At Henley Financial and Wealth Management we are here to help you save money wherever we can, we want to help you save money being spent unknowingly and unwillingly.
So, let’s start with something we know that everyone has… a bank account.
Why do you pay a monthly fee just to keep your money in a bank account? Canada’s big 5 banks have been raking in the profits from monthly chequing account fees and additional transaction charges. We’ll even go out on a limb and say you do most if not all of your transactions online.
We have all fallen into this category once we got out of school and were no longer eligible for a free student chequing account. We use debit cards for everything, so our banks recommended that we sign-up for the “unlimited” chequing account for $14.95 per month. Again, we ask why do you pay to keep your money at the bank when you do all the work? You put your pay check in the bank and take it out of the bank without any assistance from them and you pay for that service – but there is no service. Spending money Unwillingly because this is not an option. We will come back to that “option” part later.
Since most of us lived paycheque-to-paycheque in the first few years out of school we didn’t even realize how much money we were wasting on fees. You can have those monthly fees waived by always carrying a minimum balance, but how many people could do that on a fixed start up budget.
You probably pay up to $179 a year for the privilege of using your own money in your chequing account at your bank. So, think of that as a household, your Husband/Wife, and children also have accounts so as a family (of four) you are paying over $717 a year in bank fees! That is the Unknowingly because you never stopped to do the math. Now it does not seem like much but remember you are doing all the work and it’s your money that was put in their hands.
So now that you know and are willing to save the money, would you stop paying the bank fees and switch to no fee bank account?
Here is the “Option” part we spoke of earlier, Manulife Bank has an advantage checking a online account (personal or business) that pays you an interest percentage to keep your money with them. Now that’s a service that makes sense to us, you get paid to keep your money in your own account with no penalty for using your own money. A bank with several unique features such as listed below:
- no fee daily chequing
- pays interest
- 24/7 live support
- free email money transfers
- free ABM access through the banking network
- mobile banking
Now that free chequing accounts are becoming more popular in Canada, there are many more non brick and mortar banks with high interest savings accounts than Manulife. We like Manulife because of their willingness to help with other financial needs we all need as adults, such as Mortgages, Credit cards, lines of credit, with the emphasis on keeping the money in your hands. No more Fees Lost Unknowingly or Unknowingly!!!!
Contact Us at Henley Financial and Wealth Management and we will help you set up a No Fee, High Interest Paying, Account with Manulife Bank.
A new year means new limits and data. Here’s a list of new financial planning data for 2018 (In case you want to compare this to past years, I’ve included old data as well).
If you need any help with your rrsp deposits or clarification on other retirement issues please do not hesitate to contact Henley Financial and Wealth Management, we are here to ensure your financial success.
Pension and RRSP contribution limits
- The new limit for RRSPs for 2018 is 18% of the previous year’s earned income or $26,230 whichever is lower less the Pension Adjustment (PA).
- The limit for Deferred Profit Sharing Plans is $13,250
- The limit for Defined Contribution Pensions is $26,500
Remember that contributions made in January and February of 2018 can be used as a tax deduction for the 2017 tax year.
More articles on RRSPs
- How to find out your exact RRSP limits
- The proper use of RRSPs: the one formula approach
- Lesser Known Facts of RRSPs
- Do Spousal RRSPs still make sense?
- Advantages of Self-Directed RRSPs
- The TFSA limit for 2018 is $5,500.
- The cumulative limit since 2009 is $57,500
TFSA Limits for past years
More articles on the TFSA
- TFSA Basics: Contributions and Withdrawals
- Understanding the Tax-Free Savings Account (TFSA)
- TFSA or RRSP: Why not do both?
Canada Pension Plan (CPP)
Lots of changes are happening with CPP but here’s some of the most important planning data.
- Yearly Maximum Pensionable Earning (YMPE) – $55,900
- Maximum CPP Retirement Benefit – $1134.17 per month
- Maximum CPP Disability benefit – $1335.83 per month
- Maximum CPP Survivors Benefit
- Under age 65 – $614.62
- Over age 65 – $680.50
Reduction of CPP for early benefit – 0.6% for every month prior to age 65. At age 60, the reduction is 36%.
CPP rates for past years:
For more information on CPP
- Four reasons why you should still take CPP early (post 2011 rules)
- Three current debates of Canada Pension Plan
- How much will you get from Canada Pension Plan in Retirement?
- New proposed changes for CPP
- Will Canada Pension Plan (CPP) be there when you retire?
Old Age Security (OAS)
- Maximum OAS – $586.66 per month
- The OAS Clawback (recovery) starts at $74,788 of income. At $121,720 of income OAS will be fully clawed back.
OAS rates for past years:
|Year||Maximum Monthly Benefit||Maximum Annual Benefit|
For more information on OAS Clawback:
New Federal Tax Brackets
For 2018, the tax rates have changed.
A tax-free compounding account… In your portfolio that may have been over looked – $52,000 for each spouse to be exact, start planning now!
The tax-free savings account (TFSA) is starting to grow up.
Introduced in the 2008 federal budget and coming into effect on Jan. 1, 2009, the TFSA has become an integral part of financial planning in Canada, with the lifetime contribution limit now set to reach $52,000 in 2017.
Start taking advantage of this savings today.
Remember when you thought $5,000 did not amount to much as an investment. If you had taken advantage of this program you could have another $60,000 to $70,000 for each husband and wife invested in savings today. That’s $120,00 -$140,000 of Tax free Value based on the average market return since 2009.
Used correctly the TFSA can supplement income lowering your tax base during retirement. The gain made in a TFSA is tax-free, and therefore so are withdrawals — Did you know? That the money coming out of the account does not count as income in terms of the clawback for Old Age Security, which starts at $74,780 in 2017.
The TFSA has also become a great vehicle for dealing with a sudden influx of wealth. For people who downsize and sell their house or receive an inheritance, this money is already tax-free. Do not make it taxable in the hands of the government again.
Contact me for more information regarding this and other investments that have been overlooked. It never hurts to get a second opinion regarding your future.
You may soon find yourself with a tax refund.
- How should you spend it?
- What is the right answer for you?
- Would you be interested in a value added idea?
Presented by Henley Financial & Wealth Management – please continue to read you may find this of some value.
The average individual tax refund is between $1,500 and $3,000. Not everyone will get a tax return essentially a return means that you paid the government too much in tax during the year and now they want you to have it back… For the chosen few people that do lend the government their own money to invest during the year on a tax free basis, that’s the biggest chunk of discretionary income they’ll see in a year. There’s a lot of temptation to spend this cash as is not readily accounted for so it’s essentially free money.
What would you do with that cash if was suddenly given to you?
Hmm, A Trip, Newest Phone, Clothes, Shoes, Dinner and Drinks (well more drinks than dinner), Raptors Tickets, Concert Tickets and a host of many other ideas come to mind.
Once you see the cheque or the deposit in you bank account a spending rush will come over you. Earning 1% in a high yield savings account does not seem very appealing. Investing in your portfolio for future returns that cannot be seen for years to come does not give you that warm and fuzzy feeling.
You could take a trip of a lifetime. How could that be a bad investment? The experience alone is worth a lifetime of memories. This will subside next month when you realize that you spent the return and then some and have to pay for those memories. Hopefully you took some beautiful pictures to share with your face book and instragram friends. Those will more than make up for the sticker shock price of the trip.
The other items or ideas mentioned are all short term memories but definitely worth the time spent if that’s what you want. Just remember there is a difference between needs and wants.
So what should you do with your tax return? Here is an idea that will work but isn’t sexy at all. Double up on a mortgage payment. Or Pay down a credit card bill as it is the highest interest debt that you are carrying. Either is a good choice…
If you think about it paying down your mortgage with your return you are one month closer to paying off the principle on your house. This is one of the biggest assets you own in your portfolio especially with today’s housing market. Since mortgage rates are historically quite low, you could potentially make more money by investing that return in the market but as we know the market can be very volatile.
In any case it’s just a thought and the value to you in the long run is a great basic investment in yourself and your family.
The greatest compliment we receive is being introduced to family, friends and co-workers. Let us know if you would like to introduce someone to Henley Financial and Wealth Management. Contact us Henley Financial & Wealth Management.
As they say, the cure for high prices is higher prices.
That always seems to make the high prices more reasonable, Its called sticker shock we become acclimatized to paying a high price for our consumer goods.
But the truth at the heart of the collapse in oil prices in 2015, a force that will shape our personal finances in the coming year, is that we will become acclimatized to these low gas prices. In the GTA, it’s good news. The commute is cheaper and so is the cost of heating our homes. It adds up to a tax cut as good as the one the Liberals are giving us.
The downside of cheap gas is the upside to other expensive consumer goods across the board. So much for the savings established at the pump
In the west, where 40,000 industry-related jobs have disappeared, more pain is on the way because the energy rout may only be midstream. Even if it isn’t, more jobs will likely go. Until the price of oil stabilizes, the only thing companies can do is guess and keep cutting to make sure their costs stay below their falling revenues.
It’s hard to recall that 18 months ago, oil was at $110 (U.S.) a barrel. Today it’s trading under $35, two-thirds lower. If you think about that in terms of your household, how would you fare if your family income was cut by 69 percent?
This is all about a fight for control of the world’s oil market, dominated by the Organization for Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the lead. As China’s insatiable demand for energy drove up prices, a search for cheaper supplies made sense. New technologies made it easy to drill into shale formations and fracture the rock to release oil, creating a plentiful supply of energy in North America.
A sign of the times is that the U.S. lifted a 40-year ban on the export of domestically produced oil. That is because fracking is making the U.S. almost energy self-sufficient, just as China’s economy is slowing — and so is its need for oil. In the meantime, Iran is adding two million barrels to world markets as part of its nuclear deal.
The Saudis seeing a long-term threat to their oil power have ensured that OPEC continues to produce at the same pace to keep up market share. The Saudi goal is to drive the higher-cost fracking industry under. Our, even more, expensive oil sands are caught in the crossfire.
OPEC shows no signs of standing down.
In June 2014, with $110 oil, the loonie sat at 92 cents (U.S.). It cost us $1.09 for one American dollar. Today, it was at 72 cents, a drop of 22 percent. Which is $1.38 to $1 at the consumer level!
If oil rebounds, so will the dollar; if not, it may fall further which is something Canadians living close to the borders care a lot about. Even if you don’t live close to the border that cheap flight or vacation in the U.S. is no longer an option.
Toronto share prices are down 9.8 percent year to date. Energy stocks make up about 10 per cent of the TSX and have fared much worse. The TSX Energy Index is down 26 percent.
If oil prices improve, these shares will too.
We climbed out of our 61-cent-dollar hole in 2000, gradually getting to par in 2009 without much inflation. Our exports to the U.S. were cheaper and so more attractive, creating profits and jobs. By substituting Mexican avocados for California ones, we energized our economy without higher prices. Cross your fingers we can do that again.
If we can’t and inflation starts picking up, rates may rise even though the Bank of Canada doesn’t want them to. If so, housing starts will cool, consumer spending will fall and we’ll all have a harder time.
There are a lot of ifs, and’s and maybe’s here and, as always, beware of forecasts. Between now and this time next year, anything can happen. As I stated in a previous article no one can predict the future but much speculation will spin these storylines moving forward. All we can do is live life have fun and enjoy the day as it comes.
Since gas is cheaper in your area fill up and enjoy the ride as it will not last. We know all too well that things go up and down over night. This soon shall pass and we will be talking about something completely different in 12 months time.