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Early Fall.
Greetings!
Many of us are beginning to feel the change in seasons and are adjusting our daily routine accordingly, especially those with school-aged children. As we get closer to the end of the year, our finances should also be adjusted. Have a look at this month's newsletter to help you map out the rest of your year.
Feel free to give us a call to discuss your portfolio.
Be well.
Regards,
Peter, Claudio and Joanna
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Five financial planning milestones
by Brenda Spiering - September 2014, brighterlife.ca
Congratulations! You've booked a meeting with an advisor - that's a major first step in taking control of your financial future. You're now about to move forward on a journey that, with some sound advice and a little bit of discipline, should move you closer to realizing your financial goals.
Planning for the future is exciting, but because nothing ever stays the same, you need to think big when you sit down with an advisor. That means considering what direction you want your life to go in over the long term, and preparing for any surprises that may pop up along the way (both welcome and not-so-welcome).
Just ask Sandra Schmidt, an advisor with Sun Life in Vancouver. She says, "Your finances change as your life changes, be it marriage, a new job or a baby. So you need to revisit your goals on a regular basis."
To help you get started, here are five major milestones an advisor can help you prepare for:
1. Buying your first home
Getting the keys to your first condo or house may be your dream, but unless you carefully prepare for the additional financial commitment involved, you could end up overwhelmed. An advisor can help you set realistic goals not only regarding how much you can afford to spend on a home, but also around all of the other costs involved, from heating and hydro to basic renovations and repairs.
2. Merging your finances
When you decide to settle down with the love of your life, you won't just be merging your households. You need to think about how best to merge your finances as well. Whether it's planning for the costs of a wedding or just figuring out how your different financial goals and savings fit together, an advisor can help you create a long-term plan that works for both of you.
3. Starting a family
Kids change everything, including your financial plan. As you start your family, you need to consider the added costs of raising kids, from daycare to sports equipment to university. An advisor can help you plan for those costs and provide you with information on the advantages of savings vehicles such as registered education savings plans (RESPs).
4. Setbacks
Not all milestones are planned for or welcome. The loss of a job, illness or a death in the family are all major life events that can set you back financially. An advisor can help you prepare to handle some of life's major challenges by recommending appropriate insurance products and/or helping you build an emergency fund. That way you will have a safety net in place if and when you need it.
5. Retirement
It's important to review your retirement savings plan with an advisor regularly to make sure your savings and investments stay on track to support your retirement goals. Sure, you probably receive annual registered retirement savings plan (RRSP) and/or pension plan statements, but it shouldn't end there. You need to revisit your plan on a regular basis to make sure it continues to support your age, life circumstances and fluctuations in the financial markets.
View original article here.
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Should You Pay for Your Child's College Education?
by Tom Drake - August 2014, canadianfinanceblog.com
In spite of the debate raging around whether or not college is still worth it, many Canadians feel that college is a solid investment in their kids' futures. However, the cost of college is rising. Everyone recognizes that going to university is going to be expensive. Trying to foot the bill for your kids can cause you problems with your own finances if you aren't careful. You want to help your child succeed, but at the same time you don't want to bankrupt yourself.
So, where is that balance?
Pay What You Can
Many financial experts, including Rob Carrick, believe that you should help your child as much as you can; that you owe it to your children to support them as they go to college. However, this doesn't mean that you have to foot the entire university bill.
The most important thing is to consider what you can actually afford to pay when it comes to your kids' college education. Make sure that you are financially stable, and that you are planning for your retirement. Then you can start putting money away for college. You don't want to put your own future at risk for your kids' college. As is often pointed out, there are loans for college, but not for retirement.
Fortunately, there are a number of opportunities for you to grow a tidy sum for your kids to use for college. The government lets you contribute to the RESP, which can help you pay for college. Check to see your eligibility for the government's college savings credit, which is free money for your child's education. Some provinces, like Alberta, also offer additional money to help you with college. Figure out what your options are, and take advantage of these resources to help you help you child.
Another idea is to contribute to a TFSA. The TFSA is a great vehicle for saving up for almost anything and growing wealth. If you can afford it (and if your own retirement contributions are already squared away) consider making maximum TFSA contributions each year. You'll gain a tax advantage, and you'll have a great deal of flexibility to use the funds as you need, whether that's for your kid's college education, or for your own retirement.
Encourage Your Kids to Contribute
Of course, it also makes sense for your kids to contribute to their own futures. While you do want to help with university costs as you can, you should also set expectations for your kids to pay for some of the costs. The key is to be clear from the start. Let them know that they will have to cover some of their costs. Talk to them about saving up for long-term goals, getting good grades so they qualify for scholarships, and other ways for them to contribute.
Get your kids in the habit of putting a portion of what they make from after-school jobs and/or allowance toward long-term goals, like college. Also, accept the reality that some student loans might be necessary. You don't want your child to be burdened with a great deal of debt when the graduate, but sometimes a small amount is unavoidable. Talk to your child about managing expenses, budgeting, and the importance of planning ahead.
The key is to do what you can to start saving as soon as possible. You can even start putting money away when your child is born, and then get him or her involved at the appropriate age. The longer you plan and prepare, the better off your family finances will be - and the more likely it is that your child avoids starting post-university life with crippling debt.
View original article here.
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5 Simple Money Strategies for Students
by Sarah Milton, August 2014 - retirehappy.ca
15 years ago, when I first came to Canada, I worked as a Nanny. As a qualified teacher, working as a nanny was definitely not what I had intended to do after graduation but, as it turned out; it was one of the best things that could have happened to me. Not only did it open some incredible doors for me but It's a relationship that has continued and strengthened over the 9 years since I stopped working for them. It gave me the experience of being a "spare mom" to two wonderful boys and a chance to become part of an amazing family. This week, "my" youngest boy headed off to college and so I thought it would be fitting to share some money strategies for students in this week's post:
1. Get the Right Bank Account
As with every money decision, it makes sense to do your research. Often, when it comes to choosing a bank we stick with whichever institution our childhood accounts were set up with or we choose the same bank our parents use. However, although all five of the major banks (RBC, TD, Scotia, CIBC and BMO) offer no-fee student accounts, the benefits of each account vary significantly. For example, only CIBC and Scotia offer no-fee student accounts with unlimited transactions. (TD & RBC allow 25 free transactions/mth and BMO allows 30). RBC & BMO include a certain number of free Interac e-transfers per month whereas each of the other bank charges $1.50 per transaction.
Before deciding which account is right for you, take some time to think about the number (and type) of transactions you're likely to do each month and calculate how much they will cost you with each institution. Investing a little time now could save you hundreds of dollars over the 3-4 years you're in school.
2. Understand Your Cashflow
One of the basic principles of good money management is to understand your cashflow. Simply put, you need to know how much money is flowing into your account and how much is flowing out. One of the most challenging things for students when it comes to managing money is dealing with having a large amount of money at the beginning of each semester when student loans are paid out that has to last for several months.
Without a clear plan, it's all too easy to overspend at the beginning of the semester and that can make things really tough later on. Taking a little time at the beginning of the school year to determine how that money should be spent will save you a lot of stress.
3. Keep Your Play Money Separate!
Once you understand your cashflow, you'll know how much money you actually have left over for treats and splurges. Put that money in a separate account (perhaps with a different institution) so that there's no risk that your rent money will be accidentally "repurposed" for a night out at the bar, a new pair of shoes or a great deal on electronics.
4. Look For Discounts
Lots of stores offer student discounts. Some of them apply all the time, some only on certain days. Doing most of your grocery shopping on 'student day' can save you a surprising amount of money over the course of your student career. Similarly, shopping for clothes, electronics and other items at discount stores, online or at certain stores can add up to great savings over time and money saved on everyday things means less debt and more money to spend on fun stuff!
5. Be Cautious With Credit
One of the biggest traps available for students to fall into is the credit trap. When money is tight, it can be tempting to take advantage of the many credit options that are available to students. Whether it's a credit card or a line of credit It's important to remember that credit is big business and it makes a LOT of money for the financial institutions that offer it. Offers of credit to students are often made based on future earning potential not on your current ability to qualify and, as a result, far too many students find themselves graduating with a huge amount of consumer debt. Just making the minimum payments means handing over a lot of your hard earned money to your financial institution for the privilege of borrowing money.
Contrary to popular belief, getting a credit card is not the best way to build your credit score, especially if you end up carrying a large balance or missing payments. Debt may be a fact of student life for many but be cautious about taking on more debt than is absolutely necessary and be aware that just because your bank is offering you a credit card, it doesn't mean that it's in your best interests to take it. As with any other financial decision, do your research, talk to people you trust and then make an informed decision based on your personal circumstances.
The time spent at college or university is about growing and learning in so many ways, not just academically. Further education is a training ground for life and an opportunity to make conscious decisions about the person you wish to be and the life you want to build for yourself. Learn, grow, make mistakes and don't be afraid to fail. (Some of the most successful people built their greatest successes from their greatest "failures"). Learning to handle money and live life on your own is a key part of the learning experience and if you can master it, you will have laid the foundation for a sound financial future.
View original article here.
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Peter Bailey
Wealth Advisor
Worldsource Financial Management Inc.
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1
The information provided is for general information purposes only and is based on the perspectives and opinions of the owners and writers. The information is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting, or professional advice. Readers should consult their own subject matter experts for advice on the specific circumstances before taking any action. Some of the information provided has been obtained from sources, which we believe to be reliable, however, we cannot guarantee its accuracy or completeness. Worldsource Financial Management Inc. does not assume any liability for any inaccuracies in the information provided.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual Funds and Segregated Funds provided by the Fund Companies are offered through Worldsource Financial Management Inc. Other products and services are offered through Peter Bailey.
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