The First RRSP

The First RRSP

The first RRSP — then called a registered retirement annuity — was created by the federal government in 1957. Back then, Canadians could contribute up to 10 per cent of their income to a maximum of $2,500. RRSPs still remain one of the cornerstones of retirement planning for Canadians. In fact, as employer pension plans become increasingly rare, the ability to save inside an RRSP over the course of a career can often make or break your retirement.

The deadline to make RRSP contributions for the 2018 tax year is March 1st, 2019.

If you need help or advice with you tax planning or investments we are always available to help

Anyone living in Canada who has earned income has to file a tax return which will create RRSP contribution room. Canadian taxpayers can contribute to their RRSP until December 31st of the year he or she turns 71.

Contribution room is based on 18 percent of your earned income from the previous year, up to a maximum contribution limit of $26,230 for the 2018 tax year. Don’t worry if you’re not able to use up your entire RRSP contribution room in a given year – unused contribution room can be carried-forward indefinitely.

Keep an eye on over-contributions, however, as the taxman levies a stiff 1 percent penalty per month for contributions that exceed your deduction limit. The good news is that the government built-in a safeguard against possible errors and so you can over-contribute a cumulative lifetime total of $2,000 to your RRSP without incurring a penalty tax.

Find out your RRSP deduction limit on your latest notice of assessment clearly stated.

You can claim a tax deduction for the amount you contribute to your RRSP each year, which reduces your taxable income. However, just because you made an RRSP contribution doesn’t mean you have to claim the deduction in that tax year. It might make sense to wait until you are in a higher tax bracket to claim the deduction.

When should you contribute to an RRSP?

When your employer offers a matching program: Some companies offer to match their employees’ RRSP contributions, often adding between 25 cents and $1.50 for every dollar put into the plan. Take advantage of this “free” gift from your employers.

When your income is higher now than it’s expected to be in retirement: RRSPs are meant to work as a tax-deferral strategy, meaning you get a tax-deduction on your contributions today and your investments grow tax-free until it’s time to withdraw the funds in retirement, a time when you’ll hopefully be taxed at a lower rate. So contributing to your RRSP makes more sense during your high-income working years rather than when you’re just starting out in an entry-level position.

A good rule of thumb: Consider what is going to benefit you the most from a tax perspective.

When you want to take advantage of the Home Buyers’ Plan: First-time homebuyers can withdraw up to $25,000 from their RRSP tax-free to put towards a down payment on a home. Would-be buyers can also team up with their spouse or partner to each withdraw $25,000 when they purchase a home together. The withdrawals must be paid back over a period of 15 years – if you do not pay one fifteenth of the borrowed money, the amount owed in that calendar year it will be added to your taxable income for that year.

Unless it’s an emergency then it’s generally a bad idea to withdraw from your RRSP before you retire. You would have to report the amount you take out as income on your tax return. You won’t get back the contribution room that you originally used.

Also, your bank will hold back taxes – 10 percent on withdrawals under $5,000, 20 percent on withdrawals between $5,000 and $15,000, and 30 percent on withdrawals greater than $15,000 – and pay it directly to the government on your behalf. That means if you take out $20,000 from your RRSP, you will end up with $14,000 but you’ll have to add $20,000 to your taxable income at tax time. This is done to insure that you pay enough tax upfront for the withdrawal at the source so that you are not hit with an additional tax bill (assessment) when you file your tax return.

What kind of investments can you hold inside your RRSP?

A common misconception is that you “buy RRSPs” when in fact RRSPs are simply a type of account with some tax-saving attributes. It acts as a container in which to hold all types of instruments, such as a savings account, GICs, stocks, bonds, REITs, and gold, to name a few. You can even hold your mortgage inside your RRSP.

If you hold investments such as cash, bonds, and GICs then it makes sense to keep them sheltered inside an RRSP because interest income is taxed at a higher rate than capital gains and dividends.

For more information regarding WealthSense investments and RRSP’s

A new year means new financial limits.

A new year means new financial limits.

Here’s a list of data for 2019 

Pension and RRSP contribution limits

  • The new limit for RRSPs for 2019 is 18% of the previous year’s earned income or $26,500 whichever is lower less the Pension Adjustment (PA).
  • The limit for Deferred Profit Sharing Plans is $13,615
  • The limit for Defined Contribution Pensions is $27,230

Remember that contributions made in January and February of 2019 can be used as a tax deduction for the 2018 tax year.

Tax YearIncome fromRRSP Maximum Limit

TFSA limits

  • The TFSA limit for 2019 is $6,000.
  • The cumulative limit since 2009 is $63,500

TFSA Limits for past years

YearAnnual LimitCumulative Limit

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) – $57,400
  • Maximum CPP Retirement Benefit – $1154.58 per month
  • Maximum CPP Disability benefit –  $1362.30 per month
  • Maximum CPP Survivors Benefit
    • Under age 65 – $626.30
    • Over age 65 – $692.75

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:


Old Age Security (OAS)

  • Maximum OAS – $586.66 per month
  • The OAS Clawback (recovery) starts at $77,580 of income.  At $125,696 of income OAS will be fully clawed back.

OAS rates for past years:

YearMaximum Monthly BenefitMaximum Annual Benefit

New Federal Tax Brackets

For 2018, the tax rates have changed.

Lower Income limitUpper Income limitMarginal Rate Rate

Remember these rates do not include provincial tax. For new provincial rates, visit the CRA site.

2018 Financial Planning Guide: The numbers you need to know

2018 Financial Planning Guide: The numbers you need to know

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.

Financial Planning CalculationMore articles on RRSPs

TFSA limits

  • 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

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

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
2018 $586.66 $7,039.92
2017 $578.53 $6,942.36
2016 $570.52 $6,846.24
2015 $563.74 $6,764.88
2014 $551.54 $6,618.48
2013 $546.07 $6,552.84
2012 $540.12 $6,481.44
2011 $524.23 $6,290.76

For more information on OAS Clawback:

New Federal Tax Brackets

For 2018, the tax rates have changed.


Do you have a plan?

Do you have a plan?

Most people are concerned about having enough money to meet their obligations at or in retirement. Using traditional planning methods such as buy term and invest the difference, and live off the earnings and retain capital are the most common methods used today.

This type of planning only works if you follow a regimented plan and you don’t spend the difference.  If you fail to invest the rest… it lessens the quality of life that one should be able to enjoy in the active years of retirement! It is upside down and backwards!

With our low-interest rate environment, it’s difficult to find sustainability in your portfolio. One way to extend the life of your capital is to consider equities in the form of dividend earning stock.

This tends to be a source of hedging against tax, inflation, fees and other wealth transfers, however, using equities means taking more risk.

Who wants to take more risk leading into retirement?

If you would like advice on reducing the risk, or with what type of investment vehicle may be best for your situation please contact us at

Visit us at at Henley Financial and Wealth Management

If indeed you are investing in equities please understand the risk involved within your investable assets. Investing in equities will depend on your risk tolerance and the reality of the situation. During retirement, you should lower the amount of Equities within your portfolio to protect you against the volatility of the markets. Leading up to retirement Equities can help build your portfolio but you must be able to accept the risk of volatility which the markets will provide.

Guaranteed Lifetime Withdrawal Benefit products offer a guaranteed income bonus and can provide a stable environment for investments moving forward with the option of a guaranteed lifetime income. This takes the guess work out the planning and provides you with a pension like asset.

Another strategy is to have adequate permanent life/asset insurance that frees up other assets such as non-registered savings, investment property equity or retained earnings in a business.

Having enough life insurance allows one to spend down taxable savings RRSP’s or RRIF’s during early/active retirement years (age 60-75) whereby you’re actually reducing the tax burden overall.

By deferring the use of RRSP’s and RRIF’s the tax on these assets is actually growing as invested capital. By using the funds sooner, rather than later, (yes you are paying more tax now) but you are paying a known tax, you have control over what the tax amounts are. If you wait long enough the government dictates the amount of tax owed yearly. Meaning if you defer too long, one conceivably can pay a much greater tax than ever saved by using the registered plan strategy!

Access equity sitting dormant in your paid off or very low debt home could also be a strategy that you could use during retirement. The reverse mortgage has been a component of retirement planning  over the last few years based on the low-interest rates on borrowed money. Again this strategy requires some professional advice.

Life insurance lowers the pressure of the capital to perform and lessens market volatility risk. It also lessens government control risk. Meaning, by using a registered plan strategy you absolutely are in a partnership with the government. RRSP and RRIF products are very much a controlled revenue source for the C.R.A. your strategy will dictate the how much income they will receive on your behalf.

If you are interested in creating more spendable income during the early retirement years without fear of running out of money we can show you how. For the most part, we can increase your spendable income into and during retirement without any additional out of pocket expense!

If we can recover 1%-5% of gross income from dollars that are unnecessarily being transferred away from you through tax, fees and other opportunity costs which can be redistributed to your retirement plan and increase lifestyle along the way. Would you be interested?

Let us provide you with an overall review of your entire investment and financial plan. We will do this with no obligation from you to move forward with any recommendations we may have, or we may find that you are well on your way and continue on that path. Either way, a second opinion never hurt anyone.

Ask yourself these 10 questions? They will help you decide if you are ready…

1. When do you want to retire?

2. What percentage of your current income do you expect to need in retirement?

3. How do you plan to spend your money in retirement?

4. Have you considered your lifestyle needs in retirement?

5. What guaranteed sources of income can you count on in retirement?

6. Do you plan to work part-time or full-time in retirement?

7. How do health and wellness factor into your retirement plan?

8. Are you ready for the unexpected events in life?

9. How will you keep your money working in retirement?

10. Do you plan to leave a legacy?

Like everyone around you saving has become second nature. You have saved wisely and built a sizeable retirement fund to provide for your retirement.  The next question is one that will confuse many… Are you ready?

imagesThink about how you will keep your money growing. Talk to a financial security advisor about investment solutions for retirees.

Let us help you at Henley Financial & Wealth Management.

Contact us at for more information regarding investment solutions.

Above are 10 questions… Questions that need answers so that you can retire into the lifestyle that you have become familiar with living. Studies show us that you spend more money on the weekends (or days off) because these are generally the days you have time to spend your hard earned money. So consider this in retirement every day is a weekend or a day off.

When do you want to retire? This is a personal question with many variables being attached for each individual. How much money do you have saved? Do you like your job? Are you healthy? When we change over from a saving to spending cycle the timing of your retirement is crucial to building a fund and assessing how long you will need it to last. If you like your job you may want to work longer as a consultant, this will help fund your retirement income. Although health will be the biggest factor to your retirement date, many workers are forced into retirement, not because of age but health issues. I guess it comes down to want to retire or need to retire hopefully the decision is yours to make.

What percentage of your income today will you need in the future to retire? This is a number that needs to be calculated into the retirement plan. Most financial advisors will show you a figure of 75% of today’s income going forward. To be honest that is a generous figure. Most of your big-ticket items will have been paid for by this time. You must remember however that you will are likely to make the most income in your lifetime during the last 5 years of employment before you retire. So your final valuation is something that must be continually updated while planning for the future.

What are your current spending habits? Are you a saver or a spender? Because these habits will not likely change in retirement, and as always you must plan for the unexpected events which will be out of your control. It goes without saying savers are more likely to save more and have more than the spenders, so spenders must work to save more now to have more in retirement. This is a common sense approach but you would be surprized by the lack of respect for compounding interest and how it works in your favor over time.

imagesHow many days a year will you travel or play golf? If you retire at age 65 and live till the age of 90… meaning you will have less than 10,000 days or 9,125 days to be exact. That would be a fair amount of travel and golf for anyone; some planning will have to be involved regarding the answer to those questions. I believe these answers to be the top answers to the question of… what do you want to do when you retire? So to live that lifestyle you will have to plan for future expenses that you may not already have. If you buy a condo in Florida you will have to account for the condo fees and associated upkeep costs of two homes to allow for the travel and golf adventure you have planned. If you plan to travel the world you will have to account for the currency exchange rates and the costs associated with travel to the exotic locations you want to visit.

Calculate how much income you’ll receive during retirement – from sources such as Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) payments. Then, determine how much additional income you’ll need and where this will come from. While investment income is a nice bonus, you shouldn’t rely on it to pay for necessities.

When you consider retirement planning, make sure to account for unpredictable events – both financial and personal. As we said before plan for the unexpected. Make sure your retirement savings are strong enough to support you through a future economic downturn, and a rise in the cost of living and a long life.

If you plan for the future you will be able to enjoy life to the fullest, if you fail to plan for the future it will get away from you and your plans will have to be alterred. The choice is yours choose wisely.



Helping you understand…Part 2

Helping you understand…Part 2

You needed to save and invest for retirement, so you open an RRSP and contributed as much as you can each year.

Sure, the saving part is tough. And, of course, investing always had its challenges. But at least, we all know that an RRSP is the easiest way to invest for our future. We do this because government advises us that we should.

Then in 2009, along came the TFSA – tax-free savings account. This was started by the government to give those who had maxed out their RRSP contributions another place to invest. But did they really need a place to put another $5,000? No! But it was a government handout during an election campaign to serve the 4% of the population that wanted more room in their investment portfolio.

Most of the population are probably going to have to prioritize how they invest for their future. They will have to figure out which vehicle is right for them to focus their investment dollars. When you make an RRSP contribution, you get to deduct that amount from your taxable income. The investments inside your RRSP grows on a tax-deferred basis as long as they stay in the plan. Meaning when money is withdrawn directly from the RRSP, or from the registered retirement income fund (RRIF), or an Annuity to which the RRSP has been converted will be taxable.

Let’s say you have invested your money and your RRSP has grown to $1,000,000, that’s a nice size portfolio. You have worked hard to establish that piece of your financial security for retirement. But did you know that you also have a partner – the government – who is waiting patiently for their share!  As we stated above when you start to withdraw on your investment you will be taxed at the rate of your tax bracket.

A TFSA is the mirror image of an RRSP. Although you contribute after-tax dollars. So you don’t get a deduction for your contribution. But once the money is in the plan, it not only grows free of tax but also comes out free of tax. No tax is ever paid on this investment!

So why are we all not investing in a TFSA? There is definitely a circumstance that allows for either investment, you have to know which one will suit you best from a financial standpoint.

To help you understand the federal government introduced TFSAs, and created Chart 1:

Pre-tax Income $1,000 $1,000
Tax $ 400 N/A
Net contribution $ 600 $1,000
Value 20 years later @ 6% growth $1,924 $3,207
Tax upon withdrawal (40%*) N/A $1,283
Net withdrawal $1,924 $1,924
* The marginal tax rate — the rate of tax charged on the last dollar of income

This chart shows how a TFSA contribution is made with after-tax dollars while withdrawals are tax-free. And an RRSP contribution is made with pre-tax dollars  while withdrawals are taxable.

The chart also demonstrates that if you are in the same tax bracket when  you contribute and nothing changes and you remain in the same tax bracket at the time of withdrawal, then TFSAs and RRSPs work out to be the same. This is really simplified math and generally not the case for many investors. But it does show how these investments work in  its easiest form.

What you should know is if your tax bracket is lower at the time of withdrawal than at the time of contribution, the RRSP will win. But, if your tax bracket is higher at the time of withdrawal than at the time of contribution, the TFSA will win. The fluctuation in tax brackets is the tricky part; the perfect scenario is to be in a lower tax bracket during your retirement years.

Most of us contribute to RRSPs with after-tax savings and then spend the refund. We talked about this before in another article and it is your money to spend. Although if you invest that refund in yourself what would happen?


See the Chart 2 below:

Contributed after-tax savings $1,000 $1,000
Value 20 years later @ 6% growth $3,207 $3,207
Tax upon withdrawal (40%) N/A $1,283
Net withdrawal $3,207 $1,924

Now that’s a savings but remember this was after tax money that came from a refund and   was deposited into savings… yes, it was free money from your tax return and the initial investment into an RRSP. This shows how to use tax-free money (your refund) to your advantage keeping it tax-free moving forward.

So which investment is right for you?

TFSAs are very flexible. You can take money out of a TFSA at any time and then put it back in future years. We see this vehicle as investment portfolio for someone who is investing $5,000 or less into his or her plan a year. In other words, if you are in a low tax bracket then you may be better off with TFSA because you are not benefiting from the tax deduction.  A TFSA will be more fitting for your situation and you will not have to worry about being hit by the taxmen at retirement.

The RRSP investment is for the person who wants to lower their taxable income and is trying to invest 10% or more of their earned income into a retirement plan. As stated above the money will grow tax deferred within the RRSP until the funds are withdrawn. If you receive a tax refund that money can be used to build an alternative investment portfolio. As we have seen from chart 2 above, take your return and invest it into a TFSA you will be further ahead in the future. That alternative investment will grow tax-free and will not be taxed on withdrawal.

There is no wrong or right answer on which way to go when investing for retirement. The key is to have a plan moving forward and to stick with that strategy so that you can create a solid financial plan.

Many Canadians who are using TFSAs as retirement-savings vehicles are going to have trouble avoiding the temptation to withdraw from their plans. Many will rationalize the need to withdraw from their future retirement savings for the pleasure of spending it on something they want now. With an RRSP, the threat of paying tax on your withdrawal is a deterrent as no one wants to pay tax to the government so they can buy that must have item. Retirement planning will require some restraint and understanding when using a TFSA and savings vehicle.

Finally, some advice that will serve you well:

  • If you choose to invest in RRSPs, don’t spend your refund; Invest in yourself!
  • If you choose to invest in TFSAs, don’t spend your TFSA;
  • Whatever investment you choose, save more than you are today by trying to increase your investment dollar on a yearly basis!

Above are ideas, which may help you decide which plan is right for you, as always we at Henley Financial & Wealth Management are here to help.

You may also contact us at the following  with any questions or thoughts you may have regarding investing in your future.


Helping you understand… How RRSP’s Work!

Helping you understand… How RRSP’s Work!

How RRSPs work

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, which you use to save for retirement. RRSPs have special tax advantages.

3 tax advantages

  • Tax-deductible contributions – You get immediate tax relief by deducting your RRSP contributions from your income each year. Effectively, your contributions are made with pre-tax dollars.
  • Tax-sheltered earnings – The money you make on your RRSP investments is not taxed as long as it stays in the plan.
  • Tax deferral – You’ll pay tax on your RRSP savings when you withdraw them from the plan. That includes both your investment earnings and your contributions. But you have deferred this tax liability to the future when it’s possible that your marginal tax rate will be lower in retirement than it was during your contributing years.

How much you can contribute

Anyone who files an income tax return and has earned income can open and contribute to an RRSP. There are limits on how much you can contribute to an RRSP each year. You can contribute the lower of:

  • 18% of your earned income in the previous year, or
  • the maximum contribution amount for the current tax year: $24,930 for 2015.

If you are a member of a pension plan, your pension adjustment will reduce the amount you can contribute to your RRSP.

You can carry forward unused contributions

If you don’t have the money to contribute in a year, you can carry forward your RRSP contribution room and use it in the future.

Investments you can hold in an RRSP

Investments that can be held in an RRSP are called qualified investments. They include:

  • Cash
  • Gold and silver bars
  • Gic’s
  • Savings bonds
  • Treasury Bills
  • Bonds(including government bonds, corporate bonds and strip bonds)
  • Mutual funds (only RRSP-eligible ones)
  • ETF’s
  • Equities (both Canadian and foreign stocks)
  • Canadian mortgages
  • Mortgage-backed securities, and
  • Income Trusts

Investments you can’t hold in an RRSP

  • Precious metals
  • Personal property such as art, antiques and gems
  • Commodity futures contracts

As of March 22, 2011, you also can’t hold any of the following investments in your RRSP:

  • Prohibited investments – Examples: debt you hold, investments in entities in which you hold an interest of 10% or more.
  • Non-qualified investments – Examples: shares in private holding companies, foreign private companies and real estate.

If you buy these investments for your RRSP, you will be charged a tax equal to 50% of their fair market value. You may apply for a refund if you dispose of the investment from your RRSP by the end of the year after the year the tax applied.

Understand the risks

The value of your RRSP may go down as well as up, depending on the investments it holds.

How long your RRSP can stay open

You must close your RRSP in the year you turn 71. You can withdraw your RRSP savings in cash, convert your RRSP to a RIFF or buy an Annuity.

Where to open an RRSP account

  • Banks and trust companies
  • Credit unions
  • Mutual fund companies
  • Investment firms (for self-directed RRSPs)
  • Life insurance companies

Henley Financial and Wealth Management  We are here to help you create financial security. Contact us for more information regarding your RRSP.

You may also contact us at the following

Our next article we will discuss RRSP or TFSA?

Part 1 of 2… The great debate pay down your Mortgage or contribute to your Rrsp!

Part 1 of 2… The great debate pay down your Mortgage or contribute to your Rrsp!

Part 1…

I have been asked many times which is better?  Paying down the mortgage or contributing to your RRSP…

If only there was a simple answer, do this or do that! I think there is room for both but that would depend on who you talk to and how you manage debt.

We are in the midst of the lowest interest rates in years and because of this, the mortgage rates have followed suit. In the 80’s when interest rates were hovering in the 20% range and mortgage rates were outrageous, I would have told you to pay down your mortgage no questions asked.

With the average discounted mortgage rate hovering around 2.7%, you’d think prioritizing your RRSPs over your mortgage would be a no-brainer, right?

Not necessarily. If the historical rate of return of 10% applied to today’s market then the dilemma would be solved. But the markets have changed. A well-diversified, balanced portfolio (typically 60% equities and 40% fixed income) can return a 5% guaranteed base (within some portfolios).

When it comes to the Mortgage vs. RRSP debate I believe there are three simple questions you should ask yourself:

1) Are you a saver or spender?

Can you resist the last cookie in the package, or stop yourself from going for seconds at the buffet. The real question is whether you are a disciplined saver.

If, for instance, you paid off your student loans and then used that surplus of cash to invest in your retirement, or to save for a down payment on a home, then you, my friend, are a disciplined saver. You would benefit from paying off your mortgage first.

However, if you bought a car and went on a vacation once you had a bit of extra cash after paying back your student loan, then paying off your mortgage—a non-deductible debt—may not be in the best plan of attack because you are a spender. You should probably contribute to your retirement.

2) Are you worried about Debt?

What keeps you up at night? And be honest. If it’s the idea of having debt, then pay down your mortgage first. If you lose sleep at the thought of not having enough money in your retirement years, then contribute to your RRSP first.

3) Have you done the math?

If the interest rate on your mortgage debt is 2.5% higher than the average annual return from your retirement portfolio then ignore your RRSP and pay down your debts.

Keep in mind, that the average annual rate of return for a balanced portfolio with a guaranteed base of 5% (on some portfolios), is only a couple of percentage point higher than most mortgage rates these days.

Every investor should prioritize his or her debts. Pay off high-interest rate credit cards first, and then move to loans and lines of credit, then your lower-interest rate mortgage. There is good debt and bad debt; good debt is a debt with an appreciating asset attached to it such as a home. Bad debt would be High-Interest Credit cards, Unsecured Lines of Credit, and High-Interest Loans, which are attached to a liability.

By thinking about these three questions you can determine whether paying off, your mortgage is the right move for you, or if you should be investing in your retirement fund.

If you’re still in doubt try a Mortgage vs. RRSP calculator. I have chosen this one by Empire Life. It is simple to use and requires no sign in or login details. You must be honest with your input of values to find any benefit in the process.

In my next article, I will show you how you can potentially pay down your Mortgage by investing into your RRSP.

As always you can contact us at

If you would like information regarding a 5% guaranteed base return during this volatile time in the market don’t hesitate to contact us as we are happy to help you save for the future.

Who Should You Vote For? Be informed so you can vote on October 19th!

Who Should You Vote For? Be informed so you can vote on October 19th!

So while I was looking for answers on who I should vote for… I came across this article that breaks down the promises:

Campaign promises that affect your personal finances

Where the parties stand on taxes, student debt, pensions & more

by MoneySense staff
October 13th, 2015
We’re in the final week of the federal election campaign and all three major political party leaders have finally unveiled their full campaign platforms. Here’s an overview of what NDP leader Tom Mulcair, Liberal leader Justin Trudeau and Conservative leader Stephen Harper have promised as it relates to your personal finances.

NDP: Cancel income splitting for families with kids under the age of 18 but keep it for seniors; eliminate the CEO stock option loophole that allows wealthy CEOs to avoid taxes on 50% of income received from cashing in company stock (with proceeds invested into eliminating child poverty); increase investment in the Working Income Tax Benefit (WITB) by 15% to further support working Canadians who live below the poverty line; introduce income averaging for artists.

Liberals: Cut the middle income tax bracket from 22% to 20.5% for Canadians earning between $44,700 and $89,401 a year, amounting to savings of $670 a year (or $1,340 for a two-income household); create a new tax bracket of 33% for those earning $200,000 a year or more; reduce Employment Insurance (EI) premiums to $1.65 per $100; have the Canada Revenue Agency (CRA) contact people who have tax benefits but aren’t collecting them; cancel income splitting for families but keep it for seniors.

Conservatives: Introduce a “tax lock” plan to prohibit federal income tax and sales tax hikes along with increases to payroll taxes such as EI premiums for the next four years; cut EI premiums in 2017 from $1.88 to $1.49 per $100; phase in a new $2,000 Single Seniors Tax Credit, providing tax relief of up to $300 a year for seniors with pensions starting in January 2017; increase the Child Care Expense Deduction by $1,000 for children under age 7 to $8,000, to $5,000 for kids ages 7 to 16 and to $11,000 for children with disabilities.

Student Debt
NDP: Phase out interest on all federal student loans over the next seven years, saving students up to $4,000 in interest costs and boost funding for the Canada Student Grants program for low- and middle-income students and/or students with dependents by $250 million over four years.

Liberals: Increase the maximum Canada Student Grant to $3,000 per year for full-time students and to $1,800 per year for part-time students; increase the income thresholds for Canada Student Grant eligibility, giving more students access to the program; cancel existing textbook tax credits; eliminate the need for graduates to repay their student loans until they are earning at least $25,000 per year; invest $50 million in additional annual support to the Post-Secondary Student Support Program for Indigenous students attending post-secondary school.

Conservatives: Eliminate the income threshold used to assess the Canada Student Loans Program, so that students who work and earn money while studying won’t be denied access to the program for that reason; reduce the expected parental contribution amount to increase loan accessibility to approximately 92,000 students across Canada; expand the number of low- and middle-income students who are eligible for the Canada Student Grant program by making these grants applicable to short-term, vocational programs; increase the maximum annual grant for low- and middle-income families from $3,500 to $4,000.

NDP: Introduce a green home energy program to help retrofit at least 50,000 homes and apartment buildings making them more efficient and lowering energy bills; create 365,000 affordable housing units across Canada; mandate the Canada Mortgage and Housing Corporation to provide grants and loans to construct at least 10,000 affordable and market rental units, with any revenues to be reinvested back into rental housing supports.

Liberals: Start a new, 10-year investment in social housing infrastructure, prioritizing affordable housing and seniors’ facilities (including building more units and refurbishing existing units); encourage the construction of new rental housing by removing all GST on new capital investments in affordable rental housing; loosening the existing qualification rules for the Home Buyers’ Plan to allow more Canadians affected by sudden and significant life changes to access their RRSP savings for a down payment; review escalating home prices in high-priced markets, including Toronto and Vancouver, and review all policy tools that could keep homeownership within reach for more Canadians.

Conservatives: Establish a new, permanent Home Renovation Tax Credit which will allow homeowners a tax credit on up to $5,000 per year on home renovations. Increase the first-time Home Buyers’ Plan from $25,000 to $35,000 per person with a goal of more than 700,000 new homeowners by 2020.

Child Care
NDP: Create 1 million new child care spaces over the next eight years and cap their cost at $15 per day; add five weeks of parental leave for the second parent, extending the program to include same-sex couples and adoptive parents; doubling parental leave time for parents of multiples; provide regular EI access to parents who find themselves out of work after taking parental leave.

Liberals: Create a flexible parental benefits plan allowing parents to receive benefits in smaller blocks of time—for example, once every two weeks rather than once per month—and make it possible for parents to take a longer leave—up to 18 months when combined with maternity benefits, although at a lower benefit level; scrap the Universal Child Care Benefit for the wealthiest families, and instead introduce the Canada Child Benefit that will give the majority of families up to $2,500 more, tax-free, every year (typically for a family of four).

Conservatives: Increase parental leave to 18 months, allowing parents to take up to six months of additional unpaid leave; allow self-employed parents to earn money without impacting EI payments; offer choice between full parental leave EI payments for 35 weeks, or extend those payments, at a lesser rate, for up to a maximum of 61 weeks; women receiving EI maternity benefits will also be able to earn employment income under the Working While on Claim pilot project (this is currently permitted for those receiving EI parental benefits).

NDP: Reduce the annual Tax-Free Savings Account (TFSA) contribution limit from $10,000 to $5,500.

Liberals: Cut the TFSA contribution limit from $10,000 to $5,500 annually.

Conservatives: Double the Canada Savings Education Grant (CESG) contribution from 10 to 20 cents for middle-income families and from 20 to 40 cents for low-income families on the first $500 put into Registered Education Savings Plans (RESPs) each year, amounting to as much as $2,200 more per child in additional grant money.

NDP: Convene a first ministers’ meeting within six months of taking office to come up with a plan and a timetable for expanding the Canada and Quebec Pension Plans; scrap the Conservatives’ plan to gradually hike the age of eligibility for Old Age Security (OAS) benefits to 67 from 65 over six years starting in 2023; boost funding for the Guaranteed Income Supplement (GIS) by $400 million, a move aimed at lifting 200,000 of Canada’s poorest seniors out of poverty.

Liberals: Restore the eligibility age for OAS and GIS back to 65; introduce a new seniors price index to ensure benefits keep up with rising living costs; introduce a 10% boost to the GIS for single, low-income seniors; leave pension income splitting for seniors intact.

Conservatives: Support a voluntary expansion of CPP retirement benefits funded by workers, not employers.

Consumer Protection
NDP: Update the Consumer Protection Act to cap ATM fees at a maximum of 50 cents per withdrawal; ensure all Canadians have reasonable access to a no-frills credit card with an interest rate no more than 5% over prime; eliminate “pay-to-pay” by banks in which financial institutions charge their customers a fee for making payments on their mortgages, credit cards, or other loans; take action against abusive payday lenders; lower the fees that workers in Canada are forced to pay when sending money to their families abroad; direct the CRTC to crack down on excessive mobile roaming charges; create a Gasoline Ombudsperson to investigate complaints about practices in the gasoline market.

Liberals: The party has not included any specific measures related to consumer protection in its election platform.

Conservatives: Continue push for greater choice and lower fees in the wireless sector; grant the federal Competition Commissioner the authority to investigate the Canada-U.S. “price gap” on consumer goods; banning “pay-to-pay” practices.

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When should you invest?

When should you invest?

We as humans tend to get caught up in media hype about when that next stock market plunge will come. Especially now when the markets have been in the midst of the best run in its history.

At some point what goes up must come down…

In nearly 90 years of market history, if you bought stocks on the absolute worst day the point where the market is at it’s highest peak. The average time to make your money back has been three years. It shouldn’t make you shy away from investing in the markets. But we hear time and time again, “Stay away from the markets because you will lose your money”.

Nobody likes to lose their money but it does not stop us from going to the casino or buying lottery tickets.  We gamble with a chance of beating the odds, so why is it that most people believe that they should always beat the markets on performance.

Of course, while we can tolerate three years to get our money back. You’re probably thinking, what if the big one comes and the world ends?

Let’s look at the 2008 financial crisis we thought that was the end, I remember people talking about how we are going back to the Great Depression. If you got in at the peak of the market the worst day, it would have taken 5.5 years to recoup your money.

Not bad considering if you invested the day before the 1929 crash, it would have taken you 25 years to be back in the positive. That’s a long time, even for a long-term investor. Many of the people I’m writing this for did not even have parents who were born when that happened. We are 86 years past that historic fall in times, and the media has no problem reliving that moment in history if the market shows any signs of correction.

So in 90 years of stock market history, only the Great Depression took longer than a decade to recoup your money. And only four times since did it take longer than 5 years to get back to gains.

The Facts:

While economists might disagree over the exact definition of a bear market, most financial professionals consider a 20 percent drop in the market from its previous high to be a pretty good indicator that the market is down. The problem is, few investors actually pick the bottom, and those that do are probably more lucky than smart. The primary factors that drives market prices up or down, and the stock market is no exception. If there are more stockholders who want to sell their stock than there are investors who are willing to buy, the price per share drops, driving the stock market down. Plenty of factors can influence this, company performance, positive or negative news about specific companies or industries, world events and political changes. So once again media creates frenzy as doom and gloom sells, and seriously who wants to hear about the good times being had by all invested in the market.


It is possible to make greater returns during a down market than in an up market, for the simple reason that stocks have the potential to move higher from a lower starting point. For example, a $1,000 investment at the stock market’s peak in 1929, just prior to the start of the Great Depression, would have been worth only around $170 by the time the market bottomed out in 1932. But if you had held on to your stocks until 1959, around 27 years, your original investment would be worth more than $9,500, for a total annualized return of around 7.8 percent. If you had waited and invested that same $1,000 at the bottom of the market in 1932, your total annualized return by 1959 would have been 16 percent return on investment. Not bad, but who would have done that because certain doom was happening.


So should we invest when the market is down? That seems obvious but human nature does not allow us to invest in a market going down, as we believe the end will happen. But history shows us that what goes up must come down and what comes down will definitely go up! The graph clearly shows how a market goes up and down… If we follow the market from 1900 we see a steady increase from the beginning to now, yes the market drops but it always rebounds within certain time frame to better than average returns depending on the cycle of the fall.

Whether you buy stocks in an up market or a down market, you are more likely to earn strong, positive returns if you buy stocks for the long haul. Just remember that buying in down markets present opportunities. Holding your investment during a down turn is vital to coming out ahead; as we know if you don’t sell in haste then you have lost nothing. But if you sell because of emotion you must accept the consequence of your losses. You cannot lay blame as history dictates the value of investing for the long term.

The purpose is to show you that you should buy low and sell high but regardless of your timing. You must have a secure financial plan that does not include emotion.

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