All posts by Robb Engen

Tax Filing: DIY or Hire a Professional?

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hr-officeBy Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

We’re right in the middle of tax season, and while some keeners have already filed, Canadian taxpayers have until May 2nd to submit their personal taxes for 2015. The deadline to file taxes for those who are self-employed is June 15th.

There aren’t very many strategies for individuals to save on taxes these days and so most tax planning is fairly straightforward. That’s why for many years I filed my taxes using basic tax preparation software.

My tax situation wasn’t complicated. Just a standard T4, plus my RRSP contribution, a bit of student loan interest to deduct, and maybe some tuition credits when I was going to school.

It was no big deal filing taxes on my own – and it got even easier (and cheaper) as the software became more sophisticated. In fact, tax preparers like H&R Block started offering free software last year and will continue to do so this year by download at hrblock.ca.

More Money, More (tax) Problems

But as I started earning extra money through my online business it became clear that I needed some expert guidance to figure out whether it made sense to incorporate my business. Continue Reading…

Renewing your Mortgage this year?

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By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Our mortgage is up for renewal later this year. That’s a shame because I’m enjoying the ultra-low 1.90 per cent interest rate on our five-year variable mortgage (prime minus 0.80 pe rcent). It’s a near certainty that I’ll have to renew at a higher rate this summer.

My bank is offering five-year variable rates at prime minus 0.10 per cent, which means a mortgage rate of 2.60 per cent. That’s not much of a discount off of the five-year fixed rate they’re advertising, which comes in at 2.94 per cent.

Five years ago, when the deeply discounted variable rate was 1.50 per cent lower than the five-year fixed, it was a no-brainer to go variable. Now it’s not so cut-and-dried.

What is clear is that we’re living in the golden age of low mortgage rates. Remember three years ago when BMO introduced its controversial 2.99 per cent ‘no frills’ mortgage?

Now it’s rare to see mortgage rates ABOVE 3 per cent – and most come with all the bells and whistles; from 120-day rate holds and pre-approval, to double-up monthly payments and lump sum payment privileges.

For nearly a decade we heard how interest rates couldn’t possibly get any lower and that the smart thing for homeowners to do was lock in their mortgage with a five or even a 10-year fixed rate.

It turns out the best advice was to do what has almost always saved Canadians the most money over the last 50 or 60 years. Go variable.

Renewing your mortgage

Continue Reading…

EQ Bank: Your new High-interest No-fee Banking Solution

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eqbankbanner_HISABy Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Over the last decade or more Canadian banking customers have had to accept two inevitable truths:  interest rates on savings deposits would plummet and stay at historic lows, and banks would continue to raise fees on everyday bank accounts and services. All of this occurred while Canada’s big five banks hauled in record profits.

Savvy bank customers had to invent complicated workarounds to keep their hard-earned money safe, free of fees, and to earn a decent interest rate. That meant limiting transactions, maintaining high minimum balances, and bouncing from bank-to-bank chasing the latest short-term high-interest rate promotional offers.

If only there were a bank that offered one solution: a hybrid chequing-and-savings account that paid market-leading interest rates with no monthly fee, and no extra charges for moving your money around via e-Transfer or for paying bills.

EQ Bank

Enter EQ Bank – a new digital bank and offshoot of Equitable Bank – with its unique EQ Bank Savings Plus Account. Launched on January 18th, 2016 Continue Reading…

How to supercharge your RRSP

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Vector illustration of the engine. Gradient mash.By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

The idea that an RRSP loan can boost your savings and generate a higher tax refund does not sit well with most people. If you can afford the loan payment then why not just budget and save that amount in the first place instead of borrowing?

In The Wealthy Barber Returns, author David Chilton describes a strategy that can increase your RRSP contributions without putting you out of pocket any more than what you’d already planned to save. He explains how most of us save from our after-tax income, but when we contribute only those after-tax dollars instead of their pre-tax equivalent, we shortchange our RRSPs.

So how do you get the full, pre-tax amount into your RRSP? The answer is to use something called a “gross-up” strategy where you borrow a small amount equal to the tax refund that will be produced by your RRSP contribution. Here’s how it works:

Let’s say you are in a 40 per cent tax bracket and had $3,000 after taxes to invest. How much should you contribute to your RRSP?

The Smart Debt Coach

If you’re not sure of the answer, you’re probably like the majority of Canadians who unknowingly invest less than they could into their RRSP, according to Talbot Stevens, author of a book called The Smart Debt Coach.

Continue Reading…

Indexers are terrible at indexing

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Cartoon Humor Concept Illustration of Couch Potato Saying or Proverb

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Despite all of the evidence that low-cost passive investing outperforms actively managed portfolios, many investors still cling to the belief that an active approach can help steer them through turbulent times in the market.

Even investors who have taken the plunge into index funds and ETFs can’t help themselves when faced with uncertainty. Emotions take over, as do our instincts to tinker with our investments to try and optimize performance.

Earlier this month, Dan Bortolotti updated the investment returns from the ever-popular Canadian Couch Potato model portfolios.

Despite Dan’s best efforts to explain that these new and simplified portfolios should be used as part of a long-term investment strategy, the overwhelming number of comments from readers suggests that it’s nearly impossible for indexers to simply set-it and forget it.

Continue Reading…