Tag Archives: retirement planning

RRSP vs RESP: How to Make the Right Choice?

By Bruce Q. Thompson, B.Admin, CFP®

Family in kitchen with laptop smiling

From the moment our children are born we want the best for their future. Success is never guaranteed, but we hope to be able to offer them opportunities. And what better opportunity is there than education? So it seems like a straight forward assumption that we would contribute to a Registered Education Savings Plan (RESP).

But what about our own future? What about contributing to a Registered Retirement Savings Plan (RRSP)? Canadians are living longer, and the cost of living is always on the rise. If we don’t have a solid retirement plan, are we at risk of living in our well educated child’s basement? OK, that may be a tongue-in-cheek option, but the question of where to place our investment dollars is valid. What’s a parent to do?

The Fundamentals: What You Need to Know

Continue reading →

Leave a reply

End Financial Avoidance and Reclaim Your Power Today

By Sheila Walkington, co-founder and CFO Money Coaches Canada and the Women’s Financial Learning Centre

Action Changes Things edited blue

 

Most people procrastinate from time to time, it’s human nature to put off tasks we believe to be unpleasant or time consuming. But the habitual putting off of our responsibilities, especially our financial responsibilities, transforms procrastination into avoidance. Avoidance —Stage 2 of the 7 Stages of Financial Well-BeingTM —is one of the most potentially damaging stages on the path to financial fulfillment.

Are you in Avoidance?

It’s essential to understand that financial well-being comes with a deeper understanding of where you stand with money, emotionally and financially, developing concise and attainable goals, getting organized and implementing a manageable plan to move forward. The 7 Stages of Financial Well-BeingTM is a framework that will help you better understand where you are, and what actions to take, as you move towards Financial Fulfillment. Continue reading →

Leave a reply

Coach Spotlight: Sabine Lay, Certified Money Coach

Sabine Lay, certified Money Coach

Sabine Lay, certified Money Coach

In the five years that Sabine Lay has been a Money Coach the question she has most frequently been asked is: How do other people manage their finances? Or even, “Am I the worst case you’ve seen?” She says the comparison question arises in one form or another from practically every client.

Give your money purpose

What Sabine tells them is that comparison has no benefits. What she shows them is that being clear on their own financial values and creating goals that give their money purpose, generates the kind of confidence that makes comparison questions unnecessary. Sabine helps her clients develop benchmarks and barometers of “success” of their own making.

Money Coaching was the missing piece in financial service

Sabine grew up in Germany and spent five years living in England before moving to Canada 17 years ago. She was working for an international bank when she found herself becoming dissatisfied with the limitations on how she could help her clients.

“I was frustrated by seeing so many people with good income in debt and struggling to make ends meet. I knew I could help them, but it wasn’t within the mandate of my position to offer that kind of help.”

When she read about Money Coaches Canada in an article in the Globe and Mail newspaper she knew it was the sort of work she wanted to do and from the beginning she knew she would specialize in debt and cash flow management. Sabine also helps her clients ensure they have a solid financial foundation as they prepare for retirement.

Building trust and finding clarity

“My first sessions with an individual or a couple are discussions. Before I can help I need to know what is important to them, and they need to get to know me before they can put their trust in me. The surprise that happens in Money Coaching is the person or couple learns a lot about themselves. Relationships with money are influenced by upbringing and by the culture we live in, but it’s important to look at those influences and question whether they help or hinder our financial well-being.”

Sabine Lay TweetClients who work with Sabine can expect her to be supportive and positive but honest. She doesn’t sugar coat her advice, but clients often remark on her warmth and sincerity. The greatest benefit of working with Sabine is the level of clarity she brings to the situation. Clients will have: clarity on their current situation (where their money is coming and going), clarity on their financial goals and clarity on the steps needed to achieve those goals.

“My greatest pleasure as a Money Coach is when I see the pieces of the new plan falling into place and the person or couple is happier and taking control because they have a plan geared to their life.”

Fresh insight and real change

Sabine works with individuals and couples and says that coaching offers different benefits for each.

“I help all my clients define what’s important to them and show them how to make financial decisions based on those values, but for single clients I can also serve as an accountability partner if that is what they need. For couples it is vital to their success that they have the same goals and the same dedication to the process. I can remain neutral and help couples create goals they are both excited about, if both partners are willing and committed.”

Sabine says that someone looking for real change in their financial life will benefit from the fresh insight and expertise of a Money Coach.  Although she prefers to think of the road to financial well-being as having challenges not problems, she believes this quote from Albert Einstein makes an excellent point about the value of a different perspective:

“We can’t solve problems by using the same kind of thinking we used when we created them.”

A new way of thinking about your money is just a click away. Contact Sabine for a free consultation

Leave a reply

Your Money, Your Life – A Discussion with Steadyhand’s Tom Bradley

Tom Bradley, President and co-founder of Steadyhand Investment Management Ltd.

Tom Bradley, President and co-founder of Steadyhand Investment Management Ltd.

Money Coach Noel D’Souza, P.Eng.,CFP® recently sat down with Tom Bradley, President and co-founder of Steadyhand Investment Management Ltd. to talk about what Steadyhand offers Canadian investors how it serves its clients and his perspective on personal finance in Canada.

In addition to Tom Bradley’s leadership at Steadyhand, he selects and monitors Steadyhand fund managers and manages the firm’s Founders Fund. He has over 30 years of experience in the investment industry, including senior leadership roles at other well-known investment management firms. He currently serves as the Chairperson of the Investment Committee of the Vancouver Foundation.

Noel: Tom, who would you say is Steadyhand’s typical client and what services does Steadyhand offer?

Tom: We have a wide variety of clients, but I’d have to say that the bulk of our clients are what we call midlife professionals, in their forties and fifties, busy with kids and careers and the stuff of life. Very smart people who just don’t have the time, interest, or maybe knowledge, on the investment side of their finances, and so they look to us to do that for them.

2016-05-16_1212We also have an increasing number of young clients. Our low minimums, which are ten thousand per fund, have opened that door. But of course we also have many retired clients as well.

Our average client portfolio is around $275 000, but we have many clients under $100,000. We offer them investment management and we offer investment advice, not holistic financial planning.

Noel: I think that’s one of the reasons why Steadyhand’s work resonates with what we do at Money Coaches Canada, and why we work well together; we also typically serve busy mid-to-late career professionals, but we provide that holistic financial planning element.

What would you say is the single greatest benefit that a client will experience when working with Steadyhand?

Tom: I’d say that the single greatest thing we do for our clients is right in our name; we do a very good job of providing a steady hand. Dealing with the ups and downs of the market is crucial to long term returns. We keep people on track. We’ve looked at the data and our clients are letting the power of compounding, which Einstein calls the eighth wonder of the world, work for them in growing their assets over time.

We’re all living longer. We want people to think ahead to what I call the last third of their lives, which is going to start somewhere in their sixties and could very well go into their nineties. We need to get people to think ahead to that last third. Continue reading →

Leave a reply

Meet our Money Coach: Tom Feigs

ROB_9742_web

Tom Feigs, CFP®, CET

Financial planner and money coach Tom Feigs was born and raised in Calgary, Alberta, but his favourite piece of advice for Canadians concerned that they aren’t prepared for retirement, comes from the East, not the West. It’s a Chinese Proverb: The best time to plant a tree was 20 years ago. The second best time is now.

And now is when Tom can help. Tom’s ideal clients are in their 40’s or 50’s and are really motivated to create a retirement plan that they can be excited about.

“One of my favourite moments as a coach, is helping people realize their dreams faster than they anticipated,” he says. “It’s great to be able to tell someone who hopes to retire within five years that in fact they can retire now.”

“There is no single road to personal or financial fulfillment,” says Tom, “and the journey is as important as the destination.”

Tom’s own journey began in the Energy Industry after he earned a diploma in Engineering Science Technology. But outside of work he was studying investing, and reading books on finance. Then, seven years ago, inspired by watching his children follow their unique paths; his daughter is an actor and artist, and his son is a correctional officer, Tom decided to follow a new path of his own.

He started by committing nine months to completing the Certified Financial Planning Curriculum, because it was very important to him to have the CFP® designation and the standard of excellence it represents.

Tom had only one dilemma; he wanted to be a planner, coach and educator, not a salesperson.

“I believe there is an inherent conflict for planners who also sell products” he says. “I want clients to know that my advice has only their needs at its core.”

A solution appeared in the June 2010 edition of Forum Magazine, a trade publication for financial advisors. The cover featured an image of Sheila Walkington, co-founder of Money Coaches Canada and the Women’s Financial Learning Centre. Tom found Sheila’s goal of creating a network of money coaches across Canada appealing and was soon on board.

“I like to get to know my clients, and get them excited about their possibilities,” Tom says. “Once we crystallize their retirement goals we can plant the seeds to achieve them.”

Contact Tom today for a free consultation.

 

 

Leave a reply

Meet our Money Coach: Annie Kvick

“My family and I get out and enjoy life. I want that freedom for all my clients.”

For many Canadians, taking charge of their finances feels like being asked to scale a mountain. They may feel overwhelmed, intimidated, or afraid of making a misstep that sends them tumbling financially backwards.

Money Coach Annie Kvick, knows what it feels like to face a big challenge. At 25 years-old, and newly married, Annie and her husband left family, friends and careers in Sweden to begin a life in North Vancouver, British Columbia. The young couple realized that money management would be vital to establishing themselves in their new country, and Annie committed herself to the task. Continue reading →

Leave a reply

Podcast: Retirement – How much do you need?

Featuring: Annie Kvick, Certified Financial Planner with Money Coaches Canada

The most asked question about Retirement Planning is How Much is Enough? Retirement Planning expert Annie Kvick joins us to discuss what you need to know and where to go for information. Listen in for tips, suggestions and resources.

Listen to our Let’s Talk Money Podcast by clicking the link below

Retirement: How much do you need?

Need help with your retirement plan?

Contact Annie Kvick or join us for the upcoming Rethinking Retirement Tele-Series starting June 2nd. This information-packed four-part series with Karin Mizgala, founder of the Women’s Financial Learning Centre and CEO of Money Coaches Canada will help you kick start your retirement plan.

It goes beyond retirement savings methods and explores how life goals and priorities will affect when/how you transition to a new way of living, earning and spending.

Register Button

More info on Rethinking Retirement

Other Resources mentioned on the podcast:
Helpful Books
Service Canada

Leave a reply

Do RSPs Still Make Sense?

For most people they still do.That’s the short answer, but it is well worth reviewing your overall retirement strategy and the role that RSPs play in your financial decision-making.

So what are your neighbours doing about RSPs?
It’s true that lots of them are shying away from investing in RSPs citing disappointing markets, big mortgage payments and newer TFSA options. Statistics Canada reports that 88% of tax filers were eligible to contribute to an RRSP in 2007, but only 27% actually made contributions. They only used 7% of the total contribution room available to them and there is now almost $500 billion in unused RRSP contributions being carried forward. The median RSP contribution was only $2700.

Some advisors recommend paying down your mortgage before investing in RSPs. I disagree. The problem with this strategy is that with large mortgages and longer amortization periods, by the time the debt is paid off, there is limited time to save for the income needed in retirement.

A paid off mortgage is great, as it means lower expenses in retirement, but you still need income to cover the rest of your retirement expenses. So, unless you plan to sell your home or significantly downsize in retirement, you still need to save and invest.

RSPs still almost always make good sense if:

  • You are under 50 with 10-15 years left before retirement
  • You have less than $200K invested in RSPs to date
  • You are in the highest tax bracket now
  • You pay less than 6% on your mortgage
  • You have a balanced portfolio of conservative stocks, bonds and cash investments in your RSP

Here’s what I recommend:

  1. Set up a plan to be debt-free before retirement – preferably 5 years before the big day.
  2. Invest monthly in your RSP especially if your income is higher than $40K.  If your income is less than $40,000, use a Tax-Free Savings Account (TFSA) instead. You can always move the money to an RSP later if your income increases.
  3. Take the time now to figure out your investment game plan. Decide on the optimal mix of equities, fixed income and cash to meet your specific needs and risk profile. (Note: Choosing the right asset mix is far more important than what investments you actually select. Most people spend time on the wrong things here.)
  4. If you’re a “do it yourself investor”, then use low-cost mutual funds or index funds (Hot Tip: Check out Investor’s Aid Coop).
  5. Otherwise use an advisor that provides “value-added” financial planning advice. Ask questions to make sure you are getting the advice you are paying for. (check out: Questions to Ask your Financial Advisor).
  6. If you don’t feel you can pay down your mortgage and contribute to your RSP, then review your cash flow and reallocate your resources so you can. Sure you might have to give up some good stuff today, but you’ll thank me at retirement!

Since most people think twice about withdrawing money from an RSP before retirement, topping up your RSP will help ensure you have some savings when you retire, even if you do have to pay some tax. Just do it! – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

2 Replies

Men and women see retirement differently

When I started out my career in financial services I was skeptical about gender difference claims when it came to money. But over the years I’ve come to believe that while the capacity for financial understanding isn’t different, the relationship women and men have with money is. For one thing, women generally admit to having a lot more fear about money and studies have borne this out.

A few years ago, the US company Allianz Insurance found that over 90% of women lacked confidence when it came to money and 50% of women, even those earning over $100,000, worried about becoming a bag lady one day.

Some of the challenges women face are well-founded – women often still earn less that men. (On average, Canadian women earn about 66% of their male counterparts). And, although the gap is narrowing, females can still expect to live almost five years longer than males which add to the severity and complexity of their concerns, especially in their later years.

A recent study by Sun Life Canadian Unretirement Index highlights some other differences:

  • Twice as many men than women say they want to work past 65
  • Women are more likely to be concerned with long-term care, low interest rates and death of a spouse
  • Women working past age 65 are more apt to worry about covering their basic living expenses
  • More women believe their company pension plan will not be enough to live on
  • Fewer women than men are confident they will be able to maintain the lifestyle they want
  • Women tend to be less confident about the overall economy – and their personal finances

Each of these points has wide-ranging implications not only from a financial point of view but also in terms of emotional well being. Somehow individuals, financial advisors and we as a society need to address the stress and anxiety that often come with retirement. This is especially true as the Canadian population continues to age and there is less financial certainty in respect to the overall economy, government and company pension plans, and our own investment savings.

The Sun Life study also points to a possible remedy to retirement concerns. Both women and men were “significantly more confident about their retirement if they had worked with a financial advisor.” Coming from a financial services company, this last statement might seem a little self-serving, but there is no question that being more educated, knowing where you stand with your money and doing some advance planning can make a vast difference in your level of financial confidence when it comes to retirement. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply

How Much Cash Should you Hold?

Risk averse Canadians are sitting on an “astoundingly massive” $1 trillion or more in cash, or near cash holdings, according to a recent study by Scotia Capital Inc. While we might pride ourselves on being prudent savers, some experts are warning that our rainy day funds are now so large that they could jeopardize the country’s economic recovery. They also fear that you are not getting a good return on cash holdings. So what is right for you?

It is certainly true that cash investments aren’t very exciting these days. Rates of return for so called “high” interest savings accounts run at around 1.5% or less, and 5 year GICs are only returning 3%. And of course, over the long run, cash investments haven’t done as well as bonds or stock investments. But still, I like cash – a lot.

There’s much more to investment planning than just getting the best rate of return. Sure inflation is an important consideration. So, too, is outliving our money. So is having enough money to meet future expenses and goals. BUT – if our investments are ultimately designed to help us enjoy our life, then we need to consider the emotional as well as “dollars and cents” implications of financial security. Being stressed about money doesn’t make for good investment decisions or a happy life.

As a financial educator, I know firsthand the value to clients of being more educated about how money and investments work – greater understanding of money usually leads to better financial decisions and less worry. But I also know that graphs, charts, and financial calculations can only go so far to relieve the anxiety caused by market fluctuations.

So what do these concerns mean to your portfolio?

Let’s start with a simple and obvious fact. We’re human. Sometimes we make irrational decisions based on emotions – sometimes fear, sometimes greed, sometimes wishful thinking. Even though we “know” we should keep our emotions from dictating our investment decisions, it is unlikely that our species is going to change this type of instinctual behavior anytime soon.

So you need to make investment decisions that suit all of your needs — including the very human need and desire for security. This means that cash investments should always be an integral part of your portfolio. The amount of cash you should hold is largely dependent on two factors. First is your tolerance for risk. Second are your cash needs for the near future.

So for instance, if you don’t want to take any market risk at all, then your choices are pretty much limited to a 100% cash or government bond portfolio. (If you take this strategy, you should run the precise numbers to be sure that you’ll have enough to cover your long term needs after tax and after inflation.)

And even if you can accept a high level of risk in your overall portfolio, but need to use some of your funds in the next 2-3 years, your best bet is to hold the total amount you will need in cash or near-cash investments.

How does this work?

Let’s say you want to buy a house in 2 years but first have to save for the down payment. Your existing savings and new money should be held in cash investments so you can be sure that the money is there when you need it – regardless of what happens in the markets.

Or if you’re at retirement age and you need $3,000 a month ($36,000 annually) to fund your lifestyle, then keep a reserve of about $100,000 in cash to fund the next three years. This will give you the emotional upside of knowing that you have cash in the bank and you will be financially ok for the next few years.

By holding cash for your 2-3 year short term needs, you will be more comfortable with your other higher risk investments that you need for growth. Then even when the markets fluctuate wildly, it will be easier for you to resist the temptation to react emotionally because you know that some of your portfolio is protected. Not an exciting strategy but a good night’s sleep sure make sense to me.  – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply