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Making sense of the markets this week: October 15, 2023 + MORE Oct 19th
Kyle Prevost, creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course, shares financial headlines and offers context for Canadian investors.
Clearly, the biggest world news is the conflict in Israel and Gaza. This week we are holding off discussing the effects.... More »
How does an executor pay estate expenses during the probate process? + MORE May 4th
I’ve realized that my large RRSP would generate a very large income tax bill if I die in the near future. I don’t have a spouse, or anyone who qualifies as a beneficiary to my RRSP on a tax-deferred basis. How can my executor pay my income taxes if it takes a year to get probated?—Carol
.... More »
Is the 4% Rule obsolete? + MORE Aug 3rd
Over the half decade I’ve written this column and attempted to practice what it preaches, a central pillar has been the so-called 4% Rule. As originally postulated by Certified Financial Planner and author William Bengen, that’s the rule of thumb that retirees can safely withdraw 4% of the value.... More »
Watch: 4 things to consider before putting your money in a TFSA or RRSP Sep 28th
You know both can help lower how much income tax you pay—both are registered accounts, after all—but how do you decide whether to put your money into a tax-free savings account (TFSA) or a registered retirement savings plan (RRSP)? Watch this video to learn about the four things to consider befo.... More »
Bear markets: What’s a long-term investor supposed to do right now? + MORE Jul 13th
My mutual funds are doing terribly, and I know they always say that it is better to stay the course and ride out this market crash and whatever. But I’ve been thinking about divorcing my big bank for awhile now. I have RRSP with mutual funds that have high management fees with RBC, slightly b.... More »
What’s the best way to pay for a master’s degree in the U.S.?
– moneysense.ca
Q. My daughter, Sonia, is 27 years old with a bachelor’s degree in English from a Toronto university. Needless to say, she is currently not working in the field that she was trained in. She thinks going back to school would enhance her employability in the writing and publishing industry, so she applied to—and was accepted at—two universities in New York City.
The cost of tuition as well as living in the U.S. is not cheap. Tuition for a master’s degree alone amounts to $53,000 USD, or about $70,000 CAD. Now the question is: How does she pay for it? Sonia has $40,000 in a stock market account, a $25,000 TFSA* and a $40,000 RRSP account, all started by her at the age of 18. Do we liquidate everything, and what are the consequences of that?
I have other questions as well. Does she take out a line of credit? Or some other kind of loan? Can she get a student loan for an American university? Can a Canadian get American scholarships for things other than sports? Any advice would help.
–Tammy
A…
The cost of tuition as well as living in the U.S. is not cheap. Tuition for a master’s degree alone amounts to $53,000 USD, or about $70,000 CAD. Now the question is: How does she pay for it? Sonia has $40,000 in a stock market account, a $25,000 TFSA* and a $40,000 RRSP account, all started by her at the age of 18. Do we liquidate everything, and what are the consequences of that?
I have other questions as well. Does she take out a line of credit? Or some other kind of loan? Can she get a student loan for an American university? Can a Canadian get American scholarships for things other than sports? Any advice would help.
–Tammy
A…
Should you borrow to pay expenses on an investment property?
– moneysense.ca
Q. I have an investment property that I rent out. Now that I’m retired, I would like to use the income to supplement my retirement income. That would leave me with no money to pay the expenses on the property (mortgage payment, maintenance, utilities, etc.).
I’m wondering two things: One, can I borrow all my expenses from my personal home equity line of credit (HELOC), thereby making all of the expenses and interest tax deductible?
And, two, looking into the future, let’s say I have now done this for two years and the expenses are $20,000 per year. I now have a debt of $40,000 in my LOC. The interest costs are now double they were in year 1. Is all of that interest tax-deductible for year 2, or only the interest for year 2 expenses?
–Garry
A. Many rental property owners end up in a similar situation as you in retirement, Garry—that is, a point at which you need to access some of the value of your rental property, one way or another.
If you literally have no money to pay the expenses, as in no remaining investments to draw down upon, I think you need to consider if and when to sell the rental property…
I’m wondering two things: One, can I borrow all my expenses from my personal home equity line of credit (HELOC), thereby making all of the expenses and interest tax deductible?
And, two, looking into the future, let’s say I have now done this for two years and the expenses are $20,000 per year. I now have a debt of $40,000 in my LOC. The interest costs are now double they were in year 1. Is all of that interest tax-deductible for year 2, or only the interest for year 2 expenses?
–Garry
A. Many rental property owners end up in a similar situation as you in retirement, Garry—that is, a point at which you need to access some of the value of your rental property, one way or another.
If you literally have no money to pay the expenses, as in no remaining investments to draw down upon, I think you need to consider if and when to sell the rental property…
7 ways to prepare for retirement
– moneysense.ca
1. Face the facts
Saving for retirement is always a challenge. But a number of factors have added up in recent years that make it even tougher on those entering or preparing to enter retirement. Jonathan Chevreau, Retired Money columnist for MoneySense, says the strength and predictability of defined benefit pensions (which pay out until death based on your earnings) is disappearing, as corporate plans move to defined contribution pensions (which build wealth based on employee and corporate contributions but do not pay out based on guaranteed formulas). That’s hard enough, Chevreau argues, but where “financial oppression” really takes hold is that retirees are stuck with bond yields that are sitting close to zero, which means nest eggs stop growing as fast and have to be drawn down a lot faster than they were for past generations.
2. Know when to start taking CPP and OAS
You can start taking Canada Pension Plan benefits between the age of 60 and 70. It’s worth spending some time figuring out which age is right for you…
Saving for retirement is always a challenge. But a number of factors have added up in recent years that make it even tougher on those entering or preparing to enter retirement. Jonathan Chevreau, Retired Money columnist for MoneySense, says the strength and predictability of defined benefit pensions (which pay out until death based on your earnings) is disappearing, as corporate plans move to defined contribution pensions (which build wealth based on employee and corporate contributions but do not pay out based on guaranteed formulas). That’s hard enough, Chevreau argues, but where “financial oppression” really takes hold is that retirees are stuck with bond yields that are sitting close to zero, which means nest eggs stop growing as fast and have to be drawn down a lot faster than they were for past generations.
2. Know when to start taking CPP and OAS
You can start taking Canada Pension Plan benefits between the age of 60 and 70. It’s worth spending some time figuring out which age is right for you…
