Edmonton Real Estate Blog

You’ve spent a lifetime planning and building an investment portfolio designed to help fulfill your retirement dreams. Now that you’re at or nearing retirement, the time has come to look at options for drawing income out of your non-registered investments. Ideally, you’d like to do it all – that is, enjoy the active lifestyle to which you’ve become accustomed while savoring the satisfaction of knowing you’ll be leaving a meaningful legacy for your kids.

With an insured annuity, you may be able to do both

A portion of your conservative investments are used to purchase a prescribed annuity contract and a permanent life insurance policy. The annuity can generate a lifetime payment stream, that is partially taxable income and partially a return of capital, that pays the life insurance premiums and tax on the annuity. The remaining amount is used to supplement your income. At death, the life insurance proceeds provide a gift to your heirs or favourite charity.

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Financial life planning gets to the heart of the matter by reviewing your finances in relation to the rest of your life. This process connects the disciplines of financial planning with your life in order to develop a customized plan that is best-suited to your needs, goals, and aspirations. By taking into account your current financial situation and looking at it in the context of where you’ve been, where you are now, how you got here and where you’d like to go, financial planning gets brought to life, your life – to provide you with the best possible financial plan.

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When drawing retirement income, greater returns, even if accompanied by greater volatility, can increase the amount of time an investor can withdraw from their portfolio. Taking $5,000 a year from $100,000 cash that is not earning income guarantees that the savings will be depleted in 20 years. An investor investing in a moderate portfolio can potentially take $5,000 per year for 32 years.

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Dollar cost averaging can help manage the risks of investing. Dollar cost averaging is an investment technique that involves buying equal dollar amounts of a given investment on a regular basis. Rather than investing all your money at once, making a commitment to invest a smaller amount on a regular basis can lower your average cost per unit by purchasing more units at lower prices. Talk to us about how this strategy can result in a substantial increase in the value of your investments.

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Since 1956, the S&P/TSX has delivered an annualized return of 9.16% and has proven to be resilient through the worst market conditions. Market volatility is a regular occurrence of investing. Over the same period of time there have been many instances when the TSX declined by more than 10%. Each time, the market recovered and achieved new ground. Staying the course is of the utmost importance during periods of volatility as it ensures investors are able to fully recover from these periods and achieve their long term investment goals.

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Duration is a measure used to assess the impact that a change in interest rates will have on a bond. Shorter term bonds are generally less price sensitive than longer term bonds. If a bond fund has a duration of 5 years and interest rates increase by 1%, the bond fund’s unit price may decrease by approximately 5% (5 x 1). Bonds are also affected by other factors such as inflation expectations and the supply and demand for bonds. Different bond funds will react differently to those economic factors, making it important to diversify across asset classes.

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Tax-Free Savings Accounts (TFSAs) are a nearly brand new and quite flexible investment vehicle; Registered Retirement Savings Plans (RRSPs) have been a vital tax-advantaged retirement savings opportunity for many years; and non-registered investments are an important component of virtually every financial plan. If you are currently weighing the advantages of each of these investment options as you restructure your investment portfolio to match your overall financial goals during this difficult economic climate, you need to know how each is taxed. So let’s compare the tax treatment rules for TFSAs, RRSPs and non-registered investments.

There are tax and income-building advantages and disadvantages to each of these investment options. You need to look at them in relation to your overall tax situation and financial objectives. Your professional advisor can help you make the right decisions for your unique situation.

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Investors are led to believe they pay no fees when investing in Guaranteed Investment Certificates (GICs). The truth is that the interest you are paid on a GIC is much less than what the bank earns when they subsequently invest your money in loans or mortgages.

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Taxation of income

Your investment plan needs to consider all the financial possibilities, including the impact to your annual tax bill. One key component is to understand that there are three basic asset classes (cash, fixed income, and equities) and three types of income you can receive from these types of investments (interest, dividends, and capital gains). Different types of income are taxed at different rates, depending on your level of income and your province of residence. Understanding this can have a significant impact on your financial success. Talk to us about how The Plan can help you manage taxes.

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When you see a new home you like on the market, it’s easy to get distracted by all the features you love – the wrap-around backyard deck or the spacious rec room with plenty of space for entertaining. You just need to make sure that in all that excitement you don’t overlook any expensive maintenance issues that could be just around the corner.

Nothing lasts forever. The major components of every home – from the furnace to the roof shingles – need to be replaced eventually. Knowing when such maintenance issues are likely to arise can help you make a smarter decision about the home you’re considering.

How do you do that?

When viewing a property, ask for the age of the major components of the home, such as the roof shingles, furnace, air conditioner, water heater, and appliances. Roof shingles may look merely weathered in spots – and you might think they have years of service left – when, in fact, they’re due to be replaced in a year.

Also pay close attention to the backyard deck, fencing, flooring, and windows. Do any of those components look aged, worn, and in need of repair or replacement sometime soon?

Finally, don’t forget to check the kitchen and bathrooms. Sinks, faucets, bathtubs, showers, and cabinetry have a life-span of about 10-15 years.

Of course, there are things you can’t see, such as wiring, plumbing, venting, and other components of a property that may require maintenance soon. That’s why it’s so important to make any offer to purchase a home conditional on passing an inspection by a qualified home inspector.

Want more ideas on buying the right home for you? Call today 780-634-8151.