Monthly Archives: December 2016

House shopping for Millennials

Posted By |

By Barney Whistance

Special to the Financial Independence Hub

In the wake of a new generation now growing up and planning to settle down, one of the biggest concerns for them is finding a place to live. Finding a house for you and your spouse to live in is one of the most important decisions that you will have to take. Therefore, it should not be taken lightly. There are a lot of factors for you to consider when you set out to purchase or get a house on mortgage.  You have to be certain about your choice as you will be the one living with it for a major part of your life.

Your financial situation is the biggest aspect you have to consider when making a decision like that. Once you know your financial point and how much you can afford, you must decide on where you want to live.  Planning everything step by step always gets the work done more smoothly and also makes your choice easier.

Finances

Talk about your finances with your partner, so in order to set a budget, you already know how much you both have. Once you have done the initial financial scrutiny, you can decide which plan you should be applying for. Continue Reading…

How an RESP offsets the cost of post-secondary Education

Posted By |

By Jo-Anne Wong

Special to the Financial Independence Hub

Post-secondary education is a necessity to get ahead in the new economy, but for many Canadians, attending university is out of reach due to rising tuition costs.

This why it’s now more important than ever for parents to start saving for their child’s education. Thankfully the Government of Canada offers one of the best ways to save for your child’s future through a Registered Education Savings Plan (RESP).

Rising Tuition Costs

According to Statistics Canada, tuition costs have increased by 40 per cent in the last ten years, and between 2014-2015 and 2015-2016 school years it rose by almost three per cent. The news is worse for parents in Ontario where the average cost of tuition is $8,114: the highest in Canada. If your child chooses to study out-of-province or overseas, fees will be significantly higher. Knowledge First Financial’s Guide to Education Costs in Canada projected that tuition could climb to over $14,000 by 2034. These figures do not account for living expenses. For example, four years of tuition, room and board could add up to $90,000 at the University of British Columbia.

The cost of tuition has been rising steadily over the last ten years and continues to outpace inflation. Compared to last year, students paid on average 3.2% more in tuition compared with the previous year, while the Consumer Price Index was 1.3%. According to Statistics Canada, the national average for university costs in 2015/2016 was approximately $19,500 for students in residence, and $10,000 for Guide to Education Costs in Canada projects that first year tuition could climb to over $14,000 by 2034. These figures do not account for living expenses, students who lived at home or did not have to pay for residence and meals. Students in Ontario have the greatest challenge, where tuition is the highest in the country.

These high costs have resulted in a record-high number of students applying for loans, which is putting them in debt. According to the 2015 survey of 18,000+ graduating university students conducted by the Canadian University Survey Consortium, the average student owed $26,819. Costs are not limited to university degrees, with 37 per cent of Canadians with student loan debt being non-degree students, attending vocational schools or other certificate programs, says Stats Canada.

 

RESP from Ottawa

Continue Reading…

Baby sitting & RRSPs: a 9-year old’s rules for when to TFSA

Posted By |
9-year old Carlie Weinreb lectures financial bloggers on when to use TFSA or RRSP

By Carlie Weinreb

Special to the Financial Independence Hub

I lectured about RRSPs and TFSAs this November 3rd at the CPA Mastering for Money Conference for 45 minutes. I was a bit nervous because I knew that Former Prime Minister Paul Martin was also speaking. My example was very detailed with lots of Excel spreadsheets.

I then had a sleepover at my friends house the next weekend after dance class. My friend’s parents heard I lectured to over 400 Chartered Professional Accountants about RRSPs and TFSAs. They asked “OK what’s better?” I said “Well, it depends on your income and a couple of other things.” I knew they were not satisfied. I could tell they wanted like a 15 second answer.

The following week I was lecturing at the Canadian Personal Finance Conference presenting on RRSP and TFSAs again but they gave me only 20 minutes. And most recently, I presented on RRSPs versus TFSAs at Microsoft. They only gave me ten minutes.

3 quick rules

Continue Reading…

4 sensible financial literacy books as gift suggestions

Posted By |

Santa Clause putting a shiny Christmas present into a stocking. Isolated on white.Want to give the gift of financial literacy to a loved one this Christmas?

We have a few stocking stuffer ideas,  following the just-completed Financial Literacy Month in Canada. Throughout November,  there were lots of articles out there on the importance of financial literacy and even more opinions about how to improve it.

Some argue for it to be taught in schools:  aren’t our schools stretched enough for resources as it is?  Some say parents should make it a priority to teach their children about money but many parents struggle with money concepts themselves and “do as I say, not as I do” isn’t always convincing.  Many argue very credibly that the financial services industry in Canada generally works to separate people from their money rather than to educate them about how to best grow their money.

We’re not sure what the answer is but agree it’s an important subject.  If you’ve already read David Chilton’s The Wealthy Barber and are ready to move on to the next step, here are a few investment books that are sensible and concise.

*We first published this list in February 2015 and have received positive feedback!

1) The Investment Answer – Daniel Goldie and Gordon S. Murray – 2011

The Investment Answer – Daniel Goldie and Gordon S. Murray – 2011

Publisher summary:

“What if there were a way to cut through all the financial mumbo-jumbo? Wouldn’t it be great if someone could really explain to us–in plain and simple English–the basics we must know about investing in order to insure our financial freedom? At last, here’s good news. Jargon-free and written for all investors–experienced, beginner, and everyone in between–The Investment Answer distills the process into just five decisions–five straightforward choices that can lead to safe and sound ways to manage your money.”

2) The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns – John C. Bogle – 2007

The Little Book of Common Sense Investing- The Only Way to Guarantee Your Fair Share of Stock Market Returns – John C. Bogle – 2007

Publisher summary:

“Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. Common sense tells us-and history confirms-that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns. To learn how to make index investing work for you, there’s no better mentor than legendary mutual fund industry veteran John C. Bogle.”

3) The Empowered Investor: A Canadian Guide to Building a Better Investment Experience – Keith Matthews – 2013

The Empowered Investor- A Canadian Guide to Building a Better Investment Experience – Keith Matthews – 2013

Publisher summary:

“With The Empowered Investor: A Canadian Guide to Building a Better Investment Experience, author and advisor Keith Matthews answers the call for a clear, intelligent guide for Canadians looking to invest wisely. Dispensing with jargon and hype, The Empowered Investor is an easy-to-read finance and portfolio management book that offers a down-to-earth treatment of a complex subject with an accessible style that will appeal to novices and experts alike.”

 

4) Exchange Traded Funds for Canadians for Dummies – Russell Wild and Bryan Borzykowski – 2013

Exchange Traded Funds for Canadians for Dummies – Russell Wild and Bryan Borzykowski – 2013

Publisher summary:

“The fast and easy way for Canadians to understand and invest in ETFs – Exchange-traded funds (ETFs) are an increasingly popular part of the investing landscape, being less volatile than individual stocks, cheaper than most mutual funds, and subject to minimal taxation. But how do you use this financial product to diversify your investments in today’s ever-changing market?

Exchange-Traded Funds For Canadians For Dummies shows you in plain English how to weigh your options and pick the ETF that’s right for you. It tells Canadian investors everything you need to know about building a lean, mean portfolio and optimizing your profits. Plus, the book covers all of the newest ETF products, providers, and strategies, as well as Commodity ETFs, Style ETFs, Country ETFs, and Inverse ETFs. The only book on the market catering specifically to Canadian investors.”

5 more suggestions

Editor’s Note: For a list of  5 more financial book suggestions, read this article from Saturday’s Financial Post: Here’s a look back at some of the best personal finance and economics books of 2016.

graham-bodelGraham Bodel is the founder and director of a new fee-only financial planning and portfolio management firm based in Vancouver, BC., Chalten Fee-Only Advisors Ltd. This blog is republished with permission: the original ran November 29th here. 

Mental health & credit-card debt during the holidays

Posted By |

By Eva Wong

Special to the Financial Independence Hub

It’s the most wonderful time of the year and many of us celebrate by making purchases for our loved ones. Sometimes lots of purchases.

We at Borrowell paused to consider how this time of year might make Canadians in debt feel.

Earlier this year, a survey we commissioned found that 58% of Canadians have carried or are currently carrying a balance on their credit card. That doesn’t include other forms of debt, like student loans, lines of credit, car loans or mortgages. When you factor in that the average consumer owes just over $22,000 in debt in 2015, not including mortgages, we wondered why no one was addressing how Canadians juggle the expectations of holiday shopping with the realities of their debt.

Dr. Oren Amitay, a noted Toronto psychologist, told us the holiday shopping season is a time of year that can cause emotional and psychological distress for people who are in the red.

Financial pressure takes its toll

“A lot of people try to ignore their debt by doing things like not opening their bills,” explains Dr. Amitay. “But you can’t run from it at holiday time. Continue Reading…