May 2015
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We are growing.

 

Greetings!

  

We are pleased to announce the addition of two new members to your financial team:

 

Sandy Bielas - Client Services Representative: (416) 787-4517 ext. 211, [email protected]

Sandy has worked in the financial industry for over 10 years, and this experience has kept her well versed in mutual fund products. As a part of our Client Services team, she will ensure that your instructions will continue to be handled in a timely manner.

 

Ben Dawson - Mutual Funds Advisor: (416) 787-4517 ext. 208, [email protected]

Ben started off as an Advisor at the Bank of Novia Scotia four years ago and has quickly moved up within their branches to the role of Senior Financial Advisor. He will be helping to build and nurture the long-term partnership we have with you.

 

Thank you for your continued partnership. It is with your trust and confidence that we are able to expand our team. We will continue to look for ways to effectively service your needs. Should you have any questions, please feel free to give our office a call.

 

Be well.

 

Regards, 

Peter, Claudio, Joanna, Sandy & Ben

Five smart ways to use your tax refund

by Sheryl Smolkin - May 2015, brighterlife.ca

 

Expecting an income tax refund? Before using it for an exotic vacation, consider how you can put it to work to enhance your financial future.

 

You just pushed the send button on your income tax return and you can't wait for your refund to be deposited into your account. But before you start thinking about using that money for an exotic vacation or a down payment on a new car, you may want to think instead about how it can enhance your family's financial picture over the long term.

 

Here are five options to consider:

 

1. Start an emergency fund

At some time in your life, one of the following things may happen: You will lose your job; your car will break down when you need it for work; or you will need to take extended, unpaid time off work to care for a sick or dying family member. By having the money to cover about three to six months of necessary living expenses in an easily accessible, high-interest emergency savings account or a TFSA (if you have contribution room), you will be better able to financially weather a crisis. Your income tax refund can form the basis for an emergency fund, or enhance your current emergency savings.

 

2. Top up your RRSP

For the 2014 tax year, the Registered Retirement Savings Plan (RRSP) contribution limit was 18% of earned income from the previous year, to a maximum of $24,270 (with adjustments for company-sponsored pension plan contributions). Yet according to a study by the BMO Financial Group, only 57% of Canadians had made an RRSP contribution for the 2014 tax year before the March 2, 2015 deadline, with the average contribution being $3,737. If you haven't been contributing the maximum to your RRSP, you can use your income tax refund to help accumulate a larger nest egg for your retirement. The interest on your money will also compound over a longer period than if you only make contributions at the end of each year.

 

3. Pay down credit card debt

According to calculations by CreditCards.com, the average adult Canadian carries about three credit cards. The Canadian Bankers Association reports that about 60% of Canadians pay off their accounts in full each month - but that means that 40% of us are paying interest rates of 15% to 20% on our outstanding balances. Paying down or paying off your credit card debt will give you more disposable income to boost your retirement savings.

 

4. Pay down your mortgage

Given that the average Canadian home sold for $439,144 in March 2015, according to the Canadian Real Estate Association - and the sale price of an average detached home in Toronto topped $1 million that month, per the Toronto Real Estate Board - there's a good chance you took on a large mortgage to purchase your family home. Mortgage interest rates are low now, but if they inch back up again, your payments may no longer be affordable. So, depending on your situation, it may make sense to take advantage of early pre-payment privileges to reduce your mortgage debt as quickly as possible. Once your mortgage is paid down or paid off, you can catch up on RRSP contributions.

 

5. Open an RESP

For the 2014-2015 school year, the average undergraduate tuition fee was $5,959, according to Statistics Canada - and that's only one year out of a four-year program, and doesn't count books and living costs. Those expenses can add tens of thousands of dollars to the bill - and by the time your young children are of university age, the total will likely be a lot higher. If you're not saving for your child in a Registered Educational Savings Plan (RESP) you're leaving free money on the table. That's because when you contribute to an RESP for your child, the Canada Education Savings Grant adds 20 cents to every dollar you contribute, up to a maximum of $500 on an annual contribution of $2,500 until your child is 17. Special rules apply, so it's important that you speak to your financial advisor in order to maximize the grant. Using your tax refund to make annual RESP contributions is a great investment in your child's future.

 

To view the original article, click here.

5 Myths about Insurance

by Marie Engen - May 2015, boomerandecho.com

 

Insurance is one of those budget items that you hate to pay, but you're really happy to have it if you need to make a claim. There are, however, popular misconceptions that many people believe that will, unfortunately, cause them to be underinsured or improperly insured. Do you believe these common insurance myths?

 

Myth #1:  Insurance is expensive

Most people are underinsured, even across all income levels. The average consumer thinks life insurance costs more than it actually does and that it is a needless expense, especially if they are young.

 

Costs are based on life expectancy - and life expectancy is constantly increasing - so, the younger you are, the less it will cost.

 

Myth #2:  Employer-provided life insurance is all you need

Group insurance through your employer certainly has significant benefits - ease of purchase and lower administrative costs per policy, for example, but it may not be enough for your purposes.

 

Your employer may provide you with life insurance equal to one or two times your salary. This may be sufficient if you're single and it's enough to cover personal debts and funeral bills. Others will need to replace their income for their dependents. Experts generally recommend at least 5 - 8 times your income and some even go as high as 10 - 12 times.

 

Even if you are able to purchase an additional amount, you may lose it when you leave your job, or if you can convert it to an individual policy, it may be much more expensive.

 

Myth #3:  A "house spouse" doesn't need life insurance

Many people assume that only the breadwinner needs life insurance.

But, "house spouses", especially those with young children at home, are providing a very valuable service.

 

Notwithstanding all those articles that place an economic cost on the value of a homemaker's tasks (some go up to $500,000 per year), hiring someone to take care of the house and kids would be costly.

 

Mike Brady (of the Brady Bunch TV show) hired Alice as a housekeeper and to take care of his three sons after his wife passed away. She became so beloved by the family that they kept her on even after Mike married Carol.

 

Insuring the life of a stay-at-home spouse makes a great deal of sense.

 

Myth #4:  If both spouses are making "big money," neither needs life insurance

The theory here is that, in the event of a spouse's death, the surviving partner (and children, if any) could carry on quite comfortably. The problem with this logic is twofold:

  1. What happens to the children's financial future if the couple dies simultaneously?
  2. Many well-to-do couples invariably raise their lifestyles to reflect their joint success.

Although "comfortable" is a very subjective word, few of us would use it to describe any financial situation less prosperous than the one we've become accustomed to. In this case at least, buy enough life insurance to eliminate all debt and take care of future obligations.

 

Myth #5:  Your house should be insured for its real estate market value

The recommended route is insuring based on the cost of rebuilding after a total loss (materials and labour). That number is totally different from what someone would pay you for your home and the lot it sits on.

 

Home insurance should cover loss that would be expensive for you to pay on your own. You could probable handle replacing a broken window yourself. Therefore, opt for a larger deductible and save up to 35% on your premium.

 

Bonus myth:

People believe that red cars cost more to insure than other-colour cars. The perception is that they get ticketed more often.

 

Insurers don't use car colour as a factor in setting rates.

 

View original article here.

Five financial products you should own

by Brenda Spiering - May 2015, brighterlife.ca


 
You don't need to be born with a silver spoon in your mouth to build wealth. With the right products, you can grow and protect a healthy nest egg.

Here are five key financial products that should be part of your plan:

 

1. Registered Retirement Savings Plan (RRSP)

As soon as you begin your working life, you should have a Registered Retirement Savings Plan (RRSP). It's one of the most tax-effective ways to save for retirement.

 

You're allowed to contribute up to 18% of your earned income from the previous year to a maximum of $24,930 for 2015 and $25,370 for 2016. (If you're a member of a group pension plan, your contribution room is reduced by your "pension adjustment," an amount you'll find listed on your T4.)

 

Contributions are tax deductible, meaning you can net a tidy tax refund while building your savings. Plus, you can turbo-charge your RRSP savings by putting that tax refund back into your RRSP as soon as you receive your cheque.

 

2. Tax-Free Savings Account (TFSA)

Tax-Free Savings Account is an ideal savings tool for both long-term and short-term goals such as a vacation or home renovation. Also, for younger Canadians who haven't yet reached their peak earning years, a TFSA is a great way to start saving for the future.

 

TFSAs came into effect in 2009. From 2009 to 2012, the annual maximum contribution was $5,000. It increased to $5,500 in 2013, and to $10,000 in 2015. And while contributions aren't tax deductible, there's no tax payable on investment growth and withdrawals are tax-free.

 

3. Life insurance

While TFSAs and RRSPs help build wealth, you also need to think about protecting your financial future. That's where life insurance comes in. If you're married, have kids or own a business, you should have a life insurance policy in place in case anything happens to you. How much you need depends on your personal situation but it should be enough to cover any debts you may have (including your mortgage) and help cover your family financially for as long as possible.

 

4. Critical illness and disability insurance

It's important to not only have life insurance but also to ensure you'll be financially protected should you ever become unable to work due to illness or injury. Would your workplace benefits provide you with adequate coverage? If not, what would happen to you and your family?

 

Critical illness insurance helps pay the costs associated with a life-altering illness such as cancer or a stroke. You receive a lump-sum payment if you become critically ill and you decide how you wish to spend the money.

 

Disability insurance protects you from a potential loss of income due to injury or illness. You receive a recurring monthly payment to cover ongoing financial costs. Even if you have workplace group disability benefits, it's often wise to have your own personal policy to provide you with additional coverage.

 

5. Registered Education Savings Plan (RESP)

If you have kids, a Registered Education Savings Plan (RESP) is a must. It's a special savings account that lets you save for your kids' education after high school. Income earned inside the plan accumulates tax-free until it's withdrawn and then it's taxed in the hands of the child (meaning usually no tax is payable).

Not opening an RESP to save for your child's education means you're also turning down free money. That's right. The Government of Canada will match 20% of your annual contributions up to a maximum of $500 per year to a lifetime maximum of $7,200 per child. That's a big boost in savings!

 

View original article here.

Issue: 54
Financial Markets
In This Issue
Five smart ways to use your tax refund
5 Myths about Insurance
Five financial products you should own

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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. It 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 their 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. References to goods or services on third party links should not be regarded as an endorsement either. By accessing any of the links provided here you will be leaving our newsletter and we are not responsible for the information contained on the third party links. 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.