Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

The evolution of Robo advice

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By Josh Miszk, CFA, CFP

Special to the Financial Independence Hub

Alongside the rapid growth of the online wealth management space is the speed with which firms are evolving to investors’ demands.

Some of the first online investment managers in Canada have evolved their initial investing models to include services like financial planning, advisory firm partnerships, and now, a platform offering portfolios from multiple management firms.

One of the challenges in evaluating cost, performance, and reputation across multiple “robo-advice” platforms is looking at their similarities and differences to get a real sense of how each portfolio compares. In addition, many firms are relatively new and, while investors like the experience of working with an online advisor, they’re restricted to portfolios designed solely by the same firm they feel provides that great experience.

A simple way of choosing the right portfolio

In response to the demand for greater choice, we’ve created a platform that offers clients multiple portfolio options created by two of the largest and most reputable institutional money managers in the industry; BlackRock and Vanguard. In working with these two firms, we are not only leveraging the quality of their investment products, but also their expertise in providing great portfolio solutions.

This addition will allow potential clients to compare and select portfolios based on our recommendations for them, as well as the elements of a portfolio they value most, like performance, asset allocation, and cost.

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Be the first line of defense: top tips to prevent financial fraud

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By Brent Reynolds, Capital One

Special to the Financial Independence Hub

As social media becomes ever prevalent in our lives, we have become increasingly accustomed to sharing personal details with friends, family and coworkers. While there’s certainly no harm in sharing vacation details or family photos with your network, this culture of sharing can lead to troubling consequences when it extends to personal financial information.

In the spirit of Fraud Prevention Month – an educational campaign each March that encourages Canadians to recognize and reject fraud – I’d like to offer a few tips to help empower Canadians to be their own first line of defense.

Protect your personal details

Our recent fraud prevention study found 47% of Canadians have shared their credit card number over the phone, via email or through the mail. One in five Canadians (22%) also admit to sharing their banking information via email, where the risk of phishing is high.

When it comes to sharing your personal information, always be cautious. Whether it’s over the phone, in person, through the mail or on the Internet, always know who you are sharing your personal or financial information with and why. If a call or email seems questionable, end the communication and visit the company’s secure website to contact them directly.

Select a strong PIN and protect it

While it may seem harmless to share your PIN with family members (in fact, 40% of Canadians admit to doing it), a PIN should never be shared with anyone. Select a secure and difficult-to-guess PIN that isn’t based on personal information like a birthday, address, SIN number or telephone number. Make sure you choose a unique PIN for each card. And, when accessing an ATM or paying with your card, be aware of who is around you and cover the keypad when you enter your PIN. Finally, if you’re going to store your PIN somewhere, make sure you choose a secure location and never write it on or store it near your card.

Take advantage of any features your card issuer offers

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Retired Money: How tax filing changes in Semi-Retirement

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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

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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.

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Duking it out: The RRSP vs TFSA

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By Brandon Hill, CFP

Special to the Financial Independence Hub

I’ll never forget when I was growing up hearing my parents talking about “buying RSPs” (I got excited about saving money. I know… I’m a weirdo).

In my mind, they were this magical investment that people bought so they could multiply their money to one day retire. This term, “buying RSPs” is still used today; however, I think it adds to the confusion of what a RRSP really is.

I’m here to explain in plain English the difference between the RRSP (Registered Retirement Savings Plan) and the TFSA (Tax Free Savings Account).

What are they?

The best way to think of an RRSP or a TFSA is simply as an account that has special tax benefits. Just like your chequing account, you are able to deposit and withdraw money into a RRSP or TFSA; however, the special tax benefits make it slightly more complicated.

RRSP: When you deposit money into an RRSP, you’re allowed to deduct this amount on your tax return, saving you tax and increasing your refund. However, when you withdraw money from your RRSP, you have to pay tax on this amount.

TFSA: When you deposit money into a TFSA you do not get a tax deduction, although when you withdraw from your TFSA, you do not have to pay any tax.

All growth within an RRSP and TFSA is tax free.  

You can invest in many different ways inside the RRSP or TFSA, including: stocks, bonds, GIC’s, Mutual Funds, ETFs, and other more advanced options.

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