Sunday, April 24, 2011

Financial planning pays off

Value – according to a pair of long-term, in depth studies by two of the country’s leading professional standards and investment organizations, that’s exactly what Canadians get when they engage in thorough financial planning with a professional advisor. Value that pays off in the twin benefits of financial and emotional wellbeing.

The Value of Financial Planning1 -- a comprehensive five-year research study by the Financial Planning Standards Counsel (FPSC) -- delivered real empirical evidence that Canadians who engage in financial planning are far better off than those who don’t. Among the report’s findings:
  • Of respondents who engage in comprehensive planning, 51% said they were on track to reach their desired lifestyle in retirement, compared to just 18% of those who don’t receive any financial advice.
  • The research also revealed that of individuals who engaged in comprehensive, integrated financial planning:
    • 61 % felt confident they would be satisfied with their desired lifestyle in retirement, compared with 27% with no financial planning.
    • most also felt that they had improved their ability to save, had greater peace of mind, are less concerned about their financial situation, and feel better about having discretionary income to be able to lead the life they want.
A second report – The Value of Advice: Report2 – from the Investment Funds Institute of Canada (IFIC) drew similar conclusions:
  • Third party empirical data (from Statistics Canada, Ipsos Reid and others) showed that when Canadians choose financial advice, they accumulate more assets and are better prepared, financially, for retirement.
    • 74% of advised households agreed that they feel confident that they will have enough money to retire comfortably.
    • 71% of advised households agreed that a year from now, they will be financially better off than they are today.
The IFIC report highlighted the wide range of valuable services that professional advisors provide for their clients, including: setting and achieving planning targets; choosing the right vehicles and plans; setting the right investment mix; and delivering customized solutions based on individual choice and personal goals.

As these studies confirm – and as so many Canadians have already discovered for themselves -- financial planning pays off. Get the value you deserve by talking to your professional advisor today.

1The first phase of the study was conducted by The Strategic Council for FPSC, August 2009 to January 2010 and surveyed 7,300 Canadians.
22010 Value of Advice: Report, IFIC, July 2010

Sunday, April 17, 2011

Wow! A tax refund – spend or save?

It’s great to get a tax refund, isn’t it? (Maybe not – but more on that later.) So, what are you going to do with it? You could spend it but then, it would just be … gone. In the interest of a long-term improvement to your personal financial picture, here are a few alternative tax refund uses to explore.

RRSP it Make your 2011 RRSP contribution right now and you’ll get the benefit of nearly an extra year of potential long-term tax-deferred growth and a tax deduction against next year’s taxes.

TFSA it You are allowed to save up to $5,000 a year in a Tax-Free Savings Account (TFSA). Your contributions are not tax-deductible but you will not be taxed on a cent of the investment income generated by your TFSA and you can re-contribute any of your tax-free withdrawals in a future year.

Invest it If your RRSP and TFSA are topped up, consider adding to your non-registered investments. It’s a sound strategy to hold stocks and equity mutual funds outside an RRSP or TFSA because these types of investments are taxed at a more favorable capital gains inclusion rate and Canadian investments qualify for the dividend tax credit.

Learn from it Set up Registered Education Savings Plans (RESPs) to fund future education costs for your kids. RESP contributions are not tax-deductible but their growth is tax-deferred and they qualify for Canada Education Savings Grants (CESG)1 of up to 20 per cent of your contribution.

Take interest in it Pay down costly credit debt with interest rates that can range from 15 to 29 per cent and then pay down non-deductible debt such as your mortgage – a single prepayment can chop months or even years off your repayment schedule and potentially save hundreds or thousands of dollars in interest payments.

Park it Got a large refund? Why not park some cash in a short-term investment that you can access without penalty. You’ll have a ready source of cash for a rainy day or maybe a new car without having to borrow or use your credit card. (You can also use a TFSA as a rainy day fund.)

Eliminate it Here’s why getting a tax refund isn’t the greatest: That refund cheque is not a gift from the government. It’s money you overpaid during the year and are now getting back without interest. Put more money in your pocket each pay period by applying to lower your withholding tax, using File Form T1213, available from your local Canada Revenue Agency (CRA) office or from the CRA Website (Québec residents must also fill out the Québec form TP-1016-V.)

A tax refund is great – a comprehensive tax-reducing, life-goal-achieving financial plan is much better. Your professional advisor can help make it all work for you.

1CESG is provided by the Government of Canada

Sunday, April 3, 2011

Tips to help keep the CRA out of your pockets

No one wants to pay more tax than they have to ... I think we all feel that we pay enough as it is. With this in mind, Andrew Beattie shares some ways that all Canadians can limit their tax exposure.

Read through this Globe Investor article and see if there are any strategies that you can take advantage of ... or perhaps let me know if you have come up with something else.

As always, the right advice is key, so if you have questions be sure to talk to a professional advisor or your accountant to get the information you need.

Source: Globe Investor