Elements of investing

First steps to financial literacy

With the Covid-19 pandemic more people are spending more time at home. This has also led many people to try a little do-it-yourself investing. After, all opening an investment account is relatively easy, and almost every financial institution offers online do-it-yourself investing platforms. What’s not so easy is how to proceed with investment planning, so you don’t immediately lose what’s in your account. So here’s my list of 10 basic investment and money management principles that it’s important to learn before you sit down in front of that screen and start trading.

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Elements of financial planning

First steps to financial literacy

This is a challenging time for building your wealth and saving for retirement. A newly released survey by FP Canada found that Canadians between age 45 and 54 are struggling the most during the Covid-19 pandemic. Over a third in the so-called “Sandwich Generation” (caring for both children and aging parents) say they don’t think they can recover financially, and less than half say they were strong enough financially before the pandemic not to have to worry about their financial health. And the FP Canada 2020 Financial Stress Index indicates that Canadians rank money as their greatest cause of stress in life.

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Dealing with the season of volatility

Portfolio management tips for troubled times

October is a typically volatile month for markets, and this year has been no exception. The main North American stock indexes were down for the month across the board. So were crude oil and gold. We heard media talking heads bringing out all the old saws about how markets “hate uncertainty,” or “it’s the U.S. election,” or “it’s Covid-19.” And while it’s true some or all of these things may have contributed to stock market volatility, no single item could be said to predominate. And then on the first trading day of November, a strange thing happened. READ MORE

Parents take note: Covid-19 has put financial literacy into perspective

Now, more than ever, it’s crucial to teach your kids the first steps to financial literacy. Read my recent post on how to help your children learn the basics of money management.

Power up your RRSP planning now!

Make the most of this wealth-creation tool all year

Many investors only think about their Registered Retirement Savings Plan (RRSP) in February. But that’s really just a conditioned reflex, spurred on by financial institutions to get you to give them money in the first 60 days of each year. Any contribution made within those 60 days can be applied to the previous year and is deductible from your previous year’s income. That’s all well and good, but your RRSP really needs more attention than a panicky annual deposit just before the deadline.

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Three investing blunders to avoid

Vulnerable in the season of volatility

The fall season of volatility is here again. This year, however, stock markets may be susceptible to even more gyrations than usual, given the vagaries of the Covid-19 pandemic and its effect on economic growth, the U.S. presidential election cycle, and the massive injections of monetary and fiscal stimulus to help keep economies afloat. Most recently, we saw stock markets sell off on Oct. 2 on the news that U.S. President Donald Trump had tested positive for Covid-19 and had been admitted to hospital for treatment. But any sustained correlation between market activity and the political cycle is tenuous at best, and is typically very short-lived. So it proved to be, as markets rebounded sharply on the following Monday.

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Time for a financial wellness checkup?

Four trouble areas, and how a planner can help

The Covid-19 pandemic and lockdowns have created plenty of financial stress for individuals and families. Temporary or even permanent income loss has been only partially mitigated by relief programs, such as the Canada Emergency Relief Benefit (CERB) and the Canada Emergency Wage Subsidy (CEWS). In any case, these programs are not permanent and will be wound down eventually. Feeling stressed? This is a good time to take stock of your situation with a financial wellness check in four key areas.

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Rules for RESP withdrawals

What if your child decides not to go the post-secondary route?

If you’re tapping into Registered Educations Savings Plans this fall to pay for your kids’ post-secondary schooling, keep in in mind that there are plenty of rules about how RESPs are administered. And some parents will have to deal with the question of what happens to the RESP if their child decides not to go on to post-secondary school just now. Here’s a look at what’s involved.

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The lure of record high stock markets

Review your portfolio before jumping in

The Dow Jones Industrial Average is reaching all-time record highs. So is the S&P 500 Composite Index – amidst a pandemic and a recession, no less. And smaller investors are jumping on the bandwagon. Should you join the fun?

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Individual Pension Plans can supercharge retirement income

Professionals, executives, business owners can benefit

The defined benefit pension plan has pretty much gone the way of the dodo. With one exception: the Individual Pension Plan (IPP). If you’re a business owner or executive, or an incorporated professional, such as a physician, dentist, lawyer, accountant, and so on, and you are over age 40 in your peak earning years, you might consider an IPP. Its many advantages for people in this group certainly outweigh its drawbacks. And as tighter rules for passive investments in private corporations have limited the availability of the small business tax rate, an IPP offers some business tax advantages as well.

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