$~Financial Personality Quiz~$

Take our quiz to find out what your attitude toward taxes, budgets, shopping and planning says about you, and what you can do about it.

With the income tax filing deadline looming, money is weighing heavily on a lot of people’s minds. So why not have a little fun, and take our quiz to find out your money personality. Pick the most accurate response to each question, count up your answers and see what your results say about you. Then find out what you can do to improve your score.

1. How do you keep track of your receipts?

1. I gather all electronic receipts in a folder along with scanned copies of all paper receipts.
2. I have a paper file that includes printouts of any electronic receipts I spot in my inbox.
3. A shoebox… somewhere
4. Receipts?

2. Who prepares your tax return and when do you file?

1. My accountant or a retail service, as soon as I get all my receipts
2. I do it myself, or get my brother-in-law to do it, in mid-April.
3. I look for a how-to video on YouTube and do it at the last minute.
4. Nobody. I haven’t filed in years. (Shhhhh…)

3. How do you feel about budgets?

1. I love them – I update my spreadsheet regularly.
2. They’re a necessary evil.
3. I should probably have one, but I’ve never gotten around to it.
4. Yuck. A budget would cramp my style.

4. How do you shop for groceries?

1. I check the sale flyers, make a list and stick to it strictly.
2. I have a pretty good idea of what I need in my head, and I compare unit prices.
3. I wait until the fridge is empty and I’m hungry, then I pick up whatever looks good.
4. I eat out most of the time. The only things in my fridge are a jar of olives and some leftover pizza.

5. Do you have a financial plan?

1. Yes; I’ve had one since I started working, and I update it regularly.
2. Yes; I only have a few years until I retire, so I went to an advisor recently to plan for it.
3. I think I probably should, but I haven’t gotten around to it.
4. Who needs a plan? I’d rather live in the moment.

6. How well-prepared are you for retirement?

1. Totally prepared. I know exactly how much I need to save and by when, and I’m on track to reach my goal even a bit early.
2. Reasonably well prepared. I have a pretty good idea of what I need to save, and I’m fairly confident that I’ll get there – but maybe a year or two later than I’d like.
3. I’m afraid I’ll never be able to retire.
4. Who wants to think about getting old?

 

 

What your results say about you:

Mostly a’s: You are careful, conscientious and technology-savvy. To find out about the latest ways to raise your game even further, talk to an advisor.

Mostly b’s: You are responsible about your money and you try to do the right thing. You may not be able to retire at 40 with millions in the bank, but with a little luck, you’ll be all right. To see if you’re on track, run your numbers through our retirement savings calculator.

Mostly c’s: You try not to think too much about money, because it stresses you out. Find out how to reduce your stress: Five financial frights and what to do about them.

Mostly d’s: You’re the life of the party, but what will you do when the party’s over? Find out how getting guidance from an advisor can be enjoyable, as well as useful: My first meeting with a financial advisor.

As we said, this quiz is just for fun. For a true picture of your situation and a plan for your financial security, it’s a good idea to spend some time with an advisor.

Let’s talk about safeguarding your investments to secure predictable, sustainable income in retirement – guaranteed for life.

Having a chat with a financial advisor about your money situation can bring great news, including the discovery that your finances aren’t so bad after all. That’s what happened to me.

I had thought my financial situation was a disaster and had started to see Lotto 6/49 as my retirement income plan. My wife and I knew we were spending too much, but we couldn’t seem to develop a savings strategy. We decided it was time to find an advisor who would talk to us regularly, create a plan and show us the “big picture.”

A new view of our finances

Victor Grieco is an advisor who lives a few blocks from my home. We would exchange pleasantries as my daughter, my wife and I passed his office on our way to treating ourselves to an ice cream. Vic never asked us to come to him for financial advice.

We liked his gentlemanly style and finally asked him to help us. Vic collected everything related to our finances: insurance policies, pension and RRSP statements, mortgage payments, car payments and savings account balances (that was easy — we didn’t have any). He also asked us to use his budget template to track all our income and expenses.

After compiling and analyzing this information, Vic gave us a binder with more than 100 pages of numbers, summaries and recommendations. He called it a “living document” that he would work with us to update frequently.

Here’s what I learned from this process:

We have lots of room for improvement

Creating a budget was a great idea, proving what I’ve been told so many times. We could clearly see where we were spending too much, and where we could easily make some minor sacrifices for major savings. For example, instead of a late-night trip to a local restaurant to watch a hockey game I don’t really care about, drink a beer I don’t think is worth the price and have a snack I don’t need, I plan to pick up one of the many books on my reading list.

Our debt is manageable

At my current age of 52, I’m worried about taking mortgage debt into retirement, if I retire at the traditional 65. We found a way to make progress by setting up separate accounts in our credit line-mortgage: one to pay down the principal and regular bills and another that limits us to a set, monthly spending amount. National Bank of Canada and other financial institutions offer this method of paying your mortgage and other bills.

Retiring comfortably is possible

With some changes to our spending habits, I could retire in my mid-60s, if I choose to, and be able to cover our expenses. My wife put our debit and credit cards away, so that now we’re relying only on our monthly allowance. No more impulse buying! We’re also reviewing our expenses to see if we really need everything we’re currently paying for every month. Do we really need satellite TV, now that we subscribe to Netflix and can still rent movies that aren’t on that service? Is it time to get rid of our telephone land line, since we hardly ever use it? Just cancelling those two non-necessities would put almost $1,500 back into our pockets over one year — money that could go into an RRSP.

There was exciting news

Vic discovered over $50,000 in a pension to which I had contributed during a previous job, which I didn’t know I had. Hard to believe, perhaps, but true. (I’ve never claimed to be a financial genius.)

I wouldn’t ever guarantee that talking to an advisor could lead to a surprise like the one we received. But seeing your overall financial situation and making a plan is definitely worth the time it takes to gather statements, create a budget and attend a few meetings.

My wife and I have a new perspective on our finances. We’re looking forward to working with Vic. And now I walk right past the lottery kiosks!

Olympian’s charitable investment strategy pays dividends for advisors

Olympic swimmer Mark Tewksbury makes his living these days teaching athletes and executives leadership skills. His swimming career taught him about achieving excellence and the work that goes into it but not without struggles along the way.

Now 47, Tewksbury made an investment in a Toronto juice bar in his early 30s that closed after a year-and-half. Financially and emotionally it was a tough lesson to take losing most of his savings he’d cobbled together in his 20s from sponsorships and speaking engagements.

The experience taught him to save, save, save. He set up a holding company, paid himself a salary and put the rest of his earnings toward debt reduction. At the time it likely appeared hopeless that he’d recover financially from his business failure but he did despite the hole he’d dug.

Buying and selling real estate in Montreal in the early 2000s refilled Tewksbury’s coffers and today he has about 75 per cent of his investments in real estate including an old Victorian house in Toronto that he’s converting into a multiunit dwelling.

Where has the former Olympian put the remainder of his investments? Well, he’s got RRSPs and TFSAs like many other Canadians; the banks definitely play a big part in his savings.

However, his most important investment is the life insurance policy he set up through the Special Olympics Canada Foundation. Paying monthly premiums for 18 years, when Tewksbury dies the policy payout will go to Special Olympics.

In the past our sister publication, WP, has run stories discussing charitable giving whether by advisors themselves or as a platform for clients; the one thing that hasn’t been discussed is life insurance and philanthropy.

By setting up this plan Tewksbury saved on his taxes while benefiting a sporting organization close to his heart.

What’s better than that?

Bright ideas for back-to-school season

Whether your child is entering pre-school, returning to grade school or heading off to university, Brighter Life brings you tips and tools to help you start the school year right.

• Ensure a smooth transition from summer vacation to classroom. Ever had a dream where you showed up late to school wearing pyjamas? Toronto teacher mom, Diana Mancuso, has. Check out five strategies she developed to help prevent her nightmare from turning into a reality in Preparing your child for back-to-school.

• Cut costs on school supplies. Looking for ways to stretch your back-to-school budget? Frugalista Amrita Singh shares clever ways to save on clothing, school supplies, snacks and more in Bright ideas for back-to-school savings.

• The ABCs of RESPs. Registered education savings plans can cut your tax bill, help you pay for your kids’ higher education and even get you free money from the government. Find out how in Registered Education Savings Plans (RESPs), simply put (Video). For creative ways to find money to save in that RESP, read Five smart ways to save for your child’s education.

• Head off daycare colds. Children can be exposed to a lot of illnesses at daycare, but there are things you can do to boost their immunity and decrease their chances of coming down with whatever is going around. Learn ways to help keep your kids healthy in How to dodge daycare germs.

• Minimize student debt. As college and university tuition costs rise, so does student debt. But it’s possible to borrow wisely and repay responsibly. Learn how in Smart ways to manage student loans.

• Consider going back to school in retirement. Always wished you could have studied at a top university such as MIT? Or learned a new language? Now you can. Thanks to the Internet, you can satisfy your thirst for learning and even earn that longed-for degree. Get Free online courses for learning at any age.

Are seg funds right for you?

Are seg funds right for you?

 

Looking for an investment option that can help you sleep at night? Segregated fund products can guarantee you’ll get back some or all of the money you invest.

Segregated (seg) fund products, available exclusively through insurance companies, provide the growth potential of market-based investments with the benefits of an insurance contract. They first came into popularity over 20 years ago, when interest rates began to fall and conservative investors turned to them as a more secure alternative to GICs (guaranteed investment certificates). They continue to provide a safer way to grow your assets while providing you with some protection from market downturns.

Sadiq Adatia, Chief Investment Officer, Sun Life Global Investments, says, “98% of Canadians surveyed as part of the 2015 Sun Life Canadian Unretirement Index said it’s important to have some form of guaranteed income in retirement. At the same time, Canadians are living longer than ever before and many are underestimating their longevity and underfunding their retirement.”

He says, “Seg fund products can offer greater peace of mind for those looking to participate in the market but wanting the reassurance of insurance guarantees to help them sleep better at night.” They’re particularly suitable for those who are:

• Seeking enough return on their investments to reach savings goals.
• Looking for a broad range of quality investment options.
• Building their savings but looking for protection against market downturns.
• Seeking insurance benefits, including prompt estate settlement and guarantees.
• Looking for guaranteed income for life.

Seg fund products have some similar features to mutual funds in that they can hold a range of assets and enable you to benefit from holding a diverse mix of investments. They differ in that they offer the following unique benefits:

• Maturity guarantee: Even if the value of your investment declines, you are still guaranteed to get back 75% to 100% of the money you have deposited, less any withdrawals, in either 15 years or at age 100.*

• Death benefit guarantee: Seg fund products offer a 75% or 100% death benefit guarantee that can protect the value of your estate. The greater of your market value or death benefit will bypass probate and flow directly to your beneficiaries.*

• Potential creditor protection: Small business owners and entrepreneurs can benefit from the fact that, under provincial insurance legislation, seg fund products may offer protection against creditors in the event of a bankruptcy.

Segregated fund products also provide a variety of investment options to meet the needs of people in specific life stages:

• Competitive fees: In the past, seg funds have typically been more expensive than mutual funds. But some of today’s seg funds come with lower maturity and death benefit guarantees and carry management fees not much higher than standard mutual funds.

• Lock in market gains: Some seg fund products provide the option of resetting the maturity guarantee up to several times a year. If your funds go up in value, you can lock in a higher guarantee.

• Guaranteed income options: Looking to fund your retirement? Some seg fund products are designed to function like an annuity and provide you with a guaranteed income for life.

A financial advisor can help you learn more about seg funds and determine which products may be right for your particular needs and goals.

* The information about maturity and death benefit guarantees is based on segregated fund products commonly found in Canada today. Each product offers unique maturity and death benefit guarantees; read the product documentation and speak to an advisor if you have any questions.

How to save for your first home: Four steps

How to save for your first home: Four steps

It may seem overwhelming to save enough for a down payment on your first home, but with a solid plan it can be done.

Recently, my boyfriend and I received the news no one likes to hear from their landlord: “I’ve decided to sell.” So, in a few months we’ll be packing up our place and moving to a new home: another rental.

If you rent, you probably know that little pain you feel every month when a significant amount of money flies out of your account into thin air, never to return again.

So, with the thought of signing a new lease in mind, I asked my boyfriend, “How long before we can stop paying off someone else’s mortgage and start investing in our own?”

If you’re a professional 20-something, buying a place of your own is becoming increasingly difficult. With graduates leaving school with more and more debt and housing prices continuing to climb, home ownership can seem further and further out of reach.

With some hard work, my boyfriend and I have managed to pay off the student loans we’d racked up from university and started saving with the idea of someday owning a place. But what’s next?

So many questions: How do we get to our goal? Are we saving in the right way? Are we saving enough? Is there something we’re forgetting? For an over-thinker like me, the questions quickly started to mount up. We needed advice!

Four steps to home ownership

Cue my financial advisor, Sara Zollo¹ from Sun Life Financial. She helped put things into perspective and, with her great advice I was able to create the ultimate first-time homebuyer’s preparation plan:

1. Figure out how much it will cost you

Sure, you may want a three-bedroom, detached home downtown, but can you afford it? Be realistic. “Work backwards to figure out what size of asset you’re able to take on,” instructs Zollo. “In other words, what kind of monthly mortgage payment could you handle and what would you be approved for?” You can work with a mortgage broker to figure this out. The size of the mortgage you can take on, plus what you can save for a down payment, equals the price of the house you can afford. If you want more house, you’ll have to save more for the down payment.

But before you start budgeting and planning based on that number, don’t underestimate the additional costs buying a home entails. Remember realtor and lawyer fees, not to mention taxes, can add up. Many individuals also forget that buying a new place generally means furnishing one, which isn’t cheap. “Ensure you have a clear idea of what these fees are going to be and, as a rule of thumb, round up,” says Zollo. “It’s better to overestimate the costs!” Once you have that information, you’re ready to budget.

2. Make a budget and save, save, save

Sure, you’ve been saving for the last couple of years, but this will likely be the biggest purchase of your life, so it’ll take more than putting away birthday money from Grandma! Work with your financial advisor to make a plan and begin saving right away; every cent counts.

To save, Zollo suggests mixing it up: “An RRSP is always a good spot for the first $25,000 if you qualify for the First Time Home Buyer’s Plan and a TFSA can help, since the funds that accumulate there are tax sheltered.”

Figure out how much money you will need to save monthly to attain your goal on time, and create an automated transfer if possible, either monthly or bi-weekly, depending on your pay period. I strongly believe in the motto “out of sight, out of mind,” so I’ve opted into my workplace group RRSP. That way the money goes into my RRSP before I can even see it.

3. Plan for emergencies

How many times have you heard someone say, “Don’t put all your eggs into one basket”? You’ve saved up enough for your down payment and now you’re ready to buy, but throwing every penny of your savings into a mortgage might not be the best idea.

“Real estate is a great investment, but the importance of diversification never gets old,” says Zollo. She recommends ensuring you have some savings left over in a TFSA, where it can easily be withdrawn, tax free, in case of an emergency. After all, a broken furnace in your new home won’t be a cheap fix, and now it’s your responsibility, not your landlord’s!

4. Surround yourself with trusted professionals and take the plunge

You’ve estimated costs, budgeted and even managed to save a little extra in your “just in case” account. Now you’re ready to find that perfect place. Work with your mortgage broker and financial advisor to make sure you haven’t missed anything and once you’ve found “home,” have a lawyer review everything before you sign on the dotted line.

After you’ve completed the process, you’ll likely be a little dumbfounded to think that you just spent all of that money. But you should also feel insanely proud of yourself: You set a goal and, with a lot of hard work and dedication, you accomplished it!

Five financial products you should own

You don’t need to be born with a silver spoon in your mouth to build wealth. With the right products, you can grow and protect a healthy nest egg.

Here are five key financial products that should be part of your plan:

1. Registered Retirement Savings Plan (RRSP)

As soon as you begin your working life, you should have a Registered Retirement Savings Plan (RRSP). It’s one of the most tax-effective ways to save for retirement.

You’re allowed to contribute up to 18% of your earned income from the previous year to a maximum of $24,930 for 2015 and $25,370 for 2016. (If you’re a member of a group pension plan, your contribution room is reduced by your “pension adjustment,” an amount you’ll find listed on your T4.)

Contributions are tax deductible, meaning you can net a tidy tax refund while building your savings. Plus, you can turbo-charge your RRSP savings by putting that tax refund back into your RRSP as soon as you receive your cheque.

2. Tax-Free Savings Account (TFSA)

A Tax-Free Savings Account is an ideal savings tool for both long-term and short-term goals such as a vacation or home renovation. Also, for younger Canadians who haven’t yet reached their peak earning years, a TFSA is a great way to start saving for the future.

TFSAs came into effect in 2009. From 2009 to 2012, the annual maximum contribution was $5,000. It increased to $5,500 in 2013, and to $10,000 in 2015. And while contributions aren’t tax deductible, there’s no tax payable on investment growth and withdrawals are tax-free.

3. Life insurance

While TFSAs and RRSPs help build wealth, you also need to think about protecting your financial future. That’s where life insurance comes in. If you’re married, have kids or own a business, you should have a life insurance policy in place in case anything happens to you. How much you need depends on your personal situation but it should be enough to cover any debts you may have (including your mortgage) and help cover your family financially for as long as possible.

4. Critical illness and disability insurance

It’s important to not only have life insurance but also to ensure you’ll be financially protected should you ever become unable to work due to illness or injury. Would your workplace benefits provide you with adequate coverage? If not, what would happen to you and your family?

Critical illness insurance helps pay the costs associated with a life-altering illness such as cancer or a stroke. You receive a lump-sum payment if you become critically ill and you decide how you wish to spend the money.

Disability insurance protects you from a potential loss of income due to injury or illness. You receive a recurring monthly payment to cover ongoing financial costs. Even if you have workplace group disability benefits, it’s often wise to have your own personal policy to provide you with additional coverage.

5. Registered Education Savings Plan (RESP)

If you have kids, a Registered Education Savings Plan (RESP) is a must. It’s a special savings account that lets you save for your kids’ education after high school. Income earned inside the plan accumulates tax-free until it’s withdrawn and then it’s taxed in the hands of the child (meaning usually no tax is payable).

Not opening an RESP to save for your child’s education means you’re also turning down free money. That’s right. The Government of Canada will match 20% of your annual contributions up to a maximum of $500 per year to a lifetime maximum of $7,200 per child. That’s a big boost in savings!

UCCB and what it means for you

With the implementation of the new UCCB it is a perfect time to consider investing in your child’s future (RESPs etc).

How can you benefit?

http://www.cra-arc.gc.ca/bnfts/uccb-puge/menu-eng.html

What should you hold inside an RESP?

So you’ve decided to open a Registered Education Savings Plan (RESP) to save for your child’s education. What next? When you meet with an advisor to set up the plan, you’ll be asked how you want your contributions to be invested. There are two options:

1. Fixed-income investments:

These include short-term bonds, guaranteed investment certificates and cash held in an investment savings account. Why are they are called “fixed”? Because they offer a fixed rate of return. They pay you a set interest rate and provide you with the security of knowing your investment is guaranteed not to drop in value. The downside? When interest rates are low, the amount you earn on your contributions is also low.

2. Equity investments:

These include stocks, which are publicly traded shares of a company or corporation, and equity mutual funds, which are pooled investments consisting of a group of stocks selected by a fund manager. They are called “equity” because they provide you with a percentage equity ownership. This means you will profit if the companies you’ve invested in go up in value. Historically, equity investments have provided the highest long-term rate of return. The downside? Their short-term value can go up and down. The advisor who sets up your plan can help you determine the best mix of investments for your particular situation, based on:

• The age of the child you’re saving for. Equity investments can be a good choice for a younger child’s plan, as the money won’t be needed for a while and they provide the greatest opportunity for long-term growth. But they’re not so good for teens who have only a couple of years until college, since their short-term value can fluctuate. For older kids, fixed-income investments may be a safer investment alternative.

• Your personal risk tolerance. This is something only you (with the help of your financial advisor) can determine. You may be asked to complete a questionnaire to help determine a specific investment ratio that corresponds with your personal comfort level.

Simply put: Selecting a balanced mix of investments for an RESP, and working with a financial advisor to gradually shift the balance of investments from equity over to fixed-income as you approach the date when the funds will be withdrawn, can help ensure the plan will grow and the money will be there when it’s needed.

More about paying for your child’s education:

• Registered Education Savings Plans (RESPs), simply put (Video)
• Five smart ways to save for your child’s education
• RESPs: What happens if your child doesn’t go to university?
• The cost of college and university in Canada
• How to find a scholarship

Get more bright ideas for back-to-school.

Summer fun, Canadian style

Summer fun, Canadian style

The Brighter Life weekly roundup of recommended reads about money, health, family, working life and retirement:

You know it has to be summer in Canada when it hits 28^o in Whitehorse (as it did on June 29). That said, our summers are short, so smart Canadians know how to make hay while the sun shines. Check out these ideas for fun from across the country:

Show off your stylish Dad bod
Canadian Dad blogger Chris Read of Ottawa shares some of his family’s favourite summertime activities. Nothing fancy here, just lots of tried and true fun: pool parties (for rocking that Dad bod), road hockey, community fairs and BBQs, bike rides and a lemonade stand.
What to do now that summer is finally here!

How to take a vacation without leaving Vancouver
If you’re lucky enough to live in Vancouver (or if you’re planning a visit there this summer), here are some great ideas for fun close to home, courtesy of the Savvy Mom blog, as well as some suggestions for family day trips in the area. For instance, take the ferry to Bowen Island, try out the Sea to Sky Gondola in Squamish or cool off at the Cultus Lake Waterpark.
Summer staycation

Entertaining the troops in the Rockies
The Family Adventures in the Canadian Rockies blog has five great, inexpensive ideas for keeping your kids busy, including going geocaching in a Calgary park or natural area (nature meets high tech: genius!), hiking and biking the Paskapoo Slopes and hitting the beach within the city limits at Fish Creek Provincial Park.
DIY summer camp on a budget

How to stay on budget while having fun
Toronto’s Common Cents Mom blog offers eight ways to enjoy the summer without splurging (too much). Once you’ve decided how much you can afford to spend between now and September, stretch your funds by cashing in rewards card points, grabbing a booklet of discount attractions coupons from a tourist office and taking advantage of what’s on offer at your local library. At certain branches, that includes the Sun Life Financial Museum + Arts Pass, which will get two adults and up to five kids into fun spots such as Black Creek Pioneer Village, the Toronto Zoo and the Ontario Science Centre – for free!
Create a summer budget and have fun