Advisorsavvy Blog

Your Year-End Financial Checklist: 6 Actions For You To Take

On top of looming winter, Canadians have to deal with tax season this time of year. While taxes and dealing with your finances can be bland, we’re here to make it a little easier and understandable. Since finances are already at the forefront of Canadian’s minds right now, it’s an optimal time to review and adjust your general finances as well. In this year-end financial checklist, we offer a comprehensive list of what to consider on an annual basis. The importance of an annual financial check-in Most people have financial goals they’re trying to achieve. These could be short-term or long-term. For example, saving for your next vacation is likely a short-term goal. Whereas saving for a downpayment on a home or retirement may be a long-term goal. Regardless of your specific goals, an annual financial check-in is important for tracking your progress. By revisiting your finances yearly, you can review how you’re doing and reassess your goals. Perhaps you

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How to Invest in Mutual Funds in Canada

ETFs tend to get a lot of attention these days. Mutual funds, however, have been a Canadian portfolio cornerstone for decades. In fact, according to the Investment Funds Institute of Canada (IFIC), the amount of money Canadians invested in mutual funds skyrocketed from $100 billion to $1.71 trillion between 1990 and the end of 2019. Now, there are over 5,000 mutual funds in Canada. And it’s no wonder Canadians are still so keen on mutual funds. Right off the bat, they offer diversification by design and professional management —two things many investors look for. And while ETFs are gaining in popularity for their benefits, as Jonathan Hartman, vice president and head of Advisor Channel Sales atRBC Global Asset Management explains, “mutual funds remain the most commonly used vehicle in Canada, especially among investors with $25,000 to $50,000 to invest.” This guide answers some of the biggest questions investors have about mutual funds in Canada, and why they are such a

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How To Invest In Index Funds In Canada

They’re a top recommendation of investing legend Warren Buffet. They’re also great for new investors and/or those looking to follow a passive investing style. ‘Index fund’ sounds like a fairly technical term, doesn’t it? In reality, they’re pretty straightforward —and can be a great way of diversifying your portfolio at a low cost. This guide will outline how index funds work, explain the pros and cons, and list some of the top funds in Canada. What are index funds? Simply put, an index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio designed to match or track a specific market index. This might be theStandard & Poor’s 500 Index, or S&P 500, which is 500 of the top companies on the US stock market, or Canada’s benchmark S&P/TSX Composite Index. For example, the iShares S&P/TSX 60 Index ETF(XIU) tracks the 60 biggest stocks on the TSX. As of November 5, these include Shopify, RBC, TD,

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Financial Conversations To Have Before Marriage

As Frank Sinatra sings about love and marriage, “you can’t have one without the other.” These days, however, it’s important to also add “make sure you’re on the same page about finances before getting hitched” to the mix. Sure, it’s not the most romantic of topics, but having an open and honest dialogue about money matters before the big day can go a long way in building a successful marriage. And money is certainly at the top of mind for coupled-up Canadians. According to RBC’s Love, Money & Marriage Poll from the summer of 2021, 88% of respondents said: “having similar financial goals and habits and also being aligned on how to spend and save money were deemed to be important for a healthy long-term relationship.” At the same time, 32% of respondents found it hard to talk about finances with their partners. 32% were also not comfortable discussing each other’s current financial situations. To top it all off, 47%

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How To Finance A Home Renovation

Love your home so much that you want to take extra care to make sure it’s absolutely perfect? Or maybe you’re in a bit of a fixer-upper situation, tackling cabinetry and bathroom fixtures straight out of 1995? Either way, if you have a home renovation in mind, we’re here to look at all the ways you can finance it. Haven’t checked out our complete guide to the costs of home renovations? Be sure to do so! For this article, let’s start by revisiting some of the basic points of project costs. How much will a home renovation cost? Whether a small bungalow in Halifax, a bay-and-gable home in Toronto, or a west coast Vancouver Special, the cost of home renovation is going to depend on a variety of factors.Some of these include: The size/age of your house Who you’re planning on hiring for the job (professional or handyman friend) How fast you want them to work If you’re confident in

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How Much Do Home Renovations Cost? A Complete Guide

Did you know that, according to a HomeStars survey, almost three-quarters (74%) of Canadian homeowners planned on improving their homes in 2021? Many Canadians have transitioned to fully remote work, meaning they’re spending more time enjoying their homes — no doubt coming across rooms and features that need sprucing up. HomeStars found that 54% of homeowners were planning on improving their outdoor space this year, with 29% citing that they want to better enjoy the space. Other top renovation projects include bathrooms (32%), kitchens (23%), basements (17%), and appliance repair/replacement (12%). Another big reason why Canadians are renovating? The desire to age in place. 79% of respondents said they are planning on staying in their homes as they continue to age, and 50% said they were renovating to ensure they could do so. And while the recent rush to renovate even caused lumber shortages/price increases, homeowners have been sprucing up their homes for decades — and they’ll continue to do

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How To Buy A Car: A Complete Guide

Time for a new set of wheels? Maybe, you’re preparing to buy your first car, or your university-aged child has saved up for theirs. Either way, you want to buy a car. Is it one of those big purchases that can seem daunting, with a LOT of steps? Yes (sorry!) The reality? Yes, there’s a lot to the process. But if you’re able to take your time and follow each step while keeping your eyes on the prize and your own needs in check, you’ll end up with the perfect car. Let’s get started! What is the total cost of car ownership? Before diving into all of the steps of buying a car, it’s important to think about the total cost of owning a car. To be blunt: it can add up. When starting the process of buying a car, financing (either through your bank or the dealership) is typically top-of-mind. But when you’re figuring out a budget, factor in

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Life Income Funds (LIF) In Canada: A Complete Guide

We’ve been taking a good look at accounts designed with retirement in mind. First, we reviewedRRSPs(the most well-known savings account that helps Canadians save money for retirement), followed byRRIFs(where all that money you saved eventually goes to give you income in retirement). We recently featured Locked-In Retirement Accounts (LIRAs), an account for your employer pension if you leave your company or end up laid off. If you’re wondering whether LIRAs operate in a similar way as this RRSP-to-RIFF pipeline, you’re in luck — they do! Introducing Life Income Funds, or LIFs. What is a Life Income Fund (LIF)? It’s not uncommon these days to hold several positions at a variety of companies over the course of a career. Pivoting career paths, taking on contract work, and hopping between jobs has become totally normalized. That said, Statistics Canada reports that active membership in registered pension plans in Canada surpassed6.4million in2018. Fortunate enough to have a job that offers a pension? When/if

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Locked-In Retirement Accounts (LIRAs) In Canada

We’ve talked about RRSPs (the most well-known savings account that helps Canadians save money for retirement) and RRIFs (where all that money you saved eventually goes), but now, let’s pivot to LIRAs —or Locked-In Retirement Accounts. And it’s here where employer pensions come into play. What are Locked-In Retirement Accounts (LIRAs)? Did you know: According to Statistics Canada, active membership in registered pension plans in Canada surpassed6.4million in2018. There are two main types of employer pension plans: defined benefit plans and defined contribution plans. The nature of work, however, has drastically changed in recent years. The days when you’d start with a company after graduating high school or university/college and stay there for 40 years are mostly over. Now, it’s not uncommon to hold several positions at a variety of companies over the course of a career. Career pivoting, contract work, and job-hopping are certainly more normalized than before. So if you’re fortunate enough to have a job that offers

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What Is A RRIF And How Does It Work?

Have an RRSP? Well, one day —depending on how close you are to retirement — it’ll have to become an RRIF. What do you think about when you hear the word ‘retirement‘? [If you’re daydreaming now, we’ll wait…] Certainly no more early mornings or commutes, but how about more travel? Maybe fully immersing yourself in what was once a weekend hobby like crafting, gardening, or writing. Alas, a key piece in the retirement puzzle is, of course, money. You save and save and save for it —dutifully contributing to an RRSP. Then what? That’s where RRIFs come into play. What is a RRIF? RRIF stands for Registered Retirement Income Fund. Much like its name suggests, it gives you a steady income in retirement. Even better, they’re one of the most flexible and tax-effective ways of generating income in retirement. Three reasons why RRIFs are great: Your money grows, tax-free How you invest the funds in your RRIF is totally up

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Marginal Tax vs Average Tax: Understanding Canadian Tax Brackets

Tax rate, tax bracket, marginal tax, average tax — there sure is a lot of tax-related terminology floating around, isn’t there? In our previous blog post, we discussed the ins and outs of tax credits and deductions in Canada, and how you can get a bigger tax refund. This time, we’re zooming out a little bit, tackling the differences in marginal tax vs average tax, and just what tax bracket you might fall into in the first place. This will ultimately help you better understand and plan your finances, and how/when you can claim tax credits or deductions. What is the average tax rate? The average tax rate measures your tax burden — i.e. the share of income you pay in taxes. It’s calculated by taking the total tax you paid and dividing it by your total income. Ultimately, it’s an accurate reflection of overall tax liability. What is the marginal tax rate? Simply put, your marginal tax rate is

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Guide To Tax Credits: How To Get A Bigger Tax Refund In 2021

It’s pretty hard to argue against trying to get the biggest tax refund possible. (And after the year we’ve had, don’t we all want every last bit of refund we can possibly get?) As it turns out, it’s pretty simple to maximize your return. What you do with your tax refund is a whole other conversation — paying down debt or putting it into savings are commonly recommended actions. It mostly comes down to knowing the difference between tax credits and tax deductions. After that, it’s knowing which ones apply to you. How to maximize your tax return Just grabbing your box of slips, logging onto your tax return program, and getting your tax filing out of the way is easy. As a result, you could be leaving a wide variety of tax credits and tax deductions on the table that the Canada Revenue Agency (CRA) has available to Canadians. A quick word to the wise: the Canadian government does

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How To Retire Early In Canada

In order to retire early, you need to assess what you need your retirement savings to do and what you want your money to do. Necessary funds include those that cover your basic living expenses.

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Best Dividend ETFs in Canada For 2021

A dividend ETF is an exchange-traded fund that is designed for investment in a selection of high-dividend paying stocks. These ETFs typically track a specific index that is screened to include blue-chip type companies considered to be lower risk.

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