Monthly Archives: February 2017

RRSP Gross-up Strategy: Contribute 40-70% more to your RRSP

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“Never put dry pasta into your RRSP.”

By Ed Rempel

Special to the Financial Independence Hub 

Wouldn’t it be great if you could save a lot more for your future without affecting your day-to-day cash flow?

One of the main things people learn when they first have a retirement plan done is that you need to invest more than you thought to have the future that you want. But with all the day-to-day expenses, it can be difficult to find the money to contribute as much as you would like to your RRSP.

The RRSP gross-up strategy is a simple strategy that can make a huge difference for you. It can enable you to easily contribute 40 to 70% more to your RRSP.

The strategy works if you already expect a tax refund. If you contribute monthly to your RRSP or have various tax deductions or credits, you probably expect a tax refund.

It is smart to gross-up every RRSP contribution you make.

You have three options with your tax refund:

  1. Spend it.
  2. Invest it.
  3. RRSP gross-up strategy.

Here is how the RRSP gross-up strategy works. Continue Reading…

The power of positive thinking

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Positive thinking is a state of mind that allows you to focus on the bright side of life and believe that you can overcome any obstacle and difficulty, including dis-ease. While not accepted by everyone, the concept is growing in popularity. Optimism is the key to effective stress management and we already know that stress negatively affects our health.  The health benefits of positive thinking continue to be researched but may include an increased life span, lower rates of depression, greater resistance to the common cold and a reduced risk of cardiovascular disease related deaths.

The way you think, feel and act has an effect on your body and there is growing evidence that you can change your health just by changing your mindset. Emotions can impact the course of an illness and the mind can affect the outcome of disease. For example, a stomach ulcer may develop after a stressful event, such as the death of a loved one or loss of a job.

Body speaks to Mind

At the root of every physical symptom is an emotional connection; the body speaks the mind. Poor emotional health can weaken your immune system. Continue Reading…

Impact of the Trump administration’s Potential Tax Reform

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Summary of potential tax cut across Indexes

By Jeremy Schwartz, Director of Research, WisdomTree Investments and

Josh Russell, Quantitative Equity Strategist, WisdomTree Investments
Special to the Financial Independence Hub

 

Corporate tax cuts were a focal point of Donald Trump’s campaign — and Trump says lowering corporate taxes will be a priority in his first 100 days as president.

Based on the initial market response to Trump’s victory, lowering tax rates looks to us like the most important factor driving the market.

Equity markets, of course, like it when taxes are cut. It naturally means more after-tax earnings that can be reinvested or distributed to shareholders — and, importantly, an improvement in valuation ratios that many think look extended under present circumstances.

We published an initial sensitivity analysis to look at how various assumptions on tax rates might impact the earnings growth and ultimate market valuations across a market cap-weighted index set of the S&P 500, S&P 400 and S&P 600 — and across the sectors in those indexes. We have updated our original analysis to also include domestic WisdomTree Indexes; we also have updated our initial model for estimating the potential tax benefit that shows new results for the cap-weighted index family.1

Lower Tax Rates = Big Earnings Growth and Market Moves in Small Caps 

To summarize the results, a simple model shows the following: the more earnings (and taxes paid) that come from the U.S., the greater the earnings growth would be from a tax cut, because by and large, the companies with revenue across the world already have lower effective tax rates. Continue Reading…