Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Retired Money: How tax filing changes in Semi-Retirement

Here is my latest MoneySense Retired Money column: Tax filing advice for retirees.

It relates my personal experience of filing this year’s tax returns for the 2016 calendar year.

There is quite a difference between the key tax documents when you’re a full-time employee and the ones you receive when you’re fully retired. And in semi-retirement, it’s an interesting combination of both. Instead of T-4 slips from full-time employers, and RRSP receipts that help you minimize the high tax rates of employment, the semi-retiree now may be receiving T4A slips that tell you (and the Government) how much pension income you received in the prior calendar year and how much (if any) tax was withheld at source.

And the mirror image of the RRSP receipt in retirement or semi-retirement is the T4RSP slip, which tells you how much money you withdrew from your RRSP and how much (if any) tax was withheld at source.

The article also links to an earlier Retired Money column on “Topping up to Bracket,” which describes how you really want if at all possible to tap into the roughly $20,000 “Tax-free” zone made up of the Basic Personal Amount ($11,474 in 2016, which rises to $11,635 in 2017), another $2,000 for the Pension Credit and for those who are 65, the $7,125 Age Credit.

Age Credit escapes the axe … for now

As I noted in my Budget blog last night and this morning, despite fears that the Age Credit might be the victim of the Liberal zeal to jettison costly tax credits, evidently the fear of offending the 5.2 million seniors affected stayed the hand of Finance Minister Bill Morneau. While it is income-tested, for modest-income seniors I view the Age Credit as essentially making Old Age Security (OAS) benefits tax-free, assuming they are commenced also at the magical age 65. Continue Reading…

Budget 2017: No capital gains tax hike for investors, Age Credit for seniors remains intact

Seniors and affluent investors who were bracing for a hike in capital gains taxes or other attacks on investment income can breathe easy, at least for a few months as Ottawa monitors developments south of the border.  And homeowners will be relieved to know that there was no move to end the capital gains exemption for principal residences.

Bye bye CSBs, hello electronic T-4s

Budget 2017 hikes a few sin taxes, imposes a sales tax on Uber and did eliminate some tax credits. Oh, and they killed Canada Savings Bonds!  For full report, read this Globe & Mail summary. Or these 10 things you need to know. And Rob Carrick reviews ten ways the budget may affect our personal finances. (You may not be able to access the link if you’re not a G&M subscriber.) Among the points: the first-time donor’s super credit expires as planned in 2017, and Ottawa will review the use of private corporations by high earners to minimize taxes.Oh, and a 3-year pilot program that starts in 2018-2019 will make it easier for adults to qualify for Canada Student Loans and grants.

Continue Reading…

What pessimists may say about top Canadian bank stocks

The big Canadian banks in the heart of downtown Toronto

We’ve recommended buying the five top Canadian bank stocks since the 1970s, but not everyone has agreed with that advice.

Canadian banks have gone through periodic and sometimes lengthy slumps, like any other stock group. They occasionally make costly management errors. On rare occasions, they have suffered from adverse regulatory decisions.

This is what pessimistic investors might say about top Canadian bank investments. But because these stocks have grown, paid high dividends and have generally been available at highly attractive prices, they’ve provided well-above average investment returns for decades.

Investor worry and the banks

Some investors fear the banks will lose out to “fintech” (upstart financial technologies, comparable perhaps to Uber or AirBnB). Or they wonder if the banks will get caught unawares when interest rates make their long-awaited upward move.

Our view is that the banks had a long time to prepare for the inevitable rise in interest rates, and the inevitable coming of fintech competition. In fact, they will probably wind up prospering in fintech, if not dominating it, as they did in stock brokerage, insurance and other financial areas that they have entered in the past few decades.

On the whole, investors have underestimated top Canadian bank investments for as long as I’ve been in the investment business. As a result, these stocks have often traded at attractive share prices. Because they were growing, and cheaper in many respects than other stocks, they gave conservative Canadian investors a near-ideal combination of pluses: above-average dividend yields and records; low-to-moderate ratios of per share price-to-earnings; and above-average long-term capital gains.

Look for top Canadian bank stocks with consistent dividends

Continue Reading…

The Missing Middle: are Townhouses the answer?

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Shelling out a million for a home is no longer just an issue for downtown dwellers: it now costs that much on average to purchase a detached house in the ‘burbs, according to several new reports.

The February numbers from the Toronto Real Estate Board reveal regional home prices have surpassed two pricey milestones; average detached home prices in the city proper have hit the $1,500,000 mark, and $1,106,201 in the surrounding GTA. That’s tough news for those planning to trade a lengthy commute for affordable housing, as the competitive factors from the hot Toronto real estate market now stretch as far as the Niagara Region.

Too few houses to go around

The latest narrative around GTA housing is the scant supply of listings, with just 793 detached houses changing hands last month. “The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double-digit home price increases we are now experiencing on a sustained basis, both in the low-rise and high-rise market segments,” said Jason Mercer, TREB’s director of market analysis. “Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue.”

And it’s not just the resale market that’s too hot to handle. January numbers from the Building Industry and Land Development Association (BILD) report newly-built low-rise housing –- whether it be detached, semi-detached, or freehold row houses –- also exceed the average million mark, as fresh stock is immediately snatched up. Continue Reading…

Pack your bags, not your stress this March Break

By Brigitte Gougeon

Special to the Financial Independence Hub 

Taking a vacation is supposed to be a time to relax and enjoy a week away from the stresses of work and daily commitments. But with two in five Canadians planning to travel during March Break, there will be many people worrying about some aspect of their trip.

A recent TD Insurance survey found that for nearly half (49%) of Canadians planning to travel, the potential of falling ill while away was one of the top three causes of stress. Other top travel stress factors were losing a wallet or travel documents (58%) and other personal items such as a camera or mobile phone (41%).

Even though Canadian travellers are worried about the prospect of needing medical care while they’re away, only four in ten (39%) report regularly buying travel insurance. Canadians who don’t regularly buy travel insurance list a variety of reasons for not doing so, including it not being top of mind, thinking they don’t need it or thinking it’s not worth the cost.

Those planning to travel over March Break should take care to make travel insurance part of their broader travel-planning checklist. The cost of not buying travel insurance can have a devastating financial impact. Covering unexpected medical costs out of your own pocket can be financially ruining as, on average, government provincial health insurance will only cover a small portion of medical expenses. And even then, that coverage is capped.

Travel insurance has to be bought BEFORE your trip

Even when taking a short trip across the border –- which many Canadians take for granted –- you never know if something unexpected will crop up, like a fall or accident that requires medical attention. To safeguard you and your family, it’s important you ensure you have the right coverage that fits your unique needs and situation. And remember, you have to get insurance before your trip starts; it won’t protect you if you get the insurance after an accident happens or your trip is cancelled.

Additional travel tips for cutting down on stressors: Continue Reading…