February 2014
RSP season is coming to an end..




Many of you may be rushing to get your last RSP contributions in before March 3rd, and our office is ready and more than willing to help you make it before the deadline. Please give us a call today.


As we near the end of this RSP season, we should not lose focus on other aspects of financial planning. This month's articles have been gathered to help keep in mind other areas that require attention and thought.


Be well.



Peter, Claudio and Joanna

Questions you need to ask about your money

by Dave Dineen - February 2014, brighterlife.ca


It's not so much the questions you ask about your personal finances that can make all the difference - it's the questions you don't ask.


Before I retired, I worked on big-name financial websites for years, often writing responses to frequently asked questions (FAQs). I always loved answering FAQs; I believe that helping consumers understand their finances is noble work.

These days, FAQs are one tiny piece of a broader effort to improve Canadians' financial literacy. The creation of financial websites, blogs, personal finance columns, online and mobile self-service resources, social media outreach and improved training of financial advisors have helped Canadians like you and me take charge of our finances.


You can access almost all those things 24/7, so access to information is no longer a barrier to financial literacy.


It's what you don't ask that's the problem.


As a recent retiree and current reader (vs. writer) of FAQs, I've come to recognize that some of the best questions are asked infrequently, if ever.


The answers to these questions can help you use your money more effectively and achieve your financial goals:


Who am I? 

It sounds like a stupid question. But look closely at several months of bank statements from your main chequing account. Yes, your name is at the top, but how well does the pattern of financial transactions shown on the statement fit the life you want to live? What are you spending your money on? Your bank or credit card accounts don't speak up when you lose your way, like a GPS system would, so it's up to you to keep a close watch on your spending.


What are my goals? 

Things important to you generally cost money. If you haven't written down your goals, put away your wallet until you do.


Does today trump tomorrow? 

Card players often ask "what's trump?" to figure out how to play their cards. In your financial life, a better question may be, "when is trump?" At some stages of life, "today" is trump and you have to focus on short-term spending. But sometimes, "tomorrow" needs to be trump, so you can achieve longer-term goals, by putting current spending on the back burner. Be realistic: If today is always trump, tomorrow isn't going to turn out well. And if tomorrow is always trump, today won't be much fun.  I remember when my wife caught my attention by counting how few paydays remained before we became empty-nesters. Trump was about to change ... and we needed to change our game strategy.


Am I getting distracted? 

Is something drawing your attention and resources away from pursuing your goals? I really like the styling of some of 2014 cars, for example. But my key personal goals have nothing to do with replacing my perfectly serviceable, five-year-old car. So I ignore those fetching car ads.


When will I pay this off? 

Be brutally honest.


What am I missing? 

A good financial advisor is worth his or her weight in gold, asking you questions you probably aren't asking yourself. Advisors are better trained at this stuff than we are. They have better discipline than most of us. They're better at the math. Get a good advisor.


What could go wrong? 

Life is like a game of snakes and ladders. If you're like most people, you're excited about the chance to do well in life and climb those ladders. But don't forget the snakes. If you lost your job, could you manage your debt? If you had to retire earlier than planned, how would you manage? If you became seriously ill, what would happen? If you or your partner died prematurely, what would happen? You can rely on an advisor to address this not-so-fun stuff.


What does my will say? 

If you have a will, check it. If you don't have a will (and I didn't for an embarrassingly long time!), call a lawyer. It's no biggie to draw one up, and it's great to have it finished.


View original article here.

Can Saving Money and Paying Taxes Really Go Together?

February 2014, financialhighway.com


Let's face it: everyone wants to find easy ways to save their hard-earned money. Some clip coupons and shop online for discounts and deals, some invest in long-term savings, and others simply drop their spare change in a piggy bank every day. But is it really possible to save money when it comes to taxes? It seems the Canada Revenue Agency makes you pay tax on everything, but there are some ways to reduce what you owe the taxman.


It might seem like free money when you receive a tax refund cheque in the mail, but the reality is it is your money. A tax refund is money you overpaid the government last year. Some people call this 'intaxication' - the excitement you feel when you get your tax refund, only to realize that it was your money in the first place.


Plan ahead

Thinking about your taxes in March is too late. You cannot do anything that will impact your return by then. Tax planning should be a year-round activity. If you have a financial plan already in place, Cleo Hamel, senior tax analyst for H&R Block Canada, suggests making tax planning a part of it. "Ideally, you want to neither owe money nor receive a refund when you file your tax return," says Hamel. "You want to pay the right amount of tax during the year, rather than give the government an interest-free loan."


Pay attention to your pay and where life takes you

If you are a salaried employee, your payroll department will ask you to complete a TD1 Form when you are hired. Employers are obligated to withhold tax based on how you complete your TD1 Form. In most cases, people fill out the form and forget about it. But if your life changes, updating your form to reflect the new situation is a good idea.


Are you a newlywed? If you get married while still working for the same employer, you should update your TD1 Form if your spouse has little to no income. For example, if your spouse earned no income in 2013, the spousal amount would result in $1,655 of tax savings. So updating your TD1 means an extra $137 per month, rather than the lump sum at tax time.


What about a new addition to the family? If you have a child you can claim the child amount, which is about $27 per month in tax savings. And if you are a single parent with custody, you can claim the eligible dependant amount. It may not result in a huge increase in your pay cheque but it is better than giving the government an interest-free loan.


Manage your investments

If you are a regular contributor to your RRSP, you can also ask for your tax withholdings to be reduced. Unfortunately, this cannot be done via a TD1 Form but through a special request to the CRA.


"It is the employee's responsibility to complete his or her own T1213 Form Request to Reduce Tax Deductions at Source, provide supporting documentation and send it to the CRA for approval," says Hamel. "And remember, the CRA will require proof that you are making your RRSP contributions so be sure to keep clear records of all of your investments - big and small."


Life events = tax events

Inheritances are not taxable, for example, but if you earn income from the money you receive then that income is taxable. And if you inherit a house when you already own one, you may be facing capital gains on the eventual sale of the home. For tax purposes, the CRA calculates gains as if the deceased sold all their assets on the day they died.


If you have a stock or share that has been good to you during the year and you cashed in some of your holdings, you will need to report the capital gain. However, you may be able to claim this against capital losses you are carrying forward. And bonuses or gifts from work may be considered a taxable benefit and appear on your T4, so you will need to pay tax on these amounts.


Life events-both good and bad-can change your tax situation and being aware of that will likely save you both money and headaches.


View original article here.

Planning on an Inheritance - Think Again!

by The Perspective, Winter 2014


As parents our goal is to ensure for the happiness and stability of our children, and as children our tendency is often to presume that our parents will always be there to pick us up should we fall.


The recent Manulife Financial Investment Sentiment Index which surveyed 2000 Canadians aged 25+, casts some doubt on parents goals and children's expectations. The November 2013 survey results showed that it is 'not likely that younger Canadians - already challenged by a tough job market and chronic underemployment - have a future inheritance to look forward to' The survey found:


  • 43% of Canadians report they haven't given any thought to how much cash or assets they'll leave to their heirs.
  • 13% per cent say they plan to leave nothing, while more than one quarter (29%) say they will leave less than $100,000, the index shows.
  •  Only two per cent of Canadians report that they plan to leave an inheritance of $1 million or more to their offspring.
While this survey helps to provide some clarity around Canadian parent's lack of foresight, it doesn't elaborate on how to create or even to quantify a legacy (inheritance). While a goal of parents is to educate their children in order to help them become financially independent, most parents also have the goal of ensuring for the ongoing well being of their children. There are some steps that may help in that endeavor.

Taking Inventory
An inventory is essentially a list of all assets currently owned. This list can be as specific or as broad as you want to make it. For instance, the list could indicate that dad's hockey card collection is to be left to a specific grandchild or that the entire residue of the estate is to be left in equal portion to all of the beneficiaries of the estate.The advantage of being specific about family heirlooms is the avoidance of strife between beneficiaries who place the same value on the item. As parents we should talk to our children about what personal property they want to receive. Then prepare a detailed disposition list, perhaps even with photos (i.e., which ring did you intend to pass on?).

Setting Goals
Goal setting is always important and includes both determining how much you need in order to lead your desired lifestyle as well as how much you wish to distribute to your heirs at death. While not easy to quantify either amount your current lifestyle requirements should not be minimized and should also include amounts for the potential of long term care and disability needs. After all you earned it.

Creating and Protecting Wealth
An often overlooked aspect of estate planning is the use of life insurance as a means of protecting and creating wealth. Life insurance can provide a tax-efficient way to transfer all you've worked for to your family.

Life insurance proceeds can be used to preserve estate assets as it can be used as a facility to pay for funeral expenses, pay down debt and address tax liabilities. It can also be used to create wealth as funding of the policy can sometimes be less painful than years of saving and prudent investing.

Update your documents
Unfortunately many marriages end in divorce and divorced spouses often assume that upon divorce all rights of an ex-spouse are also expunged. This is however not the case as your Will is only declared invalid upon the exceution of a new Will or upon marriage. As a result many ex-spouses have cheerfully received inheritances when Wills and beneficiary designations were not updated.
Issue: 39
Financial Markets
In This Issue
Questions you need to ask about your money
Can Saving Money and Paying Taxes Really Go Together?
Planning an Inheritance - Think again!

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Peter Bailey
Wealth Advisor
Worldsource Financial Management Inc.
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1 

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