We often find ourselves lured by the thought that there are shortcuts to living a wealthy lifestyle. We may dream about winning the lottery, investing in the next enormous stock tip, or having that one business idea that becomes the latest hit. If only you had jumped on that stock tip that was guaranteed to make you rich. We have all been given the stock tips that will make us rich – but the only people getting rich on the tips are the people who truly know what they are doing. If getting rich is so easy, why are only 4% of the Canadian population considered rich?

What can you do right to accumulate wealth in Canada?

Wealth is not built overnight and since only one percent of our population’s wealth has been inherited. Most wealthy Canadians have built their wealth one step at a time. One of the key habits of wealthy people is their ability to create a systematic disciplined savings plan. If you want to succeed then develop a plan that pays yourself first. Put a percentage of your paycheck into a savings portfolio before any other expenses or deductions are incurred. Just think if you could save 5% – 10% of your income before expenses how much money would you have saved in a year? Continue that over a few years with the added value of compounding interest you would have created a savings portfolio with incredible growth potential.

Keep debt in check

Ever wonder what a wealthy person looks like. The typical wealthy person might not be the one that drives the nice new Mercedes, lives in the biggest house, or wears the top designer clothes. Rather, the millionaire next door is the person that has lived in the same bungalow they have lived in for the past 20 – 30 years, they may drive a nice car but it is an older well-taken care car with lower mileage. They live within their means.

Know where your money is going

Most wealthy people not only live below their means but also are very conscious of where they spend their money. If you want to become wealthy, you should develop a habit of tracking where you are spending your money every month. Budgeting can be a very intimidating word but the fact remains, it is an essential habit for wealth accumulation.

Avoid debt

Wealthy Canadians make a very conscious effort to avoid, minimize and pay off debts. It is so easy in our society to access debt. But if don’t spend money you don’t have. You will be able to build wealth with the money you do have.

Maximize income

There is a correlation between wealth and income. While this makes sense, it may not always be easy to just go out and increase your income so you can increase your wealth. Building wealth will take some effort and your wealth will be directly correlated to your situation. Wealth has a different value for everyone, for instance, if you earn $50,000 a year and you managed to put $5,000 into your savings portfolio that would be incredible. Now, what if you could earn a 6% return on investment compounding interest per year on that investment (strictly stated for illustration purposes) – that would mean over the next 8 years you would have saved just over one year’s salary. Given the same time frame and math, the same can be said for someone earning double the amount and saving $10,000 a year. It’s all relative when it comes to maximizing your savings.

Own things that appreciate

A majority of wealthy people are on their way to owning their own home. Owning your residence creates a positive net worth on your balance sheet. This intern creates a positive asset that is used when discussing wealth. Besides, having equity in your home, your newly found saving plan is also considered an appreciating asset. The next time you put your money into something, ask yourself if it is an appreciating asset or a depreciating asset.

Get professional advice

Wealthy people typically work with professionals to help them accumulate, manage and protect their wealth. This might include accountants, lawyers, and financial advisors. Although they use professional advisors, they ultimately make the final decisions themselves. If you want to become wealthy, you must seek help but understand that you are always the one to decide on when to move forward on the recommendations given.

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.

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 info@Henleyfinancial.ca

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 information@henleyfinancial.ca 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… 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 Info@henleyfinancial.ca

Our next article we will discuss RRSP or TFSA?

What can we learn from our past?

What can we learn from our past?

1987 was our first experience with a violent correction in financial markets since 1929 and it taught us a few things about investing. Or so you would think!

The crash of 1987 was a violent correction in financial markets. Share prices had been on a tear during the first half of the year. Year-over-year through August, the Dow Jones was up 44 per cent. The TSE, as it was called then, was up 34 per cent year-to-date. Good times were rolling. Although this is nothing like what has happened in the last part of 2015 and the beginning of 2016. Good times have been rolling since the correction of 2008 -2009.

In October of 1987, things fell apart. The psychology turned on hints that interest rates might rise and a sense that prices had galloped ahead too far, too fast. Markets trembled on Fri., Oct. 16. Monday, Oct. 19, saw a record 23 per cent drop for the Dow Jones Industrial Average, and 11 per cent drop for the Toronto Stock Exchange. Sounds and looks familiar to all things we hear today.

The scale of the collapse was well beyond anyone’s ability to measure; the damage was the worst since 1929. Early forms of computer trading, which sold blocks of shares as prices fell, helped pile on the downward pressure.

Ever wonder what tycoons like Jim Pattison or Warren Buffet did when everyone is screaming that the world will end in the face of market corrections. They bought shares, mostly in blue chip companies. In the face of a total market collapse, they would be diving in. Why not, opportunities like this didn’t come along very often — great companies with great businesses at a bottom of the barrel prices.

When I started in this business I would hear the seasoned veterans at round table talks advocate for buying low and selling high. Which sounded like reasonable advice to me, and if I followed their advice I would create a sound financial investment portfolio for my clients.

Markets always seem to recover, regardless of the pessimists. The Dow ended 1987 with a small gain, as did the TSX, which was up 3 per cent on the year. It takes a while for the lessons to sink in, but here’s how to look back on that experience

imagesNobody can predict the future though many claim they can. How long or lasting will this setback be is only a guess by anyone claiming to know. In 1987 and in 2001, the corrections were short and sharp.

In 2008-09, it lingered. But when prices took off in mid-2009, it was a four-year spree. One reason was record low-interest rates; the other was an expectation of a global recovery that would fuel profits.

But the recovery has been weak and share prices have run ahead of the profits behind them. The rise in share prices has not been supported by growth. The issue for Canada is the rapid fall in commodity prices. Our resources are not all we have going for us, but the global war for oil dominance has caught us smack in the middle. Companies that are dominant with a history of profitability are good bets in good times and bad. Sentiment can turn quickly. Irrational exuberance can give way to irrational pessimism. The TSX is down again, as is the price of oil and the loonie. It may go on for a while yet. There’s no question it hurts, but where we are in the last week of January isn’t necessarily where we’ll be at the end of the year.

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.

contact us http://info@henleyfinancial.ca