The Time to Invest in Your Future is Now. Not Next Year.

As 2018 becomes a shadow of the past and 2019 shines its opportunity upon us, it brings us closer to “that time of year”. Tax time. If you’ve ever seen The Lion King, saying tax time is like whispering Mufasa and watching the Hyena’s shiver. Now is the time where talk turns to deductions and retirement investments before the February cut-off for contributions. Now the shadow of 2018 is rearing its ugly head as it’s there to remind you that you had all year. You’re not alone. Millions of Canadians wait until Spring to start thinking about their RRSPs, and with a heavy heart they sigh and think “I’ll do better next year”. However, next year is already this year and it’s unlikely any signification changes have been made. Life has gotten back to normal after the holidays and lives have become a whirlwind of school, work, sports, family and just trying to manage life. Soon it will be summer and Manitoba will do it’s typical slow down where cottages become priority. Then school starts again and before you know it, it’s already the holiday season again. After which, you’ll sigh and say “I’ll do better next year”. The good news is, you can do something about it now. Instead of scrambling to put together a good contribution, perhaps this year (yes, this year) is the year to take an easier approach. RRSP loans strategies such as gross up, are a great way to boost your RRSP savings while minimizing interest rates Interest rates are quite low right now, and the gross up strategy is a great way to take advantage of that. Consider this scenario. You have $5000 to contribute to an RRSP, you’re sitting in the 40$ marginal tax rate and your RRSP limit allows for more than $5000. If you borrowed $4000, that would give you $9000 to invest in your RRSP. Based on the aforementioned scenario, you can anticipate receiving approximately $3600 in a tax refund which you can use to pay down the loan. This part takes self-control to apply those funds to the loan instead of self-indulgence. Remember, you’re indulging in the long-term plan using this approach. Depending on your stage of life, current income and debt ratio, there are numerous ways to invest in your future goals. Between RRSPs, high-interest saving accounts, TFSAs and GICs, it can be overwhelming to determine which route to take. A Financial Planner can help guide you on these options and what fits best for you.

There Are Two Certainties in Life and One is Taxes

It’s the time of year where the working world is split into those that look forward to tax refunds and those who dread seeing how much they owe. Yes, that’s right, it’s tax time. The buzz has begun with the distribution of T4s, which companies have until the end of February to deliver. Tax returns are one of those things in life that are necessary, but are never really reviewed. It’s a wonder there isn’t a life skills course offered in high school which covers real life lessons such as budgeting, tax requirements and filing, resume writing, interview skills and grocery shopping. Now is the time to gather all the documentation you need to prepare your taxes.  These include slips such as T4, T4A, T4E, T5, T5007, receipts and certificates. While most personal tax returns are filed electronically, paper copies or records must be retained and available for CRA by request. One of the tax reduction options still available is RRSP contributions. The deadline for RRSP contributions for the 2017 tax year is March 1, 2018. It’s important to keep track of your RRSP contributions to ensure you don’t go over the limit and incur over-contribution penalties. While you are allowed a lifetime over-contribution of $2000, it’s best to carry any overages into the next tax year. Investments are another unclear area for most people. There are a multitude of qualified RRSP investments available such as segregated or mutual funds, stocks, bonds, ETFs and GICs. It’s important to have a diversified portfolio. In other words, don’t put all your eggs in one basket. If you haven’t before, this would be a great time to talk to a professional financial advisor. Financial Planners understand all the benefits and risks of each of these options and which would be best suit you and your stage in life. Now that we’ve talked about planning for the upcoming tax season, stay tuned for more advice on tax saving opportunities.