Monthly Archives: August 2017

India’s ambitious renewable energy plans

By Caroline Grimont

(Sponsor Content)

Greater access to electricity — one of the pillars of Prime Minister Narendra Modi’s reform program –is powering increased economic activity, enhanced efficiency and improved productivity in India.

Modi has pledged to achieve universal electrification in India by the end of 2022; and to make increasingly greater use of solar power. In fact, India hopes to derive at least 40% of its energy needs from renewable sources by 2030.[i]

Although India is the 6th largest country in the world in terms of power consumption,[ii] almost 300 million of its people, particularly in rural areas, did not have access to 24×7 power supply prior to Modi assuming office. As of June 30, 2017, 14,834 census villages out of 18, 452 have been electrified.[iii]

Even as it expands the production of coal-generated electricity, India has started ramping up its solar capacity and hopes to generate 100 Giga Watts of solar energy by 2022, which will make it one of the largest users of solar power in the world. This will help to bring sustainable, clean, climate-friendly electricity to millions of India’s people.

“The world must turn to (the) sun to power our future,” Modi is reported to tell the 2015 COP21 climate conference in Paris. “As the developing world lifts billions of people towards prosperity, our hope for a sustainable planet rests on a bold, global initiative.”

And to support India’s solar power ambitions, the World Bank has approved a $625 million loan that will support the Government of India’s Grid Connected Rooftop Solar program by financing the installation of solar panels on rooftops across India. The project draws funds together from the Bank, as well as from the Clean Technology Fund of the Climate Investment Funds (CIF), and will mobilize additional funding from public and private investors.[iv] Continue Reading…

Retirement projections have the answers

Much has been written about the level of retirement readiness and capital needs required to fund that long-term family objective. I submit that the retirement projections have the answers.

I am, however, puzzled by this key observation: “None of the potential clients I’ve met for the first time in the past five years had a recent retirement projection.”

There is much talk and little walk of the talk around this subject. Even though retirement is a top priority for investors and their families.

You are wise to start crafting your personal retirement projection. The sooner the better, then revisiting it every three to five years.

This is something I encourage everyone to mull over. “How do you assess whether your retirement prospects are on target if you have no personal retirement target in mind?”

I summarise three more observations from meetings with potential retirees:

  • Most have not come to grips with the possibility of retirement lasting 25 to 30 years, maybe longer.
  • Most have not thought about the implications of their portfolios receiving little or no saving capacity after retirement.
  • Most are not prepared for escalating costs of health care, say a retirement home facility, even if for only one spouse.

Planning three decades of dependable retirement income is the new money management challenge. Especially, during times of continued low returns.

Very few investors now retired, or nearly retired, have a “retirement projection.” I liken it to building a home without the blueprint.

I don’t know of anyone who builds homes this way. However, there is no shortage of investors who continually try to assemble and guide their retirement nest egg without a personal plan of action. They just buy stuff for the investment shelves.

Retirement surveys keep popping up frequently with similar messages. Typically about how investors are not fully prepared for the long retirement journey.

Some may have accumulated too much debt or too few assets. Others may have incurred too much risk. Perhaps, many may not be saving enough.

Reasons aside, it is rare to meet someone who has a grasp of the capital ballpark required to fund retirement. The main ingredient is the “retirement projection,” also known as the “capital needs” analysis.

The basic step of preparing a retirement projection is a very informative process. I favour constructing one for every client well before retirement and updating it periodically.

The retirement projection is the starting point for everyone considering retirement or actually now retired. It is a ballpark indication of what the family capital needs look like for the long run.

My projection covers several key retirement aspects, such as:

  • Providing long-term retirement income goals, possible health costs and inflation factors.
  • Reviewing the family’s total expenses and cash requirements for projects and purchases.
  • Inclusion of income sources, like employment, pension benefits, real estate, CPP and OAS.
  • Assumptions for possible home downsizing, longevity, special needs and pension funding.

The analysis brings to light these important facts:

  • Capital estimate of funds required to achieve your retirement goals and desires.
  • Periodic saving capacity required by your investment plan.
  • Annual return estimates to reach and maintain your desired retirement lifestyle.
  • Whether your retirement goals are achievable or in need of periodic adjustments.

A retirement projection allows the design of a customised investing road map tailored to each client. It also ensures that what the client seeks is reasonable and suitable vis-à-vis family goals.

Most investors do not feel comfortable navigating their retirement math. A solution is to engage a professional who is well versed with retirement projections.

You are wise to start crafting your personal retirement projection. The sooner the better, then revisiting it every three to five years.

Clearly, up-to-date retirement projections have the answers. It’s time for action if yours is missing in action.

 Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA  started in the investment and financial advisory profession in 1972. He graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971,  then attended the University of British Columbia, graduating with the MBA in 1972. This blog is republished here with permission from Adrian’s new website, where it originally appeared on May 23rd

4 emerging family-friendly Condo trends

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

It used to be that high-rise living was the domain of young professionals and couples; those who were happy to sacrifice outdoor and living space if it meant dwelling close to all conveniences of the downtown core.  However, as real estate prices in Canada become less affordable for the average family, the idea of “moving up” in the market has taken on a whole new meaning.

Priced out of traditional low-rise homes in the biggest urban markets —  prices hit $707,269 for Toronto townhouses in July while all home types rose above the million-mark in Vancouver– those with kids in tow are increasingly embracing the condo lifestyle. That means the industry —  from developers to municipal planners — is taking notice.

Here are four emerging trends we’ve noticed as condos become more popular with growing families.

Demand for larger units

Not so long ago, micro-units –- apartments under 500 square feet — were considered the future of condo dwelling. You could fit loads of them onto a floor-plan plate, and young homeowners and renters enjoyed their sleek and modern aesthetic. Now, though, the pressure is on developers to increase their unit sizes and to include more multiple-bedroom units in their builds.

Continue Reading…

Unfair or not, get ready for these 3 big corporate tax changes

“We see these approaches to managing people’s affairs through a private corporation as creating an unfair playing field … We’re trying to tighten these loopholes to make sure that it’s fair.”

Doesn’t sound like taxes for small business owners are going down, does it?  The above is from federal finance minister Bill Morneau’s July 18 announcement outlining some of the measures the government is proposing to help level what they perceive to be an unfair playing field.

Since the announcement we’ve been thinking about the potential implications of these changes and digesting comments from a variety of different tax experts.  We agree with one expert who opined that “fairness is subject to personal interpretation.”

Unfortunately adhering to these proposed changes won’t be subject to personal interpretation so the bottom line is that we encourage all small business owners, especially those using private corporations in conjunction with saving for retirement or for the benefit of their families as a whole, to seek expert tax advice ahead of these changes coming into effect.

How did this come about?

Taking a step back, the reason that small businesses were given preferential tax treatment in the first place was to encourage them to reinvest in growth opportunities, employ more people, contribute to the Canadian economy in a more meaningful way and that would be good for Canada – hard to argue with that.

Of course all rules, especially tax rules, end up with unintended consequences.   The current government feels many small business owners and their families have been taking advantage of opportunities (loopholes) in the legislation that allow for further savings when it comes to their personal taxes. Furthermore, they seem to be particularly concerned about the increased “corporatization” of certain professions that has taken place over the last 10 to 15 years in order to reduce tax bills. As not everyone is a small business owner, the tax advantages are deemed to be unfair to those who aren’t.

What are the specific areas that are deemed to be unfair?

1.) Income sprinkling

Income sprinkling is a strategy where a business owner looks to save tax by distributing income, dividends and capital gains to other members of his or her family in order to take advantage of multiple sets of graduated tax rates (i.e. pay other family members who are in a lower tax bracket) or exemptions, in order to lower the overall family tax bill.   Continue Reading…

Retired Money: A third of OAS recipients can also expect Guaranteed Income Supplement

My latest MoneySense Retired Money column was published today and looks at the Guaranteed Income Supplement (GIS) to Old Age Security. You can find the full column by clicking on the highlighted headline adjacent: What to expect when applying for GIS.

Service Canada says as of June 2017, 1.94 million seniors were receiving the GIS, roughly a third of the country’s 5.93 million OAS pensioners.

You can get an overview of the GIS program at the Service Canada web site. It says the first requirement to receive GIS is that you also qualify for and are receiving OAS. So that means you have to be age 65: unlike CPP (which can pay reduced benefits as early as age 60), there’s no such thing as early OAS or early GIS, except in certain special circumstances. If you were automatically enrolled in OAS, you should apply for GIS three months before your 65th birthday.

Maximum monthly GIS payments for a single is $871.86: tax-free!

How much can you receive if you qualify? Service Canada’s media relations department says that as of the July to September 2017 quarter, maximum GIS amounts for those receiving the full OAS pension of $583.74 a month are $871.86 a month for a single, widowed or divorced OAS pensioner (so adding the two, $1,455.60 a month); $524.85 if your spouse/partner receives full OAS, $871.86 if your spouse does not receive an OAS pension or the Allowance, and $524.85 if the spouse receives the Allowance.

Thresholds to qualify are very low

Of course, the fact that two thirds of OAS recipients do NOT qualify for GIS suggests that most people are unlikely to qualify: after all, GIS has been referred to in some circles as “Senior’s Welfare.”

In the case of a couple with a combined income of no more than $23,376 and where the spouse gets full OAS, the maximum monthly GIS for the other spouse is $524.85. If the partner is not receiving OAS and the combined income is no more than $42,384, the individual will get some GIS; they will get the full $871.86 monthly GIS benefit if they have no other income. In the case of a couple making no more than $42,384 and where the spouse is receiving the Allowance, the maximum monthly GIS for the other partner is $524.85. For updated numbers, click here.

Still, if you’re close to these thresholds there’s little to lose by seeing if you may qualify. It used to be that Service Canada didn’t always go out of its way to notify low-income seniors that they may qualify for GIS. This has since been rectified: free money that’s also tax free is certainly something worth investigating!