5 Tips for Surviving Economic Uncertainty

By Karin Mizgala, co-founder and CEO Money Coaches Canada

It certainly has been a challenging start to Spring as we’re all grappling to make sense of the events around us. What will the immediate impact be on our jobs, businesses, investments and our physical and emotional health? When will we be able to “get back to normal”? And what will the longer-term implications be on our economy, our children, our retirement?

calculator-385506_1280The most difficult thing for all of us is that no one knows for sure, and that includes our experts and leaders. Instead, we are being asked to sit tight, stay in the moment and wait. This is not comfortable for an action-oriented world where speed and growth have been our norms.

On top of that most of us are facing immediate consequences within our own families and communities. In the last 2 days I got word that my niece was laid off and prospects in the fashion industry are well, nil for the foreseeable future. My sister-in-law’s father is in the hospital with a blood clot – and because of COVID, no one is allowed to visit him. A good friend is very ill but tests and surgeries are being postponed. Continue reading

Posted in For your information, Investing

Ask a Money Coach: Which Tax Software Would You Recommend?

Few people look forward to tax time, but with the help of a good software program it doesn’t have to take long or be painful. Most of the well-known options available to Canadians are quite similar, so how do you choose which one to use? The differences arise around support and which features are offered at what cost. Here is a quick overview of some of the most popular options. Continue reading

Posted in Ask Your Money Coach, For your information, Money Coaching, taxes

Honoring Women and their Supporters on International Women’s Day

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

As I reflected on the upcoming International Women’s Day, I started thinking of all the trailblazing women before me with deep appreciation for the battles they fought and the victories that have been won.  While I am impatient for the day that there is full equality for all women and minorities, my historian husband often reminds me that there has been unprecedented social change in an incredibly short blip in history. 

It is true that even one generation before me, it would be almost unheard of for a woman to run a successful business, own a home, manage her own investments or even get a credit card without her husband’s signature (that didn’t change until 1974).  Continue reading

Posted in Money Coaching

Exchange Traded Funds: Everything You Wanted to Know But Were Afraid to Ask

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Most Canadians are very familiar with mutual funds. In simple terms, a mutual fund is made up of a collection of individual stocks, bonds or other securities carefully chosen by a fund manager, with the goal of generating returns for the investors while balancing risk. Investors pay a management fee, referred to as the Management Expense Ratio (MER), to cover the cost of the management, marketing and administration of these funds. In Canada the average MER is around 2%.

With greater focus on the cost of investing and fee transparency in Canada, it’s not surprising that there is growing interest in Exchange Traded Funds (ETFs), which in most cases, have lower fees than mutual funds. But what else should you know about this up-trending investment option before deciding if ETFs are right for you? Continue reading

Posted in Financial Literacy, For your information, Investing

Should You Help Your Kids Buy a Home? 3 Questions You Need to Ask Yourself Before You Ante Up

By Karin Mizgala, co-founder and CEO Money Coaches Canada    

Buying a home, especially for first time buyers, has  become increasingly challenging over the last decades. In 1985, according to the Toronto Estate Board, the average home in the city sold for $109,094 and the average Torontonian was earning $31,956. That’s means if you put your entire salary towards a home, it would have taken you 3.4 years to pay it off in 1985.

According to Statistics Canada the median salary for a Toronto family in 2017 was $83,000. Assuming a 2.5% average salary increase, that would be $89,000 in 2020.  That’s a significant jump from 1985, but according to the Toronto Real Estate Board the average price for a detached house in the city of Toronto in 2020 is $1,163,000. So despite that increased annual wage, putting your families’ entire salary towards your home, it would now take 13 years to pay it off.

It’s true that cities like Vancouver and Toronto are known for having high housing prices, but even smaller cities like Ottawa are becoming more challenging for first time buyers. A shortage of available houses in that city has created a bidding war situation, with highly desirable properties often selling far above the asking price.

Young adults, many of whom are already carrying an average of $25,000 in student debt, look at the high cost of entry to the market and wonder how home ownership will be possible for them. And many of them are turning to mom and dad for help.

Parents, often homeowners themselves, know that getting into the housing market can provide their child with stability, security and financial growth, so it’s very tempting to want to help them realize their goal.

But help of this sort doesn’t happen in a vacuum, it can have a huge impact on your life and your relationship with your kids. It’s vital that you answer these three questions before you start visiting open houses. Continue reading

Posted in Kids and Money, Money Coaching, Retirement savings, Will & Estate Planning

Are RRSPs Still a Good Investment?

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

With the March 2nd RRSP (Registered Retirement Savings Plan) deadline looming, it’s often the only time of year we give retirement savings much thought. March 2nd, 2020 is the deadline for contributing to an RRSP for the 2019 tax year. 

Are RRSPs still a good investment? Should you be paying down your mortgage first? Or are Tax-Free Savings Accounts (TFSAs) a better savings strategy? These are some of the questions we hear from our clients who understandably are confused by the many and varied options. And while in general, I tell them investing in RRSPs is a good idea, there’s by no means a one-size-fits-all answer.

While most financial institutions extol the virtues of RRSPs (it is a big part of their business after all), I see more articles and debate about their usefulness.

From RRSP supporters, we hear about the benefits – you can deduct RRSP contributions from income. So, as a result, you pay less tax and the income earned in an RRSP is tax-sheltered.

On the flip side, naysayers argue that RRSPs aren’t really a tax savings vehicle, just a tax deferral because you must pay tax when you withdraw the funds. The drawback is that if you are still in a high tax bracket when you withdraw the money at retirement, you pay tax at that higher rate, and you might also lose your Old Age Security pension benefits. Or, if you still have a large RRSP at death (unless you have a spouse), your estate will be hit hard with tax rates that can lop off 50% or more of the estate value of your hard-earned RRSP savings.

Truthfully, there is so much to consider. But it’s important not to get overwhelmed. Let’s start by painting the portrait of the ideal RRSP investor and then looking at a few other questions we frequently address from would-be RRSP investors.    Continue reading

Posted in Money Coaching, Retirement savings

How To Invest Like a Professional

By Daniel Evans, BSc., CLU®, CFP®

You work hard and understand how important an investment portfolio is to your financial well-being. However, simply owning an investment portfolio isn’t enough.

The unfortunate truth is that most Canadians receive financial advice from commissioned salespeople that are paid to sell specific financial products and services. But you need investments that work for you, and only you.  

Despite all the jargon and the financial industry’s best efforts to keep investors in the dark, it’s not hard to develop the basic knowledge to evaluate your investments on your own. At the very least, educating yourself on some of these basic concepts, and getting comfortable with the language, will put you in a much better position to have an informed discussion with your advisor.

It’s vital that you develop a basic understanding of how to evaluate your investment portfolio that’s independent, free of bias, and has only your best interests in mind. Learn the following concepts and implement these best practices, and you will be on your way to investing like a professional. Continue reading

Posted in Investing

Should I take CPP at age 60?

By Barbara Knoblach, PhD, CFP®

Mature couple walking in countryside

The calendar has flipped, and we have a new year ahead. Bring on 2020.

The kids are back at school; homework, lessons and sports practice have begun to fill the family calendar again. Summer holidays and backyard BBQs are on the horizon but may not feel that way given the dark days, rain (and snow) across most parts of Canada.

It’s a time to look toward to new challenges at work, plans for the New Year, and yes, summer vacations. Because, really, what is all our hard work for, if not, at least in part, to afford time with friends and family?

In fact, as you ease into a busier winter schedule, it’s a great opportunity to pause and remember why you work hard, and to recommit to your life goals—including your important retirement goals. Who doesn’t dream of the day when all four seasons are theirs to shape and enjoy?

But retirement looks very different to everyone, and one of the most important things to consider when planning yours, is the optimal time to apply for Canada Pension Plan (CPP) benefits. All it takes is a bit of calculated foresight, to make the decision that will best suit your circumstances.

Here’s a look at some basics:

Canada Pension Plan benefits can be drawn as early as age 60 (reduced 0.6% for each month before 65) or as late as age 70 (increased 0.7% for each month after 65).

The average life expectancy for Canadians is age 80 for men and 84 for women. Statistics Canada predicts a continued rise in life expectancy of roughly two years over the next 15 years.

Things to consider:

Life expectancy

Contemplating your mortality may feel uncomfortable, but it should not be ignored. Your health and whether longevity is a family trait, are things to consider when making your decision regarding CPP.

If you take your CPP starting at age 60, your breakeven point with someone who waits until age 65 is when you both turn 74. Confused? Let me put it another way – I will use an example to illustrate my point.

If Mary takes her CPP at 60 and Brenda takes hers at 65, Mary’s monthly CPP payment will be 36% lower than Brenda’s, but she will collect five years longer. They will be 74 when Brenda pulls ahead of Mary for overall amount collected.

Continue reading

Posted in Ask Your Money Coach, For your information

5 Retirement Pitfalls and How to Avoid Them

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Over the years I’ve transitioned many clients through retirement and while each story is unique, there are some commonalities in their experiences. One story that sticks with me is the reaction that my client Margaret (name has been changed) had when we went through the retirement projections which gave her the green light for retirement. Instead of jumping for joy, she burst into tears!

Initially, we were both surprised by her reaction, but it really isn’t that surprising at all. Retirement is a major life change, and what major life change comes without a mixture of excitement and fear? Margaret was elated that she had achieved her goal of a comfortable retirement, but overwhelmed by the implications of what this freedom actually meant for her and the new set of decisions she now had to make.

While we may gripe about our jobs and dream of the day when we can kick up our feet and relax, the side of us that is fulfilled by the structure and purpose of our work may feel overwhelmed by the responsibility of deciding what comes next. The cage is open, yet we may be afraid to fly out into the unknown. Continue reading

Posted in Money Coaching

Make the Most of the Holiday Season

financial well being

Don’t let this holiday season hurt your financial well being. Stay on track and enjoy the season without the stress of putting your financial future in jeopardy.

To help, we’ve assembled our most popular holiday-themed articles in one place. Each is a quick read and will give you great tips and strategies to enjoy the best of the holiday season without adding financial stress.

Continue reading

Posted in Budgeting and Cash Flow, Money Coaching