Unlocking the Power of the RDSP: A Lifeline for the Future

By Corey Butler

Imagine a savings plan so powerful, the government not only matches your contributions but sometimes gives you money even if you don’t put in a cent. Welcome to the Registered Disability Savings Plan (RDSP)—a little-known but life-changing financial tool available to Canadians living with disabilities.

For families navigating the added costs and uncertainties that often accompany disability, the RDSP is more than just another bank account—it’s peace of mind, security, and a way to build a future with dignity and independence.

What Is the RDSP, and Why Should You Care?

Launched in 2008, the RDSP is a federally registered savings plan designed to help people with disabilities build long-term financial security. It’s similar in some ways to a retirement plan, but tailor-made to support individuals who qualify for the Disability Tax Credit (DTC).

What makes it remarkable? Free government money. Through a combination of grants and bonds, the government can contribute up to $90,000 over the lifetime of the plan.

This isn’t just smart saving. It’s strategic empowerment.

Who’s Eligible?

To open an RDSP, a person must:

• Be under 60 years old
• Be a Canadian resident
• Have a Social Insurance Number (SIN)
• Be approved for the Disability Tax Credit (DTC)

Parents or guardians can open the account on behalf of a child, and contributions can be made by family or friends—anyone looking to invest in the future of someone they care about.

The Two Magic Words: Grants and Bonds

Canada Disability Savings Grant (CDSG)

This is a government match program that can triple your contributions. For lower- and middle-income families, the government will contribute up to $3 for every $1 saved, depending on income and amount contributed. Over a lifetime, you can receive up to $70,000 in grants.

Canada Disability Savings Bond (CDSB)

Even if you can’t afford to contribute, the government may still deposit up to $1,000 per year into the plan—no personal savings required. That’s up to $20,000 for those with lower incomes.

Smart Money, Tax-Free Growth

The RDSP allows savings to grow tax-free, and withdrawals are designed to supplement—not replace—income and disability benefits. That means you can plan for the future without risking access to vital programs like the Guaranteed Income Supplement (GIS), Old Age Security (OAS), or provincial social assistance.

In fact, in most provinces, money held in an RDSP is fully exempt from asset and income testing—making it a rare and powerful exception in the financial world.

Can You Access the Money?

Yes—but with caveats. The RDSP is meant for long-term use, so early withdrawals come with potential clawbacks. Any grants or bonds received in the 10 years prior to withdrawal may need to be partially repaid.

After age 60, beneficiaries can begin receiving regular payments without penalty, creating a steady source of income during retirement or later life stages.

Getting Started: No Experience Required

Setting up an RDSP is easier than it sounds:

1. Get approved for the Disability Tax Credit (DTC).
2. Visit a financial institution that offers RDSPs (most major banks do).
3. Open the account and apply for the grants and bonds.
4. Start contributing—if you can. Even small deposits can unlock thousands in support.

The Bottom Line

In a country with universal health care and social safety nets, the RDSP stands out as one of the most generous and empowering programs for people with disabilities. And yet, it remains underused and often misunderstood.

If you, your child, or someone you know is eligible, don’t wait. This is a rare opportunity to secure a future on your own terms—with help from a system that, for once, truly works in your favour.

Corey Butler

To see this blog published in the Mingo Magazine Fall 2025 issue – click HERE

The post Unlocking the Power of the RDSP: A Lifeline for the Future appeared first on Ecivda Financial Planning Boutique.

By Shawn Todd, CFP

There’s a silent, slow-moving risk that many business owners face. It doesn’t show up in the income statement, and it doesn’t flash red on a dashboard.

But it’s real. It can destroy their business, and it’s often overlooked. It’s succession uncertainty.

And I know the cost of it firsthand.

My Story. From 3 Years to 16: The Long Transition That Almost Didn’t Finish

When my stepfather Brian and I first discussed a transition plan, the idea was simple: a 3- to 5-year succession of his financial planning business. We mapped out a phased strategy where I would slowly take the reins while Brian prepared for a well-earned retirement.

Except, that timeline stretched. And stretched again.

The business grew—and I mean really grew. New clients, more complexity, bigger opportunities. With all that momentum, the idea of stepping away felt impossible. Brian loved the work, the people, the mission. How could he walk away at the peak of what he’d built?

So what started as a 5-year plan turned into a 16-year journey.

And then everything nearly collapsed.

Almost a Crisis. The Wake-Up Call: Health and the Unexpected

Months before the purchase was finalized—and I mean we were right there—Brian was diagnosed with a serious heart condition. Heart surgery was scheduled. The deal froze.

We had worked so hard, for so long, to get it right. But in a heartbeat, the entire transition was at risk.

What if something had happened to Brian?

Suddenly, every intention we had could’ve crumbled. His clients—people he’d spent decades advising—could’ve faced exactly what he didn’t want: a chaotic, rushed, and impersonal handoff.

That’s when it hit me. Succession planning without an emergency transition plan is like climbing a mountain without a harness. It might work—until the moment it doesn’t.

We had to have the hard chats.  “What are we going to do – if you die Brian?”, “What do you want Mom to have?”, “Who is going to run the company? Pay the employees?”

Lesson One: Succession Is Not Just About Retirement

Succession is about continuity. It’s about ensuring that the people who depend on you—your clients, your team, your family—are taken care of if life throws a curveball.

Retirement is only one potential exit.

Health. Family emergencies. Even unexpected offers to sell. All of these can arrive earlier than planned. And if your business isn’t prepared, the damage isn’t just financial—it’s emotional and reputational.

We had spent years building a reputation and a business.

We weren’t going to allow it to stop there.

Lesson Two: You Need a Plan for the Plan

After [and in the middle of] our health scare, I sat down and built a full Emergency Transition Plan—something we now use with our clients and peers. This isn’t just a document. It’s a roadmap. It outlines:

• Who takes over what
• How clients are communicated with
• What systems are in place to maintain trust and operations
• And what happens in the first 72 hours

We’ve now guided multiple business owners through this exact conversation, from financial advisors to family businesses. And time and again, I’ve seen the power of this kind of clarity.

It’s a must have document for every business.

Who gets the first call after your family finds out you’ve had a stroke?

Who is the 20 clients that can’t find out by email that you’ve passed away?

What risks does your business stand in the event of your death or disability?  How much reveue drop will there be?  What systems are in place?

Lesson Three: You Don’t Have to Do It Alone

I’m grateful to mentors like JD Lanctin and Kim Siegers, who helped me think deeply and critically about the gaps in most succession strategies, including ours. Their insights pushed us to build a program that’s more than legal documents—it’s a way to protect legacy, relationships, and peace of mind.

Because no one wants to spend 30 years building something meaningful, only to have it unravel in six months, or six minutes.

Final Thoughts: The Cost of Inaction Is Too High

If you’re a business owner without a succession or emergency plan, you’re not just risking your business—you’re risking the relationships it supports.

The conversation might feel awkward.

It might feel premature.

But trust me—waiting until you’re “ready” is most likely already too late.

Create the plan.

Build the transition.

Give your future, and the people who rely on you, the safety they deserve.

The post What Happens If You Never Create a Succession Plan? appeared first on Ecivda Financial Planning Boutique.

By Shawn Todd, CFP

There’s something humbling about sitting across the table from a busines

s owner who’s built something from scratch. Maybe it’s a thriving construction company, a medical practice, or a family-run restaurant. The business might be wildly successful or just finally gaining traction—but in almost every conversation, I hear the same thing:

“I wish I had started planning for myself sooner.”

It’s something I understand not just professionally—but personally.

I grew up surrounded by business owners. My mother and stepfather both ran their own businesses. My dad built a business on the side. My sister has run several successful businesses. My cousin started a very successful & growing online company. I started a business with my stepfather, my uncle was a business owner, and my grandfather ran two farms. I incorporated my first business at 26, after drawing up a logo on the back of a business card and getting a small $7,000 loan.  How hard could business ownership be?

In short, entrepreneurship is part of my DNA. But so is seeing the cost when financial planning gets pushed to the back burner.

After 20 years of walking alongside business owners approaching retirement, here are some of the most important lessons I’ve learned—lessons I wish more people talked about earlier in the journey.

1. You’re Not Just Building a Business—You’re Building a Life

Too many business owners spend their best years reinvesting in the company, skipping vacations, and putting off key conversations at home because “the business needs them.” But if you don’t align your business with your life goals, you risk waking up one day with money and no map.

The best outcomes happen when business and personal goals are planned in sync—when you view your company as a tool to fund your freedom, not just your workload.

2. Your Business Can Be a Legacy—or a Liability

I’ve seen it too many times: someone’s poured 30 years into a business… only to have no plan to exit, no valuation, and no buyer. That turns a potential legacy into a long list of regrets.

Business succession isn’t just a legal conversation—it’s a deeply emotional one. Who will carry on what you’ve built? Is it a partner? A child? An external buyer? Starting early gives you the most options—and peace of mind for everyone involved.

3. Cash Flow and Profit Aren’t the Same as Financial Clarity

Many owners think, “I must be doing okay—I’m not struggling to pay the bills.” But clarity goes beyond surviving.

It means understanding:

• What you own (and what it’s worth)
• What your business contributes to your retirement
• What your tax exposure really looks like
• And what your family needs from all this

You don’t need to be an expert—but you do need a clear picture. Without it, every decision feels like a guess.

4. Your Family Is Watching—and Waiting

Business owners often carry the weight alone. Your spouse may not ask, the kids don’t know what to say, and you assume silence equals peace.

But silence usually equals stress.

When I meet with families, I hear the same fears:

• “What happens if something happens to them?”
• “Is the business our retirement plan?”
• “Are we safe if they step away?”

One of the greatest gifts you can give your family isn’t money—it’s clarity and communication. As I’ve grown my business – I’ve learned that really good conversations and insight come from home.  My spouse Michele has often been a great sounding board for some of my ideas, and has been the provider of great wisdom over many years.  It’s a relationship & dynamic that I truly appreciate.

5. Your Network Is Gold—So Learn from It

I’ve learned more from business owners in real conversations than I ever did in textbooks. I’ve seen what works, what fails, and what haunts people.

Some of the best business owners I’ve met I either was lucky to work for, or work around.  I learned tons of lessons on quality of work, discipline, and belief in your vision.

When Corey & I started the podcast – we originally wanted to open the dialogue to include some of the amazing business owners we meet.  Let them tell their stories. Since then, some of these incredible conversations have turned into really great and valuable lessons for us both.

So, take the time to talk to the people around you. Ask your peers what they regret. Ask what they wish they did differently. And if you don’t have someone you trust to ask… then find one.

Because at the end of the day, you don’t have to figure this out alone.

Final Thought: It’s Never Too Late, But Sooner is Always Better

Whether you’re 10 years from retirement or 6 months from a deal closing—clarity brings peace. And clarity comes from planning.

If you’ve spent your career building a business, maybe it’s time to start building your future with the same level of intention.

The post What I’ve Learned from 20 Years of Working with Business Owners on the Edge of Retirement appeared first on Ecivda Financial Planning Boutique.

By: Rushit Goyani, RFRA

In May 2025, Canada’s unemployment rate rose to 7.0%, the highest in nine years outside the pandemic. This signals a slowing job market, with more people looking for work and fewer new jobs being created.

What Is the Unemployment Rate?

The unemployment rate shows the percentage of people in the labor force who are jobless but actively looking for work. It is a key economic signal used to measure how strong or weak the job market is at any time.

What Happened in May 2025?

Unemployment rose slightly from 6.9% in April to 7.0% in May, meaning job growth is no longer keeping up with population growth. While some jobs were added overall, key industries like manufacturing lost positions due to economic pressures, including U.S. trade tariffs.

Source: – Statistic Canda

More Canadians are staying unemployed for longer, with the average job search now taking over 21 weeks. That is a clear sign the labor market is tightening, and opportunities are becoming harder to find. Below is a month-on-month comparison for unemployment data.

Source: Trading Economics / Statistics Canada

In Canada, an increase in the unemployment rate is generally seen as a sign of economic weakening, often prompting the Bank of Canada to reassess its monetary policy stance. This trend indicates that job creation is not keeping pace with the country’s growing population, suggesting a cooling labour market.

To counteract such economic slowdowns, the Bank of Canada may opt to lower its benchmark interest rate in an effort to encourage borrowing, spur investment, and drive employment growth. However, this strategy must be weighed against the potential for inflation. For example, as of June 2025, the Bank chose to hold its key rate steady at 2.75%, despite signs of an economic slowdown. This decision was largely influenced by the uptick in core inflation, which had climbed to 3.15% in April, exceeding the central bank’s comfort zone.

This cautious approach highlights the challenges involved in setting monetary policy amid mixed economic signals. Although rising unemployment would usually justify easing interest rates, sustained inflation can limit the Bank’s flexibility. Consequently, the Bank of Canada must navigate a delicate balance, factoring in a range of economic indicators to ensure financial stability and support long-term growth.

Below is a long-term chart of the unemployment rate, interest rate, and GDP growth rate.

Why It Matters: Bonds and Stocks

Bond Market Effects

When unemployment rises, central banks may lower interest rates to support the economy. Lower rates tend to boost bond prices, as investors shift to safer, more stable returns during uncertain times.

Stock Market Effects

Higher unemployment can hurt company profits, as fewer people working means lower consumer spending. But if markets expect interest rate cuts, that could help stocks rise by making borrowing cheaper and boosting confidence.

Key Takeaways

• 7.0% unemployment shows Canada’s economy is slowing and job creation is not keeping pace.
  This may lead the Bank of Canada to adjust interest rates to avoid further economic weakening.
• Bond markets often respond positively to rising unemployment because it suggests future rate cuts.
  As a result, bond investors may see rising prices if the central bank shifts to a more supportive stance.
• Stock markets face uncertainty, balancing the negative effect of weaker earnings with the potential benefit of lower interest rates.
  The reaction depends on whether investors believe the slowdown is short-term or a longer economic trend.
• Investors should watch for Bank of Canada updates and labor market trends.
  These signals help forecast economic direction and how both bonds and stocks might behave.

Bottom line: Canada’s rising unemployment rate is a sign of economic slowdown. It affects everyday people, financial markets, and policy decisions—so it is a number worth watching.

The post Canada’s Unemployment Rate Hits 7%: What It Means for You and the Markets appeared first on Ecivda Financial Planning Boutique.

By: Rushit Goyani, RFRA

Storms don’t announce themselves. The same goes for financial disruption. So, when life gets choppy—are you wearing your financial life jacket, or are you just hoping to swim?

The market can be like the ocean—sometimes calm, sometimes wild, and sometimes, out of nowhere, a wave hits. And when that happens, you better have your life jacket on.

In the world of investing, your life jacket isn’t made of foam or nylon—it’s made of preparation. Two to three years’ worth of financial savings, kept aside for emergencies—medical, personal, or otherwise. It’s money that’s liquid and accessible, ideally in a conservative portfolio that doesn’t nosedive during a market dip but still grows more than inflation. That’s the peace of mind you need.

Last week, we saw the market fluctuate wildly—up 8–10% one day, down 6–7% another. By the end of it, we will back to square one. But for many investors, those swings triggered fear. Portfolios dropped, emotions ran high, and panic set in.

But not for everyone.

The investors who stayed calm? They were the ones with their life jackets on. They weren’t worried because they had their emergency funds in place. They knew that regardless of what happens in the market—or what headlines pop up—they’ll still eat good food, drive their nice cars, take vacations, and live their lives. Nothing fundamentally changes for them.

Now, let’s be clear: we’re not suggesting you pull everything and stash it in GICs. That doesn’t work either. GICs barely beat inflation, if at all. They might seem “safe,” but you’re losing money in the long term because your cash isn’t working for you. It’s just sitting there. Not ideal.

This is where a good financial planner enters the picture. At ECIVDA, we work with clients to design portfolios that reflect their risk tolerance and future needs. We call to check in, support you during turbulent times, and make sure your financial “life jacket” is always zipped up and ready.

Because when the market gets rough—and it will—those with a solid foundation don’t flinch. They float.

If you don’t have this kind of setup yet, don’t worry. We’re here to help.

Click HERE to book a meeting today!!

The post Is Your Financial Life Jacket Onboard? appeared first on Ecivda Financial Planning Boutique.

Why GICs Are Only for Short-Term Investments—and What to Choose Instead

By: Rushit Goyani, RFRA

Guaranteed Investment Certificates (GICs) are often seen as a safe way to grow your money. They offer guaranteed returns, making them attractive to risk-averse investors. But when you consider taxes and inflation, the real return on GICs is often disappointing.

The Hidden Reality of GIC Returns

A 1-year GIC may show a 3% return on paper, but once you factor in taxes and inflation, the real value of your money remains stagnant—or worse, declines. This is because:

• Taxes eat into your interest earnings.
• Inflation reduces your purchasing power.
• Over time, your money doesn’t truly grow, but simply maintains its value at best.

If your goal is purely capital preservation for the short term (6 months to 1 year), GICs can be a viable option. However, for long-term growth, they are not the best choice.

Balanced Mutual Funds: A Better Alternative

For investors seeking a similar risk profile to GICs but with better long-term growth, balanced mutual funds are a great alternative. These funds invest in a mix of stocks and bonds, providing moderate growth while minimizing volatility.

Let’s take a look at some real balanced mutual fund performances over the last nine years:

• Low Volatility: Out of nine years of data, balanced mutual funds have had only 2 to 3 years of negative returns.
• Strong Growth: A $100 investment in 2015 would have grown to between $150 and $220 by 2024, delivering an approximate return of 50% to 120%.
• Medium to Low Risk: These funds balance safety with reasonable returns, making them a great choice for long-term investors.

 Comparing GICs and Balanced Mutual Funds

Final Thoughts

While GICs are great for preserving capital in the short term, they do not provide meaningful growth over time. If you want your money to work for you while maintaining a conservative risk profile, balanced mutual funds are a much better alternative. With historically strong returns and limited downside, they offer an excellent way to grow your wealth over time while still protecting against major market downturns.

Before making an investment decision, consider your financial goals, time horizon, and risk tolerance. But if you’re looking for growth without excessive risk, balanced mutual funds are a smarter choice than GICs.

Book an appointment to talk to us today!  CLICK HERE

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By: Shawn Todd CFP

We’ve all heard terrible financial advice at one point or another.

It might have been in the locker room at hockey, around the coffee machine at work, or even from a friend.

“Your most expensive advice is the free advice you receive from your financially struggling friends and relatives.” – Robert Kiyosaki

“Max out your credit cards to build credit.” This advice suggests that fully utilizing your credit limit will enhance your credit score. In reality, high credit card balances can lead to significant debt and negatively impact your credit rating. Terrible quote. Can really start someone off on a terrible foot.

“You don’t need a budget.” Some claim that budgeting is unnecessary. However, without a budget, it’s challenging to track spending and achieve financial goals, often leading to overspending and financial instability. I see this so many times. 80% of people just don’t take the time to write this out.

“Renting is throwing money away.” This advice implies that homeownership is always superior. However, owning a home comes with significant costs like maintenance and property taxes. Depending on individual circumstances, renting can sometimes be the more financially sound decision. A strong belief by many. Last time I did the math – I believe you are fine renting for about 7 1/2 yrs before seeing a crossover on benefit / cost. So no need to rush. Ownership over long term can help with wealth building in most cases though.

“You should buy as much house as possible.” Encouraging individuals to purchase the most expensive home they qualify for can lead to financial strain, especially if unforeseen expenses arise. This is terrible. I had a friend tell me this in my 20’s and all this mantra did was produce stress to buy a big house. This carries no great value to it,

“You don’t need insurance if you’re young and healthy.” Neglecting insurance due to youth and good health overlooks unforeseen events. Accidents and illnesses can occur at any age, and lacking insurance can result in substantial financial burdens. Again terrible advice. Many insurance disbelievers [and there are groups of financial advisers of the same thinking] that minimize needs for insurance, particularly for younger people. Getting approved mid 40’s and 50’s with high cholesterol and heart conditions can be difficult. Having the proper coverage starting young isn’t a bad idea at all.

“Always go for the cheapest option.” Opting for the least expensive choice isn’t always cost-effective in the long run. Investing in quality can lead to better durability and value over time. I see this a lot with investment discussions. I won’t argue the merits of trying to find affordable and cheaper investment options – that’s reasonable. Some believe that cost is the most important part of this conversation on any topic – and this isn’t always true. No matter if you are discussing investment options, insurance, the fee for advice from an accountant, lawyer, or financial planner…or a nice dress shirt. Or flowers for your spouse. And definitely do not take the cheapest rock-climbing course, or scuba diving course. You can see where this is going. If I have an option between a hand made, professionally inspected custom parachute for $500, and a machine made parachute [that everyone else is doing] for $99 that all of the articles assure me do the same thing, sometimes its worth just looking a little deeper at the more expensive parachute. Sometimes.

“You don’t need to save for retirement yet.” Delaying retirement savings can significantly impact your financial future. Starting early allows for compound interest to work in your favor, building a more substantial nest egg. This can really be costly. Delaying too long will back you into a corner that will cost you tens if not hundreds of thousands of dollars more.

“Follow your passion, and the money will follow.” While pursuing passions is fulfilling, it doesn’t always guarantee financial stability. It’s essential to balance passion with practical financial planning. I’m a big follow your dreams guy. I think this speaks to balance. Just opening the door, walking outside and declaring to the world you biggest dream, isn’t going to do it. Passion is important. Paying bills & saving – also important.

“Co-sign a loan to help a friend or family member.” Co-signing makes you legally responsible for the debt if the primary borrower defaults, potentially damaging your credit and financial standing. Scott Terrio – will lose it if I don’t mention this here. This has a small space in the terrible advice section here for a reason. So many make this choice without understanding what this really means. It’s not just a favour.

“You can’t get rich working a 9-to-5 job.” This mindset undermines the potential of disciplined saving and investing. Many individuals have achieved financial success through traditional employment by managing their finances wisely. So wrong. I see lots of manual, very traditional 9-5 job employees have significantly more wealth [monetary, family and life] with their situations. Working endless days does not equal financial freedom. Decision making does.

“Always follow your instincts when making financial decisions.” While intuition can be valuable, relying solely on gut feelings without research or professional advice can result in poor financial choices. We are wrong too often to rely on this. Sometimes the gut check is a big saviour. Sometimes it also will devastate you. This is where all those buying into weed stocks should please leave a comment below.

“You should get a credit card as early as possible to build credit.” While establishing credit is important, obtaining a credit card without understanding responsible usage can lead to debt accumulation and financial mismanagement. Credit is important. Living under debt =not important. Please be cautious.

“Investing is only for the wealthy.” This misconception prevents many from taking advantage of investment opportunities. Starting with small amounts can lead to significant growth over time through compound interest. Growing up, the only people I saw who invested were the ‘wealthy’. I feel this is where good planning, and good advice fits it. There are so many who should be investing, to build their own wealth. It’s often a missed strategy for so many.

“You should always aim to retire with $1 million in the bank.” Setting an arbitrary retirement savings goal without considering individual lifestyle, inflation, and future needs can be misleading. Personalized planning is essential. What will help someone else’s situation, may not help yours. This might work if you have no debt, and a decent lifestyle. If you are a spender, and carry debt, and want to retire earlier – this advice won’t be helpful.

“Borrowing from your retirement fund is a good way to handle short-term financial needs.” Tapping into retirement savings can jeopardize your future financial security and incur penalties, making it a risky short-term solution. Ripping out long term money to pay off the hot tub, vacation, or house reno you just did is terrible decision making, and bad advice all around. That $10,000 you removed from your RRSP at age 30 to do one of the above – will only get you $7,000 in your pocket, and would have potentially grown to $76,122 by age 60. That was costly.

I’d never shy away from listening to advice around the coffee shop. Great friends, great people – they all want you to hear what they have done. Listen, learn, act wisely.

My thoughts on this today –

The post A Short List – of Terrible Financial Advice Sayings appeared first on Ecivda Financial Planning Boutique.

1. Have one main investment account and another for short- to mid-term needs

Most people who have at least one long-term [investment] account should consider opening another account for mid-term goals. Mid-term goals might involve buying a house or paying for a child’s education.

Match your portfolio spending to the specific goals and time horizon.

2. Don’t be too restrictive with your budget

Trying to change your spending habits too quickly can result in burnout.  Make room for expenses that matter to you. If an activity with a friend is a priority, keep this in your budget. Find other ways to cut down on spending; like canceling unused subscriptions.

3. Automate saving money

You should automate everything you can about saving so that you don’t have to make a conscious decision to do it.   Money in a checking account can be tempting and easy to spend.  Make regular transfers to a high-yield accounts that can help you save for an emergency.

If applicable, automatically transfer your money to a retirement account. If you work for a company that offers a shared RRSP plan, it’s ideal to sign up for the full employer match. Not taking advantage is like leaving hundred-dollar bills on the ground.

4. Spend more to save more

Focus on quality and spend more if it means it will last.  For big-ticket items take advantage of sales events and/or buying seasonal items at the end of the season. Participate in free loyalty programs and search for online coupons before making a purchase.

5. Look out for the small purchases on your credit card statements

When reviewing your credit card statements, it’s easy to just focus on the bigger charges. But it’s key to also review the smaller line items.

These purchases are easy to overlook. Check your statements monthly, and if you see something you don’t recognize (even a few-dollar charge), report it to your credit card company immediately.

 6. “One-size-fits-all” approaches doesn’t work

Personal finances should be based on your values.  Once you understand that other people’s priorities are not the same as yours, you will be able to make the most sense of the right savings methodology for you.

The question becomes: What is important to you may differ from your neighbours and friends.

Bottom Line

There are a lot of rules of thumb out there when it comes to money, but don’t feel pressure to follow them all.  The best thing you can build into your personal financial plan is the flexibility to make changes as needed.

The post 6 Money ‘Rules’ You Should Follow appeared first on Ecivda Financial Planning Boutique.

Well executed estate planning leaves little room for dispute when it comes to distributing monetary and physical assets, but also re-establishes adherence to wishes regarding charities, bursaries and trusts.

What you need to know

It is imperative that any will include the sound advice of a lawyer specializing in this area.  We may want to rely on those we have trusted in the past, but if your lawyer isn’t listed as a specialist, rely on them for a recommendation to a trusted colleague with the appropriate experience.

Inexperienced attorneys may not provide the appropriate after-tax guidance, or the proper advice to select an executor, both of which could make your legacy desires difficult, or even impossible to fulfill.

If you have some special needs, like the following, experience becomes even more important.

Charitable Trusts

Setting up a charitable trust allows the trustee to decide where their money is going and how they will be remembered.

Establishing your legacy may include making a contribution to an area of your community that was significant in your life. Areas may include sports, the arts, the hospital, the zoo, or your alma mater.

You may ask yourself:

• What causes are important to me?
• How will my money (and this charity) further benefit society?

Your Last Will and Testament

Drawing up a will is an important resource regardless of the life-stage, amount of assets, likelihood of death, or number of heirs.  If you own anything of value that you would like to pass on to another, it is always better to decide yourself, versus running the risk of having an outsider make decisions on your behalf.

It is also important to note that your will is a living, breathing document, which means you can’t just set it and forget it.

Updating your will every few years to reflect your changing financial and familial situations allows you to remain in control of your assets and determine how they will be distributed. The conditions that could cause you to re-set your will are:

• Getting married, or divorced
• Becoming a widow(er) – This is an often-overlooked event since the strain of loss distracts the surviving spouse, and, unfortunately, elderly couples often pass away quickly after one another.
• Birth of a child or children
• Marriage or divorce of an adult child
• Birth of grandchildren
• Passing away of siblings

Often the beneficiaries of investment accounts, especially “registered” accounts like RRSPs and RRIFs should be specifically named in the Will and with the custodian of the accounts.

Let’s review the basics.

To begin this process, you must first determine your net worth. To do so use this equation:

Total Assets – Total Liabilities = Total Net Worth

Assets include land, buildings, and things that you own outright.

Liabilities encompass debts, mortgages, and anything that you owe.

Steps to Creating Your Last Will and Testament

1. Hire a lawyer— Be sure to choose a lawyer that you feel is skilled and experienced with Wills and Estates, trustworthy, honest, and that will hopefully be around longer than you. A lawyer will help you put your affairs in order and ensure you don’t miss anything important.
2. Name your trustee/executor— This person will make sure that the stipulations outlined in your will are met. So, choose someone you know and trust.
3. Decide how your assets will be divided — Planning for every scenario will alleviate additional stress on the part of your trustee/executor when having to make decisions about your personal assets.
4. Name your beneficiaries.
5. Determine if you are contributing to any charity or trust and describe said identity in the will.
6. Outline your end of life decisions in your living will ( also called Power of Attorney for Personal Care)
7. Update beneficiaries for all your life insurance policies and registered accounts, including pensions

A Living Will for End of Life Decisions

A Living Will is a legal document that a person uses to make known his or her wishes regarding life prolonging medical treatments.

A Living Will outlines your wishes for medical treatment if you are unable to speak or lie in a vegetative state. The document outlines which life prolonging treatments you want and do not want in regard to resuscitation.

Canadian law is changing on the matter of Right-to-Die, and a Living Will could include additional instructions that address overt action to end a life.

Estate Planning and Beyond

Determining how your life will be remembered in the event of your death is an important part of your legacy. Making the big decisions easier for your family by having them outlined in a comprehensive document can be one of the most important choices you ever make. You may determine establishing a charitable trust is the right choice for you or you may deem to divide the assets among family. The most important thing to remember is that it is your decision and will therefore be the right one.

Bottom Line

Planning the management of your estate after you’re gone is not an easy endeavor. Your financial advisor is an appropriate person to consult at the beginning and throughout the process.

The post Establishing Your Legacy: Estate Planning and Beyond appeared first on Ecivda Financial Planning Boutique.

It’s a common misconception that having a pre-existing condition means that you automatically do not qualify for life insurance. The good news is this is not always the case and armed with a good life insurance agent, many individuals with pre-existing conditions get approved for insurance. The path to being insured just may look a little different for someone with a medical condition.

What You Need to Know

Work with a Broker – There are many life insurance carriers in Canada and each company has a different set of underwriting guidelines and level of flexibility. It is crucial to reach out to a number of companies when trying to get a pre-existing condition covered. Working with a broker is the most efficient way to research companies as most life insurance brokers have the ability to work with any company they choose.  This also means they will have knowledge of which companies work best for hard-to-insure clients.

Understand Traditional Underwriting vs Non-Medical Underwriting – Many companies now offer non-medical underwriting. This usually means that applicants will be asked a number of medical questions and if the questions satisfy the insurance company, then the insurance will be approved. If they don’t, the application will be rejected.  This can work in the favor of someone with a pre-existing condition if the questions either:

1. 1. 1. do not ask bout that particular condition
      2. the question asked about that condition is forgiving (example: you are diabetic, but the application only asked if you are an insulin dependent diabetic).

However, sometimes traditional underwriting can be the best option for someone with a pre-existing condition. Traditional underwriting can allow you the opportunity to make a case for a well-managed pre-existing condition through in person exams and doctors statements.  If the applicant doesn’t qualify for non-medical insurance because of a condition, there is usually no wiggle room with the insurer.

Manageable Condition vs Severe Condition – Not all pre-existing conditions are treated the same by insurers. Life insurance companies put each applicant through an underwriting process that uses in person medical exams, claim histories, and underwriting guides to determine whether or not they will insure someone.  There is a big difference to an insurance company between someone with a manageable condition and someone with a severe condition.

For example, having high blood pressure is considered to be a pre-existing condition.  However, it is a condition that can often be managed by medication and lifestyle choices. Therefore, an insurer may look at someone with high blood pressure and determine that their condition is well under control and be willing to make an offer to insure. 

Conversely, someone who has been diagnosed with a terminal cancer would be considered to have a severe and unmanageable condition that would cause the insurer to reject the application.

Guaranteed Acceptance Products – Many companies offer guaranteed acceptance life insurance products and sometimes this is the only option for applicants with a pre-existing condition. These products are typically offered with high premiums and small face amounts.   As well as higher premiums, they usually contain a deferred provision.  This means that the insured is expected to pay premiums for two years before the insurer will pay out the death benefit. In the event the insured dies within the first two years, the premiums are most often paid back to the beneficiary.  This can be a good option for those who are otherwise uninsurable but would like to have something to cover final expenses.

The Bottom Line

Knowledge is power when it comes to getting approved for life insurance and so is having a good advisor to guide you along the way.  Be sure to bring a complete list of medical conditions and any medications you are on when meeting with a life advisor so that they can help you sort through companies and products to find the best fit for you.

The post What Does Having a Pre-Existing Condition Mean for Your Life Insurance? appeared first on Ecivda Financial Planning Boutique.

Dealing with dementia with financial services and investment clients will become increasingly complicated over time. The number of people who are aging, the ever-extending length of their lives, and the activity that they display well into retirement, coupled with the complexity of capital markets and products can produce a difficult situation for many.

The boundaries of the Boomer generation has them aged from 55 to 75 in 2024. Advances in all types of medical diagnostic and treatment regimens has increased the life expectancy well into the 80s for both men and women in Canada and the United States.

The legislation and regulation regarding clients with dementia will continue to evolve, but it squarely falls under the Know Your Client area. As you suggest or receive investment recommendations and choices to or from your clients, you must feel confident that they are capable of making decisions on their behalf.

And as much as Advisors may feel that Compliance can make their lives miserable at times, this is one situation where involving Compliance will be the smartest decision to make. It is paramount that you maintain your clients’ interests above all else and if you embark on this journey too quickly, without guidance, and, frankly, as the friend and trusted advisor who is now discussing potentially personal and emotional issues, the relationship could be irreparably damaged.

Involve a third-party like Compliance, branch or regional management to assist with each case.

If one of your clients displays the following characteristics, it may be time to act.

1. Rapidly forgetting items and details, and the inability to retain new information
2. Difficulty performing familiar tasks
3. Forgetting words or using words out of context
4. Disorientation in time and space by not knowing the day or a familiar place
5. Impaired judgment with the inability to analyze and act on a situation
6. Problems with abstract thinking like telling time or performing mathematics
7. Misplacing items or putting them in unlikely places
8. Severe mood swings from easy-going to anger
9. Changes in personality
10. Loss of initiative and interest in friends, family and favourite activities

If you see several of these activities and conditions in a client, especially when they haven’t been previously present, it is time to act.

Each situation is different since each of us are individuals. But several steps are common to every situation:

• Review the Power of Attorney documentation on file
• If family members are involved, encourage your client to include them in your next meeting or conversation
• Discuss your concerns with your branch or regional management to receive the latest direction from your firm’s legal and compliance departments

The sources of dementia are many; they range from strokes, sleep disorders, nutritional deficiencies, thyroid conditions, Parkinson’s disease, Huntington disease, mental illness and the most discussed cause, Alzheimer’s Disease.

The source of the dementia will determine the appropriate course of treatment, naturally. In nearly every case, as a percentage of the total, the reversal of symptoms is almost always impossible to achieve.

Canada, along with the rest of the G7 countries, has some of the best dementia diagnostic and treatment in the world. As developed nations the life expectancy is consistent, and the incidence of dementia is similar across the seven countries. In 2023 the number of cases is estimated at nearly 14 million, or 30% of all dementia cases worldwide.

Each province and territory has a well-developed system of provincial, regional, and local dementia and Alzheimer’s societies. Each provide educational and support resources for individuals and families.

If your practice is skewing toward older clients, and this is an area of interest to you, volunteer opportunities are plentiful on the fundraising and care dimensions. Special areas have been established in many care facilities where well-mannered and tempered dogs are brought in to provide later stage dementia patients with comfort, for example.

Key Factors to Know

Dementia, whether it is Alzheimer’s or another source, will touch almost every family. Globally almost 50 million people have been diagnosed, with a new case identified every 3 seconds according to the Alzheimer’s Society in the United Kingdom.

The cost of dementia globally is estimated at $818 billion USD for 2015. A significant amount of healthcare resources are being poured into this area since it has a debilitating effect on those directly and indirectly afflicted.

Memory loss and diminished mental abilities, like reduced joint flexibility and endurance, are a normal part of aging. According to the Alzheimer’s Society of Ontario the symptoms typically follow a pattern of increased frequency of forgetfulness, and the forgetfulness of increasingly important and personal details of one’s life.

The Bottom Line

Stay attuned to your client’s personal situation and stay in-contact closely enough to understand if any physical or mental abilities are being impaired.

The best pre-emptive steps are to include multiple generations in your client base and include multiple generations in your discussions for family financial planning. Obtain consent to discuss your client’s situation with their adult children.

And don’t assume that the older generation, who may be losing some mental acuity, and may be experiencing dementia, does not realize this and want assistance.

The post Dealing with Dementia appeared first on Ecivda Financial Planning Boutique.

The amount deposited into a Tax Free Savings Account (TFSA) is subject to a yearly contribution limit.   For 2024, the annual limit has been set at $7,000.   The lifetime maximum contribution has grown to $95,000.

If an over-contribution is made Canada Revenue Agency will levy penalties.

What You Need to Know

CRA will inform you when an over contribution on the account has been made and request an immediate withdrawal.  Once you have made the correcting withdrawal, you must submit Form RC243 (https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/rc243/rc243-19e.pdf) and its Schedule A (https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/rc243-sch-a/rc243-sch-a-17e.pdf)  to calculate the penalty.

As a rule, CRA charges 1% per month on the excess contribution. The 1% penalty will be charged against the highest amount of excess during a month until the excess amount is withdrawn.  The CRA does not pro-rate this penalty.  If an over-contribution exists at any time during a calendar month, the CRA treats it as an entire month.  If you correct your mistake on the first or second day of the month, you will be penalized the same 1% as you would if you corrected your error on the 31^st.

To make the necessary withdrawal of funds, you will need to contact your financial institution and request the withdrawal be made.

Two common scenarios lead to most over-contribution errors:

• TFSA Management
  • If you have multiple TFSA’s, especially when spread across several financial institutions, it can be difficult to correctly track all of your contributions. This becomes more difficult as time passes and the balances in each TFSA reflect its current market value, not the sum of its contributions.
• Withdrawal Management
  • TFSA withdrawals are tax-free and, unlike RRSPs, your contribution room never goes away. However, the contribution room is not returned to you until the following calendar year begins.  If you have contributed your maximum lifetime amount to your TFSA you must wait until the following January before contributing to your TFSA or incur the wrath and penalties of the CRA.

The Bottom Line

TFSAs are relatively simple but require some fundamental monitoring.  Proper planning with this tax-saving advice can also avoid penalties.

The post What Happens If You Overcontribute to Your TFSA? appeared first on Ecivda Financial Planning Boutique.

A financial plan is like a roadmap to achieving the financial future you envision. It starts by identifying where you are financially and provides directions for getting to where you want to go. There are many areas that make up your finances: your assets and liabilities, investment portfolio, cash flow, tax situation, retirement income, insurance and estate plan (or lack thereof).

Your lifestyle also plays a role. For a financial plan to be effective, each one of these areas must be addressed in a coordinated way to provide a personalized, comprehensive financial solution.

What You Need To Know

As with any goal or strategy, a financial plan must have objectives. How do you see yourself five, ten or 20+ years in the future? After determining your current financial state in the areas mentioned above, you will need to establish a clear vision to start creating and implementing a plan. This includes what your retirement lifestyle will be, because only then can you determine needs for investments and income. If you have children, it may also include funding for their education or other endeavors.

Once you’ve clarified your current financial situation and understand your vision for the future, calculations can then be made to determine how your assets need to grow to reach those goals. This will determine the investment plan that you’ll need to produce the necessary returns from your assets.

A comprehensive financial plan must also consider the tax ramifications of your finances and identify strategies to minimize your tax liabilities. Additionally, your financial plan should mitigate risk and protect your wealth using tools such as insurance products. The use of insurance can also be beneficial in your estate plan, as there are ways to minimize taxation and maximize the wealth of your estate.

If all this sounds a bit complex or outside of your comfort zone, consider working with a financial advisor. Find someone who understands the implications that each area of your financial plan has on achieving the goals you’ve set. He or she may need to liaise with other professionals, such as your lawyer or accountant, to do a complete and thorough job.

Bottom Line

A proper financial plan is more than managing your investments, creating tax minimization strategies or planning for your retirement. It is all these things plus others, including risk management (insurance) and estate planning.

A comprehensive financial plan requires the coordination of all these areas to maximize the wealth potential from your current financial situation. It begins with setting clear financial goals and working through all the aforementioned areas. This is generally best done by working with a capable financial advisor, as all these areas must be addressed in a coordinated way to create an effective, holistic financial plan.

Book an appointment with us to get started on your financial plan today!  CLICK HERE

The post What is a Financial Plan? appeared first on Ecivda Financial Planning Boutique.

Many of you will know that throughout my life, I haven’t minded risk at times.  Before I was 35 yrs. old, I was a police officer, I was a diver with the OPP Underwater Search and Recovery Unit, and I was an Explosives Disposal Technician. I’m currently a business owner [a lot of business owners have an appetite for risk]. I downhill ski, I have a motorcycle, and I’ve climbed Kilimanjaro with my spouse Michele.

I imagine many of you have your own interests. You enjoy sailing, or camping, or travelling overseas. Flying to see family, swimming at the cottage, or having a steak on the BBQ. Some may enjoy biking in the city, ice skating on the canal, or smoking a cigar. Risks show up all over, and we all don’t enjoy talking about it.  We like the excitement of a ski weekend getaway in Tremblant, but we don’t enjoy talking prior to the trip about the potential of breaking our leg.

When I first came into the financial planning and advisory business eighteen years ago, that version of myself believed that insurance would be the least interesting part of my work. I spent hundreds of hours researching investment portfolio theory, financial planning, marketing, building a business, but the very last thing that I felt was needed by most up and coming young professionals was some of the insurance products that I was learning about.

I was dead wrong.

Five years into my financial planning career I had a terrible ATV accident while out with friends and clients. I broke my back in five places, split my liver, broke three ribs, tore my adrenal gland and almost died in a field in Calabogie, Ontario.  It was the scariest moment of my life. I had just met the person I have always wanted to be with, and I had children to care for.

Today, eighteen years after beginning as an advisor, I have had had several important and close clients experience terrible and demanding situations. I’ve lost some great clients and friends to a variety of illnesses, accidents, and situations. No one was planning on not being here in 20 years.

One of the things that strikes me as incredibly common about both my experience, and the experiences that I have had with clients, is that its difficult to talk about what might happen if we get sick, or if we die. It’s terrifying.

In my time as a financial planner, I have picked up a great deal of more experience and knowledge since my beginning days as a new advisor. I have seen well planned out life insurance policies provide enough income to a family after the unexpected loss of spouse. I have watched planned gifting to children and grandchildren that has allowed full lives after a loved one’s passing. Business owners have used it to ensure security while their business started, and while success ebbed and flowed. Professionals have used it to protect their occupation and income. Tax planning has allowed it to be used as a formative tool in dealing with business owners, passive income strategies, or dealing with terminal tax.

There are a few distinct things that talking about risk, and protecting ourselves, can provide.

• It can remove a lot of stress from your life. No more worrying about what happens [even if you don’t want to talk about it normally]
• It can help provide income to you or family members if you are sick, injured or die.
• Some may be able to pay off debts.
• During key parts of a financial plan, it can provide a great deal of stability for income and assets needed to achieve goals.
• It can be used as an opportunity to diversify how you invest or use business capital.
• Its usage may help in minimizing taxes – both now, and later
• During business growth periods it can provide a great deal of security to the business, the shareholders, and their families.
• For some it can offer an ability to gift to children, grandchildren, or even charities that are important to you.

While 92% of people believe talking with family and loved ones about the end of their life is important, only 32% do. [ Seattle Times – “Why don’t we talk about death” May 2019]

To conclude…

It may well be time to begin opening the conversation about your own risks. What risks do you have in your life that you are most concerned about? How would they affect your financial plan, or financial integrity? Are there opportunities you should consider for your business, your own portfolio, our own situation? If you didn’t speak about your risk concerns – would the situation have changed for the worse of the better in ten years time?

Speaking about risk, and what may come may be difficult for most. There is never a better time to start this conversation than today.

Just my thoughts for the day.

The post Not today. Why we don’t like thinking about risk. appeared first on Ecivda Financial Planning Boutique.

Most of us have golfed at one point or another during our lives. It may have been once, or it may have been many times throughout the summer. No matter how often you have golfed you will always remember the feeling of a firing a shot into a bunker [when you were going for the green], or just firing a ball into the water on a par 3. It’s tough, and it really starts to take the fun out of the game.

Most of the people reading this will have also invested at one point. Your home is one of your largest investments, and you may have several other investments in your portfolio. If you’ve been doing it as long as I have, then you also will have memories of the tech wreck, the financial crisis, and the market correction during Covid.

What does golf and investing during these market corrections have in common?

A well thought out gameplan.

If we approached golf without any consideration for the inherit risks of the game, well we would just feel the consequences. We’d lose a ball here, bogey there, it would be a miserable experience.  Some of us all can feel that pain. Playing the game more smartly, hitting more fairways, staying out of the bunkers, well of these efforts make for far better results.

Investing needs to be focused, and well thought out. Ensuring you understand the risks of the portfolio you are in, the timelines you have, the goals of each portfolio, and the risk of each investment in your portfolio; is incredibly important. There needs to be a well thought out plan for taxation, capital gains [this is the topic of the day – thanks to the recent budget], and a discussion of the solutions that make the most sense for each investor. Often what works for you, may not be what works for your neighbour or colleague. Like golf, we all have different risk tolerances, capability, and performance needs. You need to play your own game, and your own pace.

Unlike golf – there are some great opportunities that will enhance your experience. Portfolio management, risk management, diversification, and a deep understanding of your needs – will all allow for an exceptionally smooth ride.

Imagine golf is someone could just tap your shoulder right before you started your ill-fated swing and said – “I just wouldn’t take that shot”.

It might make the game a lot more fun.

Consider helping your investing experience by adding a professional wealth management team to help you understand your own gameplan.

My thoughts for the day.

The post Hitting more Fairways & Success in investing. appeared first on Ecivda Financial Planning Boutique.

By: Brian P. Adams CLU. CH.F.C

Many employees opt-out of their health and dental benefits because they are listed on their spouse’s benefits plan. After all, why bother with additional group benefits if you’re already covered, right? Wrong. Beneath this assumption lies an oversight that could leave you vulnerable in times of need.

While your partner’s plan may offer a safety net for routine health and dental expenses, it does leave you open for potential financial risks. Here’s why:

• Firstly; relying solely on your spouse’s benefits means neglecting critical protections like Long Term Disability (LTD). Your partner’s employer can’t extend LTD coverage to you, as it’s contingent upon direct employment—a fundamental requirement you don’t fulfill.
• Secondly; the life insurance component of your spouse’s plan might offer a modest cushion, typically ranging from $5,000 to $10,000. While this might suffice for some, it pales in comparison to the comprehensive coverage you could secure through your own group benefits.
• Thirdly; if, for any reason, your spouse loses their coverage, you are going to have a problem. Most plans allow for all members to come onto the plan no questions asked at the time it is set up or when they are first hired. Attempting to secure coverage through your employer’s plan later is either disallowed or exceedingly difficult to qualify for.

Why subject yourself to such uncertainty? The answer is clear: secure your financial safety net by enrolling in your own group benefits plan for life and disability coverage. By doing so, you not only safeguard yourself against unforeseen hardships but also ensure seamless access to health and dental benefits through your employer, should the need arise.

Remember, the foundation of financial security lies in proactive planning. Don’t gamble with your future. Invest in your well-being today, and rest assured that you’ve built a shield against life’s uncertainties.

The post Unlocking the Hidden Value of Group Benefits: Why You Shouldn’t Rely Solely on Your Spouse’s Coverage appeared first on Ecivda Financial Planning Boutique.

There are lots of ways to spend your time.

In fact, I find there is just no end to how we can use it.  It can be spent reading, hiking, watching TV, time with friends, playing boardgames with your family, a sport you love, or you can literally watch time pass doing very little – if you choose to.

When I spend time with a variety of business owners, or growth minded clients – having a conversation about what is most important to them, a majority of time they will always write down that family is the most important thing to them.  Everything they have built or spend time doing during their day – is all done with the intention in appreciating, supporting, or helping their family.  This makes sense – it is their most cherished part of their life.

Surprisingly, even though all the activities they are doing are meant to help their family, this is not necessarily where they are spending their time.  This speaks to me as I’m also guilty of this.  I’m going to give full credit to my spouse Michele for showing me a great values exercise that came up in conversation a few years ago.

When wanting to consider if you the time you are spending in your life aligns with your values – then write out two columns.  Write your values and things that are important to you – in one column.  Write where you are spending your time in the second column.  Rate each of the values that you have on a scale of 1-10. How important is being dependable to you?  Love? Health? Self-Improvement?

Now compare what is most important to you, to how you are spending your time.  Are they aligned? If not, are there areas of your life that you need to reconsider or change?  Do you need to consider adjusting some of your routines, or being more focused in other areas?

Spending time reviewing my own values, and they way I spend my own time has allowed me to begin [its not perfect yet] aligning my time with what is most important to me.

Living well begins with ensuring you are spending your time doing the things that will best advance your life in the way you really wish it was moving.  This exercise may help as you contemplate your life goals now, and in the future.

In a recent article “97% of retirees with a strong sense of purpose were generally happy, compared with 76% without that sense” – the Retirement Manifesto 2023

Even spending time reading this article is conscious decision on how you wish to spend your time.  Should I read this article, or should I go for a walk outside?

There is no end to how we spend our time, and I hope this helps in all of our efforts in spending our time well.

Just my thoughts for the day.

Shawn Todd CFP – Partner – ECIVDA

The post Living Well. Aligning your time and your values. appeared first on Ecivda Financial Planning Boutique.

Investing today, whether for the short-term, long-term or in-retirement, can be complicated. An Advisor can guide you but there are many terms that investors should know in order to best understand the direction, recommendations and outcomes of their investments.

The following is a glossary of terms to help you understand some of the jargon and technical terms you have heard, and will likely hear again.  Please use it as a reference tool.

Investment Terms

1. Rate of Return: gain or loss of an investment expressed as a percentage of the invested capital and is calculated on an entire investment portfolio to determine performance. Planning your Rate of Return to match financial goals and your risk/reward profile is a necessary step to successful investment planning.
2. Asset Allocation is an investment strategy that balances Risk and Return by placing investments inside an investment portfolio into different Asset Classes like equities/stocks, fixed income, and cash. Each class has its own characteristics and can contribute more to the total as proportions increase. Asset allocation helps manage risks and rewards to meet your financial needs.
3. Equities is a broad term used to describe ‘stocks’ or shares of a company. Most owners of shares believe they own shares, but, in fact, they own the company. In the case of publicly traded companies people investing for retirement own a very small percentage of the company, but they are the owners.
4. Fixed Income is a category of investments that generate interest at a predictable, stable amount. Fixed income instruments inside a portfolio are often meant to be the safest investments. In the case of GICs, the balance is guaranteed by insurance and the interest payments typically have a very strong track record of occurring.
5. Cash and Cash-like instruments are highly liquid investments. These investments can take advantage of market opportunities, and accommodate short-term unexpected personal expenditures without forcing the sale of an investment at an inopportune time.
6. Capital Gains: Increase (or loss) in the value of a security at the time it is sold versus its cost when purchased. Since capital gains are taxed in Canada at a lower rate than interest income, depending on the province or territory, the highest marginal tax rate for capital gains is approximately 25%.
7. Interest Income: Payments made to the owner of capital for the use of that capital and is calculated by multiplying the capital amount by the interest rate being paid for a particular period of time. Example – a $10,000, one-year annual-pay GIC paying 1.5% generates $150 of interest income each year, and would be paid on the anniversary date.
8. Dividends: Payments made monthly, quarterly, semi-annually or annually to the “owner of record” of a share of a company. The dividend yield is calculated by dividing the expected dividend for the next year by the current share price.
9. Basis Points a single basis point is one-one hundredth (1/100^th) of a percentage point (1%) or 0.0001. Mathematically, a basis point is equal to one ten-thousandth.  Basis Points are used to express very small changes in numbers like percentages or the value of the Canadian dollar compared to the US dollar, for example.
10. Volatility: the reaction of an investment to changes in the overall market. In other words, if the market goes up by 10%, will the stock react more, less or the same. Volatility is called ‘Beta.’ An investment’s Beta expresses how it reacts relative to the market, meaning the stock market in total.
11. Diversification is a way to mitigate risk by placing investments in different kinds of investments (see Asset Allocation above) and by placing investments within an asset class in different industries, sectors, countries, etc. Diversification is a method used to manage risk by not having all of your eggs in one basket. If a country or an industry or a single company has a bad day, month or year your entire portfolio will have a measure of protection by being spread around.

The Bottom Line

We are here to help guide and advise you through the sometimes complicated world of finances and investments. To best understand our recommendations and their implications it is important for you to understand investment terminology. Keep this filed away as a tool for your reference or contact us for assistance or clarification anytime.

The post Terms Every Investor Should Understand appeared first on Ecivda Financial Planning Boutique.

Life is a rollercoaster, and as it takes unexpected twists and turns, our financial situations evolve with it. As a responsible investor, staying connected with your financial advisor is essential. By keeping them up-to-date on changes in your life, such as income fluctuations, marital status, or the arrival of a new family member, you empower them to tailor your financial strategy to meet your evolving needs. In this blog post, we’ll explore the vital importance of maintaining open lines of communication with your advisor and how it can lead you to long-term financial success.

“The Secret Sauce to Financial Bliss:  Honesty and Communication!”

The Power of Honesty:  Trust and transparency are the bedrock of any successful relationship, including the one you have with your financial advisor. Being honest about changes in your life allows your advisor to accurately assess your financial situation and make informed decisions. Whether it’s a raise or a pay cut, updating your advisor about your income can help optimize your investment strategy and maximize returns.

“The Butterfly Effect:  How Life Changes Impact Your Finances”

Navigating Major Life Events:  Life is full of milestones that can significantly impact your financial landscape. When you tie the knot, welcome a child, or experience other major life changes, it’s crucial to inform your advisor promptly. Marriage may require updating beneficiary designations and insurance coverage, while a new addition to the family may lead to college savings planning. By sharing these developments, you empower your advisor to adapt your financial plan accordingly, ensuring a solid foundation for the future.

“Baby on Board:  Secure Your Child’s Financial Future!”

Preparing for the Future:  Your financial advisor is your guide through life’s financial journey, and as your circumstances evolve, so should your investment strategy. Regularly updating your advisor about significant life changes enables them to align your portfolio with your long-term goals. Whether it’s retirement planning, estate management, or funding your child’s education, your advisor can help you take proactive steps to secure a prosperous future.

“From Success to Significance:  Empower Your Advisor to Help You Make a Difference”

Philanthropy and Legacy Planning:  If making a positive impact on society is a priority, discussing your philanthropic goals with your advisor is essential. By sharing your desires to support charitable causes or leave a legacy, your advisor can integrate philanthropy into your financial plan. Together, you can develop strategies such as donor-advised funds or charitable trusts that align with your values and make a lasting difference.

Conclusion:

Regularly updating your financial advisor about changes in your life isn’t just a courtesy—it’s a proactive step toward achieving your financial goals. By fostering open lines of communication, you provide your advisor with the information necessary to tailor your investment strategy, navigate major life events, and secure your financial future. Remember, your advisor is your trusted partner in building wealth, so keep them in the loop, and together, you can pave the way to long-term financial success.

The post The Key to Financial Success: Keeping Your Advisor in the Loop! appeared first on Ecivda Financial Planning Boutique.

“Set It and Forget It: Automate Your Savings for Stress-Free Financial Growth!”

The Power of Automation: Life can get busy, and amidst the hustle and bustle, saving money often takes a backseat. However, by automating your savings, you can remove the mental burden of manual transfers and make consistent progress towards your financial goals. Setting up automatic contributions ensures that a portion of your income is saved without requiring any active effort from you.

“Make Savings a Priority: Pay Yourself First!”

Pay Yourself First: One of the fundamental principles of successful saving is to prioritize yourself. Instead of saving what’s left at the end of the month, make it a habit to save first. When you receive your paycheck, allocate a predetermined percentage or fixed amount towards savings and have it automatically transferred to your investments. This way, you ensure that your future self is taken care of before other expenses arise.

“Small Steps, Big Impact: Watch Your Savings Grow!”

The Magic of Compound Interest: Automating your savings not only instills discipline but also allows you to take advantage of the power of compound interest. Over time, even small contributions can grow exponentially as interest compounds on your savings. By consistently funneling money into your investment, you can harness the magic of compound interest and watch your wealth grow steadily.

“Incremental Increases: Boost Your Savings Effortlessly!”

Incremental Increases: As your income grows or expenses decrease, consider increasing the amount you automatically contribute to your investments. Gradually bumping up your savings rate can be painless, as it adapts to your financial circumstances without disrupting your lifestyle significantly. Aim to periodically review and adjust your automated contributions to ensure they align with your financial goals and aspirations.

Conclusion:

Automating your savings is a game-changer when it comes to achieving financial success. By making consistent contributions to your investments without the need for constant monitoring, you can build a solid financial foundation. Remember, every small step you take today will lead to a brighter financial future tomorrow. So, set up those automated contributions, pay yourself first, and enjoy the peace of mind that comes with knowing your savings are on the right track. Happy saving!

The post Boost Your Savings with Automated Contributions appeared first on Ecivda Financial Planning Boutique.

Tax season is hardly anyone’s favourite time of year.  What can make it even worse is seeing a negative balance on your tax account and having to pay extra income tax to the CRA.  Simply being aware of a few tax planning strategies can help ensure that you don’t get hit hard when tax season rolls around.

What You Need to Know

1. RRSP Contributions – Contributions to an RRSP are deductible against your income tax, which can result in either a deduction in your taxes or even a refund.   RRSP contributions are reported on line 208 of your T1 General Tax Return. The financial institution that holds your investment will issue your tax receipts.  Contributions from March-December 2023 will be taxed on your 2023 return, but any contributions made between Jan 1, 2024- Feb 29, 2024 can be taxed on either your 2023 or 2024 return.  Taxpayers can contribute up to 18% of their income every year to their RRSP.

2. Capital Gains/Losses – Many people are aware that any capital gains on their investments must be reported on their tax return; however, you can also report your capital losses.  Capital losses can offset capital gains on your tax return, therefore lowering your tax bill.   While there are a few exceptions, capital losses can generally be carried forward indefinitely and carried back three years.

3. Carrying Charges – If you earned investment income last year, the CRA would allow you to claim carrying charges against certain types of income.  There can be some gray areas with carrying charges, it is always best to check with a tax professional regarding what can and cannot be claimed. Types of charges can include:

• • Investment fees and fees for looking after your investments.
  • You may be able to claim fees involved with obtaining financial advice.
  • Fees paid to an accountant.
  • Any interest paid for a policy loan that was used to earn income.
  • Legal fees involved in getting support payments that your current or ex-spouse will have to pay to you.

4. Changing Tax Rules – Last but not least, the best way to make the most of your taxes is to keep up with the ever-changing tax rules.  New deductions and credits are being added all the time though they may not be widely advertised.  Taking some time to find out what’s new this year might present you with a tax-saving opportunity you may not have otherwise known about.

The post Pay Only Your Fair Share to Canada Revenue Agency appeared first on Ecivda Financial Planning Boutique.

The question of reducing debt or contributing to savings will continue to be debated for as long as people plan to retire in Canada.

Of course opting for both: reducing debt and increasing savings is the ideal. As for which is better, however, really depends on the individuals involved, their goals and feelings and their unique financial situations.

If you find you just can’t decide whether to save or pay off, start by contributing to a TFSA; those deposits can easily be withdrawn and applied to your mortgage.

What you need to know

Tax implications are not a consideration.  Mortgages and TFSAs both deal with after-tax dollars.  Any additional payments against your mortgage or sent to your TFSA will be after you have paid income tax, and there is no reduction in taxable income for making contributions to a TFSA.  Also, when the capital gain from the home (assuming it’s your principal residence) and any growth and withdrawals from your TFSA will not be subject to income tax.

To simplify the matter, the question becomes ‘can I earn more inside my TFSA than I pay in mortgage interest?”  If your mortgage interest is 4% per annum, paying down your mortgage by $10,000 will save you $400 in interest charges each year.  Placing the same $10,000 in your TFSA earning 4% per annum will earn you $400 each year.

One difference is that next year the original $10,000 will be $10,400 and at the end of year two at 4% become $10,816 with compound interest.

For some people becoming debt-free as soon as possible buys peace of mind and freedom, for others a nest-egg and the security and flexibility it provides is more important.

Bottom Line

If you find yourself torn between building a nest-egg and paying off your mortgage, we encourage you to get in touch to set up a short conversation where we discuss your goals, crunch some numbers and find the perfect solution for you.

The post Pay-down your Mortgage or Top-up your TFSA appeared first on Ecivda Financial Planning Boutique.

How a TFSA Works

The TFSA is easy to understand since it works similarly to a “regular” savings account, and like an RRSP, but with a few important differences.

Firstly, there are deposit limits. The allowable, annual TFSA contribution is determined by CRA.  Canadians begin building contribution room at age 18 and “room” accumulates until it is used.  That is, if you have never contributed to a TFSA, you can catch-up by contributing the total “room” that you have accumulated since age 18.  The lifetime limit as of 2024 is $95,000.

Secondly, the TFSA can hold investments such as stocks, bonds, mutual funds, and GICs, like an RRSP.  Many TFSAs hold only cash, because many investors opened these accounts without understanding all of their potential benefits.

Thirdly, income inside a TFSA is exempt from income tax.  A TFSA can earn interest, dividends, or capital gains without limitation, and without a tax bill.  TFSA withdrawals are not subject withholding or income tax to the account owner.

Lastly, in the year following a withdrawal the contribution room is recouped.  For example, if a withdrawal of $14,000 is made on February 3, 2024, on January 1, 2025, an additional $14,000 of contribution room is available to the account owner in addition to CRA’s annual limit for 2025.

TFSAs are as easy to open as a bank account and require no additional effort when filing annual income taxes and can deliver significant financial benefits.  A married couple with $190,000 in their TFSAs, collectively, earning 5% annually with a marginal tax rate of 50% would save $4,750 each and every year in income tax.  In this example, each year they earn $9,500 tax free.

Advantages

TFSAs are suitable for both short- and long-term investing goals due to the ease of withdrawals. The main advantage of a TFSA is that it allows investors to benefit from tax-free growth of their investment.  This is an invaluable tool that investors have available to them to grow their wealth.  While there are no immediate tax breaks to contribute to the TFSA, investors will benefit over time from tax free growth and withdrawals from the account and recouping of “contribution room”.

Limitations

Annual contribution amounts are the same for everyone age 18 and above.  Over-contributing earns a penalty of 1% per month on the amount in excess of your lifetime limit until it is resolved.  More than one TFSA can be owned, and they can be owned at different financial institutions.  It is simplest to track your lifetime contributions when you own only one TFSA or confine them to one institution.

Understanding Contribution Limits

The contribution limit for 2024 has been raised to $7,000 from $6,500 in 2023, and the lifetime contribution limit has reached $95,000.

Time Frame (# of years) x Annual Contribution Limit = Total

2009 – 2012 (4) x $5,000 = $20,000

2013 – 2014 (2) x $5,500 = $11,000

2015 (1) x $10,000 = $10,000

2016 – 2018 (3) x $5,500 = $16,500

2019 – 2022 (4) x $6,000 = $24,000

2023 (1) x $6,500 = $6,500

2024 (1) x $7,000 = $ 7,000

Lifetime Contribution Limit $95,000

The annual limits are set in increments of $500 by the CRA based on the rate of inflation.  It is not uncommon for the limit to stay the same from year to year as it did from 2009 to 2012.   Each person over the age of 18 in Canada is subject to the same contribution limits, regardless of income.

An individual gains the full amount for the year that they turn 18, and contribution room is not pro-rated.  The owner must be a resident of Canada for the entire year, and contributions must be made under a valid Social Insurance Number.

Contribution room can be carried forward indefinitely from years when it is not used.  Also, the withdrawal amount from your TFSA is added back to your TFSA contribution limit in the following calendar year, so you can recontribute the amount you withdrew once a new year begins, or if you have available contribution room.

The Bottom Line

Tax Free Savings Accounts are one of the most effective financial tools available to Canadians and should be viewed as much more than just a simple savings account.  TFSAs provide significant investing opportunities and tax advantages that can help you reach your financial goals faster.

Additional details can be found HERE.

The post Tax Free Savings Accounts… The Basics appeared first on Ecivda Financial Planning Boutique.

By:  William Henriksen, CFP^®

I’m writing to share with you some wonderful news that fills me with both excitement and gratitude. After much reflection and anticipation, I have moved to the beautiful city of Victoria, British Columbia! I’m excited to be here and thrilled to expand ECIVDA’s presence on the West Coast. The West Coast is growing, and it aligns with our vision of growth and providing clients with an even more enriching financial planning experience.

To all my clients living in Ontario and Quebec, I’m continuing to expand my practice in the east as well. Your financial success is at the heart of everything I do, and you will continue to receive the personalized and high-quality financial planning you deserve. I will remain just as accessible as I have been. In fact, I’m now available for evening meetings thanks to the 3-hour time difference.

The year of the lockdown was a year of adjustments, and it was a difficult one for many. I met with clients virtually and was surprised when I eventually found that not only was it easier than I expected to host meetings this way, but it was also simpler to walk through various concepts using the tools on my computer and present my recommendations by sharing my screen. Throughout the year I realised there were other benefits of having virtual meetings such as saving the travel time between meetings and lowering overall paper consumption. Clients could fit in meetings more easily because there was no physical meeting location to get to and back from, and both the client’s and my use of time was more efficient.

It had become the norm in my practice to meet virtually, and I started thinking about what other opportunities could come from this. Last year, I was in California visiting my cousin for the holidays and I scheduled a few meetings with clients living in Ottawa. The meetings went seamlessly, and the idea to move across country sprouted from there.

I’m now living in Victoria, as the first out of province ECIVDA advisor. Before we dive into this new adventure, I want to express my deepest gratitude to my clients for your unwavering support. Your trust has been the backbone of my success, and I am genuinely excited about continuing this incredible journey with you in the years and decades to come.

I also want to express my gratitude to my Ecivda Family. I’m very fortunate to have such an amazing team supporting me. Their dedication and hard work behind the scenes have been instrumental in making this move as smooth as possible.

If you have any questions, thoughts, or just want to chat about this exciting move, please feel free to reach out to me.

Here’s to new beginnings and continued success together.

Warm regards,
William Henriksen CFP

The post Embracing Change: My Exciting Move from Ottawa to Victoria appeared first on Ecivda Financial Planning Boutique.

Currently, Canadians aged 65 years old, can expect to live an additional 22 to 24 years, on average.  Not only are people living longer, they are leading more active retirements.  Achieving success in retirement no longer requires the bills to be paid, and to sit at home awaiting the arrival of the grim-reaper!

To gain access to the investable assets today, and manage them into retirement, advisors should examine their clients in a broader, more complete perspective.

What you need to know

The Bottom Line

Without planning that includes more elements than just finances, retirement and the years leading up to it can be anxiety laden.  The period that should be relatively carefree will be the opposite.

Financial planning is a critical element of all retirement plans, but an analysis that focuses solely on money will not prepare you for a successful retirement.  Additional items like those mentioned above must also be addressed.

The post Retirement . . . Ready or Not! appeared first on Ecivda Financial Planning Boutique.

Understanding how your investments are taxed is an important consideration for investment planning since after-tax yield is more important than gross returns.  The most common types of income most investors will receive are interest, dividends, and capital gains.

Inside a registered account, like an RRSP or TFSA, these earnings are not taxed.  The total withdrawal from an RRSP is subject to income tax, while TFSA withdrawals are not.  For investment income that is subject to tax when it is earned, the effective income tax rate can vary widely for an individual.

What You Need to Know

Interest Income

Interest income refers to the compensation an individual receives from making funds available to another party. Interest income is earned most commonly on fixed income securities, such as bonds and Guaranteed Income Certificates (GIC).  It is taxed at your marginal tax rate without any preferential tax treatment and is taxed annually whether or not it has been withdrawn from the investment.

Example:

An investor buys a 10-year GIC that has agreed to pay him 4% annually.  If the investor bought the GIC for $100, the contract stipulates that they will earn $4 of interest each year for the next 10 years.  The investor must report the $4 of interest income on their income tax return each of those 10 years.

Since interest income is reported as regular income, like employment income, it is the least favourable way to earn investment income if it is subject to income tax.  Typically, GICs offer relatively less risk than other investments to compensate for lower gross and after-tax returns.

Dividend Income

Dividend income is considered property income.  A dividend is generally a distribution of corporate profit that has been divided among the corporation’s shareholders.  The Canadian government gives preferential tax treatment to Canadian Controlled Public Corporations (CCPC) in the form of a dividend income gross up and Dividend Tax Credit (DTC).

Taxpayers who receive eligible dividends are subject to a 38% dividend income gross up, which is then offset by a federal DTC worth 15.02% of the total grossed up amount.

Example:

 A shareholder of a Canadian Controlled Public Corporation is paid a dividend of $100.  This income is an eligible dividend and is subject to the gross up and the DTC.  The dividend would be grossed up 38%, so the income is now considered to be $138.   The DTC would be 15.02% of $138, the grossed-up amount, equaling $20.73.  Therefore, the shareholder would report a dividend income of $138, but would have their federal taxes reduced by $20.73. 

The rationale for the gross up and DTC is related to the fact that dividends are paid in after-tax corporate earnings.  If there were no adjustments to the dividend, it would result in the dollars being double taxed.   This tax treatment makes dividends a more tax efficient way to receive income than interest income. Tax is payable when the dividends are paid out.

Different rules apply for dividends derived from non-Canadian and private corporations and can offer different tax treatment and advantages when professional tax expertise is employed.

Capital Gains

Capital gains are realized on equity investments (such as stocks) that appreciate.  For example, if an investor bought a stock at $6 per share and sold at $10 per share, they would have earned a capital gain of $4.  In Canada, only 50% of a capital gain is subject to income tax.  In this example only $2 of the gain would be taxed.  Another desirable trait of capital gains income is that tax is not due until the investment is sold or deemed to have been sold.  This provides the investor with a measure of control over the timing of taxes.  Whether or not they are the most tax efficient income depends on your province of residence and subsequent tax rates.

The Bottom Line

It is important to ensure that investors understand their tax situation and the implications that different types of investment income can have on future taxes.

Financial, retirement and income planning should include the anticipated tax obligations at both the federal and provincial level.  Ensuring an investor’s expert advisors understand overall objectives, risk tolerance and retirement timing can allow them to maximize after tax returns.

The post Investment Income and Income Tax appeared first on Ecivda Financial Planning Boutique.

By: Michael Lutes CFP, CLU

Certified Financial Planner

Introduction

In Canada, the taxation of passive income earned by corporations has been a topic of interest and debate for many years.

The rules and regulations surrounding this income have evolved, impacting how businesses manage their investments and financial strategies.

In this blog post, we will delve into the essentials of Canadian corporate passive income, including what it is, how it is taxed, and strategies for optimizing your corporate investments.

What is passive income?

Passive income refers to the income earned by a corporation from investments in assets such as stocks, bonds, rental properties, and other passive sources. This income is distinct from active business income, which is generated from a corporation’s core business operations.

Common types of passive income include:

1. Dividend Income: Earnings received from investments in shares of other corporations.
2. Interest Income: Earnings from investments in bonds, GICs, or loans.
3. Rental Income: Income generated from leasing out real estate properties.
4. Capital Gains: Profits realized from the sale of investments, such as stocks or real estate.

How is passive income taxed?

Taxation of passive income is governed by the Canadian Income Tax Act. The key principle is that passive income is subject to a higher tax rate compared to active business income to discourage corporations from accumulating excessive passive investments.

Moreover, having too much passive income in any given year will reduce or eliminate a corporation’s access to the following year’s Small Business Deduction, the effect of which can be an additional approximately 15% income tax.

Strategies for managing passive income

To minimize passive income and avoid the potential loss of the Small Business Deduction, business owners should consider the following strategies:

1. Withdraw additional funds for investment in RRSP or TFSA accounts.
2. Use accumulated Capital Dividend Account (CRA) credit to withdraw funds tax-free and reduce potential for passive income.
3. Remove funds tax-free by having the corporation repay any outstanding shareholder loans.
4. Focus on capital gains-oriented investment. Unlike interest and dividend income which is earned regularly and taxed in the year it’s received; capital gains can be realized strategically and only 50% of capital gains are included in income.
5. Let your winners ride! In other words, if you have unrealized capital gains, you might consider hanging on to them until a future year when you may avoid a further reduction of your SBD. Or hang on and sell them in a year when you already have greater than $150,000 of passive income and have already eliminated the SBD anyway.
6. Spread out your gains. Instead of deferring capital gains to future years, sell your winners over two or more years to potentially avoid reducing your SBD.
7. Implement an Individual Pension Plan (IPP). An IPP is essentially a business owner’s very own defined benefit pension plan. The money contributed is eliminated from the calculation of passive income.
8. Buy permanent life insurance inside the corporation. The investment income is sheltered inside the policy as “cash value” and doesn’t count to the calculation of passive income. Furthermore, on death the entire death benefit can often be paid out to shareholders tax-free.
9. Donations from a corporation will reduce the funds that would otherwise be producing passive income. Further, if donating securities or funds with unrealized gains, there are additional benefits such as no tax payable and a credit to withdraw funds from corporation tax-free.

Conclusion

Understanding Canadian corporate passive investment income and its taxation is crucial for businessowners looking to optimize their financial planning strategies. By staying informed about the rules and employing effective tax planning strategies, businessowners can strike a balance between accumulating passive investments and managing their tax liabilities. Consulting with a qualified tax professional or financial advisor is often recommended to navigate the complexities of corporate taxation in Canada effectively.

The post Corporate Investments – Getting active around passive income. appeared first on Ecivda Financial Planning Boutique.

An article featuring our very own, Corey Butler, CIO – Chief Investment Officer, Wealth Advisor, Ecivda Financial Planning Boutique.

by: BMO Mutual Funds HQ

Corey Butler began his career as a bricklayer, where he learned the value of building a solid foundation. Now a successful Wealth Advisor and Chief Investment Officer at Ecivda Financial Planning Boutique, Butler shares the secrets that have allowed his advisory practice to more than double its assets under management in only six years, and why he sees the BMO Strategic Equity Yield Fund as an important building block for client portfolios.

Click HERE to read the full article!

#ECIVDA #ThinkForward #planningrighttoleft #BMO #BMOglobalassetmanagement

The post “How One Advisor Doubled His Book in Six Years” appeared first on Ecivda Financial Planning Boutique.

Receiving a raise or a bonus is a great accomplishment that lends a feeling of accomplishment and celebration. Many of us opt to use the bonus to buy something we’ve been wanting, like that flat screen television, for example. Rather than splurge, however, why not hold onto that bonus or raise and invest in wisely?

Saving a Raise

If you are not already on a pre-authorized contribution (PAC) to a savings or registered account, now is a great time to do so. Each pay, or each month, have a predetermined amount removed from your bank account and placed into savings. Once the funds are in a savings account (and removed from quick and easy debit card access), they can be used for several purposes:

Pay down debt:

• • Especially high-interest consumer debt like credit cards
  • Pay off your mortgage sooner: Save money for the future by increasing the mortgage payments above the minimum amount or increasing the payment frequency (bi-weekly instead of monthly)

Maximize the use of a “Registered” account:

• • Place the pay increase directly into a registered account like an RRSP to increase savings

In most cases a blended approach is best. Paying down debt alone doesn’t afford you the opportunity to amass a small, liquid, emergency nest-egg to cover unexpected expenses.

Saving a Bonus

Unlike a raise that should affect all future earning and raises that follow, the one-time bump on a bonus can disappear as mysteriously as it arrived. Rather than spend your bonus on a one-time, self-gratification, why not use it to strengthen your financial future?

Pay down debt:

As explained above, the pre-tax earnings required to pay post-tax debt can be significant. A large, one-time bonus can significantly affect the short and long-term savings of your family.

• • Paying off a large portion of your mortgage: a reduced balance causes each subsequent mortgage payment to have a larger portion dedicated to reducing the principal

Maximize the use of “Registered” accounts:

• • Place the bonus (or part thereof) directly into a registered account like an RRSP to increase savings

Often you may feel that as if your raise or bonus didn’t actually happen. You earn more, but don’t enjoy any of the benefits. A small celebration allows you to acknowledge and move forward. The celebration could take many forms, but it is best if it is unusual and distinctive.

Bottom Line

Getting a raise or bonus is an impressive accomplishment. Often, you may feel like you didn’t even get a raise which is why it is important to commemorate your accomplishment with a small celebration. Take some of that money and treat your family to dinner, go to the spa or celebrate however you see fit. Then, contact your Advisor for assistance to determine how to best utilize the extra funds.

The post Did You Get a Raise or Bonus? Save it!!! appeared first on Ecivda Financial Planning Boutique.

By:  William Henriksen, CFP^®

Farmers play a vital role in our society, providing food and sustaining our communities. However, there comes a time when farmers may start thinking about selling their farm or retiring from the agricultural business. This exit requires careful planning and consideration to ensure a smooth and successful transition. According to a recent census, 60% of farmers are 55 or older, but only 13% of farmers have written succession plans in place!

In this blog post, we will explore the essential factors that farmers need to consider when they are contemplating selling or retiring from their farming operations, with a specific focus on the lifetime capital gains exemption.

1. Understanding the Lifetime Capital Gains Exemption: The lifetime capital gains exemption is a tax provision available to Canadian farmers and fishers. It allows them to claim a tax exemption on the capital gains realized from the sale of qualified farm or fishing property, up to a certain limit. Today, the exemption limit is $1 million. Understanding the details and requirements of this exemption is crucial for farmers considering selling their farm, as it can have a significant impact on their tax payable.
2. Eligibility and Qualified Farm Property: To benefit from the lifetime capital gains exemption, farmers must ensure that their property meets the criteria of qualified farm property. Qualified farm property typically includes land, buildings, and equipment used primarily in a farming business. Farmers should review the specific requirements outlined by the Canada Revenue Agency (CRA) and consult with tax professionals to confirm their eligibility and ensure compliance with the exemption rules. I’ve included the current requirements at the end of this blog.
3. Tax Planning and Optimization: Farmers considering the sale of their farm should engage in thorough tax planning to optimize the use of the lifetime capital gains exemption. This involves assessing the potential capital gains, considering the available exemption limit, and strategizing to minimize tax liabilities. Working with experienced tax advisors or accountants can help farmers navigate the complex tax rules, identify opportunities for tax minimization, structure the sale in a manner that maximizes the benefit of the exemption and ensures maximum long term wealth preservation.
4. Timing the Sale: The timing of the sale can have a significant impact on the utilization of the lifetime capital gains exemption. Farmers should carefully consider their tax situation, personal circumstances, and market conditions when determining the optimal time to sell. Changes in tax laws or regulations may affect the availability or value of the exemption, so staying informed and seeking professional advice is crucial.
5. Transition and Succession Planning: Farmers looking to retire and sell their farm must also consider the implications of the lifetime capital gains exemption for succession planning. If the goal is to transfer the farm to the next generation, structuring the sale in a way that allows for the use of the exemption by both parties can be advantageous. This may involve strategies such as share transfers, leasing arrangements, or implementing a gradual transition plan. Working closely with legal and financial professionals can help ensure a smooth transition while optimizing the tax benefits.
6. Professional Guidance: Given the complexities of tax laws and regulations, it is essential for farmers to seek professional guidance when considering the lifetime capital gains exemption. Engaging with tax advisors, accountants, and lawyers experienced in agricultural taxation can provide valuable insights and ensure compliance with the CRA’s requirements. These professionals can also assist in developing a comprehensive tax strategy that aligns with the farmers’ overall retirement and financial goals.

Hopefully by exposing more farmers to articles like this one, we start seeing the percentage of farmers with written succession plans trending higher year over year. If you’re a farmer or if you know a farmer, share this with them and encourage them to seek professional guidance so that they can optimize their retirement planning and ensure a smooth transition to the next phase of their lives.

Below are the current requirements to meet the criteria of qualified farm property for the purpose of the lifetime capital gains exemption:

1. Farming Activity: The property must be used primarily in a farming business, meaning that it is actively involved in agricultural production. This includes activities such as cultivating land, raising livestock, growing crops, or producing aquaculture or other agricultural products.
2. Ownership: The property must be owned by an individual or a partnership of individuals. Corporations or trusts generally do not qualify for the lifetime capital gains exemption on farm property.
3. Duration of Ownership: The property must have been owned and used in a farming business for at least 24 months before the disposition (sale) occurs. However, in some cases, the CRA allows for a shorter ownership period if there were circumstances beyond the farmer’s control that prevented meeting the 24-month requirement.
4. Nature of the Property: The property must meet specific nature criteria to qualify as qualified farm property. The following requirements generally apply:
   • Buildings and Structures: Buildings and structures, such as barns, storage sheds, or silos, that are used primarily in the farming business can qualify as part of the qualified farm property.
   • Shares of a Family Farm Corporation: Shares of a family farm corporation can be considered qualified farm property if certain conditions are met, including that the majority of the assets of the corporation are qualified farm property and that the shares are owned by individuals who meet specific eligibility criteria.
5. Farming Income Test: The farming income test requires that farming income, either alone or in combination with farming income of a spouse or common-law partner, exceed other income (excluding taxable capital gains) in at least two out of the last five years. This ensures that the lifetime capital gains exemption is primarily available to farmers and not individuals who may own farm property but do not actively engage in farming activities.

If you are a farmer, and you are contemplating selling or retiring from your farming operations, or if you would like to set up a succession plan, click HERE to book an appointment with us today!

The post Financial Planning & Succession Plans for Farmers appeared first on Ecivda Financial Planning Boutique.

Starting with The Debt with Highest Interest Rate

This is known as debt avalanche. It entails you starting off paying the debt with the highest interest rate to the least. Debts with high-interest rates are always difficult to pay because of the accumulation of the interests. Getting it off your books first will save you money and help you focus on paying off other debts and financial goals. Picture an avalanche and imagine your debt tumbling down quickly. That is how this strategy works.

Starting with The Debt with the Least Balance

This strategy is good for gaining momentum. It is known as the snowball debt repayment strategy, and it is more motivational than strategic. If you are finding it difficult to figure out how to pay your debt, start from the lowest and gradually work your way up. Another advantage is that it gives you that little bit of extra cash to tackle your big debts. This strategy also comes in handy where you feel you cannot adopt the previous strategy. Start with the least balance.

Starting with Your Largest Balance

This is the opposite of snowball strategy. This strategy prioritizes the debt with the largest balance, and it is an unpopular strategy because it may be difficult to achieve. The question is why will I start with my highest debt? It may not give room for other financial goals because all your resources will be channeled towards paying off that debt. However, there are cases where you may opt for this type of strategy. An example is when that particular debt has a promotion of a reduced interest rate, and you need to pay it off before the promotion ends.

Consolidating Your Debts

This is usually what you resort to when it is taking too long to pay your debts, or the interest rates are making it difficult to get it off your books. When you consolidate your debts, it gives you the opportunity of paying all your debts at once. You can take a loan to pay for your consolidated debts which then leaves you with the repayment of that loan only. For example, you can consolidate all your credit card debts and pay them off with a balance transfer credit card. This strategy is particularly effective when you have multiple debts that are hindering you from achieving your financial goals.

The post Prioritizing Your Debt appeared first on Ecivda Financial Planning Boutique.

How Does Cash Value Work?

Cash value is a type of permanent life insurance that provides insurance cover for the policyholder’s life. Most cash-value life insurance policies require a fixed-level premium payment. A part of it is allocated to the cost of insurance and the remaining is deposited into a cash-value account and invested in different financial investment portfolios. It earns a tax-deferred modest rate of interest. This ensures that the cash value of your life insurance increases steadily over time. The implication of this is that as the cash value increases, the risk of the insurance provider decreases because the accumulated cash value offsets part of the insurance provider’s liability. You can also use the earnings to increase the death benefits in your policy or other living benefits, depending on your preference. Bear in mind that as you make withdrawals from the cash value in your insurance policy, the death benefit will also reduce.

Example

Assume you have a life insurance policy with a $35,000 death benefit with no outstanding loan or prior cash withdrawals. The accumulated cash value of the policy is $10,000. Upon your demise, the insurance provider will pay the full death benefit of $35,000 but the money accumulated into the cash value becomes the property of the insurer. The implication of this is that because of the cash value of $10,000, the real liability cost of the insurance provider is $25,000. This is calculated by subtracting the death benefit from the accumulated cash value ($35,000 – $10,000).

Types of Cash Value Life Insurance

Cash value insurance is usually used to augment your life insurance policy. However, you need to understand how it works for each type of life insurance policy.

Whole Life Insurance

If you have a whole life insurance policy, having a cash value policy will augment your life insurance policy. When you take a cash value insurance policy, your premium stays the same for the rest of your life. A small percentage of your premium is diverted into a savings account to accumulate interest. The rate of interest returns varies depending on the insurance provider, but it is known to hover around 2%. You have access to the funds in the savings account during your lifetime.   

Variable Life Insurance

This is slightly different from the whole life insurance policy. With this policy, you can determine how your accumulated cash is invested. You have the opportunity to invest the small portion diverted from your premium into investment portfolios such as bonds and stocks. This requires a good knowledge of the investment market. Variable cash value life insurance has a higher premium than the whole and universal cash value life insurance.    

Universal Life Insurance

Under universal life insurance, you have a bit of control over what you pay as your premium. For example, you can pay more than you usually pay for a premium and you can divert the surplus into your savings account. The advantage of this type of policy is that if you cannot meet up with the premium payment in a particular month, you can use the money in your savings account to pay your monthly premium. There are three types of Universal Life Insurance: Guaranteed Universal Life Insurance, Variable Universal Life Insurance, and Indexed Universal Insurance.

Advantages of Cash Value Life Insurance Policy

• You can earn interest on a cash value savings account
• You can overpay on your premium and divert more money into your cash value account
• You can spend from your cash value account while you are alive
• You can earn returns on a cash value investment account

Disadvantages of Cash Value Life Insurance Policy

• Your returns are capped at a certain amount
• If you remove money from your cash-value account, your death benefit decreases
• You have to pay fees associated with your cash-value account

Tax Advantages

There are various tax benefits you and your beneficiaries enjoy with a cash value insurance policy. One of the benefits is that your beneficiaries can receive your death benefits tax-free. This is an advantage your beneficiaries get to enjoy with your cash value life insurance policy. Another tax advantage is that the earnings on your invested accumulated cash value are tax-deferred. Therefore, as your cash value grows, you do not need to worry about the CRA deducting from your earnings. One of the things you can use your accumulated cash value for is collateral for loans. When you borrow money against your policy, you do not have to worry about paying taxes on the loan as long as the policy is still active. However, if you withdraw your accumulated cash value or take the surrender value and terminate the policy, you may be taxed on the portion of the money that came from interest or investment gains on your invested cash value.  You should understand the tax rules before making withdrawals from your cash value policy.

Bottom Line

There are other minor considerations and questions you may have when considering this approach. Talk to us about your options.

The post What Are Insurance Cash Values? appeared first on Ecivda Financial Planning Boutique.

Diversification is a concept that many investors understand on some level.  It makes sense to not put all your eggs in one basket, but diversification is more than just investing in more than one fund or stock.  Diversification is the basis of modern portfolio theory, and it is an essential risk management tactic that every investor should be utilizing. Here’s how it works:

Correlation

The measure of correlation indicates how closely two assets follow together when the markets go up and down. The scale of correlation goes from -1 to 1, with -1 being a perfect inverse correlation and 1 being a perfect correlation.   For example, Oil Company A and Oil Company B will both fall if oil prices fall, and they will both rise if oil prices rise.  Therefore, they have a perfect correlation.  Conversely, when Oil Company A rises, Automobile Company A will fall.  This indicates an inverse correlation.  If one company’s rise and fall does not affect another company, then they have a correlation of 0.

The key to diversification is having varying degrees of correlations so that your portfolio is getting the most out of the market, while offsetting losses. 

Asset Allocation

Picking a group of stocks that have varying degrees of correlation is a good place to start, but to truly diversify one must take on a variety of different assets.  This is where assets allocation comes into play. Determined by risk tolerance and time horizon, holding a variety of different asset classes is the best way to curb volatility in your portfolio.   Asset classes include stocks, bonds, commodities, mutual funds, real estate trusts… to name a few.  Each asset class brings different risks to the table, so it is important to make sure you are thoughtfully choosing investments that complement one another and work well together.

Overdiversification

Too much of a good thing isn’t a good thing at all, and that is especially true when it comes to diversification.   It is possible to hold too many different investments that correlate in too many different ways. This might diversify the risk out of your portfolio, and it may stop you from making any gains.   It is important to work with a wealth professional who can help you pick an appropriate amount of investment holdings while still utilizing an appropriate asset allocation so that you stay on track.

The Bottom Line

Understanding that you need to diversify your portfolio is not always enough as it can be a bit more intricate than it seems.  We can help you understand how your investments work together to optimize your portfolio.

The post What Does it Actually Mean to Diversify? appeared first on Ecivda Financial Planning Boutique.

Business owners regularly face complex retirement planning and insurance needs. It is not uncommon for business owners to have a large amount of their wealth tied up in their corporation.  This can create a complex need for both insurance coverage to protect that wealth and the flexibility to use that wealth.  The Corporate Retirement Strategy was developed to address both of those needs.  This strategy can provide insurance protection and a flexible income stream in the future.

Below are the basics of how this particular strategy can work for a business.

What You Need to Know

The Corporate Retirement Strategy has two key components.

The first of which is a permanent life insurance policy.

The idea is that the corporation will purchase a permanent life insurance policy on the business owner to provide them with the insurance coverage needed to protect the company assets.  On top of the monthly insurance premium, the business would direct any surplus earnings into the permanent life insurance policy. These surplus funds would build up significant amounts of tax-advantaged cash value within the policy. This policy serves a dual purpose.  The insurance provides much needed protection for the company all the while accumulating funds that could be used by the business owner in the future.

The second component to this strategy is utilizing the funds that the insurance policy has accumulated. 

The corporation may be able to pledge the policy as collateral in exchange for a tax-free loan from a lending institution.  The corporation could then use these loaned funds to supplement a shareholder’s retirement and the loan would be repaid by the life insurance policy when the insured dies.  On death, a portion or all of the life insurance proceeds are used to pay off your loan. Even though the benefit was used to pay off the loan, the corporation may still post the death benefit amount to its Capital Dividend Account.

This strategy may be good for any shareholder or key person of a Canadian Controlled Private Corporation who has a successful business with either excess income or a large corporate surplus.  With proper planning this strategy can help reduce taxes, supplement retirement, and provide insurance protection fort the company.

The Bottom Line

While this strategy may work for some business owners, it is not the right fit for every corporation.  It is important that the strategy is executed carefully to be successful and fulfill its intended purpose.  It may be prudent to work with a tax professional, your insurance advisor, financial planner, and the lending institution to ensure that your corporation will benefit from the Corporate Retirement Strategy.

The post The Corporate Retirement Strategy appeared first on Ecivda Financial Planning Boutique.

By: Louai Bibi, Advisor Associate

You’ll likely have heard about the concept of a family trust through a movie or TV show. If this is the case, you’ll likely assume that there is a direct correlation between having a family trust and being ultra wealthy.

This isn’t always the case and family trusts can be a huge help to the average Canadian family, but trusts are complex and requires advice from your tax/legal/financial planning team.

Here is an example where a family trust can be helpful:

John has two children from a previous marriage. John later marries Jane, who has two children from a previous marriage as well. John owns a cottage which he & Jane, as well as the four children love to visit. If John were to leave the cottage to Jane in his will, she may or may not let John’s kids have access to the cottage after his death or worse, when Jane dies, she very well may pass the cottage on to her own children through her will, which leaves John’s children out of the equation and likely conflicts with John’s wishes.

If John were to have set up a family trust that owned the cottage, he could have stipulated in the trust agreement that Jane & her children, as well as his own could have all enjoyed the cottage during their lifetime (following his death) but when Jane were to pass, the cottage would be willed to John’s children.

This doesn’t just apply to cottages or vacation properties either. John could have had a child with a disability who can’t handle their financial affairs and wanted the inheritance John leaves to this child to be paid over their lifetime, as opposed to a lump sum. There could even be a family member who would have blown through their inheritance during a weekend in Vegas, and a trust could allow this individual to receive their inheritance in chunks or once achieving a major milestone to mitigate this risk.

For the purpose of this blog – I won’t be addressing the tax benefits or consequences too deeply. After all, the most qualified person who can speak to this is your trusted accountant.

There are some great tax advantages to using a trust:

• Possibly reducing taxes at death.
• For business owners – multiplying the capital gains exemption.
• Income splitting opportunities with lower income earning beneficiaries.

There are also some disadvantages to using a trust that can sometimes outweigh the advantages:

• Cost of setting up a trust and annual tax returns are required.
• Attribution rules can be complicated and may make it difficult to shift income to lower-income beneficiaries.
• Likely not an ideal solution for US citizens and/or taxpayers.
• Trusts are taxed at the highest personal marginal tax rate.

All that to say, the decision to implement a trust is not one that should be rushed and should entail detailed discussions with your tax/legal/financial planning professionals as to how this strategy fulfills your goals and mitigates unnecessary cost, complexity, tax, and risk. Here is a link to a great article by BDO that uses an example of gifting a cottage from parents to children and the options available to them.

This process starts with some self-reflection. What does my legacy look like? Who receives my assets at death, what does my family dynamic look like and how can I structure this in a way that results in the least heartache, complexity and possibly reduces my taxes owing? Sometimes a trust fills that gap and sometimes it doesn’t. Once you’ve had some time to reflect on these items, you can directly book yourself into one of our calendars here to continue this conversation.

The post Should I set up a family trust… and why? appeared first on Ecivda Financial Planning Boutique.

What Is Good Debt?

Good debts are generally referred to as future investments that will appreciate in due time. The phrase ‘it takes money to make more money’ comes to mind. There are loans you may need to take to generate more income and build your net worth. Such loans are justified because they are needed investments for a future reward. Paying such loans back is not usually a problem because you would have used it to make double the loan. Examples of good debts include student loans, business loans, and mortgages.

However, there is an inherent risk in taking a ‘good debt’. As was mentioned earlier, debts are generally an inconvenience on one’s financial plan, so there is always that inherent risk when taking a loan even when it is supposedly going to build your wealth and increase your net worth in the future. When you take a loan for investment, there are a lot of assumptions involved. Nothing is certain; you may not get the return you hope for but what’s life without risk. This is why it is always advisable to be conservative about your projections. In other words, when taking a loan, always consider when the return will start coming in and what will be the amount of returns you will be expecting. Juxtapose it with the loan you are taking and ask yourself if it is worth it. When it comes to debts, there are no guarantees, even for good debts, the purpose of the loan is all that matters.

What Is Bad Debt?

Debt is said to be bad when you are borrowing to purchase a depreciating asset or an asset you do not need. Borrowing money to acquire a want and not a need is usually ill-advised. Financial advisers will say if the money will not increase in value or generate more money for you, then don’t borrow. Borrowing money to purchase a depreciating asset will only put you in more debt. The risks in a bad debt are visible as day. Examples of bad debt include car loans, credit card loans for shopping, football tickets, etc…

Other Debts

There are other types of debt that do not fall within the category of good or bad debt. These are debts that are relative to everyone’s financial capacity at the time of taking the debt. These types of debts may be good for one person and bad for the other. Someone with enough financial cushion may afford to take further loans to pay off his other debts or invest in more portfolios compared to someone already drowning in debt.

Debt Choices

As discussed, be it a good or bad debt, the reality is that it is still a debt, and you must pay it back. In deciding what type of debt to take, you must consider the type and purpose of the debt. This will help you determine whether a debt is truly worth it. Are you investing in your future or satisfying your wants? That question will help you in deciding whether to take the loan or not.

The post Good Debt vs Bad Debt appeared first on Ecivda Financial Planning Boutique.

There are two forms of capital gain:

Realized capital gain: You have a realized gain when you sell an asset for a higher price than you bought it.

Unrealized capital gain: This occurs when there is an increment in the value of your asset, but you haven’t sold it.

Therefore, you only ‘realize’ a capital gain once you sell that particular asset that has increased in value. However, you must know that a realized capital gain isn’t just yours to possess, and the government takes a cut from it by way of tax.

How is Capital Gain Taxed in Canada?

Capital gain gets taxed at a rate of 50% in Canada. Once you realize a capital gain, you’ll need to add 50% of the capital gain to your revenue. This means the portion of extra tax you pay will differ depending on how much you’re earning and what other sources of earnings you possess.

The only way you can have a capital gain without being taxed on it by the government is if your investments are registered in tax-sheltered plans like Registered Retirement Savings Plan (RRSP), Registered Retirement Plan (RPP) or Registered Education Savings Plan (RESP).

Apart from these plans, your capital gain will be taxed. You must know how to calculate said capital gain tax.

How To Calculate Capital Gain Tax?

Before effectively calculating your capital gain tax, you must know some significant amounts. They are:

Adjusted Cost Base (ACB): The price of an investment, including any costs related to obtaining the capital property.

Dividends of Disposition: This refers to the amount you have profited by selling your capital asset. This is the amount gotten when you deduct any outlay or expense you may have incurred by selling.

Expenses Required to Sell:  These are any outlays you may have to make when selling your capital property.

Capital gain subject to tax = Selling price – the Adjusted Cost Base

Bottom Line

Ultimately, you possess a capital gain when you sell a capital asset for a higher amount than the total of its ACB and the outlays and expenses incurred to trade the property.

The post Capital Gains 101 appeared first on Ecivda Financial Planning Boutique.

By: William Henriksen, CFP

Congratulations! Officially becoming the professional that you studied so long to become is an amazing achievement and that deserves to be recognized! The path to becoming a professional such as a doctor, dentist, or lawyer requires almost a decade of post secondary education or more. Take a moment here to acknowledge your achievement. Think of all the work you’ve put into those years and think of all the various paths you can take your career from here. It’s exciting, scary, stressful, and wonderful all at once. Let’s explore how you can best position yourself for the future.

Managing your cash flow as a professional

The moment you start making an income, you begin feeling the biggest cashflow flip that you’ve ever had. This is where you have an opportunity to set up a great habit for yourself by creating a budget that incorporates your values, priorities, and the wellness of your future self.

Things to consider when creating a budget:

1. Your fixed expenses: This establishes a baseline for all future lifestyle expenses so be careful.
2. Your insurance premiums: If you are running your own practice you may need to get individual insurance and should factor the premiums into your budget early on.
3. Your savings rate: How much should you be putting away for your future self and for your long-term goals? Do you have an emergency fund in place and how much should you aim to have in it? The amount will vary from person to person and should be discussed in the context of your unique goals and situation. As a professional, keep in mind that you will likely need to fund your own pension as you may not have an employer to fund a pension plan for you.
4. Debt repayment: Many professionals come out of school with significant student debts. Should you focus on paying it down first? If so, how aggressively? This will also depend on your unique situation.
5. Automation: Having all the above automated will create the possibility to implement point number 6.
6. Guilt-free spending: What’s left over in your budget is non-allocated money. In the real world the amount will vary from month to month depending on how often you get paid, but if you’ve automated everything to come out on the same date, once it’s past you can confidently spend money that’s left over with a clear conscience because you will have already allocated money to pay your fixed expenses, protect your income, health and family through insurance, and you will have paid yourself through saving and debt repayments. If the amount you’ve allocated to points 1-4 allow you to reach your goals, the amount left over can be spent guilt free.
7. Reviewing regularly: Keep in mind that being financially organized is a continuous process, so learning and adapting your strategies as your financial status evolves is key.

Following these steps and living below your means is a huge step toward reducing the stress or uneasiness you may feel about your financial situation. It will also have the effect of increasing your confidence that you’re doing the right things to align your capital with your values and priorities.

Protecting your future self and your loved ones

It’s easy to avoid thinking about what happens if life doesn’t go the way we plan because we don’t want to believe bad things can happen to us. We tend to avoid difficult conversations until we’re prompted to have them. As a planner I have a responsibility to have these kinds of conversations with clients when evaluating their insurance needs. More often than not, people don’t know what would happen if they got sick or injured to an extent where they can’t work to receive an income. They aren’t sure if they would be leaving enough financial support for their loved ones should they pass away. Ask yourself now, what kind of financial impact would something like that have on you and your family? Without insurance, your potential income you’ve studied for would go down to zero. If you passed away, those who depend on you may be left with financial hardships. You may want to consider if your current needs are going to change down the road and structure your insurance to account for those potential needs. Disability insurance, life insurance and critical illness insurance are ways to ensure that you and your loved ones will be financially taken care of if you’re faced with such events which are out of your control.

A common reason people avoid looking into insurance early on is that they believe it will be too expensive. This doesn’t have to be the case. Not only does it cost less to get insurance the younger you are, but you can also structure insurance plans as starter policies that are easily graduated into more robust long-term policies later. This keeps costs low until you have a handle on your cash flow and protects you right away with the coverage you need. If your insurance need today is relatively low compared to what it will become, you may want to have the option to buy more later when your situation changes without needing to prove you’re insurable. This is possible and should be discussed when evaluating your insurance needs.

Incorporating

As a young professional, you may be considering starting your own business or working as a freelancer. If you plan to grow your business, you may want to consider incorporating. Incorporating means creating a corporation, which is a separate legal entity from its owners.

Why should you consider incorporating? Here are some reasons:

• Limited liability protection: One of the main benefits of incorporating is limited liability protection. As a corporation is a separate legal entity, the corporation’s creditors cannot go after your personal assets. This means that your personal assets are protected from any lawsuits or debts incurred by the corporation. This can be particularly important for businesses that are exposed to higher risks or liabilities.
• Tax advantages: Another benefit of incorporating is tax advantages. A corporation pays corporate income tax on its profits, which is typically much lower than personal income tax rates. Additionally, as a corporation, you are subject to many different rules that create opportunities for various tax planning strategies.
• Insurance strategy benefits: Incorporating can also provide benefits for your personal insurance strategy. When I mentioned graduating your insurance policies earlier, this would be the place to graduate them to. Some of them anyway. This point could be an article on its own and is not the focus for today, but seeing the full game plan from a bird’s eye view can make the action plan for your current stage easier to understand.
• Credibility: Incorporating can also enhance your business’s credibility. It shows that you are serious about your business and committed to its success. It can also give your business a more professional image, which can help attract more clients or customers.
• Access to capital: If you plan to raise capital to grow your business, incorporating can make it easier to do so. Corporations can issue shares or bonds to raise funds, which can help you grow your business faster.

However, incorporating also comes with some drawbacks:

• Higher costs: Incorporating can be more expensive than other business structures. You will need to pay fees to incorporate and file annual reports with the government. There may also be legal fees associated with incorporating.
• More paperwork: As a corporation, you will need to keep detailed records and file annual reports with the government. This can be time-consuming and requires a higher level of record-keeping than other business structures.

In conclusion, incorporating can be a smart choice for young professionals who want limited liability protection, tax advantages, insurance strategy benefits, credibility, or plan to raise capital. However, it also comes with higher costs and more paperwork. If you are considering incorporating, it is important to speak with a financial professional or legal expert to determine whether it is the right decision for your specific circumstances.

Creating Options 

All things considered, there are a lot of big topics to approach at this stage of your life and of your career. You likely have some degree of uncertainty regarding the future and it’s very possible that your life changes significantly in your early career as you juggle your personal goals and your professional ones. To get off to the best start, and to account for these possible changes, it’s important to create options for your future self. Finding the right financial planner for you, creating a budget, getting the right type and amount of insurance in place, and working with your planner and their team to build your vision are the best things you can be doing now for your future self. Your future you will thank you!

If you would like to discuss this – book an appointment with us, we would love to hear from you!

The post Young Professionals – Get Started Right appeared first on Ecivda Financial Planning Boutique.

By: Louai Bibi, Advisor Associate

We are pleased to announce that we will be able to offer our clients the new First Home Savings Accounts (FHSA) at Ecivda Financial Planning Boutique as of June 12, 2023!  If you are in the market for your first home, or if you know someone that is in the market for their first home, this is an exciting new opportunity!

Outlined Below:  What is the FHSA & how does it work, who is eligible to open one, the benefits & planning opportunities around this new account, what happens if you no longer wish to buy a home, and how to get in touch if you’d like to review considering this account for yourself.

What is the FHSA and how does it work?

This exciting new account came about as part of the 2023 federal budget to help Canadians build more tax-free savings to fund their home purchase goals. The FHSA characteristics are a blend of the TFSA, RRSP, and RESP rules; so it is easy to get confused. I have compared the FHSA to the RRSP & TFSA in a past blog, which I encourage visiting if you’d like to look at specific differences and similarities of each account.

The basic premise is:

• You can contribute $8,000 per year, up to a lifetime limit of $40,000. Contributions are tax-deductible!
• Since the FHSA came into effect on April 1^st of 2023, you can only deduct contributions made between April 1^st and December 31^st of 2023 for the 2023 tax year. Contributing in the first 60 days of the following year does not count towards your 2023 taxes like RRSP contributions do.
• You can carry forward the tax deduction indefinitely to a year where your taxable income is higher.
• These contribution limits are separate from those of the TFSA and RRSP.
• You can hold a variety of investments in the FHSA, or you can simply choose to keep the funds in savings plan within the account.
• If you are withdrawing from this account to purchase a home, you can do so tax-free. Otherwise, you would pay taxes on the withdrawal at your respective tax rate.
• You can carry forward unused contribution room to future years. So, if you open a FHSA in 2023 and don’t fund it, in 2024 you can contribute $16,000. You can only carry forward room if you have already opened your FHSA.

Who is eligible to open a FHSA?

Most of us read ‘first home savings account’ and immediately assume that this account won’t be relevant to them if they have owed a home in the past. This is not necessarily the case! The definition of first-time home buyer is unique here and I’ll address this further below.

You are eligible to open a FHSA if you satisfy the following conditions:

• Canadian resident for tax purposes.
• Between the age of 18 and 71 years old.
• Have not owned a home in the current year or last four years prior to opening a FHSA.
• Have not lived with a spouse or common-law partner who owned a home in the current year or last four years prior to opening a FHSA.

Disclaimer: this account may not be appropriate for US taxpayers. Please consult with your advisory team to ensure the FHSA is an appropriate fit if this applies to you.

What are the benefits and planning opportunities of the FHSA?

I’ve addressed the features and eligibility of the FHSA and you may be wondering how this account may benefit you. Here are a few benefits that you may find compelling:

• You get to deduct your contributions against your taxable income. If you had $50,000 in taxable income in 2023 and contributed $8,000, you will be taxed as though you made $42,000 instead.
• As great as the tax deduction can be now, you may wish you took advantage of it when your income was higher. You can absolutely do so!
• While there is a lifetime contribution limit, there is no limit on how much you can withdraw and it is tax-free if it is for a qualifying home purchase! Your account could have doubled in value and you won’t owe a cent in taxes.
• Many of us may be familiar with the Home Buyer’s Plan feature of the RRSP (RRSP HBP) that let’s us borrow up to $35,000 from our RRSPs tax-free as a loan. If you have existing savings in a RRSP that you may want to use for your home purchase but also want to save regularly in a FHSA, why not take advantage of both programs?
• Better yet, if you are buying a home with your spouse or common-law partner, how great would it be if you each leveraged the RRSP HBP and the FHSA? That is a lot of tax-free money to put towards your home!
• There are more advanced tax applications of the FHSA that can be assessed on a case-by-case basis, regardless of what life stage you are in. I’ll save these for another blog, but there are some unique and beneficial ways to merge your first-home savings goals with your ongoing tax planning.

What if I change my mind about buying a home?

if buying a home is no longer a part of your current financial plan, this is no problem at all. You can transfer the funds in your FHSA into your RRSP without needing to withdraw and pay taxes.

Beyond this, you need to close your FHSA by no later of December 31 of the year in which the earliest of the following events occur:

• 15^th anniversary of opening your first FHSA.
• You turn 71 years old.
• The year following your first qualifying withdrawal from your FHSA.

How do I get in touch if I’d like to learn more?

The FHSA is an exciting opportunity for eligible Canadians and we are exciting to be able to offer it to our clients. We would love to review the merits of implementing the FHSA into your financial plan but believe it is also important to consider the existing options available to first-time home buyers as well how each account fits our individual circumstances.

If you are saving for your home purchase goal, please get in touch with any member of our advisory team to coordinate opening/funding your FHSA. We will be happy to help you tailor your FHSA contributions & investment portfolio to your goals!

You are welcome to book yourself into any of our calendars here.

The post The New First Home Savings Account (FHSA) appeared first on Ecivda Financial Planning Boutique.

Creating a budget may sound boring but taking the time to do so will have a huge impact on your future.  It is easy to overspend and with the amount of household debt at an all-time high, managing your finances can seem hopeless.  However, the more attention you pay to your spending habits, the easier you will find it to achieve financial success.

What You Need to Know

Below are four reasons why you should create a family budget…today!

1. It Will Help Keep Your Goals in Sight – Setting financial goals for yourself is one thing, having a plan in place to achieve them is another.   Setting a budget for yourself will help you set goals, make a plan to achieve them, and will allow you to track your progress.
2. It Will Put an End to Spending Money You Don’t Have – When you have a realistic budget and commit to it, there are no excuses to spend on credit. You’ll know exactly how much money you have coming in, how much you can spend, and how much you need to save.
3. You’ll Be Prepared for Emergencies – Sometimes life happens, whether it be losing your job or becoming sick or disabled.  Having a budget means that you will have savings you can access if an emergency arises.  You will sleep better at night knowing that you are prepared for the worst.
4. It Will Force You to Acknowledge Any Bad Spending Habits – Sometimes we don’t know where we could improve until we start keeping track of our spending.  Even if you think you are doing well with your money, writing a budget may shed light on some areas that you could cut back.  This is a great opportunity to redirect some money into retirement savings or saving for another goal.

The Bottom Line

Everyone can benefit from writing a budget, whether you think you need it or not.  The key to achieving your financial goals is having a plan.  If you feel overwhelmed and don’t know where to start, reach out to us!  We will help you start a plan and will monitor your progress!

The post Why Every Family Should Have a Budget appeared first on Ecivda Financial Planning Boutique.

You have worked hard all your life and have been saving for retirement.  That day has finally come, you are ready to retire, and you wonder, what do you do now?  What is the next step? This is probably one of the most asked questions we get as financial advisors.

It is quite simple really! You are just exchanging one investment product for another. One is an accumulation product and the other is an income product. The important thing to remember is that there are different rules governing pension proceeds and not all pension plans allow conversion to a personal income plan.

So why go to all this trouble? Why not just take an annuity from your pension? What is important to remember is that although a pension annuity provides you with a lifetime income, unless it is significantly indexed like a federal government plan, it has some disadvantages. First, it means in most cases that your spouse will only receive 60% of your retirement income at your death. Further, your retirement proceeds cannot pass on to your children or another beneficiary. They simply go back in the pot as it were. Also, you will have no say in how your retirement income is invested and you will not be able to vary the amount of income you receive.

So, what it boils down to is how much control do you want to have over your money?

You can convert your pension money into two different products. Any voluntary contributions that you have made to your pension plan can just be converted into a RRIF just like your RRSP. However, any contributions made by your employer are what we call locked-in. This means that they are governed by those pension rules I mention earlier.

As a result, this money must either go into an annuity or a life income fund (LIF). A LIF works like a RRIF, except that there are minimums and maximums that must be paid out based on age. You can also split this money and have some of it in an annuity and some of it in a LIF.

Before the money goes into a LIF however, it must first be converted into a locked-in retirement account (LIRA). This satisfies the pension rules governing locking-in of pension money. The good news is you also have the option (in Ontario) to unlock up to 50% of that locked pension money and put it into a RRSP or RRIF with no limitations as to income flow!

One of the other considerations is making sure that we can offer the same or greater income from these proceeds. Since most pension plans are invested so conservatively, we can usually meet or beat the income they provide. Most times we can do this with a very low risk investment of the proceeds.

So, you could have retirement income coming from a RRIF, a LIF, and an Annuity. Along with indexed income from your government CPP and OAS programs.

Now go out there and enjoy your retirement!

For more information, click HERE.

The post Converting Retirement Savings to Income appeared first on Ecivda Financial Planning Boutique.

By: Louai Bibi, Advisor Associate

Should I get mortgage protection or life insurance?

If you have a mortgage, your mortgage lender has likely brought this up to you, and for good reason.

It’s important to have insurance when you have people who depend on your income, whether it is a spouse and/or child. It’s also important that you know what you are paying for and how it may or may not benefit you.

Term insurance is generally cheaper, allows for you to cover other insurance needs like leaving behind income replacement for your spouse or ensuring your children experience a fully funded post-secondary education if you aren’t around to contribute to their RESP, and allows you to structure coverage for a shorter, longer or permanent period as insurance needs change.

With mortgage protection through your bank/mortgage lender, your coverage reduces as you pay your mortgage down (which makes sense in theory, until you realize your insurance payment stays the same), the bank is the sole beneficiary of that money and every time you renew or switch lenders, you need to re-apply this coverage to your mortgage and are subject to whatever increase in cost is offered.

These are just a few differences between the two products. More listed in the snapshot below!

The post Mortgage Protection vs Life Insurance appeared first on Ecivda Financial Planning Boutique.

Financial and lifestyle preparations should take place to lessen the effects of a recession.

What You Need to Do

1. Examine your monthly budget – You cannot save money that you have already spent.  Almost everyone has regular, recurring expenses that are not necessities.  Subscriptions to multiple streaming services are one example.  Find lower cost alternatives like a home, family movie night using a streaming service versus a $100 trip for four to the local cinema.  Delaying many small and large purchases can free your budget and your mind from stress.

2. Contribute to your Emergency Fund – Once you have identified unneeded expenditures in your regular spending, remove them from temptation by placing them into your Emergency Fund.  Having 3 to 6 months of income set aside is the recommendation and is almost impossible to achieve until a thorough examination of your budget occurs. Consider a TSFA.  A Tax-Free Savings Account (TFSA) containing liquid and low-risk investments provides tax exempt earnings and withdrawals.

3. Maintain your scheduled savings contributions – Whether a recession occurs or not, continue adding to your retirement savings in RRSPs and TFSAs, ad education savings in RESPs.  Skipping a few monthly contributions and the compounding of interest on them could free up a few thousand dollars but cost you tens of thousands of dollars at retirement.  The 20% grant (up to $500 annually) on RESP contributions and the $2,500 contribution to generate the maximum grant could grow into a year of tuition.  Treat savings like one of your bills that you pay first.  Your mortgage, insurance, and utilities must be paid.  Paying your savings first helps reinforce your budgeting efforts.

4. Reassess your investments – During a recession, like any other period, some types of investments can withstand the challenges better than others.  A frank conversation with your financial professional is an excellent step to preserve assets and investment income.

5. Eliminate, reduce, and avoid debt – Paying high interest rates is never a great idea, so it is best to pay them down as quickly as possible.  Interest rates are rising on the actions of central banks around the world, and those high interest rates will rise even higher.  Taking on new debt that will increase your monthly expenditures for both capital repayment and interest charges is not advisable.

6. Update your skills and resume – Should your employment be affected personally, it would be better to be prepared than react when feeling the pressure of replacing your existing income.  Revisit and update your resume with accurate dates and roles.  List your newly acquired skills and capabilities, and if applicable, don’t forget your online profile/s.  You can also consider investing in yourself by taking internal and external courses to bolster your skillset.

The Bottom Line

None of the six steps, above, require a recession or even the threat of recession to become valuable.  Each of them is prudent regardless of the overall economic and employment climate, so get ready for a rainy day, and you will be able to enjoy the sunshine, too.

The post 6 Recession Tips . . . it is never too late to plan appeared first on Ecivda Financial Planning Boutique.

By: Brian Adams, CLU, CH.F.C

You have worked for a company (or perhaps several companies) over the years, and you now want to hang up your skates and retire, however no one has shown you how to do that. In other words, where will my income come from?

Yes, you know you have a pension that you have been paying into, for what seems like forever, but how do you change that into income for you and your family?

First, you get a quote on how much is in that pension or pensions of yours and then you find out if that pension is portable (can it be transferred). Some, such as the ones with the federal government, are not.

Next you find out if your pension is indexed or not and, if so, at what percentage. If your pension is indexed, you may want to just leave it right where it is.

Let’s assume yours is portable and not indexed. So now you want to transfer that locked-in (taxed under pension rules) plan under your former employer, to a locked-in plan under your name.

You are allowed to move it to a Locked-In Retirement Account (LIRA) tax free. When you are ready to start taking an income from that account you can move it to a Life Income Fund (LIF). Which is essentially the same thing as a RRIF, that most people have heard of.

When you move it to a LIF in Ontario, you are allowed to unlock up to 50% of the value that was in your LIRA and put it into that RRIF or an RRSP.

That 50% that is still in the LIF has minimum and maximum amounts that can be taken each year as income, based on age. However, that other 50% in the RRIF or RRSP can be taken whenever you want and in any amount you want.  All income will be taxable whether in the form of LIF or RRIF income.

Combine this with your Canada Pension Plan (CPP) and Old Age Security (OAS), which are both indexed, along with any RRSP and TFSA savings you have, and you have your income.

For more information, click HERE.

The post Turning Pension into Income appeared first on Ecivda Financial Planning Boutique.

Should you take your Canada Pension Plan (CPP) as early as possible, at the default retirement age of 65 or defer to age 70?  I have included a handy calculator before to help us find out!

Click HERE

With this calculator, you’ll be able to map out at what age you’ll breakeven on taking CPP at age 65 vs 70. In this example, the breakeven age is 75 for a 50 year old. If this individual has a life expectancy of 75 years or less, it is more optimal to take CPP early on paper. If their life expectancy is > than age 75, they may be better off deferring to maximize the monthly pension amount.

The beauty of this calculator is that you can plug in your age, life expectancy (you can use the average of 84 for men, 87 for women), the rate of return your investments are achieving if you were to collect early & invest some/all of the monthly pension, the rate of inflation and benchmark a “start collecting early” versus a “start collecting late” scenario.

The reality is that we don’t have a crystal ball to know whether we’ll live to age 75 or 100, so we can’t base these decisions purely off the most optimal number a calculator spits out, which is where the qualitative considerations come in.

You may want to spend more money in retirement to visit your loved ones or check off some of the exciting items on your bucket list. I for one, would not want to wait 5 or 10 years to receive my optimally deferred pension to do these things, as long as my retirement/estate plan is sustainable and I know I won’t run out of money.

This is where we come in – whether it is Shawn, Corey, Mike, or myself. We help bridge the gap between what the calculator spits out and the values/motivations that prompted you to open that calculator in the first place. You are never too young or old to start planning for financial independence/retirement but like most things in life, it’s generally easier when you start early. You can book yourself into any of our calendars or reach out via email if you’d like advice on building out a financial plan.

Click HERE

You spend your entire working career accumulating retirement savings, but it seems that we forget that we have a right to spend it. The calculator is a great way to start this conversation, but not the way to end it!

Most optimal does not always = most appropriate!

The post Canada Pension Plan (CPP): When should you start collecting? appeared first on Ecivda Financial Planning Boutique.

By: Shawn Todd, CFP

Being a business owner is exciting.

You’ve thought of an idea for a business, made it work, helped it make its mark in whatever you do. It also brings with it challenges that can be overlooked as the business grows.

The topic that gets avoided

If you are a business owner and have avoided talking about what happens in the event of your business partner’s sickness or death – then you aren’t alone.  It’s a tough topic, one that gets avoided a lot. Talking about death and sickness is tough, and it’s hard to bring up.

It’s a common situation we run into often, where a business has been started with multiple partners, and it is now running smoothly, and may be experiencing some strong success.  The balance sheet may be positive, and the owners may be enjoying some smoother sailing than when the business first started.  If we broke down business growth into four time periods – early, growth, expansion, and mature times.  We often see this issue first, once the business hits a strong growth period, and achieves higher valuations of the company than owners expected.

What happens if a business owner dies, gets sick or injured and cannot look after the business in their capacity?

The shareholder’s agreement & buy sell agreement

Some of these initial pains to these questions can be somewhat worked out within the shareholders agreement and a buy sell agreement between the parties.  Some questions that a shareholder’s agreement may help solve will be; what responsibilities do the parties have to each other, when is a sale triggered if there is long term sickness, what happens at death of a shareholder, and some key discussions on evaluation and its formulation.  A buy sell agreement helps ensure this sale happens after death, or a triggering event.

The most common issue I see on this topic with business owners is an unfunded shareholders agreement. Often it has been talked about, but not put into place or solidified.  In the event of a shareholder’s death – normally the corporation would be expected to pay the estate of the deceased shareholder [in return – take back the shares], or there would be a well laid out insurance plan to offset this immediate cost, pay the estate, and have the shares returned in exchange.

In this example above, if Phil was to become sick long term or died, then Phil’s family or estate would be expecting a value for Phil’s shares. Ideally Olivia would rather not be in business or be left making business decisions with Phil’s family. What happens if the corporation doesn’t have enough to pay the value of Phil’s shares to the estate, or if there isn’t an insurance policy in place?

How to fix

There is a variety of ways to fund a shareholder’s agreement, the most common being with an insurance policy.  The policy can be paid personally or corporately, but the most common and most popular [for obvious reasons amongst owners] is to have the corporation pay the premiums.

Insurance policies can be set up to provide coverage for death of a business partner, loss of income due to disability, injury, or a critical illness such as Cancer.

It’s not too late to spend time with your business partner(s) to discuss these ‘what if’ situations.  Planning on what happens if a shareholder has to exit [especially under terrible & stressful circumstances] is a great way to strengthen your business in the back-end, and lower any fiscal risk.

Let us know if you have any questions, or please book a time with us to review your own shareholders agreement.  Click HERE!

Shawn Todd CFP – Partner – ECIVDA

The post The hardest topic most business owners haven’t talked about [yet]. appeared first on Ecivda Financial Planning Boutique.

By: Natalie Thornhill Pirro,

As an investor you will, no doubt, have a lot of questions for your advisor.  How much money do I need?  How do I get started?  What are the best investment strategies? What type of investment should I open?

When you meet with your advisor, they will ask you to provide information so that they can better understand your unique situation as well as your immediate and long-term financial needs.  With this information, they will be able to come up with “a plan”, recommend investments that are suitable for you, and answer all your questions.  Securities legislation and regulations require that each recommendation your advisor makes be suitable for you in relation to your investment objectives, risk tolerance and other personal circumstances.  This is referred to as the “Know-Your-Client” (KYC) Rule under securities law. This Rule requires your firm and advisor to collect the following information from you.  Your advisor may be restricted from opening your account if you do not provide this information.

• • Annual Income – Your approximate annual income from all sources.
  • Net Worth – An estimate of the value of your assets less your liabilities.
  • Investment Objectives – The specific characteristics of investment products and how they relate to the achievement of your investment goals.
  • Time Horizon – This is the period from now to when you will need to access a significant portion of the money you invest in the account.
  • Investment Knowledge – This is your understanding of investing, investment products, and their associated risks.
  • Risk Tolerance – This is your willingness to accept risk and your ability to withstand financial losses.
  • Full Legal Name and Date of Birth – This is required by the Proceeds of Crime (Anti-Money Laundering) and Terrorist. Financing Act. This legislation is designed to prevent the use of the financial system for hiding proceeds of criminal activity or financial terrorist activity.
  • Proof of Identity – This is required for certain accounts by Anti-Money Laundering legislation. To verify your identity, you may be asked to provide a driver’s license, citizenship card, passport, or birth certificate.
  • Residential Address and Contact Information – This is required by Anti-Money Laundering legislation. This information will allow your firm to contact you to provide investment advice or notify you of any changes with respect to your investments. This information is also required for account reporting.
  • Citizenship – This is required for tax reporting and may be used to determine if you are permitted to purchase certain types of securities.
  • Social Insurance Number – This is required for tax reporting.
  • Signature – This is required by Anti-Money Laundering legislation.
  • Employment Information – This is required by Anti-Money Laundering legislation to help your firm and advisor determine suitable investments for you.
  • Number of Dependents – This is required by regulation to help your firm and advisor determine suitable investments for you.
  • Politically Exposed Persons – This is required to meet requirements under Anti-Money Laundering legislation. Your firm will need to determine whether you or a member of your immediate family have ever held a position with a foreign government that qualifies any of you as a “Politically Exposed Person”. You can find more information on this requirement HERE.
  • Other Persons with Trading Authorization on the Account/Financial Interest in the Account – This is required by Anti-Money Laundering legislation. Your firm is required to maintain the names, dates of birth, employment information and the relationship of any individuals with trading authority or a financial interest in your account.
  • Source of Funds – This is required to meet requirements under Anti-Money Laundering legislation. (banking information will be required for Electronic Funds Transfers “EFT”)
  • Trusted Contact Person – (“TCP”). A TCP acts like an emergency contact for your account, although they cannot make financial decisions or account changes.

Important To Know

Your advisor is required to keep this information current. Depending on the type of account you have, your advisor may check in with you every one to three years to confirm your information remains accurate and update your KYC. As your circumstances may change over time, you should keep your advisor up to date on any changes to the information above, such as:

• Changes to marital status
• Relocation to another province or territory
• New job or job loss
• Long-term illness
• New debt financing
• Major increase or decrease in your financial resources (for example: due to inheritance)

In Conclusion

While this may seem like a lot of personal information, it allows your advisor to recommend investments suitable to your present circumstances and your financial goals.  Whenever you are scheduled to meet with your advisor, whether you are setting up a new investment or discussing current investments, you should always have your list of questions for the advisor; and be prepared to have a list of any, or all, of the above information.  If you use this Blog as a checklist, you will be ready-to-go!

Happy Investing!!!

The post Opening an Investment – What to Expect appeared first on Ecivda Financial Planning Boutique.

By: Louai Bibi, Advisor Associate

Tax time is approaching quickly, which leaves many of us scrambling between now & the RRSP deadline of March 1st to figure out how to minimize our taxes owing for 2022. The objective of this blog is to equip you with the ammunition required to make an informed decision as to how much you may want to contribute.

A quick reminder as to how the RRSP works:

• The amount you are allowed to put in per year is based on your earned income for the year. You accrue 18% of your salary in the form of deduction room, up to a CRA prescribed dollar maximum which sits at roughly $30,000 for 2023.
• Unused contribution room carries forward. This means that if you haven’t made lots of contributions over the years, the deduction room that you earned in each of those calendar years would accrue with leave you with a healthy cumulative RRSP deduction limit for you to use as needed. Best place to check this limit is your MyCRA online account!

• As you read in the first sentence of this blog, the RRSP deadline for 2022 is on March 1st. This means that if you wanted to make a deposit in 2022 and were slammed with all the holiday festivities leading up to 2023, you are not out of luck!

• The amount you contribute (up to your respective limit) gets deducted from your taxable income. For example, if you made $70,000 in 2022 but made a $20,000 RRSP contribution, the CRA treats you as if you’ve made $50,000 at tax time.

So, in this example, someone earning $70,000 in salary should be paying close to $13,000 in federal/provincial taxes if you live in Ontario. Since our employers withhold taxes on our paycheque, let’s assume they have only withheld $10,000 for all of 2022. This results in a tax bill of almost $3,000 at tax time, which represents the difference between what should be paid versus what was paid over the course of the year. Assuming this person contributed $20,000 to their RRSP & deducted this from their taxable income in 2022, a tax refund of roughly $3,000 is created.

We have a graduated tax system in Canada. This means that the more you make, the higher your tax rate can be. So, since your employer has been withholding taxes as if you made $70,000 but the CRA taxes you as if you made $50,000, you are refunded your over-payment.

I’ve attached a great calculator that Wealthsimple has put together that helps you estimate your tax liability in advance. All you have to do is choose your province & fill in the respective prompts to get your estimate, which you can generally get the answers to from a year-end earnings statement if you have a straightforward tax situation. Click HERE to view this calculator.

Our standard disclaimer would be to discuss a potential RRSP contribution with your advisory team, in conjunction with your tax advisor. The tax calculator I’ve shared offers a great estimate, but sometimes there are implications or considerations that are not visible to the naked eye that need to be discussed before making your contribution. The intention with this calculator is for a curious individual to be able to plug in their details & model a few RRSP contributions (within their allowable limit), so that they can be prepared for a discussion with their advisory team! As always, Shawn, Corey, Mike & I are happy to be service & you can click HERE to book yourself into our calendar to discuss this further.

Happy RRSP season!

The post RRSP: How much to deposit? appeared first on Ecivda Financial Planning Boutique.

By: Corey Butler, Wealth Advisor

Meriam Webster’s definition of succession:

“The order in which or the conditions under which one person after another succeeds to a property, dignity, title, or throne.”

The next 10 years will be the largest period of succession for business owners like never before. Aging demographics are highlighting this exposure for business owners. Who, what, and how will one take over the business practice. Biz owners of all walks of life have the same trait of control hardwired in them. Control is what has allowed him/her to make those hard decisions. Control has offered a sense of freedom with direction and outcome. For most the thought of succession equals loss of control, purpose and the end of the chapter.

The reality is something much different with a well thought out and executed succession plan the business owner can have their cake and eat it too. How is that possible? Share structure and tax planning are the key ingredients to make this happen. The buy/sell agreement that has not seen the light of day since inception must have the I’s dotted and T’s crossed so revisiting and reviewing is so ever important. To ensure you have a successful passing of the torch you really need to make sure you and your buyer are not just on the same page but same paragraph and better yet same sentence. Having a trusted advisory team representing all parties will ensure that all parties are happy with the result.  Everyone may not get exactly what they want as everyone may have to give a little, this is where your advisory team is key.

Too much time is spent on making sure everything is perfect with a succession plan when the reality is that success can only be achieved when all parties are willing and able to come back to the table anytime there are challenges. Life is never dull, and the grind is real in business. Stuff always happens and to be successful one must accept that stuff will happen.

A succession plan starts by planning from “Right to Left”. You know where you want to be but how do you get there? Creating a succession plan pending complexity can take anywhere from 6-18 months. As you know the days and weeks pass by quickly, and with every year we continue to age, so completing a plan that will provide for 20-25 years of income certainly will take a considerable investment of one’s time. Let alone the sheer fact that business keeps happening each and every day. No one solution but a combination of solutions will equal success.

Ecivda Financial Planning Group is trusted advisory team with over 50 years of experience helping business owners pass their torch! We have recently completed our own in-house succession plan and can so relate to your concerns and challenges. If this resonates then you know what to do next!

The post Succession Planning appeared first on Ecivda Financial Planning Boutique.

By: Louai Bibi, Advisor Associate

So many Canadians are saving for their first home. Some of us might be on the brink of making that lifechanging purchase, others may still have some time ahead of them. Regardless of your timeline, we often ask ourselves questions like:

• Should I invest this money?
• What account suits my personal circumstance the best?
• What are the pros & cons of each account?

I’ll preface by saying that if you are considering accessing your money within a 48-month window, we advise against investing in the market. While markets generally trend upwards most of the time (you might not feel like it if you started investing in 2022), we don’t have a crystal ball and we’d rather play it safe & ensure your hard-earned savings stay intact if markets happen to experience short-term volatility.

In terms of what accounts are available for first-time homebuyers, you have four great options:

• A generic savings account
• A tax-free savings account (TFSA)
• A registered retirement savings account (RRSP)
• A first home savings account (FHSA)

Your savings account is a great place to store your money when we’re on the brink of purchasing your home (think 48-month timeline, as we discussed above). The TFSA, RRSP, & FHSA all generally entail investing your money in the market. So how do you differentiate which account makes the most sense for you?

Well, let’s start with understanding what benefit each account offers a first-time home buyer:

The TFSA

The TFSA offers tax-free growth when you invest, so if your money grows from $50,000 to $100,000, you get to withdraw $100,000 tax-free, with no penalties and/or restrictions. This is pretty great in my eyes, as the last thing a first-time home buyer should be concerned with is taxes when they are going through an exciting life change. If you later decide purchasing a home no longer makes sense for you or that you need to push out your timeframe, you can keep trucking along & growing your wealth tax-free.

The RRSP

While primarily, used for retirement savings, first-time home buyer’s have an advantage when saving within this account. It’s widely known as the home buyer’s plan (HBP), which allows you to withdraw up to $35,000 from your RRSP to put towards the purchase of your first home. Generally, when you withdraw from a RRSP, that amount is taxed as income. When a RRSP withdrawal is for your first home, you can withdraw this money tax-free. The catch is that after a couple years, you need to begin paying back 1/15th of the amount you withdrew from your RRSP over the next 15 years. By participating in the HBP, you’ve essentially loaned yourself those funds from your retirement savings & they slowly need to go back to your RRSP to later fund retirement. This isn’t a ground-breaking implication, but you earlier heard me mention that we don’t have a crystal ball. We don’t know what the future holds & many homeowners are feeling the stress of higher interest rates impact their monthly payments. While a 1/15th of up to $35,000 per year may not feel suffocating to you while reading this, it certainly can add stress to the lives of others who are adjusting to the associated costs of home ownership.

The FHSA

This just launched in 2023 & the majority of financial institutions can’t even open these quite yet, as they are still building out the infrastructure required to be able to handle contributions, withdrawals & CRA reporting. This account shares a few characteristics that the TFSA & RRSP offer. You can contribute up to $8,000 per year (to a lifetime maximum of $40,000) and use these funds towards your home purchase tax-free. By the time 15 years has passed or you turn 71 years old (whichever comes first), you have the option of withdrawing these funds as cash, at which point it becomes taxable to you, or you can transfer the balance to your RRSP on a tax-deferred basis. While you are waiting for the FHSA accounts to be accessible at all financial institutions, you can save in a TFSA and/or RRSP & later transfer this account to the FHSA, with no tax implications.  Your contributions are tax-deductible just like your RRSP, which makes this unique from the TFSA.

Here are my favourite parts about this account:

• Remember how I mentioned needing to repay 1/15th of your RRSP HBP withdrawal every year? This concept does not exist when you withdraw from the FHSA for your first home. There is no repayment schedule & I think that will put a lot of minds at ease, especially when we go through times where money is tight.
• When our annual RRSP contribution room is calculated, its often based on a percentage of our earned income. The FHSA annual contribution limit is not linked to our earned income, but rather a set dollar amount prescribed by the government, which is currently $8,000/year. For those who may be newer to Canada and/or just starting their career & haven’t hit their salary potential quite yet, this may be a powerful tool to save!

When you should connect with us for help

You may want help establishing a savings target or building a roadmap to get from goal to reality. For others, our financial circumstances can be complex & may warrant a deeper conversation, like if you are a US citizen, or if you are just trying to understand where this piece of the puzzle fits in your overall wealth plan. Whether you are new a new or existing client, our door is always open to chat. Whether it is me, Mike, Shawn, or Corey, we’ll be happy to help you make an informed decision. Click HERE to book with us.

Conclusion

At this point, we have a baseline understanding of how each account works for first-time home buyers to make an informed decision. I’ve shared a table below that compares the features of the accounts that we have covered in this blog (click HERE for image source). Each of our scenarios are unique, so we do have to assess the merits of using each account on a case-by-case basis. My objective for this blog is to create general understanding of each account, as well as how they may or may not work in your favor. Buying your first home is a significant achievement & you deserve to have the right professionals by your side. Whether you need our advice, or the advice of a mortgage/tax/legal professional, we’ll put you in touch with the right person.

How does the FHSA compare to the RRSP Home Buyers’ Plan and a TFSA? 

The post Saving for your First Home? What are your options? appeared first on Ecivda Financial Planning Boutique.