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For once they agreed. Federal and provincial finance ministers agreed on creating a system that would encourage self employed and employees of small firms to save for retirement. The minister had different views on how to ensure Canadian have enough saved for retirement but they did agree that they want to make sure that employers are not put under a burden by the new plan. The Pooled Registered Pension Plan, called PRPP’s for short will be used to increase retirement savings for individuals with out a corporate pension fund. Employer contribution will be determined by the provincial registration. PRPP will enlist insurance companies and financial institutions to administer then new saving plan network which will make it easier and cheaper for small companies to offer employee sponsored pension plans to their workers on a voluntary basis. Self employed would be able to contribute to the pooled pension plan under the government proposal. The terms for PRPP’s will be worked out next June, where they will also be working on trying to a consensus on changes to the Canada Pension Plan. So far, there have been no estimates of how many people would join the plan and how much it would cost them per year and the expected savings that the plan would generate.
Self Employed Pension Plan
21-Dec-2010 | kate | Budgeting Canadian Investing Economy Estate Planning Government New Announcements
This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.
Retire First is a member of the Canadian Investors Protection Fund.
Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.
2009 RRSP Season Concludes; Quick look at fixed-income ideas
03-Mar-2010 | Reggie | Bonds Canadian Investing Retirement Planning
After a terrible year last year, the 2010 RRSP season ended very strong with many wading back into the market that scared many away last year. Last year’s RRSP season was right in the midst of the stock market upheaval that saw years of returns decimated in just a few short days. The stock market’s bottom last year actually occurred in March. The world was awash with uncertainty as to future job prospects and left investors wanting to keep savings readily available.
Many believe that the caution gained last year will linger on for a while longer as investors are still sensitive to riskier investments. Surprisingly, the high level of contributions and extra caution still wasn’t enough for the Alberta bond issue to sell out. At a rate of 3.3% locked in over 5 years, the rate was totally uncompetitive, but from data gained last week it looked like the target of $100 million would not have been reached.
In the corporate world, companies with a debt rating nearly as good as the Alberta (AAA) are showing up with some pretty competitive rates that should be enough to lure most investors away from the locked in Provincial offering. Take a look at these for example:
As of March 2, 2010 Maturity Yield
General Electric Capital AA+ 11/02/2015 3.63%
Rabobank Nederland AAA 05/02/2015 3.32%
Royal Bank of Canada AAAe 10/11/2014 2.90%
Sun Life Financial A 31/03/2014 3.74%
Bank of Nova Scotia A+ 27/09/2013 2.74%
This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.
Retire First is a member of the Canadian Investors Protection Fund.
Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.
RRSP Season has Arrived!
04-Feb-2010 | kate | Canadian Investing Retirement Planning The Wise Investor
RRSP season has arrived and the contribution deadline of March 1st, is heading our way. And as usual, the deadline is a reminder to Canadians of the pressing need to start saving for their retirement years.
Right now is the perfect time for investors to start reviewing their retirement plans to ensure that their investments are on the right track for today’s market conditions. A recent survey of Canadian investors found that 91% have retirement fears, with 30% of respondents fearing that they haven’t saved enough.
So here are some retirement theories that should be considered:
1.) My Canada Pension Plan/Quebec Pension Plan and old age security payments from the government will be enough.
Government pensions are a good start but will not necessarily be enough to live on, depending on the kind of retirement lifestyle you want. It is also important to remember that government pensions are fully taxable and that for those accustomed to living with higher incomes, the payouts will replace only a small portion of what people were earning while working.
2) Company Pension.
Having a company plan will also not guarantee that you will have enough income for your retirement, you may need to save additional money on your own.
3) $1-million rule
The $1-million figure is based on the assumption that you should have saved 20 to 25 times the annual income you will need once you are retired. So as you can see, this rule would vary from life style to life style. As well this number would change with inflation and tax rates. So you may need to save less or even more depending on your personal situation.
4) 70% Rule
Instead of fixating on your pre-retirement income, focus on what your expenses will be when you retire.
5) “I will be fine if I only withdraw 4 or 5 per cent a year from my savings once I retire.”
In some cases you have no choice in how much you withdraw. For instance, if you have a Registered Retirement Income Fund (RRIF), your withdrawals are based on your age. Many individuals may find that they spend even more money in the first few years due to traveling etc. Later in life you might find that certain expenses will go up, like health care.
This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.
Retire First is a member of the Canadian Investors Protection Fund.
Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.
Examining Chris Seaburys’ Real Estate Vs. Stocks article
29-Jul-2009 | kate | Canadian Investing The Wise Investor
Very often through out our day, my colleagues and I come across some pretty interesting articles. Yesterday Retire First President, Doug Allan, gave me an article to read on whether real estate or investing in stocks would be better for you. The article Real Estate Vs. Stocks: Which One’s Right for You by Chris Seabury examines the positive and negative aspects of investing in real estate and stocks to help the audience decide where they should position their investment dollars.
Investing in real estate and Stocks are two very different things. Real estate is a tangible physical property and as the Seabury article explains, there are two main types of real estate: commercial and residential. In his article real estate is limited to physical building and does not go into discussion regarding real estate investment trusts.
There are several different ways to (hopefully) make money in real estate, such as flipping (renovating a home for a potential profit) or using the property as a rental unit. But it isn’t all glamorous, you have to come up with a down payment (can be up to 20% of purchase price) secure financing and fund for upgrades and up keep for the property.
As Seabury points out, there are many positives to owning real estate such “depreciation (writing off wear and tear on a commercial property), and tax deductions.” Another bright side of real estate is that since the property is financed, you could potentially invest in more than one property at a time by putting less money down on several different properties. But this tactic should be used with caution; while profitable when used correctly this can lead people into financial difficulty.
Seabury is quick to point out that real estate investing has its draw backs too. Unlike liquid stocks, real estate tends to be illiquid meaning that you typically cannot sell it right away. As well many people think that real estate is always a winning investment. Just like the stock market, housing prices fluctuate and you could end up making payments on an amount that is more than the house is worth. Rental properties have additional downsides including keeping up the property which includes responding to tenant’s needs, repairs, yard maintenance and dealing with lease agreements.
Finally Seabury points out that it is very hard to diversify your investment with real estate. You can create some diversification by owning a mix of commercial and residential properties as well as focusing on investing in a number of different communities.
Compared to real estate it is much easier to diversify your holdings with stocks. Stocks represent a small piece of ownership in the company. When a company is performing well you can make a profit by selling your ownership on the stock exchanges. Stocks are more volatile then real estate but over the long run they have provided “much better return on your investment then real estate.”
As previously discussed, it is easier to diversify when investing in stocks because you can purchase companies in numerous industries such as transport, grocery, retail and even green companies all in one account; which will lower your overall risk.
As with real estate you do have the option to borrow to purchase shares through a margin account, to increase the overall amount of shares that you own. As with real estate there is risk with borrowing in your investment account, when the price of a share decreases you will get a margin call. This happens when the equity, “in relation to the amount borrowed, has fallen below a certain level and money must be added to the account to bring it back up.” If a client fails to respond to a margin call, positions will be sold in the account to cover the amount loaned to you.
There are a couple of advantages to stocks over real estate investments. For example stocks are approved investments for Retirement or Tax Free Savings Accounts, while real estate investments are not approved. Stocks are fairly liquid meaning that they are easy to sell, but you are vulnerable to the volatile market.
Seabury wraps up his article by directly comparing the investment stating that while “stocks may have the advantage in more categories then real estate, real estate seems to be better when it comes to stability and tax advantage;” while historically there is greater returns in the stock market. Similar to Seabury’s opinion, each investment has its own drawback and benefits and to be able to determine which one best suits your financial needs would be to take a look at your current financial situation and to determine your investor risk type.
This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.
Retire First is a member of the Canadian Investors Protection Fund.
Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.
Getting Serious with Your Retirement Expenses
28-Jul-2009 | kate | Retirement Planning The Wise Investor
Getting Serious with Your Retirement Expenses
Lately I have been reading a lot about of weary retiree’s who are knocking on full services firms like Retire First for help. After a paragraph or two about their investment portfolio, we are usually getting down to the serious end of their problems. They failed to correctly navigate their retirement expenses and are now having trouble making ends meet.
First of all, it is never too late for help. But the best strategy is to get serious about your retirement and sit down (before you retire) to balance your retirement cheque book. The best way to do this is to look at your current budget and work from that to figure out your retirement budget.
The biggest thing to realize is that during retirement only some costs go down, while others will go up. While, you may no longer have a mortgage payment or need to save for that well deserved retirement, it is important to keep saving some money, since emergencies happen even to the retired. You need to continue saving funds for days where you are having bad luck and need to call the plumber or electrician. The good news is you could save up during your working years (maybe this will be what your TFSA will be for) some extra money that will de dedicated to emergency use only.
People also forget that as they age, we might incur expenses that we currently do not budget for such as an increase in our insurance premiums, prescription drugs, and for some their first pair of glasses.
Another big factor that catches some retirees off guard is the impact of inflation on their savings. For example, you retired when you turned 60 in 1984 and you are now 85 years old. It would cost $191 today to buy the same goods that cost $100 when you first retired. So what does this mean? Basically it boils down to the fact that if we don’t plan for inflation, it could come back to haunt us.
After you go through your expenses and take a hard look at what they will be like during retirement, your next step is to see if your current level of savings, investments, pension and government benefits match up to your ideal retirement. (Don’t forget to factor in inflation!)
Some people will be lucky, and balance the numbers the first try. For others this might become a challenging task, but if you start planning early you will have the flexibility to change your current habits to reflect your retirement goals.
This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.
Retire First is a member of the Canadian Investors Protection Fund.
Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.
