The RRSP deadline for your 2022 contribution (March 1) isn’t very far away now. Some of you look forward to this - every year. And some of you will view this deadline with a mixture of fear, dread and disinterest. If you are looking forward to it, you are almost certainly also putting your money into your RRSP automatically, so this might now affect you too much. But if you aren’t so sure, then here is another reminder that it's that time of year again.
What do you need to know before you get started?
This is the time of year that your RRSP contributions can be deducted from your taxable income tax for the previous tax year. Any contributions you make to your RRSP are directly deducted from your taxable income. This is why people like to put money into their plans during these first two months of the year - because they can see the tax benefits right away.
People who contribute money every month receive all these benefits. They've just decided that making it a regular part of their financial schedule makes things easier overall. It also offers them the chance to benefit from accumulation throughout the year.
But sometimes, your income isn't consistent throughout the year, and you need to think through your cash flow a little more carefully. You work on commission or have your own business with seasonal cash flow.
Either way, the most important thing is that you make your contributions each year. And if you do it now, you can see the tax benefits right away. Otherwise.. there's always next year.
There are limits, you know!
Your individual contribution limit is set by the government of Canada to 18% of your earned income for the year. For 2023, that limit is $30,780. That works out to a taxable income of $171,000. Last year's limit $29,210 and is adjusted by the Canada Revenue Agency every year.
Any contributions left over from previous years are available as well. So if you haven't used your limits in previous years, then you can use them now.
You are even permitted to make overcontributions - up to $2000, without penalty. After that, you will be charged 1% per month for as long as the money stays in your RRSP account. And that's not something I would recommend.
Just do it
We all have to go shopping for bread, eggs, milk, and all the rest. And we can all see that inflation is still a big problem. And there have been stories in the news going on for months about a recession in 2023.
But it’s still important that you put whatever money you can into your RRSP account.
COVID the world three years ago, and it’s not really done yet. So much of what we are going through right now is a carryover from the economic impact of closed businesses and closed borders all over the world. And that’s on top of the horrific human toll this health crisis has inflicted on all of us.
And then Putin decided to attack Ukraine a year ago. That war has had a major impact on world food supplies, as Ukraine was a major supplier of many important food stuffs. On top of that, Putin threatened to cut off vital energy supplies to Europe, creating more financial turmoil in the European Union and around the world.
But in 2023, the world is slowly shaking off COVID. And Putin’s economic and military efforts have obviously fallen short of his expectations. Ukraine is at least holding its own on the battlefield, and Europe was able to get through the winter with alternative sources of energy - renewable and non-renewable.
It’ll always be something
One thing to keep in mind when you are putting money away for the future is that there are always things going on that are going to affect our current perception of the world. But those events will pass, and new conditions will show up to take their place.
There is actually a term for that- dollar-cost averaging. Time has shown that this is one of the best ways of investing and is also one of the easiest. Investopedia tells us that:
So, if you aren’t already putting away money into your RRSP start doing it today.
Don't neglect your RRSP. Please
So, if you aren’t already putting money into your RRSP start doing it today.
Make use of your RRSP contributions - don't let them get away. It is one of the most effective saving tools available to Canadians.
After you've decided to do that, then we can work together to decide on how to invest it. Only a proper conversation with a professional financial advisor will get you the investment outcome that will fit your needs. Or at least that's what I think.
I look forward to hearing from you soon. And remember, you can reach out to me at [email protected] or call me at (519) 279-0186. You can also click here to Book an Appointment
Season’s Greetings to One and All
Snow has begun falling once again. And it’s time to begin preparing for the arrival of another holiday season and the end of another year. I want to start marking this festive season by wishing you and yours a Merry Christmas and Happy New Year, however you might choose to celebrate it. So many ways to bring joy to what might be just a cold and dreary winter.
This year we are forced to make decisions about party planning and gift-giving in an economic climate gripped by high inflation and corresponding interest rates. The increased cost of everything makes each of us stop and think about our festive planning.
Budgets are either inflated, or the actual items purchased are cut back. Our love and joy haven’t diminished. But maybe the number of parcels under the tree has.
Throughout this last year, we have followed the headlines showing us the events that have triggered this round of inflation and interest rate hikes. Let’s hope that 2023 will show a way out of these troubling conditions and into a safe, calmer world.
As you stand in the supermarket trying to decide whether or not to buy that tray of butter tarts (oh, sorry, pick up more raisins and pecans because you plan to make them yourself - this year), you may be reflecting back on what all of it cost last year.
I’m with you. Inflation is not pleasant, and its reflection in the cost of everyday items and occasional treats is frustrating. But at the same time, depending on your circumstances, this may also be time to re-evaluate your portfolio.
With the rise in interest rates, you may have noticed an equivalent rise in rates for GICs and term deposits.
It’s been a while since GICs (Guaranteed Investment Certificates) were worth investigating. The extremely low rate of return took them off the table as viable investment tools for many of us.
But in today’s investment climate, these fixed-income tools take on a new charm. As we watch real estate fishtail, stocks remain uncertain, and cryptocurrency enters a new era of uncertainty, it’s nice for us to be able to consider things with some certainty in them.
This is where GICs come in. GICs offer certainty. They’re Guaranteed. But in an economic setting with low-interest rates, those guarantees aren’t exactly inspiring. As the guaranteed rates rise, so does their allure.
But with those guarantees come limits. When you purchase a GIC, you tie up your money for however long that GIC lasts. And these GICs can have maturation dates (the date the certificate comes due) of either months or years. You just need to be certain that you are not going to need that money before its maturation date. If you can set it aside for that long, then it can be a great way to see your money grow in a context that lets you sleep at night.
So in between glasses of eggnog and kisses under the mistletoe, go ahead and give me a call. I can help you figure out whether GICs are right for you. Give me a call at (519) 279-0186 or drop me a line at [email protected] Let’s get your New year off to a safe and happy start.
And just let me close by repeating my wish for you to have a Merry Christmas and a Happy and prosperous New Year. And if those are not the holidays you celebrate – please enjoy the festivities that are right for you. Just be sure to stay safe and warm in the days to come.
We have had a lot of doom and gloom in the news lately. High inflation, possible recession, war in Ukraine just to name a few. It can be hard to find positives in the daily news cycle, or when watching the markets.
That being said, we do have some good news for your TFSA.
A small consolation of the high inflation (cost of living) is the government has raised the 2023 TFSA contribution limit to $6,500. This is a $500 increase from 2022.
This means anyone over 18 can contribute $6,500 as of January 1st, 2023.
It’s important to note that the limit only applies to clients who have contributed the maximum amount in previous years. In other words, unused contribution space accumulates over time and can be carried forward to future years. According to the latest estimate from the Canada Revenue Agency (CRA), only 10 per cent of clients contribute their total TFSA limits.
With $6,500 in new available contribution space coming in January, the total allowable space for those 18 years or older when the TFSA was introduced in 2009 will be $88,000.
Your available contribution room is based on contributions and withdrawals made over the years. You can find yours through your CRA “May Account”
The TFSA Advantage
Since its introduction in 2009, the TFSA has become a fantastic tax-free investment option for everyone.
Your money can be withdrawn at any time and investment returns - be they capital gains from equities sold, or income from Canadian dividends and fixed income - are “tax free”.
In non-registered accounts, by comparison, half of capital gains are taxed and most income is fully taxed at your marginal rate. Dividends are also subject to full taxation, but tax credits can be applied against payouts from eligible companies.
As another comparison, An RRSP is basically a tax deferral. Contributions can be deducted from taxable income Those same contributions - along with the returns they generate over time - are fully taxed when withdrawn again at your marginal rate.
Unlike RSPS, TFSA contributions cannot be deducted from taxable income.
The TFSA is great for short-term savings goals like education or vacations but has also become a very effective retirement tool as the allowable contribution amount grows. With proper planning, TFSA funds can be used as a source of Tax-Free income. This can be very advantages, especially if you are in higher tax bracket come retirement.
A word of caution, many investors contribute to their TFSAs through more than one institution and it’s the account holder who will be penalized if they exceed their limit.
Contribution space from TFSA withdrawals can not be reclaimed until the following calendar year. If you maxed out your TFSA and made a withdrawal in 2022, as an example, you need to wait until 2023 in order re-contribute. That is why it is important to confirm your room through your CRA “May Account”
Investment options for a TFSA
Like a RRSP, a TFSA can hold just about any type of investment including GICs, mutual funds, exchange-traded funds (ETFs) just to name a few.
I ensure your portfolios tailored for any time horizon, risk level or personal goals.
I have spent my professional life helping my clients build the financial plan that is right for them. I work hard to listen to your needs and help you find your goal.
If you want to discuss how a TFSA can benefit your financial future, send me an email [email protected] or give me a call at (519) 279-0186. You can also book an appointment through my website: www.bjkfinancialgroup.ca
I guess it’s been long enough since I finished carving the turkey and enjoying leftover dressing. Now it’s time to stock up on treats and prepare for the yearly visit from our local contingent of pint-sized ghosts and goblins. And get ready to rake up the leaves and even dig out the snow shovel. Sigh.
The changing of the seasons is often a good time to bring things into perspective and prepare for the season ahead. While it might be more challenging to barbecue burgers or take a dip in the pool there are still things I look forward to as fall turns to winter. Going skating, building snowmen, and drawing pictures on icy car windows are just a few examples.
While we can have some fun thinking about the family activities we have to look forward to I also think it’s important for us to loo back on the year that’s been and the year to come.
While getting caught up in the moment can be fun when we’re jumping into a pile of freshly raked leaves, it’s not the best way to look at our personal finances. There you need a longer perspective and an appreciation for the influence of other types of seasons.
News of the last year has been dominated by war in Ukraine and inflation at home. And COVID almost “ALMOST” feels like a forgotten memory. And time before the pandemic? What was that like?
As an old folk-pop song from the 60s used to remind us, there is “a time to every purpose under heaven”. The Byrds tried to offer light in a dark time in American and Canadian history. The Vietnam War, the Cuban Missile Crisis and the October Missile Crisis filled television screens then just as COVID, the war in Ukraine and debate about the “Freedom Convoy” fill our twitter feed now.
And you can add the impact of increasing real estate costs, skyrocketing interest rates, and unpredictable gas prices to the mix if you want.
The important thing to keep in mind is that these too shall pass. Each of these events will have an impact (some bigger than others) but the world we are looking at five years from now will be addressing an entirely different set of problems, concerns and opportunities. Oh yeah, do you remember when Bitcoin was going to transform the world and make us all rich instantaneously? Well...
The important thing to remember is that we have to try and make our plans without getting overwhelmed by current events and current fads.
When you open the business section you can see stories about escalating rents, volatile real estate, the likelihood of recession, and how much avocados are going to cost this winter. But that is not the news you need to be focusing on as you build your financial nest egg. Whether you are saving to buy a house, send the kids to college, or better enjoy your golden year, you need to keep the end goal in mind.
The best way to do that is with the help and understanding of a financial advisor who can help you understand what will best fill your particular needs. Your timeline, your comfort with financial risk and your end goal all play in a role in putting together the portfolio that is right for you.
I have spent my professional life helping my clients build the financial plan that is right for them. I work hard to listen to your needs and help you find your goal. If that sounds like something you’ve been looking for send me an email at [email protected] or give me a call at (519) 279-0186
It is hard for me to properly put my feelings about HM Queen Elizabeth II into words. As many have already said, there are personal and historical reasons to treat this time with solemnity and sadness. Her role as Head of State here in Canada, as the leader of the Commonwealth, and as the longest-ever reigning monarch in British history leaves us with a legacy beyond compare.
Elizabeth has been a steady element in my life and no doubt in yours – whatever your thoughts on the role of the crown in today’s crazy world – full of blog posts, Twitter feeds, and Facebook updates. And now these new social media elements have been there to give tribute to this amazing world leader.
She Served Us All
Our Queen was always there – to offer a rock-solid steadiness in an otherwise crazy world. The British crown is as secure as it is because she gave the role the gravitas it so richly deserved.
She was the most travelled British Monarch in history, visiting Canada something like twenty-two times (please forgive me if I’m off by one or two). Maybe, like me, you will remember the episode of The Crown when she and Philip, on a safari in Africa, are informed of her father’s death and must rush home to step into a role she was not expected to fill when she was born. Let’s remember that at the time of her birth, Elizabeth was the first child of the King’s brother, not the King. Once her uncle abdicated, she became the direct heir to the throne.
Looking back at her relationship with her uncle – and he with the monarchy – I can appreciate the steadiness of nerves and commitment to tradition and to the British people that she displayed.
It’s Personal - Thank You Very Much
Like all of you (well, almost all of you), I knew of no one else as our Monarch, our Queen. And in my youth (my exact age is not important), I joined the Military Reserves as a member of the Royal Highland Fusilier of Canada. And on November 12, 1994, I took the Canadian Forces Solemn Affirmation to the Queen. An affirmation I hold dear to this day.
I, Brian Joseph Kettles, do solemnly affirm that I will be faithful and bear true allegiance to Her Majesty, Queen Elizabeth the Second, the Second Queen of Canada, her heirs and successors according to law.
It was one of the proudest moments of my life. And will remain a cherished memory throughout the years to come. Her ties, and those of the entire Royal family, to the military both in Britain and abroad gave me strength and solace.
And Now We Must Say Goodbye.
As the events of the last month or so have unfolded, we have had the opportunity to reflect upon and pay tribute to a life well lived, in service to the British people, to the entire Commonwealth, and to the world as a whole. As much as we knew that this day had to come, its arrival was still shocking and disheartening.
And then last week, as the procession travelled from Westminster Abbey to Wellington Gate, I was overwhelmed with pride as I watched members of the RCMP – the Royal Canadian Mounted Police – lead the way.
As Canadians, We Can be Particularly Proud
One of the things that many Canadians have proudly commented about was the role those Mounties played. And it was not just the riders that many of us were so proud of. It was also the horses they were riding. Even Horse Canada wrote about it. (https://horse-canada.com/horse-news/horses-queens-funeral/)
All of these horses were gifts over the years from Canada to Her Majesty and three of the four had even been ridden by other members of the royal family at the Queen’s 96th birthday parade just a few short months ago. Thank you, Darby, George, Sir John and Elizabeth. A fine equine quartet to be sure.
Your service spoke well to both yourselves and your homeland.
However Personal, It Is Also Historical
I marvel at the mesh of history we have witnessed over these last few weeks. Grief was shown over social media, in a context no one could have imagined, when HM Queen Elizabeth received her coronation on June 3, 1953. That event at Westminster Abbey, where every British Monarch since 1066 has been crowned, adds an element I can barely comprehend. It adds gravity and consequence to the events – in both their current and historical context. That is a level of stability we should truly appreciate in the topsy-turvy world we are witnessing right now.
And now let us reflect and remember - the Queen has died! Long live the King!
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