have a budget, start one! There are plenty of budgeting apps that will help you manage your monthly expenses. By seeing how much you’re spending each month, you may find areas where you can cut out unnecessary expenses. The key is to put any excess money you manage to cut from your expenses into paying down other debt. 2. Pay off higher-interest debt first. Like many people, you probably have some credit card debt, a line of credit and a mortgage.