News Archives - Page 19 of 28

Three portfolio presets for summer

Many investors choose to step away from their portfolios to enjoy their summers, but before you do there are some presets you can set up to protect your investments. First, you can create a stop-loss order, which will decrease any potential loses if your stocks go down in value. Second, you can set up accounts for dividend reinvestment programs. This allows you to purchase more of the same shares using your dividend payout with the added advantage of not paying fees. Third, you can also set up automatic deposits into your RRSP and TFSA accounts to help spread out your contributions into these accounts throughout the year.

Personal Investor: 4 ways HELOCs can make life easier

Canada has a high number of people who have home equity lines of credit (HELOC). Frequently, these people only pay the interest on these loans each month, which has caused the average HELOC to grow to $70,000. For disciplined borrowers, a HELOC can be beneficial, for instance, to consolidate debt as well as set up an emergency fund. Additionally, people can use them to add value to their home by renovating or boosting their retirement savings plan contribution.

“With borrowing rates on the rise, HELOCs can be dangerous in the wrong hands. But for disciplined borrowers, they can be a lifeline when times are tough and a springboard to grow household wealth.”

What today’s savers can learn from today’s seniors about retirement planning

A new study of retirees, from 30 countries including Canada, provides valuable insight to those looking to retire in the future. When asked, 44 percent of retirees said they wished they had saved “a little” more and 14 percent wished they had saved a lot more. Nearly 1/4 of them are using pension income, which may not be available to those currently working as pensions and benefits are on the decline. While Canadians need to be saving more to make up for the difference, many are saving less due to spending more on real estate and higher debt levels. The Canada Pension Plan (CPP) and Old Age Security (OAS) will only provide a modest amount of the average Canadian retirees’ income, so Canadians should be thinking more about saving independently.

Small businesses that embrace technology do better, says BDC

Although technology is used successfully by most large businesses, a recent poll of Canadian and American businesses has shown a high percentage of small businesses do not take advantage of available technologies for inventory to human resources to make them more successful. The biggest reason is that these businesses are worried about the start-up costs, but in reality, they are hurting themselves by not making the investment. Businesses that invest in technology are outperforming those that don’t use it.

“According to a new study from the Business Development Bank of Canada (BDC), small and medium-sized businesses in Canada are lagging behind when it comes to adopting technology, with only one in five having what the bank calls an ‘advanced digital profile.'”

What you need to know about inheriting or transferring a foreign pension

In Canada, if you receive an inheritance, whether from a Canadian or foreign estate, it is tax-free. However, there are exceptions. A recent case involved “inheriting an IRA” from his father in the United States. When the taxpayer did not report the IRA payment on his Canadian tax return, the Canada Revenue Agency reassessed him and added it to his income minus the A judge upheld the ruling that the payment was taxable, because the payment didn’t come from his father’s estate and since there is a specific rule in the Canadian Income Tax Act stating that a taxpayer must include any pension benefit in their Canadian income. The taxpayer could have done things different to avoid the tax, but it does get complicated and depends on your unique circumstances.

Do I pay tax on dividends after I withdraw my fund from a TFSA?

Anything you draw out of the TFSA, whether it is capital gain, interest, or dividend income, is all tax-free. If the investment is held elsewhere in a non-registered account, then the dividend income is considered taxable. In the example, because the high-paying dividend stock is in a TFSA, the dividend income isn’t taxable. Another advantage of holding this type of investment in a TFSA is the possibility to avoid some clawback issues due to the 38% dividend gross-up. This happens as a result of the gross-up being applied to your income prior to benefits such as the OAS, age credit, and GIS being calculated. The dividend tax credit will reduce your income back at the end of your tax return, but the timing of the credit may have resulted in reducing your benefits.

Talking to kids about money: An age-appropriate guide

There is a lot that kids need to learn to develop a healthy relationship with money. The recent introduction of personal finance in elementary and high school is a great start, but parents can also help teach kids. The guide offers a number of age-appropriate lessons to show kids at home. For children between ages 4-6 years old, it’s an ideal time to introduce them to how money buys things, how some people who have more share with others, and how money is earned. Playing games, purchasing small items, handling coins and introducing the concept of charity are all great at this stage. As they get older, more complex concepts will help them develop more financial skills to better prepare them for when they need to manage their own money.

Understanding your net worth statement

Taking it in its simplest terms, your net worth is the equivalent of all your assets minus all of your liabilities, or debts. While it sounds simple, not all your assets are equal. Liquid assets, for instance, is defined as assets that can be readily be converted to cash. At first glance, bonds and stocks may appear to be liquid, but often due to maturity dates or current market conditions, they may not be equal to their presumed face value. The same holds true for items of worth, such as jewels, which may be given a certain value on paper, but its resale value would be less. As a result, one should never assume a stated value is what they will fetch in the open market. Debts are the sum total of what you owe creditors and loan entities. It constitutes the residual amount owed on your mortgage, for example. Understanding your net worth is a good place to start when planning for your financial future.

10 ways for investors to be more boring —and successful

While it might be tempting to invest using some unorthodox strategies, consider reigning in the impulse. The truth is that the more mundane and proven methodologies work better in the long-term and should be embraced. Some things to keep in mind are: Don’t try to outsmart the markets as most stocks are fairly priced. Past performance isn’t necessarily an indicator of future performance. Selling too early is a common misstep so invest for the long-term. Remember that there are proven factors to help achieve a good return on investment. Diversification, avoiding market timing and not investing based on emotion are all ways to invest better and achieve a better return on your securities. In short, it is not necessary to remake the wheel and there are guidelines in place that are proven and will make investing easier.

What to do if the CRA gets you in its crosshairs and reviews or audits your taxes

If you find a dreaded audit or review notice from the Canada Revnue Agency (CRA) in your mailbox, you need to take immediate action. With an increase in audit activity, Canadians may find that it is often as a result of something unusual in your filing that triggered CRA to want to take a closer look. It’s also important to make the distinction between a review, which is usually a request for additional information, and an audit, which is a more serious and deeper look into your numbers. Responding to their request and co-operating by sending in the documentation they request can generally resolve most investigations. If you’re unsure what they’re asking or require assistance, then be sure to have all your receipts and documentation or check with a professional before you respond.