Test Your Financial Knowledge

Studies show that Canadians aren't as financially savvy as they think they are. When asked, 70% of Canadians claimed to be financially literate, but when asked to test their knowledge 60% failed. How do you compare?

Test your knowledge by answering the following 15 statements with ‘true’ or ‘false’

1. A mortgage term refers to the length of time you need to pay off your mortgage.

2. You must pay for government insurance on mortgages where you put down less than 20% of a down payment-unless the home is worth $1 million or more.

3. A car that is more expensive always costs more to insure than a cheaper car.

4. You never have to report interest and profits gained in your TFSA when filing taxes.

5. You can have multiple TFSA accounts with different banks at the same time.

6. Your auto insurance automatically goes down when you turn 25.

7. Applying for a credit card can negatively affect your credit score.

8. Home insurance can sometimes protect you if your dog bites someone in your home.

9. Your home insurance will always cover you if a tree falls on your home.

10. Checking your credit score has no impact on the score itself.

11. The colour of your car affects your car insurance rate.

12. All banks charge you money to have a chequing account.

13. Auto insurance premiums can be cancelled mid-way through their term.

14. You need to be licensed to buy stocks in Canada.

15. There's no need to get travel insurance if you're travelling within Canada between provinces.

How did you do?

Check your answers below.

Answers: 1. False  2. True  3. False  4. False 5. True  6. False 7. True 8. True 9. False 10. True

11. False 12. False 13. True 14. False 15. False

See how Pattie Lovett-Reid scored on her financial quiz.

Financial Plans For Your Future

Here at Continuum II we get asked all the time "What's the most beneficial way for me to invest my money?".

Our answer is always the same; everyones financial landscape is unique, and that everyones financial portfolio should reflect that. But overall, the most important thing is that everyone has a plan.

Many people don't realize that there is difference between a financial plan and an investment plan. 

An investment plan focuses solely on your investments, and your return on those investments. While investments are important, they are nothing without a solid financial plan.

What you have to ask yourself is, will your investment plan stand up if something goes wrong in other areas of your life? What if you suffer from one of the four D's (death, divorce, disability or disaster)?. This is where a financial plan will help to ensure you're protected.

Here is what a financial plan can offer, that an investment plan can not.

• A financial plan looks at all of the financial aspects of your life, not just your investments.
• Financial plans look at insurance and estate needs, educational planning.
• Financial plans help you to make big financial decisions, like whether to buy or rent.

In acknowledging you need a plan, the next step is to hire a financial planner. A financial planner typically provides a written financial plan that outlines your goals, challenges and considerations, recommendations and action plan. A comprehensive written financial plan generally includes the following:

• A clarification of your short, medium and long term goals
• A statement of Net Worth
• An analysis of your cash inflows and outflows
• A detailed budget and debt-reduction strategies
• A review of your current investments and investment strategy advice
• Projections regarding your retirement, including pension recommendations
• A review of your insurance needs, group benefits and estate planning, including recommendations
• The action steps needed to implement your plan

Do you have an individualized comprehensive financial plan? Get started now with the quick RediNest questionnaire below. With RediNest you'll discover how your financial readiness compares to other Canadians with similar goals. It’s easy to use, free and a great way to preview the work we do here at Continuum II Inc. - C2Inc.

5 steps for saving for retirement

Save for retirement in five simple steps

Here at Continuum II we get asked all the time "how much do I need to save before I can retire?"

The answer is; retirement is not one-size-fits-all and everyones ability to retire depends on a variety of factors. For example; it depends on how much you make, what age you want to retire, your current standard of living, your pension (or lack thereof), only to name a few.

To help give you a ball park figure of what you need to save for retirement, The Globe and Mail has put together a list of 5 simple steps to arriving at your ideal retirement goal.

1. Figure out how much of your working income you will have to replace in retirement.

• Most people find they will need to replace between 50-70% 

2. Consider how much you will receive from the government by the way of Canada Pension Plan and Old Age Security.

• For a lifelong resident of Canada who has worked steadily for decades the typical annual payout is $15,000 (this is just a rough number, it could be lower or higher depending on your financial history)

3. Do the math.

• If your household income is $120,000 a year (and you need to replace 60%, your target income would be $72,000). From this figure subtract what you would receive from government programs. If you receive roughly $30,000 from government programs, that means you will need to generate $42,000 from other sources.

4. Consider your pension.

• Your workplace pension may be able to cover the remaining portion of your retirement income not covered by government programs.
• If you don't have a pension, you could purchase annuity, which would pay you the remaining portion annually. Find out more here.

5. Plan for the unexpected.

• We can't stress enough how important it is to plan for the unexpected. To be more safe than sorry, you might want to add a little extra to your figures as cushion

While the above can help to give you a rough idea of what you'll need to save for retirement, the best option will always be to contact an advisor who can help you build a plan that fits with your unique financial lifestyle.

Don't have a retirement plan? or do you need a little extra help with your current retirement plan? Contact our offices today and let us help you feel comfortable and confident about retirement.

Holograph Wills In Ontario

Holograph Wills 

A holograph will that is wholly handwritten by a testator is called a holograph will. Holograph wills are exempt from the statutory requirement that a will be witnessed by at least two people, who each subscribe the will in the presence of the testator.

Below, our friends at Pallett Valo LLP, have laid out everything you need to know about validating a holograph will.

A testator may make a valid will wholly by his or her own handwriting and signature, without formality, and without the presence, attestation or signature of a witness.

Wholly in the handwriting of the testator

An essential aspect of a holograph will is that it to be wholly in the testator’s own handwriting. Partially handwritten wills, such as fill-in-the-blank forms, do not meet the requirements of a holograph will. Whether or not such a document will be admitted into probate will depend on the court’s ability to sever the handwritten portions from the written portions so that they themselves form a complete expression of the testator’s wishes.

Likewise, it has been determined by the courts in Ontario that typewritten documents cannot be incorporated by reference into a holograph will. Where a holograph will makes reference to a typewritten document, the type-written portion will not be admitted into probate and the handwritten portion must be able to stand on its own as a testamentary document.

Signed by the testator

The signature of the testator will also play a key role in creating a valid holograph will. The signature must be at the end of the document and this will give effect to any disposition that comes before the signature. Anything that follows the signature will not take effect. As well, any disposition or direction inserted after the signature was made will not take effect.

Full and final expression of intention 

Separate and apart from the above two formal requirements set out in the SLRA, case law has established that the contents of a holograph will must reflect that the testator possessed the necessary intention that it be a fixed and final disposition upon death, and not merely some other expression of their wishes. The onus falls on the party alleging the document to be testamentary to show, by the content or by extrinsic evidence that it reflects this intention. 

Handwritten Alterations
Handwritten alterations to wills are governed by section 18 of the SLRA. Where a handwritten alteration is made to a formal will, the alteration must meet the same formality requirements set out in s. 4(1) of the SLRA, i.e. the alteration must be signed by the testator and witnessed by two witnesses, who each subscribe as witnesses to the alteration.

In the case of alterations to holograph wills, a handwritten alteration will only require the signature of the testator. Where there is no signature (or initials) beside the alteration, the issue becomes one of determining when the alteration was made. If the alteration was made at the time of execution of the holograph will, the change is valid. If the alteration was made after the execution of the holograph will, the alteration would be invalid.

In conclusion, while holograph wills can be a quick and inexpensive option, it is evident that there are numerous issues that may affect their validity. As with any legal document, it is always prudent to obtain legal advice about the manner in which a holograph will must be made, and the potential issues that may arise.

RESP Withdrawals

Think before you withdraw. 

If you have kids heading to university or college in September you are probably starting to think about dipping into those RESPs. Before you do, here are 4 things you should know about withdrawing from your RESPs. For more information, check the full article by the Globe and Mail.

1. Maximize grants without over-contributing

2. Adjust the asset mix as you get close to drawing the funds

3. Get the money out tax-effectively

4. Deplete the RESPs near the end of university

Overall, the key to withdrawing from your child's RESP is knowing how, and when, to do it in order to fully benefit from it's perks. Below is an example of how to do it;

 To figure out roughly how much EAP money you can withdraw each year without federal and provincial income tax, using 2017 figures. Start with the basic personal tax credit that everyone gets ($11,635 for federal taxes). Then add a tax credit for tuition paid (we’ll assume $9,000 for a full-year at school). Then subtract income (we’ll assume $7,000 from a summer job), offset partly by job-related tax credits for EI, CPP, and employment ($1,465 federally in this example).

In this case you should be able to withdraw roughly $15,100 in EAP money in 2017 without your kid having to pay any significant amount of income tax ($11,635+$9,000-$7,000+$1,465). (If your kid’s gross income is relatively low, you can also transfer up to $5,000 of unused federal tuition credit to a parent.) In this example you would pay no federal tax but would pay a small amount of provincial tax in some provinces because of differences in provincial tax practices.

If you want help managing your children's RESPs call our offices today.

Spend Less, Save More

As we 'spring' into May, many of us are receiving an income tax return. Should you save it or spend it?

If you choose to save, it presents the question of whether to invest in a TFSA or an RRSP. This debate comes up often here at Continuum II and here is what we suggest: 

There are both pros and cons to TFSAs and RRSPs.

RRSP Pros
- Used to save for retirement.
- Contributions are tax deductible and investments grow tax-free within the account.

RRSP Cons
- Contributions are taxable once they are withdrawn.
- Withdrawals are considered income and can affect eligibility for federal-income benefits and tax-credits.
- Once you withdraw from your RRSP the contribution room is gone.

TFSA Pros
- TFSAs can be used for both retirement and extra savings.
- Investments grow tax free within the account.
- Withdrawals do not count as income and therefore do not affect your eligibility for federal-income benefits or tax-credits.
- Contribution room is not lost upon withdrawal of investments, it is added to your limit for the following calendar year.

TFSA Cons
- Contributions are not tax deductible.
- Must be 18 years or older to have a TFSA account.
- Contributions are limited, and there is a penalty for going over your limit.

Which is right for you? While there are pros and cons to both a TFSA and an RRSP- the ultimate choice on where to invest your savings will depend on your unique financial situation.

If you are in a low income tax bracket, a TFSA might be more beneficial to your financial situation. Based on your income, the tax savings of an RRSP are less significant and you risk being in a higher tax bracket when you eventually make a withdrawal.

If you are in a middle tax bracket, we suggest having both a TFSA and an RRSP. By having both types of investment plans you could contribute to your TFSA now and accumulate RRSP room to be used later if you move into a higher tax bracket. This can help you to optimize the tax benefits attached to both types of accounts.

For those in a high tax bracket, having both an RRSP and a TFSA can also be beneficial. For similar reasons to those in the middle tax bracket-an RRSP might be a better choice if your current tax rate is higher than you expect upon withdrawal of your savings. You'll benefit from the tax deduction given on contributions and your withdrawals will be taxed less when you withdraw during retirement. You can also use your tax refund from your contribution benefit to fund your TFSA.

Talk to your Continuum II advisor today and let us help you determine the best tax-advantaged savings strategy that meets your needs.

CRA Accounts

No one knows more about your tax position than the CRA (Canadian Revenue Agency). What most people don't realize is that anyone who pays federal tax can go directly to the source through a secured, personal online account or mobile app called My Account (My CRA). If you haven't heard of the My CRA account, here's why you should sign up now.

By signing up for a My CRA account you can track your refund, access past returns, statements, updated assessments, and T-slips, check your benefit and credit payments, set up direct deposit,  or receive online mail. You can also find how much you have contributed to your registered retirement savings plans (RRSP) and tax-free savings accounts (TFSA). Also view how much contribution space you have left, which can help you to avoid nasty penalties if you contribute over the limit.

Set up account alerts, so that you can be notified of any changes that are made, or need to be made, to your personal information. i.e: If you forget to change your address after moving, your account will notify you that something is incorrect to ensure that all information is up-to-date.

Similarly, starting this year, personal online accounts will include information on your Canada Pension Plan (CPP) including contributions and benefits. View all past and present contribution amounts and asses what you can expect to collect at age 60, 65 or 70.

This is a great tool for tax, retirement and financial planning, as financial advisors we encourage all Canadian's to sign up for a My CRA account. Your financial information belongs to you. With a My CRA Account you can have immediate, secure access to all of your information in seconds.


For more information on how to sign up; check out our Facebook Page here, or go to http://www.cra-arc.gc.ca/loginservices/