How to go about securing the best Retirement Plan in Canada.
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How much real estate should you have in a balanced portfolio? May 11th
When investors talk about income-producing assets, the first that come to mind are dividends and interest, with capital gains a close third. But what about investment real estate? If you hold an asset allocation ETF, it will be chock full of stocks and bonds but offer little real estate exposure apa.... More »
Cut unnecessary costs with one simple change to your banking + MORE Dec 13th
If you’re like many Canadians, you view bank fees as a necessary expense, but this couldn’t be farther from the truth. Paying a small fee each month isn’t usually much trouble, but over a whole year, it can really add up. The good news is that affordable banking has never been more in .... More »
How women can start investing + MORE May 16th
Maybe you’re making a little more money these days and are curious about where to put it. Or maybe you’ve reached the age where you need to start, seriously, planning for retirement. Either way, we’re happy you’re here. The time for women to start investing is yesterday, or at least, right n.... More »
Severance, pensions and unemployment at 65: Should you apply for a pension if you get laid off? Aug 17th
Q. I just got laid off because of restructuring, but I got a package from work that will have me getting paid until February 2021. I am 65 as of March 2020. I did not apply for my pensions yet. If I apply now will it be deducted from my unemployment in February? Should I wait to apply for a pension.... More »
How does a mortgage inside an RRSP work?
– moneysense.ca
Q: Is it possible to arrange a mortgage inside my RRSP, so the interest payments are paid back to me?
A: I love the question, but recommend you pursue a less risky hobby. Say, axe throwing or BASE jumping? Setting up your mortgage inside an RRSP requires a lot of work with low return, says Joe Jacobs of Mortgage Connections in Calgary. He points out that “a self-funded mortgage through an RRSP has to be insured by Canada Mortgage and Housing Corp. the plan administrator will also charge set-up and ongoing fees.” You’ll also need to charge commercial interest rates on the mortgage, so the return on your self-funded mortgage will be limited to 3% or 4%. Compare this to what you could earn over the long haul if your RRSP funds were invested in equities and you’re not much further ahead. Now, if you’re interested in reducing your non-deductible debt you could focus on paying down your mortgage. Or you could try using the Smith Manoeuvre, a method of making your mortgage debt a deductible investment loan…
A: I love the question, but recommend you pursue a less risky hobby. Say, axe throwing or BASE jumping? Setting up your mortgage inside an RRSP requires a lot of work with low return, says Joe Jacobs of Mortgage Connections in Calgary. He points out that “a self-funded mortgage through an RRSP has to be insured by Canada Mortgage and Housing Corp. the plan administrator will also charge set-up and ongoing fees.” You’ll also need to charge commercial interest rates on the mortgage, so the return on your self-funded mortgage will be limited to 3% or 4%. Compare this to what you could earn over the long haul if your RRSP funds were invested in equities and you’re not much further ahead. Now, if you’re interested in reducing your non-deductible debt you could focus on paying down your mortgage. Or you could try using the Smith Manoeuvre, a method of making your mortgage debt a deductible investment loan…
Finding the right cover
– moneysense.ca
(Illustration by Taryn Gee)When finance professor Moshe Milevsky teaches insurance to a new group of students, he shows the class a picture of two people, a 30-year-old and a 70-year-old, then asks: “Who needs more life insurance?” The near-term chance of dying is higher for the 70-year-old so, without fail, most students point to the senior.
Which is the wrong answer. The need for life insurance is based on the probability of a dire financial event, but “it’s the small probability that creates the need for insurance, not the high probability,” says Milevsky, who teaches at York University’s Schulich School of Business. As you can see, insurance principles can be somewhat counter-intuitive. That means it’s easy to misunderstand where insurance makes sense and where it doesn’t. As a result, you should think through your insurance needs carefully and critically. That’s especially important at retirement, where other types of insurance needs change significantly. In what follows, we’ll review key insurance products (excluding basic products such as home, auto and travel insurance) and gauge their appropriateness in retirement…
Canada’s finance ministers are meeting again to discuss CPP expansion. Here are answers to common questions about the plan.Build a portfolio you can ‘set and forget’
– moneysense.ca
Ian Nelson, 37, Toronto (Photograph by Roberto Caruso)The Problem
Ian Nelson is a 37-year-old married father of two from Toronto who has spent the last several years paying off the mortgage on his $750,000 home and adding to his retirement savings. Right now, he has a six-figure portfolio invested solely in RRSPs that includes several Canadian stocks as well as three mutual funds, a handful of exchange-traded funds (ETFs), GICs and $16,000 in cash. Now, he’s looking for a well-diversified portfolio that’s low-cost and low-maintenance. “I invest $5,500 quarterly into RRSPs and expect to do this until retirement at age 55. I want to simply buy and hold.”
It’s no small feat to create a low-fee portfolio that doesn’t require annual rebalancing, says Miles Clyne, a portfolio manager with the Tycuda Group at MacDougall Investment Counsel Inc., in Langley, B.C. “But it can be done.”
The Fix
To get the asset allocation and diversification Nelson needs, Clyne recommends that he build his portfolio using two of the four ETFs that make up the iShares Portfolio Builders series of funds: the Conservative Core fund (XCR) and the Global Completion fund (XGC)…
