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Vanguard Canada launches four new domestic Fixed Income ETFs

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Vanguard Investments Canada Inc. has announced that four new domestic fixed-income ETFs began trading on the TSX today, doubling a lineup that previously included a couple of short-term bond index ETFs, an aggregate bond index ETF and two currency-hedged foreign bond ETFs.

The new funds add coverage to government and corporate bonds,  long-term bonds, and to domestic short-term government bonds. The full release is here on Canada Newswire. Here are the names, ticker symbols and Management fees of the four new ETFs:

ETF

TSX Symbol

Management Fee1

Vanguard Canadian Corporate Bond Index ETF

VCB

0.23%

Vanguard Canadian Long-Term Bond Index ETF

VLB

0.17%

Vanguard Canadian Short-Term Government Bond Index ETF

VSG

0.18%

Vanguard Canadian Government Bond Index ETF

VGV

0.25%

These four new ETFs round out a list of domestic fixed-income ETFs that also include the Canadian Aggregate Bond Index ETF (VAB), the Canadian Short-term Bond Index ETF (VSB), the Canadian Short-term Corporate Bond Index ETF (VSC) and two foreign (US and global) bond index ETFs hedged back into the Canadian dollar (VBU and VBG respectively). You can find the full list, including the four new products, here. (Select Fixed Income as the asset class to zero in on the full list of nine bond ETFs.)

In the press release, Vanguard Canada head of product Tim Huver said “These ETFs provide the flexibility to position portfolios along the yield curve and take advantage of targeted exposure to corporate and government bonds.”

A retired Advisor’s Open Letter to Bill Morneau on expanding TFSA

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Finance Minister Bill Morneau (bmorneau.liberal.ca)

(To:) Hon. Bill Morneau, Minister of Finance,
House of Commons, Ottawa.

Dear Hon. Minister,

Thank you for your response to my previous letter. I am a strong believer in an enlarged Tax-free Savings Account (TFSA) and have NINE reasons for that belief through my experience as an IA (Investment Advisor).

I think you will agree that the larger TFSA makes retirement savings fair for all levels of Canadians incomes, but helps those who need it most as there is little RRSP deduction benefit for low-income Canadians. I think your background experience will lend itself to agreeing with my nine reasons for restoring the $10,000 TFSA.

Restore the $10,000 TFSA

The $10,000 TFSA [the previous annual contribution level] is the most profound and beneficial social program created in Canada’s 21st century. It benefits the young, seniors and the less fortunate as well as the well off. Its principal benefit is a meaningful and manageable amount of money which can be used as a saving vehicle and a retirement savings account.

1.)  It is especially beneficial to the non-working spouse, by enabling a savings and retirement account not requiring a monthly pay cheque and its commensurate income tax and tax deductions. This was the principal reason for the Americas Roth IRA, (ROTH account withdrawals are tax free,  but after the age of 58.)

2.) The larger TFSA amount is a meaningful savings target by today’s standards in that $400,000 can be accumulated over 40 years of adult life. Continue Reading…

TFSA Primer 2017

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“Many investors are wondering whether to pursue a TFSA or RRSP strategy. Quite simply, the TFSA, which started in 2009, compliments both the RRSP and RRIF.”

It need not be an either/or approach.
Wise investors embrace the Tax-free Savings Account (TFSA) in pursuit of long term goals, like retirement.

 

I summarize my 2017 TFSA primer:

1.) How TFSAs work

Eligibility:

• Canadian residents, age 18 or older, who have a Social Insurance Number can open a TFSA.

• One TFSA account per individual should suffice most cases. Be aware of plan fees if you own more than one.

Contributions:

• There is no deadline for making TFSA contributions as the unused contribution room is carried forward.

• A withdrawal in any calendar year increases the TFSA room in the following year.

• TFSA contributions can be made in cash or “in kind” based on the calendar year.

• Deemed disposition rules for “in kind” contributions are the same as those for RRSPs.

Your maximum TFSA deposits are as follows:
Continue Reading…

RRSP Gross-up Strategy: Contribute 40-70% more to your RRSP

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“Never put dry pasta into your RRSP.”

By Ed Rempel

Special to the Financial Independence Hub 

Wouldn’t it be great if you could save a lot more for your future without affecting your day-to-day cash flow?

One of the main things people learn when they first have a retirement plan done is that you need to invest more than you thought to have the future that you want. But with all the day-to-day expenses, it can be difficult to find the money to contribute as much as you would like to your RRSP.

The RRSP gross-up strategy is a simple strategy that can make a huge difference for you. It can enable you to easily contribute 40 to 70% more to your RRSP.

The strategy works if you already expect a tax refund. If you contribute monthly to your RRSP or have various tax deductions or credits, you probably expect a tax refund.

It is smart to gross-up every RRSP contribution you make.

You have three options with your tax refund:

  1. Spend it.
  2. Invest it.
  3. RRSP gross-up strategy.

Here is how the RRSP gross-up strategy works. Continue Reading…

The power of positive thinking

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Positive thinking is a state of mind that allows you to focus on the bright side of life and believe that you can overcome any obstacle and difficulty, including dis-ease. While not accepted by everyone, the concept is growing in popularity. Optimism is the key to effective stress management and we already know that stress negatively affects our health.  The health benefits of positive thinking continue to be researched but may include an increased life span, lower rates of depression, greater resistance to the common cold and a reduced risk of cardiovascular disease related deaths.

The way you think, feel and act has an effect on your body and there is growing evidence that you can change your health just by changing your mindset. Emotions can impact the course of an illness and the mind can affect the outcome of disease. For example, a stomach ulcer may develop after a stressful event, such as the death of a loved one or loss of a job.

Body speaks to Mind

At the root of every physical symptom is an emotional connection; the body speaks the mind. Poor emotional health can weaken your immune system. Continue Reading…