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Investor's Quarterly WINTER EDITION 2016

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HIGHLIGHTS:

2015 Review / 2016 Forecast - The global economy and financial markets wobbled during the final months of 2015, with a number of factors at play. Here at home, our resource sector was slammed as the price of crude fell and we saw our loonies drop in value against a strengthening US dollar. Canada's growth rate is not expected to be much higher in 2016. 

New Year, New Politics - We finished 2015 with a new Prime Minister and promises for "real change" and reform. Appointment of a diversified, gender equal cabinet, the lowering of our TFSA contribution limit, and fast-tracking refugee immigration were among the earliest actions initiated by Justin Trudeau. 

China Spooks Markets - We had a volatile start to 2016. China caused a market sell-off the first trading week of January, with their devalued currency and weak economic data concerning investors around the world. Investors should be prepared for more volatility this year as China and U.S. rate policy weighs on markets. Stabilization in China would go a long way toward mitigating the downward trend in commodities and global trade. 

Canadian Consumer Debt - Low interest rates have been a major contributing factor to rising household debt. In 1999, only 3% of Canadians held a mortgage that was 500 per cent or more of their income. Today that number is 11%. In an attempt to cool down the hot housing market and protect homebuyers from getting in over their heads, Finance Minister Bill Moreau announced an increase in the downpayment required to purchase homes over 500K beginning February 15th, 2016. 

Investor 101: Understanding MERs - Mutual funds allow people with similar investment goals to pool their money in a diversified portfolio. A professional money manager uses the money to buy securities. The MER is the total management fee, operating expenses, and GST/HST charged to the fund each year. It is expressed as a percentage of the fund's assets for the year. The average equity mutual fund MER in Canada is 2.49%.

RRSPs, TFSAs, and Taxes - Your 2015 RRSP contribution limit is based on 18% of your 2014 earned income to a maximum of $24,930. Always refer to your last Notice of Assessment to confirm your total available contribution room. Unused room from past years is carried forward. The last day for making a 'First 60 Day Contribution' to your RRSP is Monday, February 29th. 

As promised during the election, the new Liberal government has lowered the maximum annual TFSA contribution from $10,000 to $5,500 effective January 1st, 2016. However, last years $10,000 limit will remain as part of your lifetime TFSA limit, which is now $46,500. 

The 2015 tax filing deadline is May 2nd this year because April 30th is a Saturday. Self-employed persons have until June 15th to file but, if they owe money it must be paid by the regular deadline. The mailing of RRSP contribution receipts for 2015 has begun. First 60 Day receipts are issued on an ongoing basis as contributions are received from January to March. Important information on taxable income, dividends, and/or capital gains received in 2015 will appear on your year-end fund company issued statements. 

90 Is The New 80 - Canadians now live longer, healthier lives and longer life expectancy impacts retirement planning. Income requirement timelines are now being extended beyond the current standard of age 90. Maintaining a growth component within your retirement portfolio has become critical to meeting extended future income demands. Current low interest rates on savings and GICs is not keeping up with inflation, which means zero or negative growth on your money. One more reason why diversification of your investment assets remains key. 

Pension Reform News - The Federal Liberal Government has promised to negotiate enhancements to the CPP with the provinces. Changes are expected to increase both the premium and benefits. 7 out of 10 provinces must agree before any changes are implemented. Regardless of what happens with the CPP, Ontario will proceed with Premier Wynne's controversial plan to introduce the Ontario Retirement Pension Plan (ORPP). Currently, two-thirds of Ontarians do not have a workplace pension plan. 

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