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How to plan for retirement for Canadians: A review of Four Steps to a Worry-Free Retirement course + MORE Oct 26th
With November incoming and being Financial Literacy Month in Canada, it seems appropriate to devote this edition of the Retired Money column to a new Canadian DIY retirement course created by MoneySense’s “Making sense of the markets” columnist Kyle Prevost.
Entitled 4 Steps to a .... More »
What is the Canada Pension Plan death benefit? + MORE Sep 26th
Ask MoneySense
Your recent article is the first time I have seen reference to a CPP death benefit of $2,500. Can you explain it, please?
—Sam
The primary purpose of the Canada Pension Plan (CPP) is to pay a retirement pension to contributors. Employers as well as employed and self-employed .... More »
TFSA contribution room calculator + MORE Jan 11th
Find out your current tax-free savings account (TFSA) contribution limit by using this calculator.
TFSA is a bit of a misnomer. While you can use it for straightforward savings, think of it more accurately as an investment holding account to store things like exchange-traded funds .... More »
How annuities work in Canada + MORE Apr 18th
Annuities are life insurance products that pay a regular income to a purchaser. When you buy an annuity, it’s like buying a pension plan with a lump sum premium paid from your savings. The payments you receive include a return of your original capital and interest income on that capital. It ma.... More »
Stock news for investors: Canadian Natural boosts quarterly dividend after massive Q4 profit Mar 7th
Here’s a round-up of news for Canadian investors this week.
Canadian Natural Resources
Pet Valu
George Weston
Canada Packers
Featured RRSP Accounts
featured
EQ Bank
Build yo.... More »
The lowdown on Vanguard’s Retirement Income ETF: can you rely on its 4% payout target?
– moneysense.ca
Vanguard Investments Canada Inc. has unveiled a new targeted monthly income ETF that is rolling out ahead of all other Vanguard jurisdictions in the rest of the world. The Vanguard Retirement Income ETF Portfolio (TSX: VRIF) started trading Sept. 16, 2020, and offers retirees and near-retirees a 4% targeted payout.
Positioned as a “decumulation” product for retirees and near-retirees, it’s probably no coincidence that the 4% target is nicely in line with the long-established 4% Rule discussed in this column earlier.
While a targeted return is NOT a guarantee—unlike the guaranteed but puny rates paid by GICs these days—Vanguard expects the product will attract a fair amount of money from income-oriented investors suffering sticker shock when their GICs mature. Currently, many 1-year GICs pay around 0.5%, ranging from as little as 0.3% to no more than 1.1%. Even going out to 5-year terms, they’re typically paying only 1.4%, ranging from under 1% to 2% in the best case.
Technically, those GIC returns are guaranteed, but a cynic might say they’re “guaranteed” to lose money on an after-tax, inflation-adjusted “real return” basis…
Positioned as a “decumulation” product for retirees and near-retirees, it’s probably no coincidence that the 4% target is nicely in line with the long-established 4% Rule discussed in this column earlier.
While a targeted return is NOT a guarantee—unlike the guaranteed but puny rates paid by GICs these days—Vanguard expects the product will attract a fair amount of money from income-oriented investors suffering sticker shock when their GICs mature. Currently, many 1-year GICs pay around 0.5%, ranging from as little as 0.3% to no more than 1.1%. Even going out to 5-year terms, they’re typically paying only 1.4%, ranging from under 1% to 2% in the best case.
Technically, those GIC returns are guaranteed, but a cynic might say they’re “guaranteed” to lose money on an after-tax, inflation-adjusted “real return” basis…
The scoop: What Canadian investors need to know now
– moneysense.ca
For those who like surprises, the stock markets have not disappointed in 2020. The S&P 500 surged to new heights despite the economy-clenching COVID-19 pandemic powering around the globe, and individual investors’ participation in trading reached a 10-year high during the first half of this year. Still, Canadians have generally remained cautious. Although 77% of us say we invest, nearly half (47%) are saving cash, with millennials most likely to shun the markets (57% are holding savings in cash), according to a BMO RRSP Study conducted by Pollara Strategic Insights.
Why the reticence? If a lack of insight is holding you back from investing, check out The MoneyShow Canada Virtual Expo, Sept. 29 to Oct. 1, 2020. Streamed live to your laptop screen, the show offers:
One-stop access to the best minds in the financial world and the opportunity to learn their insights and strategies—all designed to help you grow your investment portfolio and achieve your long-term financial objectives in any market environment…
