Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

My RRSP playbook for 2017: Ready for prime time

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Welcome to 2017.

The annual 2-month RRSP “season of madness” has arrived. I made my list, checked it twice so ready-set-go.

Understanding the RRSP regime makes it easier to stickhandle your planning marathon.
This workhorse has delivered on retirements since its intro in 1957, now a 60-year old boomer.

The RRSP has transformed over the years. For example, RRSP room carry forward was introduced in 1991. RRSPs really fit two groups of investors like a glove: those without employer pension plans and the self-employed.

Some investors still shun RRSP deposits. I see three solid reasons to pursue RRSP accumulations:

  • Long-term, tax-deferred investment growth.
  • Future withdrawals ideally at lower tax rates.
  • Contributions provide immediate tax savings.

Stay focused on how the RRSP dovetails into your total game plan. The power of tax-deferred compounding really delivers.

Your RRSP mission is three-fold:

  • Keep it simple.
  • Treat it as a building block.
  • The journey lasts a long time.

My updated RRSP playbook summarizes these seven vital planning areas:
Continue Reading…

The hidden dangers of leaving an inheritance without proper planning

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For many investors, setting aside inheritance money for their heirs and loved ones is a natural part of retirement planning. But doing this successfully is not easy, and fortunes rarely last for long. In fact, long-term studies show that six out of 10 family fortunes get dissipated by the end of a second generation. And nine out of 10 are gone by the end of the third generation.
In fact, there’s a good chance that at least one member of a couple in their 70s will live to age 90 or beyond. So the typical heir could be, say, age 60 before he or she gets a dime.
Moreover, medical expenses soar in later years. That’s especially so now, with today’s faster pace of medical advances, many of which are hugely expensive. It may help to inform your heirs that your retirement planning doesn’t include cutting corners when it comes to keeping yourself alive, mobile and pain-free. Continue Reading…

5 Ways to maximize your returns next Tax Season

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By Caroline Battista, H&R Block

Special to the Financial Independence Hub

It’s probably not the first time you’ve heard the saying ‘a little preparation goes a long way’. And that is especially true when it comes to filing your taxes – I can attest to that after years of counselling clients and ensuring they get what’s theirs each tax season.

Below are five ways to help you ease the burden with some simple end-of-year preparation tax tips that will help you maximize your returns and get ready for the upcoming tax season.

1.) Keep a calendar with key dates

Because timing is everything, keep a calendar with key tax filing dates. The deadline for filing your 2016 personal tax return is May 1, 2017 and June 15, 2017 for the self-employed. You can begin preparing your return once your T4s and other slips arrive. Also, try to keep up with important dates that can increase your chances of receiving a larger refund. For example, by scheduling health-related treatments before the end of the year you can maximize your medical expense deduction. Continue Reading…

Happy New Year! Time to add $5,500 to TFSAs

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Welcome to 2017. We’ll keep this one brief but a reminder that on the money front, there’s already a positive action you can take, either online now or whenever your financial institution opens its doors this week: make the 2017 contribution to your TFSA, or Tax-free Savings Account. That’s $5,500 per individual, amounting to $11,000 for couples.

Remember, if you don’t have the ready cash you can make transfers-in-kind if you have securities in non-registered investment accounts. (Some tax may have to be paid if this triggers capital gains).

Speaking of taxes, Jamie Golombek has a good column in this weekend’s Financial Post on current tax brackets and other tax data: click on Here are the New Numbers you need to get a jumpstart on your 2017 taxes.

How investing can help you achieve Financial Independence

While today’s blog is necessarily brief, a reminder that Saturday’s guest blog provides a timely summary of how investments performed in 2016, and an overview of how successful investing is a key ingredient  to achieve Financial Independence (aka Findependence). Click on the second link to get to our sister site’s republishing of the Boomer & Echo review of the new book, Victory Lap Retirement.

Simplifying Investing for Financial Independence

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By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

As 2016 comes to a close, we thought we would look back financially to where we started this adventure, from January of 1991. The chart below shows the ascent of the S&P 500 Index over our 26 years of retirement.

On our retirement date of January 14, 1991, the S&P 500 index closed at 312.49. It has recently closed at 2262, making roughly an 8% annual gain plus a couple per cent counting dividends. Hard to imagine, right? With all of the market ups and downs, global turmoil, governments coming and going, businesses expanding and failing, and still producing roughly a 10% annual return.

But is this really a one-off period and not the norm? Continue Reading…