Advisorsavvy Blog

4 Types of Income

Income is a critical aspect of financial stability and success. Without income, it would be a challenge to achieve financial goals. There are countless ways to earn income, but some are more common than others. In this blog post, we will explore four different types of income. Each type of income has its own unique benefits and drawbacks. It’s important to understand them all before making any decisions about your financial future. We’ll also discuss how each type of income can be taxed, so you can make the most informed choices for your situation. Why do the types of income matter? The types of income you earn matter just as much as the amount. That’s because different types of income are taxed in a specific way. Diversifying your income streams can help reduce your overall tax burden. In addition, having various income streams can provide greater financial stability so you’re not reliant on one source. For example, if you earn

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What is Financial Leverage and Why is it Important?

Financial leverage is an important term that often comes up in personal finance and investing. But what is financial leverage, and why is it important? In this post, we’ll define financial leverage and explain why it’s such a critical element of success for savvy investors. We’ll also look at some of the risks and benefits associated with using financial leverage. By understanding leverage, you’ll be able to make better decisions when it comes to your finances and investments. What is Financial Leverage? Using borrowed money to finance the purchase of assets with the expectation that income or capital gain from the new asset will exceed the cost of borrowing is called financial leverage. In other words, financial leverage is the process of using debt to create wealth through income producing assets or capital gain. In many cases, income produced from an asset is used to repay the obligation, such as with a rental property. Most lenders will put a limit

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Is CPP Taxable Income?

The Canada Pension Plan (CPP) is a national program that provides retirement benefits to Canadians. The CPP is funded by contributions from both employees and employers, in addition to contributions from the self-employed. It offers various types of payments, including a retirement pension, disability benefits, and death benefits. If you receive benefits from CPP, you may be asking yourself, is CPP taxable income? The answer is yes, CPP benefits are taxable, but there may be ways to reduce your tax liability on the payments you receive. Read on to learn more about how CPP is taxed and what steps you can take to minimize the impact of taxes on your benefits. What is CPP? The Canada Pension Plan (CPP) program originally started in 1965 to combat poverty among retired Canadians at the time. Since then, it has evolved and changed to adapt to modern needs. When the program first started, it relied solely on contributions from employees, employers and the

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5 Steps to Transforming Your Relationship with Money

Do you ever feel like money is controlling you instead of the other way around? You’re not alone. For many people, money is a source of stress and anxiety – but it doesn’t have to be that way. By following these five steps, you can begin transforming your relationship with money and start enjoying financial freedom. Continue reading to learn more. Why is your relationship with money important? In today’s world, money has become a necessity. It is often used to measure success and is essential for achieving most financial goals, often life goals too. For these reasons, it is important to develop a healthy relationship with money. This can be done by learning to budget, living within your means, investing money wisely, and avoiding debt. However, when your relationship with money is out of line, it can be a challenge to achieve these things. If you’re struggling to accomplish your financial goals, then it may be time to consider

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Old Age Security Canada

Old Age Security, or OAS for short, is a Government of Canada program that provides a monthly income to retired Canadians. It is one of the many benefits available to individuals in Canada. Often, OAS is paired with the Canada Pension Plan and Guaranteed Income Supplement retirement benefits to supplement income during retirement. In order to be eligible for OAS, you must meet certain requirements concerning your age and residency in Canada. This article will provide an overview of Old Age Security in Canada, including eligibility requirements and how to apply. Continue reading to learn more. What is Old Age Security? The Old Age Security (OAS) pension is a monthly stipend that can be received by people who are 65 years of age or older. Service Canada may be able to automatically enroll you for the OAS pension in some situations. In other instances, you will have to apply for the Old Age Security benefit. If you have been enrolled

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Best Place for Canadian Snowbirds

Every year, as the cold weather sets in and the leaves start to change colour, Canadian snowbirds from coast to coast make their annual pilgrimage south to escape the cold. Funny enough, so do Canadian geese! Whether this is your first year embracing the snowbird lifestyle or you’re looking for a new destination this winter, we compiled a list of the best places for Canadian snowbirds. Continue reading to figure out what the top locations are. What is a Canadian snowbird? A Canadian snowbird is a person who winters in a warmer climate, typically in the United States. However, Canadian snowbirds may go wherever else, but usually the reason for leaving is to escape the dreary winters. In the summer months, Canadian snowbirds often return home. These snowbirds, as they’re often called, spend anywhere from a few weeks to several months elsewhere to take advantage of the milder weather. Canadians retiring abroad are those who leave Canada all together, on

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Is OAS Taxable?

When you retire, one of the things you may be looking forward to is collecting your Old Age Security (OAS) payments. But is OAS taxable? The short answer is yes, but there are some nuances to consider. Furthermore, how much tax you pay on OAS depends on other aspects of your finances. In this blog post, we’ll take a look at the taxability of Old Age Security payments in Canada. Keep reading for more information! What is OAS? Old Age Security (OAS) is a retirement benefit available to Canadian citizens and residents. You may be eligible if you are 65 years of age or older. Plus have lived in Canada for at least 10 years after turning 18. However, if you retire to a foreign country, you must have resided in Canada for at least 20 years after turning 18 to keep receiving your OAS pension. If seniors choose to wait until they are 70 years old to start collecting

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Tax Loss Harvesting Canada

Tax loss harvesting is a helpful strategy to reduce your tax bill. However, it can be tricky to understand and navigate. Especially if this is your first time utilizing tax loss harvesting in Canada. Although, if you have capital gains for the current tax year, you won’t want to miss out. It’s not too late to reduce your upcoming tax bill either — you have until December 31 to execute your tax loss harvesting strategy. In this blog post, we’ll break down tax loss harvesting for Canadians, so you can make the most of this valuable tax strategy. We’ll cover what it is, how it works, and some additional tips and tricks. Read on to learn more. What is tax loss harvesting in Canada? A capital loss can only be used to offset a capital gain, according to Canadian tax laws. You may have incurred a capital gain by selling investments, such as stocks, bonds, real property and virtually any

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Centralized vs Decentralized Exchanges

An exchange is an organized marketplace that connects buyers and sellers. Within an exchange, parties can buy and sell assets such as currency, stocks, bonds, futures and options. Exchanges can either be centralized or decentralized. But what exactly is the comparison between centralized vs decentralized exchanges? Generally speaking, most exchanges are centralized, such as the Toronto Stock Exchange (TSX). However, with the arrival of cryptocurrency in financial markets, a new concept of decentralization has come about. In this post, we’ll explore the key differences between centralized and decentralized exchanges. By the end of this article, you’ll understand how both kinds of exchanges compare and contrast. Centralization vs Decentralization: What does it mean? Sometimes the terms centralization and decentralization describe how businesses operate. Centralization refers to companies that have one core function where all business activities flow through. On the other hand, decentralization refers to companies where various functions of the business operate autonomously and independently of one another. In many

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What is the average credit score in Canada?

Are you curious about the average credit score in Canada and how you rank? By assessing the averages across Canada, you can understand how you compare to others who are in a similar position to you. If you’re below average, it may be time to sit down and devise a strategy to increase your score. If you’re close to or above average, then keep doing what you’re doing! In this article, we’ll explore what credit scores are and how they work in Canada. From there, we’ll provide a breakdown of the average credit scores by age and province or territory. Continue reading to learn more. What are credit scores? Credit scores are a number that represent your creditworthiness. A credit score communicates whether you are a good candidate for a loan or other financing. They can determine the interest rate you pay as well, which is based on your risk level as a borrower. In addition, sometimes landlords and even

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Rental vs REIT

In Canada, it is a common investment strategy to purchase a property and rent it to a third party. By doing so, investors earn stable rental income and have the opportunity to profit on a capital gain of the property itself. Another popular investment in Canada is real estate investment trusts, or REIT for short. This asset is often publicly traded on stock exchanges and tends to yield high dividends. So which is better in the rental vs REIT debate? Both rentals and REITs have their corresponding pros and cons. The investment that is better for you depends on your preferences and what kind of investor you are striving to be. Continue reading to learn more about how REITs and rentals compare and contrast. Rental vs REIT: What are they? There are many different types of real estate investments. It can be confusing to navigate, especially if you’re new to the real estate market. Two of the most popular options

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Tax Efficient Investing Canada

There are a number of ways to invest your money in Canada. As an investor, it’s up to you to decide where to put your money with the goal of turning a profit. While profit is great for building wealth, it is often coupled with a tax bill. Taxes, among other financial and investment management fees, eat into your profits which can be frustrating after a big win. You might be wondering, is there a way to facilitate tax efficient investing in Canada? The answer is yes! To make the most of your money and minimize your tax bill, it’s important to understand your obligations and choose the right investment strategy for you. This guide provides an overview of taxes you can expect on your investments and how to maintain a tax efficient investing position with your portfolio. Tax on Investing in Canada In Canada, investment income must be classified before tax obligations can be determined. There are three main

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RRSP Tax Deduction

If you’re like most Canadians, you probably think of your Registered Retirement Savings Plan (RRSP) as simply a retirement savings account. While it is true that your RRSP can hold cash and other investments for your nest egg, it’s also a powerful tax tool. In fact, the Canada Revenue Agency (CRA) calls the RRSP the “single most important vehicle” for retirement savings. The main tax benefit of a RRSP is investment income is sheltered from tax. But another notable benefit is the RRSP tax deduction. So what is the RRSP tax deduction? And how exactly does it work? Let’s take a closer look below. What is the RRSP tax deduction? Most people are familiar with the RRSP, or Registered Retirement Savings Plan. This is a retirement savings account that you can open with a financial institution, and it offers a number of benefits, including tax advantages. An RRSP is a registered account which means it’s subject to special rules surrounding

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What to do when you get laid off in Canada

Currently, the unemployment rate is 4.9% in Canada. While the unemployment rate has recouped to pre-pandemic levels, many Canadians are still at risk of losing their job. In fact, Statistics Canada reported that 31,000 jobs were lost in July 2022. If you’re one of the thousands of Canadians who have lost their job in recent months, you may be feeling uncertain about your future – and you’re not alone! If you are worried about a layoff, or have already faced a layoff, we explore what to do when you get laid off in Canada below. This includes managing your finances, searching for a new job and seeking support from friends and family. Read on for details. What does laid off mean in Canada? In Canada, a layoff generally refers to the temporary suspension or reduction of an employee’s work hours. Although, sometimes a layoff means the employee is out of work permanently for no fault of their own. A layoff

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10 Best BMO ETFs in Canada for 2024

The Bank of Montreal, or BMO for short, is the eighth largest North American bank. BMO offers a number of exchange-traded funds (ETFs). Investors have many investments to choose from when it comes to building a portfolio. In this article, we will compare the 10 best BMO ETF products based on numerous benchmarks. These ETFs track the performance of equity markets, but there are some key differences among them. By the end of this read, you should have a good idea of which BMO ETFs are right for you. What is an ETF? An exchange-traded fund, or ETF for short, is a type of investment fund that tracks a certain index or asset. They hold a basket of assets which provides broad exposure to general markets. ETFs are traded on stock exchanges and can be bought and sold like stocks. They are often seen as a good investment because they offer diversification and are usually cheaper than mutual funds. In

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How to Withdraw Money from RRSP

If you’re here, you’ve probably come across an unexpected expense or there’s something you want to invest in, such as a home or education. You may be considering a withdrawal from your RRSP to cover the cost at hand. It’s a good thing you decided to read up on RRSP withdrawals before actioning one because there are several things to consider! In this article, we’ll explore everything you need to know before making a withdrawal and how to withdraw money from RRSP accounts, if you really need to. What is a RRSP? RRSP stands for Registered Retirement Savings Plan. The account was originally introduced in 1957 as a part of the Canadian Income Tax Act. It is a special account used to save for retirement and is equipped with various tax advantages. The main tax benefit is investment income, such as capital gains and dividends, is sheltered from tax. There are restrictions on the account to encourage plan holders to

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Best Vanguard ETF

Vanguard is one of the largest and most well-known providers of exchange-traded funds in the world. With over 100 ETFs available, Vanguard offers a wide range of options for investors of all experience and risk levels. With so many choices, it can be challenging to determine which ETF you should invest in with Vanguard. In this article, we’ll take a look at the best Vanguard ETFs to help you make an informed decision. What is an ETF? An ETF, or exchange-traded fund, is a type of investment that offers the owner a way to pool their money and invest in a basket of assets. ETFs trade on stock exchanges and can be bought and sold throughout the day. This means the value of an ETF fluctuates during stock market hours. ETFs typically track an index, such as the S&P 500, but this is not always the case. ETFs offer investors several benefits, including diversification, liquidity, and lower costs. For example,

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What to Know About Being Self Employed

Despite inflation continuing in Canada, many employers are failing to pay higher salaries in line with increasing costs to their employees. Perhaps you’re considering self employment to earn a higher income using your existing skills. Or maybe you have a passion to pursue or you desire the flexibility that comes with self employment. However, there is a lot of work that goes into self employment and the burden of responsibility is undoubtedly larger. By the end of this article, you’ll gain insight into life as a self employed Canadian before you embark on the journey yourself. What is self employment? Self employment occurs when a person works for themselves as a freelancer, independent contractor or business owner, as opposed to working for an employer. A person in this state generates their own income and also covers business expenses. Because of this, self employed individuals have different taxation and face unique circumstances in their careers. Freelance vs self employed Often, freelance

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Tax Implications for Canadian Snowbirds

A popular lifestyle choice in retirement is to become a Canadian snowbird. This refers to individuals who live in Canada for part of the year and elsewhere for the other part of the year. But when you leave Canada for extended periods, it can affect your residency status which can have tax implications. If you’re committed to the Canadian snowbird lifestyle, don’t let your retirement bliss be disturbed by an unexpected tax obligation. Here’s everything you need to know about the tax implications of living the snowbird lifestyle in retirement. What are Snowbirds? Snowbirds refer to individuals who live in one place for half the year, and in another place for the other part of the year. Normally, Canadians choose this lifestyle to escape the winter months and enjoy a warmer climate. In addition, the lifestyle is maintained in such a way as to reduce tax burdens and maintain residency in the desired location. Many retired Canadians enjoy the snowbird

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How to Withdraw Money from TFSA

Tax-Free Savings Accounts, or TFSAs for short, are powerful financial tools available to Canadians. Those who have access to these accounts typically make routine contributions each year. Withdrawing money from TFSA accounts may become necessary if you have an unexpected expense. Or maybe you want to invest in something, like a car purchase, education, or downpayment on a home. Luckily, withdrawing money from TFSA accounts is easy – and there’s no penalty for doing so. In this article, we’ll explore how to withdraw money from a TFSA and what you need to know before you complete the transaction. What is a TFSA? The Tax-Free Savings Account (TFSA) program began in 2009 as a way to motivate Canadians to set aside money throughout their lifetime. The tax-free incentive allows individuals to earn interest, dividends and capital gains on their investments without taxation. TFSAs are registered accounts meaning they’re registered with the Canada Revenue Agency and subject to special rules. Special rules:

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