RRSP Tips

An RRSP should be individualized and must fit well within your own personal financial goals. With the upcoming March 1st contribution deadline, here are 10 RRSP tips to remember.

1. Contribute early: Make your contribution as early in the year as possible. Tax-deferred compounding make those early dollars grow dramatically. Contributing early in life and early in the calendar year, both make a positive difference.

2. Contribute the maximum: Take advantage of compounding and get the maximum tax break by contributing your limit. (In respect of 2018, you can contribute 18% of your 2017 earned income, to a maximum of $26,230-less your pension adjustment or past service pension adjustment for 2017). While you can "carry forward" any unused contribution room to subsequent years (until your 71), you can never replace the lost growth opportunity. 

3. Invest Monthly: You might find it easier  to reach your annual RRSP limit by making monthly contributions. Consider having your RRSP contributions automatically deducted from your bank account each month, or consider a Group RRSP and make your RRSP contribution by payroll deduction through your employer. It's also a good idea to increase your monthly contribution if your income rises, and be sure to keep up with inflation. 

4. Contribute to a spousal RRSP: A spousal RRSP allows the spouse with the higher income to contribute to an RRSP owned by the lower-income spouse. (This is an excellent way to income split in retirement and reduce your combined tax rate). The spouse with the higher income takes the immediate tax deduction, but the money in the RRSP should be taxed in the other spouse's hands, usually at a lower rate when it is withdrawn later into retirement.

5. Diversify: By diversifying your portfolio and holding various types of investments, you protect yourself against the day-to-day fluctuations in any one category. To achieve long-term growth you should diversify. Some investors limit themselves to fixed-income investments. The biggest danger with conservative type investments is inflation which can erode your purchasing power. If this sounds like you , consider a small amount of diversifying into growth oriented securities-such as equities and equity mutual funds-to earn returns that can protect you against inflation and provide long-term growth potential. 

6. Resist the dip: There is nothing to stop you from accessing the money in your RRSP, however, you should consider the consequences before dipping into your RRSPs.  First, withdrawals attract tax at your marginal tax rate. Tax withholding at the time off the RRSP withdrawal may be as low as 10%, or as high as 30%-be sure to determine how much more tax you'll have to pay when your file your return. 

Secondly, you cannot restore lost contribution room. The amount you can contribute to an RRSP in your life is limited and a withdrawal erodes some of this potential. 

There are a few circumstances that allow you to access the money in your RRSP without consequence. The Home Guyers Pan and Life Long Learning Plan allow tax-free withdrawals with the ability to re-contribute. However, even in these [lans there is no ability to replace the tax-deferred growth that was lost when you make the withdrawl.

7.  Consolidate your investments: If you don't want to spend a great deal of time managing several plans, you may want to consider consolidating your investments into one portfolio. Yes, you should have a diversified portfolio of investments working for you, but you can usually combine them under one RRSP umbrella. This strategy also means you will get one consolidated statement, which may make it easier to track your plan.

8. Designate a beneficiary: Consider who will be the designated beneficiary for your investments.  Without a designated beneficiary, the account will go through your estate and be subject to probate and other fees. You should talk to us about the tax and other consequences of designating a beneficiary to your RRSP. Who you appoint as beneficiary is also very important, as there are different rues depending on if it is a spouse or other party. ** This strategy does not  apply in Quebec**

9. Get help from an expert: Our advisors at Continuum II inc. are here to help you make the right investment decisions. Together, we should review your plan at least once a year to make sure that your plan is on track with your long-term goals.

10. Have a plan: Investing of any kind, whether in an RRSP or non-registered, is part of a financial plan-but it is important to note that investing itself is not a plan. Contact your Continuum II Inc. advisor today to work your investment strategy into part of a larger financial plan.

6 Easy Ways To Save Money

6 Easy Ways To Save Money

Who wouldn't like to have more money?

Start the new year out right, and learn how to save more and stress less. Here are 6 easy ways to start saving money today.




1. Beware of the "sale" Sign - 90% off something you'll never use isn't saving money.

• When an item is “on sale,” we act more quickly and with even less thought than if the product costs the same but is marked at a regular price 
• Focus on what things cost, not how big of a discount you're getting

2. Money is money - People are more likely to spend their salary on “responsible” things like paying bills, because it feels like “serious money". Whereas "bonus money" is often spent on frivolous things-but money is money.

• Every dollar is the same. It doesn’t matter where money comes from
• Saving so-called "bonus money" can positively affect your savings

3. Try and use cash - Using cash has a bigger impact on your brain than swiping a card.

• Using credit cards blurs the process of handing over money and makes you more likely to spend
• You're more likely to overspend or loose track of your spending when using credit cards

4. "Fair" is a four letter word - The concept of "fair" messes with our heads and causes us to reject deals that still offer plenty of value.

• It doesn't pay to get hung up on the concept of "fair
• Think about whether you're getting reasonable value for the money you're paying. Otherwise the person who gets punished will probably be you

5. Try A "Ulysses Contract" - A Ulysses contract is any arrangement by which we create barriers against future temptation.

• You probably already use a financial Ulysses Contract and don't even realize it. Ex: RRSP's-You've made the decision in advance to save for retirement

6. Drop Anchor - "Anchoring" is a potentially devastating cognitive bias where the first number mentioned in a given scenario unconsciously influences your future choices.

• Example: You have consistently overpaid for lattes and oil changes in the past so you mindlessly keep doing it
• Look at your regular purchases and ask if they really make sense and whether there are cheaper alternatives

 For more on each of these 6 tips, check out Eric Barker's blog, Barking Up The Wrong Tree.

Group Benefits: HR and Administration Issues

Please join Peter Andreana and Andy Balaura on January 30th at 7:30am in a discussion focused on the issues they have both seen around Employee Benefits, many of which most people are unaware of. You will walk away with important information and tips you can start to implement in your HR immediately. See below for more details, along with registration info.

Changes to Ontario's Employment and Labour Laws

                                                     
Despite a strong and growing economy the nature of work in Ontario has changed. Many workers are struggling to support their families on part-time, contract or minimum-wage work.

In order to create more opportunities and security for workers within Ontario's changing economy, the Ontario government announced the Fair Workplaces, Better Jobs Act, 2017.

The act was officially passed on November 22nd 2017.

This legislation makes a number of changes to both the Employment Standards Act, 2000, the Labour Relations Act, 1995, and the Occupational Health and Safety Act, including major areas such as;

• Minimum wage increase
• Equal pay for equal work (casual, part-time, temporary and seasonal workers)
• One week's notice or pay in lieu of notice for employees of temporary help agencies if longer-term assignments end early
• Fairer scheduling rules
• Vacation time
• Expanded personal emergency leave in all workplaces
• Unpaid leave to take care of critically ill family member

Minimum Wage Increase

Ontario is increasing its minimum wage rates [the lowest rate that can be paid by employers to employees].

As of January 1st 2018 the general minimum wage has been increased to $14.00/hr which will increase to $15.00/hr by January 1st 2019. Additional changes have been made to different employment categories.

Scheduling

Changes will allow employees to:

• Request a schedule or location change once they’ve been employed for three months, without fear of being penalized
• Refuse shifts if their employer asks them to work with less than 96 hours’ notice, without fear of retaliation, with certain exceptions

Employers will also be required to pay wages to the employees for three hours of work if the employee:

• Regularly works more than three hours a day, shows up for work and works less than three hours or not at all (for example, the shift is cut short)
• The shift is cancelled within 48 hours of their scheduled start time, with certain exceptions
• Is scheduled to be on-call but, despite being available to work, is either not called in to work or works less than three hours. This will be required for each 24-hour period the employee is on call

Vacation Time

• Under the new legislation, employees will be entitled to three weeks of paid vacation after five years with the same employer

Personal Emergency Leave

• The legislation will require all employers to give all employees 10 personal emergency leave days per year, including two paid days if the employee has been employed for one week or longer (7 days)
• An employee who has been employed for at least 13 consecutive weeks will be entitled to up to 10 individual days of leave and up to 15 weeks of leave if the employee or their child experiences domestic or sexual violence or the threat of domestic or sexual violence. The first five days of leave, each calendar year, will be paid, the rest will be unpaid.

For more on the changes to Ontario's Employment and Labour Laws, visit www.ontario.ca

Estate Protection: Secure Your Legacy

You’ve spent a lifetime planning ahead to be prepared for every stage of your life. Leaving a legacy isn’t any different.

Estate Protection is a segregated fund that has the same benefits of potential growth and exibility for your investment portfolio. There’s also insurance protection for you and your beneficiaries through built-in guarantees.

Is Estate Protection right for you?

• Are you in the later years of your retirement? 
• Do you want to protect the money you have set aside for the important people that matter the most in your life? 
• Are you looking to pass on your legacy? 
• Do you want to participate in the financial markets, to potentially grow your money? 

If you answered yes to these questions, then Estate Protection might be the right choice for you.

What does Estate Protection offer?

• 100% death benefit-When you die 100% of your investment is protected to pass on to those who are most important in your life
• 75% maturity guarantee-When your policy ends (at age 105), even if the markets go down, Estate Protection protects most of the money you put in 
• You can select funds which can allow you to lower the impact of market volatility on your investments

Saving money is an important part of protecting the legacy you’ve built for your loved ones. With Estate Protection you can have an increased sense of certainty. Because the amount that you’ve set aside does not flow through your estate, you can save the legal, taxes, executor and accounting fees, etc. that can be part of passing on your legacy.

Overall, when it comes to fulfilling your wishes you want a sense of security. You want to feel like you have made the right estate planning decisions. You want to know you have adequately prepared for the financial well-being of your loved ones. By partnering with a financial advisor, you can be confident you have secured your legacy.

Contact Continuum II today and let us help you secure your legacy.  

For more information on Estate Protection, read the full overview from Great West Life. 

Financial Literacy Month

Did you know that November is Financial Literacy Month?

Financial literacy is important. As financial advisors we help to provide the knowledge needed to appreciate money management and to make it clear and simple to navigate. Here are just a few things to consider on your way to financial well-being.

It's not magic - it is planning. Everyone needs a good financial plan and a qualified planner.

Start Planning
- Be prepared, financial planning is for everyone, the more aware your are the better. Get help from a CFP professional
- Understand the power of saving could have a huge impact on your life
- Consider using advisor provided tools to help learn how to make budgets and how to manage any debt effectively and efficiently. Our Budget Worksheet and many other tools are available to help
- Create goals and focus on your financial strategy
- Prepare for life's up's and down's
- Canadians are living longer, it is important to have a grasp on your plans for retirement and take steps to make sure your money lasts

Reduce Stress
- Personal finance can be a major stress for many Canadians, having an understanding of financial concepts could help to reduce anxiety and improve your overall well-being
- Know your financial rights and responsibilities
- Pass your financial knowledge onto your children, build their financial confidence
- It is not all about budgeting. It's about finding out what is important to you and your family

Understanding the basics about money is a critical skill, we encourage you to ask questions and get involved. Are you ready to get started, contact us today.

                                         

                                                                                          

For more information on Financial Literacy visit, www.canada.ca and https://www.financialplanningforcanadians.ca/

Beware of 'Robo-advice'

Although most investors continue to work with human advisors, the rise of web-based investment platforms has made it more important than ever to understand the difference between 'robo-advisors' (Automated portfolio management services) and 'human advisors'.

Solutions Magazine has provided the following to help define the difference, and highlight the importance to maintaining 'human advice'.

How does “robo-advice” work?
Because these platforms don’t offer individualized advice, the term “robo-advisor,” although catchy, is a misnomer. It’s actually just software. When a client registers for a service, she or he answers a set of questions that determines a generic investor profile. The software then presents the client with choices of ready-made portfolios based on the profile. Because the profiles are formulaic – quite literally based on a mathematical formula – they can only account for a limited range of goals and risk tolerances. Robo-advisor software is designed to sort clients into broad categories and to serve those categories quickly and at a lower cost. This model relies on the investor answering the questionnaire accurately. It also places the responsibility of choosing the best portfolio on the client instead of the advisor, because there is no advisor.

The role of an advisor
Human advisors are licensed experts who create comprehensive financial plans designed to build wealth, minimize taxes and accomplish a diverse range of other goals. These may include everything from being able to afford next year’s vacation to buying a home to living comfortably in retirement. Because money is more than an account balance – it’s a family’s home, a child’s university tuition, an emergency fund for tough times – creating a plan requires understanding the emotional importance of each financial goal.

An advisor also does much more than portfolio rebalancing. She or he can help rearrange investments for tax efficiency, review budget and saving strategies, and put in place the right financial protection. As a result of understanding the full picture of a client’s life, a financial professional can handle varying degrees of complexity. If a client experiences major changes, plans can be adjusted to respond to the client’s new circumstances.

By the same token, if the economy changes, an advisor has the depth of knowledge to provide a proper analysis and plan of action. When faced with the decision of staying the course or making an adjustment, you can sit down with an expert intimately familiar with your investments. An advisor can evaluate what the decision will mean, not just for your portfolio, but for your long-term financial well-being.

Overall, the primary advantage of working with an advisor is nuanced “big picture” planning. Investing isn’t so much about buying a product; it’s about acquiring the component parts of a far-sighted strategy. Ideally, investments complement each other and click neatly into place within a financial plan. They’re allocated to generate growth or provide an income, to meet short- and long-term goals, to save taxes and to build a legacy. Furthermore, the plan must adapt – and the investments must be rebalanced – as the investor’s circumstances change. An advisor’s unique skill set supports the ability to translate a client’s vision into a concrete, achievable plan, where as a 'Robo-advisor' does not-to them you're just a number.