RRSP or TFSA? Go For TFSA When You Can’t Decide

TFSA You Can’t Go Wrong

TFSA: You Can’t Go Wrong

This time of the year, when the RRSP deadline is fast approaching, it’s hard not to notice an article about TFSA or RRSP in Canadian newspapers or magazines. However, if you get confused after reading so many of these articles and can’t decide, going for a TFSA is not a bad option at all.

In the past, I wrote about TFSA. As far as I can remember, that was the only time I wrote about TFSA, as after seeing so many articles about TFSA and RRSP again and again and writing about the same stuff I decided not do discuss it anymore. And that is a good change for someone who is trying to sort out TFSA and RRSP will only be more confused after bombarded with too much information.

If you are confused about these two and still not sure, the best thing to do is park your money in a TFSA, rather than in an RRSP. The reason is very simple: TFSA lets you able to take out your money any time without paying back withholding taxes, unlike an RRSP. One thing you need to keep in mind is that the money you are taking out from your TFSA will create equal contribution room next year, not in the same year.

And what should you do if you want to get some clear grasp of TFSA? Talk to a qualified financial professional face to face. And yes, don’t forget to write down all your questions and concerns before meeting.

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How Much Do Rich People in Canada Need to Retire?

Retirement Amount for Canada’s Wealthy

Retirement Amount for Canada’s Wealthy

A recent poll done by BMO Harris Private Banking found out how Canada retirement would look like through the eyes of affluent people in Canada. The number stands at a staggering amount of $2.3 million.

Further, rich people are more confident than average people reaching their retirement goals. 95 percent of the wealthy said they are more confident in reaching their goal. On the other hand, only 69 percent of average people are confident in reaching their goals.

However, don’t let these numbers deter you from reaching your own goals. Your personal retirement amount can be totally different than any other person. As there are many unique factors that play a role in determining each person’s retirement needs, it is possible to retire with a much smaller amount than the amount for the wealthy ($2.3 million) or the average Canadian amount (about $900,00.00).

A Dawn Journal has a retirement section featuring lots of retirement articles and I encourage you to go through it.

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Quick 10-Minute New Year Finances Checkups

New Year Financial Resolutions

New Year Financial Resolutions

A recent Bank of Montreal study reports that personal finance is the 2nd most important New Year resolution for Canadians after health and fitness for 2014. Today, I will talk about 3 financial checkups you can go through to evaluate your financial situation right now for your future. You should not spend more than 10 to 20 minutes on this.

1. Your Savings – If you have not started already, start putting 5 to 20 percent of your gross income aside every month regularly.

2. Your Investing – Start investing your savings in a low cost mutual funds or ETFs. If you are not comfortable investing on your own, I recommend fee-based financial advisors. I offer these free websites for my Canadian and global readers covering a wide array of financial knowledge.

www.adawnjournal.com

www.adawn.net

The above two sites are a good start to enhance your financial knowledge.

3. Your Evaluation – If you have already been doing #1 and #2, take a moment to take a look at your total portfolio value by the end of 2012 and 2013. The yearend value of 2013 should be higher than 2012. If it’s lower, look for reasons and stop those that are draining your portfolio. If you need to rebalance, switch, buy new products, and get rid of some products from your portfolio; do so to have a better performing portfolio for 2014. If you need help, seek professional advice or ask someone who is more knowledgeable for help.

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Canada Hot Housing Market 2014

Exceptionally Health Housing Market in 2014 ReMax
Photo Credit: Re/Max

Exceptionally Health Housing Market in 2014: Re/Max

A recent report published by real estate company Re/Max looks at Canadian housing market in 2014. Here are some highlights from that report.

- An exceptionally healthy housing market is expected in 2014 due to overall improved economy.

- An average Canadian home value is expected to rise three percent to $390,000.00 in 2014.

- Home sales are expected to rise two percent to 475,000 units in 2014.

- Housing markets in Canada are on solid ground and expected to remain balanced throughout 2014.

- Sales and home values across Canada approaching are approaching five year highs

- Toronto will finish 2013 in strong sales and prices will rise in 2014

- The upward trend will continue in 2014 across Canada in 92 percent of markets.

- Greater Toronto area is expected to rise 6 percent in 2014.

To view the full report, visit Housing Market Outlook 2014

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New Canadian Prepaid Credit Card Rules

Federal Government Tightens Prepaid Credit Card Rules

Federal Government Tightens Prepaid Credit Card Rules

The Canadian government unveils new prepaid credit card regulations to protect consumers today. Here are some changes that will take place starting May 1, 2014.

- There will not be any more expiration dates on prepaid cards.

- There will not be any maintenance or dormancy fess for at least one year once you activate the card.

- The outside packaging or box will clearly show fees user friendly way.

- Information such as how long you can use it, terms and conditions, a toll-free number, etc must be clearly displayed.

While prepaid credit cards are relatively new, you can find them in grocery stores and supermarkets, and they are becoming very popular.

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Canadian Homes Are Unaffordable

 

Higher Prices and Mortgages Making Housing Unaffordable

Higher Prices and Mortgages Making Housing Unaffordable

RBC’s latest Housing Trends and Affordability Report looks at various aspects of the Canadian housing market. Here are some highlights from this report:

- Home affordability declined over the summer for a second consecutive quarter.

- The deterioration differs on regions and types of homes.

- Average bungalows and two-storey homes became most unaffordable.

- Condos somewhat stays affordable.

- Vancouver and Toronto are the most unaffordable cities in Canada.

- The average home price is $391,820 in October – 8.5 percent higher than a year ago.

- A sharp rise in interest rates will be the biggest risk to maintain mortgage.

- The report does not see any Bank of Canada rate hikes until sometime in 2015.

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What Affects Your Credit Score

3 Moves That Affect Credit Score

3 Moves That Affect Credit Score

Here is a video clip showing 3 moves that affect your credit score. These moves are:

1. Making late payments or missing payments

2. Borrowing too much

3. Closing too old credit card accounts

If you would like to know more, visit this article:

What Lowers Your Credit Score

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CPP Hike Is Possible

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Canada Pension Plan (CPP) Hike Is Possible

CPP hike possible

Payroll Earnings Go Up

Canada’s provincial and territorial finance ministers recently agreed to enhance Canada Pension Plan or CPP. Although there were some minor issues, the end result was an agreement to enhance CPP benefits in a meeting held in Toronto.

Prince Edward Island proposed to hike maximum CPP contributions to $4,681.20 (currently $2,356.20) and maximum benefit to $23,400.00 (currently $12,150) annually starting 2016.

The Canadian Federation of Independent Business (CFIB) is asking ministers to reject mandatory CPP increases, as it will slow down new hiring due to increased payroll taxes (according to CFIB).

CARP, a non-profit organization for seniors, welcomes the CPP enhancements initiative and urges the federal government to act on this without delay.

You can find out how much your CPP benefits will be by visiting this government of Canada retirement calculator.

On a separate note, Stats Canada reports that weekly payroll earnings went up in August to $918, a 0.4 percent increase from July and 1.3 percent on a year-over-year basis. Administrative and support services, construction, health care and social assistance were the largest sectors with increases. Wholesale trade and accommodation and food services were 2 sectors that showed negative earnings.

From August 2012 to August 2013, looking at year-over-year growth in average weekly earnings by province, Ontario, Nova Scotia, and Saskatchewan were the 3 provinces with the most increases. Manitoba and New Brunswick were the 2 provinces with negative increase or remained flat.

Also, real gross domestic product went up 0.3% in August. The sectors leading to the increase were oil and gas extraction, and the agriculture and forestry sector. However, the manufacturing and utilities sector declined and the construction sector remained unchanged.

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Canada Savings Bonds Deadline Is Approaching

Canada Savings BondsCanada Savings Bonds

November 1, 2013 is the deadline to buy Canada Savings Bonds. There are mainly 2 types Canada Savings Bonds Program offers.

The Canada Premium Bond (CPB) is the product that you can buy through financial institutions. This is a safe investment and backed by the Government of Canada. CPB can be redeemed at any time, but you will redeem it before the anniversary date, you will forfeit some interest. The Canada Premium Bond (CPB) has a 3 year maturity term.

Canada Savings Bonds (CSBs) are available only through the payroll savings program. You can redeem these at any time, but no interest is paid if you redeem in the first 90 days.

Starting October 2013, you will require a SIN or social insurance number to purchase a Canada Premium Bond (CPB). Minors can purchase CPB without a SIN, but a date of birth is required.

For more information, visit Canada Savings Bonds.

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Canada Is One of The World’s Best Countries to Grow Old In

Toronto HTO Park

Canada Stays in Top 5 Countries to Grow Old In

A recent study co-sponsored by the UN created Global AgeWatch Index by looking at 91 countries covering 89% of the world’s older citizens. The Index ranks older population in terms of social and economic well-being and is the first of its kind. Canada ranks high on this index, staying on 5th place. Sweden is on top of the list and Afghanistan on the bottom. Let’s look at the top ten countries:

 

  1. Sweden
  2. Norway
  3. Germany
  4. Netherlands
  5. Canada
  6. Switzerland
  7. New Zealand
  8. United States
  9. Iceland
  10. Japan

Here are some other facts from the report:

- The world’s envy, Canada’s universal health care system, generous old age benefits, and long life expectancy helped to achieve its 5th position.

- Countries like Sri Lanka, Bolivia, and Mauritius stay relatively high on the list, while countries like India, Pakistan, Russia stay on the lower side.

- Population ageing is happening faster in the poor developing countries. Two-thirds of the older population live in poor countries.

- South Korea, one of the richest and technologically advanced countries in Asia, surprisingly stays low on the index at 67.

- Bangladesh, a model for one of the world’s worst industrial disasters, is not on the list due to lack of old age data.

- By 2050, older population (older than 60) will outnumber younger population (younger than 15).

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