Q – My husband and I are thinking of starting a family and we feel we need more space. We are currently renting a downtown condo unit, but we’re wondering whether we can afford to borrow to buy a home. Is there some rule of thumb we can use to calculate the type of house we can afford so we don’t fall into the “money pit”? – Sue T., Toronto, Ontario
Q – For the past few years, I admit I’ve been just too nervous about investing in the stock market, because I’ve heard various market experts say that the economy is still weak and the stock market will not outperform. As a result, I’ve been holding mostly bond mutual funds and cash. Luckily, they’ve done okay. But now, with the big U.S. stock indexes like the Dow Jones Industrial Average climbing to record highs, I’m starting to wonder if I’ve made a mistake. Do you think I should switch out of bonds and invest in some good equity mutual funds? – Raj S., Georgetown, Ontario
Q – I manage my own investment portfolio, and I’m an active trader with an online account. However, I just paid my tax bill for 2012, and it was a doozy! A large part of it was due to tax on investments, particularly on income on distributions and sales of some mutual funds, and capital gains on various stock transactions that I thought had worked out well. I was surprised at the size of the chunk the taxman took out of my total returns. Am I doing something wrong? – Stephen L., East York, Ontario
’Tis the season…for tips. Year-end is a great time for advisors, investment counsellors, pundits, and other financial experts. They can fire off opinions and advice, filling websites, YouTube videos, and newspapers with reams of predictions, analysis, advice, and commentary…that most people won’t pay the least bit of attention to. And who that do will soon forget what they heard, in the hustle and bustle of the holiday season. But there is, in fact, a handful of year-end investment and tax tips that make a lot of sense. Mainly because they could save you a bundle of dough – and maybe even get you a tax refund.
Q – My husband and I have just had our first child. We are in our early 30s and have a very large mortgage and substantial credit card debt. My husband was recently laid off, and we are strapped for cash. We know we need insurance, but permanent insurance is very expensive. What do you think of term insurance? – Olivia D., Niagara Falls, Ontario
Q – Like many investors, I am yet another person disappointed with my investment returns. My advisor tells me I have done well against the benchmark. What benchmark should I be looking at? I am a balanced-risk investor. Thank you. – Chris S., Vancouver, BC
Let’s say you’re a professional woman with a nice little nest-egg put aside. You’re perhaps juggling a career and a family. Maybe you’ve got a house and a mortgage. You’re crazy busy. But your nest-egg? Not so much. It’s just sitting there. It could be in what banks laughably call a “high interest” savings account, which might be giving you the princely sum of 1% a year…if you’re lucky. Or, worse, it could be in a bank money market fund, which yields something close to 0%. Maybe awhile ago you took a chance and hastily bought some units in a stock market mutual fund that your bank teller or insurance agent suggested. That’s probably gone nowhere, too. The bank teller has moved on. And your insurance agent’s forgotten about you.
Q – How do I figure out how much life insurance I need and what type of insurance to buy? – Ralph J., Ajax, Ontario
A – To estimate how much life insurance you need, consider the following: The amount needed to pay off your debts; any final expenses and taxes that will be owing on your death; the amount your family will need to maintain its lifestyle; and education costs for children.
Q – What types of investments do you recommend to invest in, given the continued uncertainly in the stock market? I am looking for stocks that provide cash flow. – Jim W., Fort Erie, Ontario
We love our lattés. There’s no question about that. It’s what’s made Starbucks one of the most successful coffee shop chains in the world. But for that delicious creamy, foamy taste of coffee heaven, you’re paying…what? Most of us don’t even know and couldn’t tell if you were asked. It’s about four bucks. Two measly little toonies. Doesn’t sound like a lot, does it? Add a tasty little snack, a break biscotti maybe, and you’re up to nearly six bucks. Do it every day, and you’ve dropped $30 or so on that “little” treat every week.