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Posts Tagged ‘Financial’

A simple tool to grow your Net Worth Date posted June 17th, 2011

Every month most of us receive a list of bills, payments taken from your account, a constant reminder of how much you owe, and the mountain of expenses most face each month. This contrasts the positive statements we get, such as, investment statements, equity and value of your home, which are sent out quarterly or annually in most cases. Taking the time to acknowledged and gauge your success is a simple and in many cases an amazingly effect way to not only visualize your success, but increasing your financial well being.

I recommend keeping at minimum an annual net worth statement. This helps you see where you stand financially, and more importantly creates a map of your financial success. This tool helps clearly layout your progress in building a solid financial future. As your net worth grows it tends to motivate more success in the same direction. I have seen great results from this simple tool. You can follow this link to a simple template to create your own net worth statement, and remember to complete it every year, as this tends to create the best results.

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RRSP Deadline Date posted February 25th, 2011

The 2010 RRSP deadline is March 1 2011. If you are planning to get an RRSP (Registered Retirement Savings Plan) this year time is running out.

Investing with Values Date posted February 24th, 2011

There is no doubt many things in the world are currently broken, and it no secret that money is often a motivation for many of these issues. When choosing where to invest your money there is an option that I like, as it fits with my values. SRI or Socially Responsible Investing. This option varies between the providers; however the concept remains the same. First there is a list of areas that they will not invest. Second they rate all companies left and have a minimum score for them qualify for investment. Third is advocacy, where they consult, make recommendations and use shareholder rights to encourage positive change in the companies they own. The three areas of focus are Governance, humanitarian and Environmental.

What I really like about this style of investing is they are clear on the filters, then work with the companies to make things better. This collaborative process not only improves the company, but in most cases improves profitability. Doing the right thing works and this process has many success stories to prove it.

SRI investing offers the ability to grow your investments, while supporting positive change in the companies you invest in.

Tackling debt Date posted February 22nd, 2011

Managing debt has become an essential in creating a strong financial future. I have written a short eBook on how I would tackle most debt. The link to download is below. We encourage any feedback on any of our strategies, so please let us know how it worked for you.

Debt Repayment Guide

Vancouver RRSP Solution Date posted February 22nd, 2011

We do maintain an office in Vancouver, however for many our mobile solution seems to be much more convenient. We are happy to come to your office, home or local coffee shop. We can offer full RRSP (Registered Retirement Savings Plan) service, RRSP loan service and a full array or solutions where you are. No need to fight traffic or wait in lines. Investing in your future has never been easier.

If you are interested or would like more information please call our office 604 637 7422.

IPP versus RRSP Date posted February 21st, 2011

An IPP (Individual Pension Plan) is a tool that can replace an RRSP (Registered Retirement Savings Account) for small business owners. So which one is better to hold your investments in?

Why consider an IPP (Individual Pension Plan).

As you near retirement the contribution limit is greater than that of an RRSP
In some circumstance IPP’s behaves differently in your estate.
Can be used in different tax planning strategies (Accountant is recommended to discuss these, but can include under funding to devalue a business)

Why would you not want an IPP (Individual Pension Plan)

Annual fees are due to maintain IPP’s
Many more rules and restriction than an RRSP
A more complicated tool to understand.

If you are considering an IPP I would recommend talking to both an investment professional that understands this tool and an Accountant that can explain the tax benefits. These can be a great tool if understood and used in the right planning situation.

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Using the RRSP “Gross up” Strategy Date posted February 20th, 2011

This is a simple strategy to increase the size of your RRSP (Registered Retirement Savings Plan) without losing more of your income to savings. The best way to explain the concept is with an example. To keep the math simple we will say the tax rate is 50% (please note that there is no 50% tax rate in BC, the benefit of this strategy should be calculated at your real tax rate, however for the example 50% is much easier to visualize).

Example, John makes a $4,000 RRSP contribution at our imaginary 50% tax rate. With this he can expect to save $2,000 on his income tax. As many put there refund back into their RRSP, the gross up strategy says he should borrow the same amount as the refund and then use the refund to pay back the loan. This increases the tax savings now and gets the money into your account sooner, giving your money longer to earn interest. Now if you add a $4,000 contribution and $2,000 refund together and make that your new contribution you would now get $3,000 at our 50% rate, so we need to run through this a few times until the extra tax savings no longer makes much of a difference.

Normal RRSP contribution of $4,000 would create a $2,000 tax savings

Gross up RRSP contribution of $4,000 would become $8,000, with a refund of $4000 to pay off the $4,000 loan required to make the contribution.

To see if this strategy works for you can work out the difference at your tax bracket and hopefully with this strategy you can save a little more for retirement, without having to find any extra money.

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Are RRSP’s Creditor Protected? Date posted February 19th, 2011

It wasn’t too long ago that pensions, some locked in retirement accounts and insurance products were the only protected option for Canadian investors in the event of bankruptcy. For the individual investor only the insurance options were available, as the rest would need to be set up by their employer (if they have one). However as of July 2008, Bill C-12, an amendment to the Bankruptcy and Insolvency Act changed this. This change provides the same protection for RRSP’s, Spousal RRSP’s, RRIF’s and some other registered accounts.

Hopefully no one invests with the intention of going bankrupt, but managing risk is about handling what we did not intend. What this protection provides is a planning opportunity for those who want to protect themselves from this risk. This could be a business person who wants to protect his retirement savings from business risk or a family hit by the financial devastation that can follow illness or injury.

The money does need to be place into a protected account a year before, and before you know of the pending issue. The main purpose of this change as I understand it was to extend the same benefits of retirement savings offered to employees with a pension to those who do not have access to a pension. As always before counting on this protection I would recommend discussing your unique financial situation with a professional as the smallest detail can make a big difference.

A last point would be to consult with a professional before accessing your money if you find yourself struggling financially. Too often I see people cash out there RRSP’s and other protected investments trying to turn things around, when they could have saved those assets and used them to jump start a new financial life.

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RRSP’s White Rock, South Surrey Date posted February 18th, 2011

With life as busy as it has become, if you need to make a RRSP contribution or need a RRSP loan before this year’s deadline, we are happy to help. We offer a mobile service, we are happy to come to your office, home or local coffee shop. No need to fight traffic and wait in line to see your advisor or planner. We broker for many investment and loan providers in the convenience of your preferred location.

If you prefer we can meet you in our office as well.

We have many clients in the South Surrey, White Rock area and are happy to provide reference.

Should I take money out of my RRSP? Date posted February 16th, 2011

Taking money out of your RRSP (Registered Retirement Savings Account) can cause create a tax bill and loss of that RRSP room. So it is important to consider carefully before taking this step, however if done right it can be beneficial. RRSP is a tax deferral tool, eventually you will have to pay tax on the money, so if it makes sense to pay the tax now it can be a big win. Some of the reasons you may want to take money out or your RRSP and pay the tax now are;

Home buyer plan, if it for a down payment on a home you may qualify to take the money from your RRSP, you will need to pay it back, however this is a way to get the funds without the tax issues.
Life long learning Plan, if the funds are for your schooling this may offer an option to borrow the money without the negative tax implications. You will need to repay the funds once you are finished school.
Low income year. If you have a low income year you may wish to take the funds out of the RRSP. This should be carefully consider as you give up that RRSP room, tax deferred growth of the funds and could owe taxes on the money. With all the drawbacks it can often make sense and leave you with more money long term.
Just need the money. RRSP’s are not ideal for short term saving. If you choose to take money from your RRSP you may face fees, loss of retirement savings, and a tax bill. With all this if you need the money and the RRSP is the best place to get it then it may be necessary. To prevent this we should all have savings to draw from when unexpected expenses strike.
Preparing for Retirement. Once you hit retirement you not only have income tax, but pension claw backs. For many moving from the RRSP.

When looking at making a withdrawal for your RRSP it is important to consider the negatives before making your decision, and discussing with a professional that understands your situation and the implications of the withdrawal is the best way to ensure you make the right choice.

money out of the RRSP before retirement can make sense. This is usually the case when your income will be higher in retirement, or you have an offsetting deduction in the years you make withdrawals.