2016 Financial Resolutions

Life GoalsEvery year we make plans to start the New Year with a clean slate, or with new goals. Maybe you want to shed a few pounds, start a new course, or open a business; but have you ever thought about your long-term goals maybe a new car, house, a dream vacation, retirement. Planning for the future starts now and the New Year is a great time to overhaul your financial life for the better. One excellent place to start is by making sound resolutions that can help to get you closer to your financial goals.

Financial Resolution 1: Know What You Want

Have clear, concise financial goals for the year.

Unrealistic Goal – “I want to pay off my credit card and have more money in the bank”.

Instead, say, “I will keep the balance on my credit card down to $0 after every month, and ensure I have over $5,000 in my savings account.”

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Are you too young to plan for your retirement?

Many persons who are under 40 years old have not yet begun planning for retirement. However, is there such a thing as “too young to plan for retirement?” Does “the early bird catch the worm? The earlier you start to plan for retirement the more prepared and at ease you will ultimately be. Here are some helpful tips to help you grow your financial wealth and ensure that your retirement years will be well cushioned. Continue reading

Make Your Retirement Dreams Come True

Wouldn’t you like to have a million-dollar portfolio when you retire?  Making that a reality requires some serious effort. While we cannot guarantee your success in making such a dream come true we have outlined some steps to help you achieve your objective. 

1. Map out your goals

The leading advice from persons who have acquired wealth is to state your goals and develop a course of action to achieve them. You can use the services of a registered financial adviser to help you map our your strategy to achieve your wealth.

2. Begin to save 

If you don’t save, you’ll never reach your goal. As obvious as this may seem, far too many people never even start to save. If your employer has a contributory pension plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your salary,  thus increasing your savings and decreasing your tax liability. Furthermore,  if your employer offers to match your contributions up to a certain limit, be sure to contribute enough to get the full match. It’s like getting a guaranteed return on your investment!

3. Get aggressive 

The returns generated by an investment are dictated by the asset-allocation decision. This is the investment strategy that aims to balance risk and reward by apportioning your portfolio’s assets according to your goals, risk tolerance and investment horizon.

Although there is no simple formula that can determine the right asset allocation for every individual almost all financial professionals hold the view that asset allocation is one of the most important decisions that investors make. The three main asset classes – equities, fixed-income and cash and equivalents – have different levels of risk and return, so each will behave differently over time. If you are looking to grow your wealth over time, fixed -income investments, or a certificate of deposit (CD) aren’t likely to get the job done, and inflation can take a big chunk out of your savings.

4. Put aside for a rainy day

Part of long-term planning involves accepting the fact that setbacks will occur. If you are not prepared, these setbacks can put a stop to your efforts to save. While you can’t avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do. Work with a registered adviser to help structure your finances to avoid financial disaster.

5. Increase the amount you save

A major mistake that persons make is to not adjust their savings as time goes by. Your income should rise as time passes due to the fact that you will get raises, you may change jobs, you may get married and you may have a two-income family. Every time more cash comes in to your pocket, you should increase the amount that you save. Unfortunately for many of us with the increase in our income, additional wants/needs arise which compete for the income. The key to reaching your goal as quickly as possible is to act as if there is no change in income and save as much if the increase as you can.

6. Watch your spending

Vacations, car, kids, and all of life’s other expenses take a big chunk out of your salary. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are key if you want to boost your savings. Develop mechanisms to make it to the end of the month before you run out of money.

7. Monitor your portfolio

If you’re a mid-to long term investor, there is no need to obsess over every moment of the stock market or investment products.  Instead, check your portfolio once a year and re-balance your asset allocation to keep on track with your plan.

8. Maximize your options 

Take advantage of every savings opportunity that comes your way.  Make the maximum contribution to tax-deferred savings plans. Tax-deferred accounts provide the greatest benefit for investments that generate frequent cash flow, or distributions, that would otherwise be taxable, thereby allowing these payments to remain whole and be reinvested most efficiently. Taxable mutual funds and bonds produce the most frequent taxable distributions, such as interest, dividends and capital gains and thus so are best suited for tax-deferred growth.

9. Catch-up contributions 

Look for more ways to save money and increase your nest egg for the fast -approaching golden years. When you reach age 50, you can check to see if you are eligible to increase contributions to tax-deferred savings plans. See if your bank or other financial institutions have any special plans or reduced charges for seniors and take advantage of these opportunities.

10. Patience is a virtue 

“Get-rich-quick” schemes are usually just that – schemes. If something sounds too good to be true it usually is! The power of compounding interest takes time to build, so invest early, invest often and accept that the road to riches is often long and slow.

Remember the sooner you get started, the better your chances of achieving your goals!

Financial Tips For Teens

This week in our series on investing for life stages, we’re putting the spotlight on those critical teenage years where future financial habits can be nurtured and developed.

As you enter your teenage years you will begin to make some “grown-up” decisions about how to save and spend your money.  That’s why learning the best ways to manage money, no matter how small is one of the most important lessons that you can learn in life.  The first thing that you have to do is set goals for yourself. Then you must make the right choice with your money to help you achieve those goals.

Here are some suggestions to consider:

Save some money before you’re tempted to spend it

When you get cash for your allowance, birthday, or from a job, automatically put a portion of it, at least 10 percent, (or possibly more)  into a savings or investment account. This strategy is called “paying yourself first.” It comes from an old saying, “What the eyes don’t see the heart doesn’t grieve for.” Basically the premise is that if you don’t have it easily accessible you learn to live without it.  Making this a habit can gradually turn small sums of money into big amounts that can help pay for really important purchases in the future.

You should consider putting the spare change that you find when you empty your pockets at the end of the day, into a jar or any other container, and then about once per quarter putting that money into a savings account at the bank to earn you interest.

Keep track of your spending 

A good way to take control of your money is to develop a budget or spending plan. This is when you decide on the maximum amounts you aim to spend each week or each month for certain expenses, such as entertainment and snack food. To help manage your money, you should make a list of your expenses for about three months, so that you have a better idea of where your dollars and cents are going. If you find you’re spending more than you intended, you may need to reduce your spending or increase your income depending on which is easiest for you to do at a particular point in time.

Consider A Part-Time Job 

Whether it’s  babysitting, washing the neighbour’s care or a job in a “established” business, working outside of your home can provide you with income, new skills and references that can be useful after secondary school. Before accepting any job, ask your parents for  their permission and advice. Once you start to collect your pay cheque you need to determine how to apportion your earnings.

Think before you buy 

Many teens make quick and costly decisions to buy the latest clothes or electronics without considering whether they are getting value for their money. Before you buy any item you should ask yourself if you really need or just want the item. Based on the response to that question you should conduct research on where the item is available and engage in some comparison i.e shopping to get the best value for money. Remember that life is about choices, so sometimes in order to purchase a particular item you may have cut back on spending for something else.

Be careful with cards 

For those of you using a debit card, which automatically deducts purchases from your back account, always remember that bank cards offer convenience, but they also come with costs and risks that must be taken seriously.

Be smart about college 

If you’re planning to go to college or to pursue any post-secondary education, take advantage of any available government assisted programmes. Remember however that there are costs to be borne by you.  Start doing research on the major expenses which may include tuition, books, fees and housing.

If you’re a past the teenage years, it’s definitely not to late to learn how to manage your money better! In our next post we’ll talk about how young adults can better understand personal finance for prosperity!

Investing For Life Stages Pt1

If you’ve been asking yourself what mix of investments is right for you at this stage of your life, read on. In this series we will highlight the different life stages from teenage years to retirement and offer tips on how to invest for each stage.

Deciding on the right asset mix  is an important part of investing and planning for your future.

You asset mix should:

  • Help you balance risk with your expected rate of return on your investment
  • Fit your comfort level for risk
  • Enable you to get your money when you need it
  • Help you get the growth you need to reach your goals
  • Change as your needs and goals change over time

Should my stage in life change the way I invest?

Your age and life situation should play a big role in your choices for investment. If you are thinking about getting married, you might be considering money to buy a home. If you’re in your 40’s, you may be saving for retirement or you children’s education.

Early Working Years

If you’re starting to work for the first time, you may not have a lot of savings. However you have time on your side. Many people at this stage are risk takers when making long -term investments since they believe that even if things go wring they have time to recover.

Middle Years

Your Salary may be much better than in your early years but you may also have a lot more responsibilities, including:

  • Children to support or help through school
  • Saving for retirement
  • Debt in the form of mortgages, loans or credit cards.

In that case, you may want to shift your investments toward less risky options.

Retirement Years

Older investors usually change their portfolio to safer investments. They want to protect their savings because they’ll need to live on those investments after they retire. They may also prefer investments that offer a steady, reliable stream of income that they can access whenever they need.

In our next post, we’ll take a more in-depth look at investing for life stages, starting with the teenage years. Stay tuned!

13 Questions You Should Ask Before You Invest

Your first step as an investor is deciding what you’d like to achieve.

What are your financial goals?  Do you want to make a down payment on a house in two years?  Will you need to help pay for your children’s education in ten years? If you’re employed, you may also need to plan for your retirement.

Here are some questions to help you decide your investment goals, and ultimately, your investment strategy.

1. How much money do you have to invest now?

2. Will your employment income allow you to invest additional money in the future? How much? Are you confident that will continue?

3. What are your monthly financial obligations and how much do those obligations change from month to month or year to year?

4. Do you have other valuable assets that will play a role in your financial future?

5. Do you have any outstanding debts that you’d like to pay off?

6. Do you plan to make any major purchases in the future?

7. Do you need money from your investments each month to supplement your regular income? If so how much?

8. Do you have dependents to care for, and will their needs be changing over time?

9. What are your life and property insurance requirements?

10. Are there income tax considerations that are particularly important to you?

11. Are you a participant in a registered pension plan?

12. Do you expect to inherit money at any point in the near future?

13. How much money would you like to have readily accessible in case of emergency?

These questions are a good place to start to help you have a clear understanding of your financial situation and thereby help to clarify your investment goals.  The idea is to pool all incomes then subtract all obligations and then, depending on the disposable income left , decide whether you want to save or invest.