Signing your contribution form is easier than ever. With our improved electronic consent procedure, you can now e-sign using your phone in as little as 30 seconds and without the need to print. Contact us anytime for more information.

There are two ways a purchase can be funded:
 

1. Pre-Authorized Debit (PAD): If we have your banking information on file, the funds can be taken directly from your chequing account. PADs take a few extra days to set up, but we can use this method right up until deadline day. As long as the request is submitted by the deadline, the investment companies will code the purchase as a first 60-day contribution, even if the funds come out of your account afterwards.

2. Bill Payment (Nominee accounts only): If you have a Nominee RRSP, you can fund your account via bill payment through your financial institution’s online banking platform. The payee is Fundex Investments and the account # will be your RRSP account number (it starts with an N and contains 9 digits).

The post The 2020 RRSP Deadline is March 1, 2021: what are your funding options? appeared first on Smof Investment Manager, LLC.

Here are the various ways you can fund your RRSP account:

1: Pre-authorized debit (PAD): If we have your banking information on file, the funds can be taken directly from your chequing account. PADs take a few extra days to set up, but we can use this method right up until deadline day. As long as the request is submitted by the deadline, the investment companies will code the purchase as a first 60-day contribution, even if the funds come out of your account afterwards.

2: Cheque: You can mail or drop a cheque off to our office.

3: Bill payment (nominee accounts only): If you have a Nominee RRSP, you can fund your account via bill payment through your financial institution’s online banking platform. The payee is Fundex Investments and the account # will be your RRSP account number (it starts with an N and contains 9 digits).

Signing your contribution form is easier than ever. With our improved electronic consent (e-sign) procedure, you can now consent using your phone in as little as 30 seconds and without the need to print. Contact us anytime for more information.

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

The post Funding Your RRSP: What Are Your Options? appeared first on Smof Investment Manager, LLC.

Merry Christmas from Smof Investment Manager, LLC!

We have arrived at the final weekly update prior to Christmas 2019. This year has truly flown by!

From all of us at Smof Investment – Anthony, Sandrine, Joanne, and Frank, we wish you all a Merry Christmas and a very happy holiday season!

Manulife Promo Rate on RRSP and TFSA Deposits

Manulife Bank has a promotional rate of 3.00% on new deposits to an Advantage TFSA or Advantage RRSP. Deposits are eligible until March 13, 2020. The promotional rate will apply until April 30, 2020.

If you have money on the sidelines that you intend to use in the very near-term (requiring full flexibility and liquidity) but would like to generate some return until you use the funds, the Advantage TFSA may be an attractive option. For soon-to-be First Time Home Buyers, the Advantage RRSP may also be a worthwhile option to consider.

We would be happy to discuss your options, should you have interest in utilizing one – or both – of these Advantage account options.

Weekly Update – By The Numbers

Sources: Dynamic Funds, Yahoo! Finance, Manulife Bank

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

The post Weekly Update – December 20, 2019 appeared first on Smof Investment Manager, LLC.

2018 RRSP Deadline Has Arrived, Tax Season Looms

Another year, another RRSP deadline. After today, all contributions will count toward your 2019 Tax Returns.

Tax season is the next big calendar event on the horizon. The 2018 tax deadline for most Canadians is April 30, 2019. If you or your spouse are self-employed, then your return is due June 15, 2019.

Regardless of when your taxes are due, if you owe money on your return, it is due on April 30, 2019.

We will be sending out our 2018 Tax Year reminder and checklists next week.

Weekly Update – By The Numbers

North America

• The TSX closed at 16,068, up 55 points or 0.34% over the past week. YTD the TSX is up 12.18%.
• The DOW closed at 26,026, down -6 points or -0.02% over the past week. YTD the DOW is up 11.57%.
• The S&P 500 closed at 2,804, up 11 points or 0.39% over the past week. YTD the S&P 500 is up 11.85%.
• The NASDAQ closed at 7,595, up 67 points or 0.89% over the past week. YTD the NASDAQ is up 14.47%.
• Gold closed at 1,294, down 9.00 points or -2.78% over the past week. YTD gold is up 0.70%.
• Oil closed at 55.73, down -1.45 points or -2.54% over the past week. YTD oil is up 21.60%.
• The USD/CAD closed at 0.7521, down -0.0084 points or -1.10% over the past week. YTD the USD/CAD is up 2.63%.

Europe/Asia

• The MSCI closed at 2,096, up 9 points or 0.43% over the past week. YTD the MSCI is up 11.19%.
• The Euro Stoxx 50 closed at 3,312, up 41 points or 1.25% over the past week. YTD the Euro Stoxx 50 is up 10.36%.
• The FTSE closed at 7,107, down -72 points or -1.00% over the past week. YTD the FTSE is up 5.63%.
• The CAC closed at 5,265, up 49 points or 0.94% over the past week. YTD the CAC is up 11.29%.
• DAX closed at 11,602, up 144.00 points or 1.26% over the past week. YTD DAX is up 9.88%.
• Nikkei closed at 21,603, up 177.00 points or 0.83% over the past week. YTD Nikkei is up 7.93%.
• The Shanghai closed at 2,994, up 190.0000 points or 6.78% over the past week. YTD the Shanghai is up 20.05%.

Fixed Income

• The 10-Yr Bond Yield closed at 2.76, up 0.1000 points or 3.76% over the past week. YTD the 10-Yr Bond Yield is up 2.60%.

Sources: Dynamic Funds

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

The post Weekly Update – March 1, 2019 appeared first on Smof Investment Manager, LLC.

What a difference a month makes. As we wrote 3 weeks ago, amid negative media sentiment, markets quietly moved upward from Christmas Eve, and finished January in style.

The S&P New York Stock Exchange closed on Christmas Eve at 13,780.20. At market close yesterday, the TSX sat at 15,540.60, a 12.77% rebound.

The S&P 500 closed Christmas Eve at 2,351.10, and has rebounded 15.01% since, ending January 31st at 2,704.10.

We see similar results looking at the Dow Jones Industrial Average (up 14.72% from December 24th through January 31st) and the NASDAQ (up 17.58% from December 24th through January 31st).

We maintain a cautiously optimistic market outlook for 2019. We outlined some of the reasons why in our E-Newsletter article, “Optimism in 10 Charts”.

Historically, we can point to one prevailing theme every year going back to the Great Depression as a reason not to invest; be it war, markets being “too high”, increased taxation, political turmoil, or a combination of these and other factors.

The simple truth is that attempting to time the market will cost you far more over time than maintaining a consistent investing strategy and sticking to it.

As we rapidly approach the March 1st RRSP deadline, remember: short-term volatility is the price you pay for superior long-term returns.

Sources: Globe Advisor, Advisor.ca

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

The post Weekly Update – February 1, 2019 appeared first on Smof Investment Manager, LLC.

Who Will Make Best Use of an RRSP?

You will benefit from an RRSP if you are working and your income is greater than your anticipated retirement income will be, you want to save money for retirement, you want your savings to grow in a tax-sheltered manner, and you will not need this money until retirement.

How Does an RRSP Work?

• RRSP contributions made from March 2nd of the current calendar year through March 1st of the following calendar year will count toward your tax return for the current calendar year. For your 2018 Tax Return, your contributions made from March 2, 2018 through March 1, 2019 can be deducted.

• Generating RRSP Space: individuals who live in Canada and derive earned income will generate RRSP space. The calculation is 18% of earned income to a maximum of $26,500 for 2019. The annual earned income required to maximize the annual RRSP generation is about $147,250.

• Generating Tax Saving: you receive a tax saving on RRSP contributions equivalent to your marginal tax rate. Let’s use the example of Suzie, an executive at Wonderful Foods Inc. Suzie makes $100,000 per year. Based on this income, her 2018 combined BC + Federal marginal tax rate is 38.29%.
  Suzie receives a bonus in cash and decides to contribute $5,000 of it to her RRSP. She will therefore generate a tax saving of $5,000 x 38.29% = $1,914.50. If we assume Suzie’s employer withholds tax such that she has a tax refund/balance due of exactly $0, then this $5,000 contribution will give Suzie a refund of $1,914.50. It is important to remember that “tax saving” isn’t necessarily the equivalent of “tax refund”.

• Carry Over Unused RRSP Contributions: You can carry over your RRSP contributions if you want. This is helpful if you want to contribute now, but you know that in the next few years, your marginal tax rate will be higher.

• Tax-Sheltered Growth While Invested: Anyone who has invested in a non-registered account must declare any capital gains, dividends or distributions, and interest earned on their investments. Not so in the RRSP. While money is invested within the RRSP, growth of any sort is sheltered from taxation.

• Equalize Retirement Basket (with a Spousal RSP): Consider the case of Suzie and her husband, Ralph. Suzie earns $100,000 per year but Ralph stays at home taking care of the children. Thus, if Suzie contributes only to her RRSP, then there will be a sizeable retirement income disparity. This disparity can be dealt with ahead of time by utilizing the Spousal RSP. In this example, the SRSP is in Ralph’s name (so at retirement, Ralph claims the income) but contributions use Suzie’s RRSP space. This makes sense because Suzie is in a high marginal tax bracket compared to Ralph, so there is a sizable tax savings in the present, and income sharing lowers the overall tax paid in retirement.

• Defer Tax until Retirement: In theory, your working-age income (and resulting tax rate) will be higher at retirement. Ramin makes $175,000 per year, so his marginal tax rate is 45.80%. He contributes $20,000 per year to his RRSP and realizes a tax saving of (45.80% x $20,000) $9,160. In retirement, Ramin converts his RRSP to a Retirement Income Fund (RRIF) and withdraws $10,000 from the RRIF. His total income at retirement is $75,000 per year. At $75,000 per year, Ramin’s RRIF withdrawals are taxed at 28.20%. By deferring his income via RRSP, Ramin has effectively saved 17.60% in tax upon redeeming, or $176 per $1,000 redeemed in this example.

Frequently Asked Questions

Question: How do I find my RRSP Deduction Limit?
Answer: You can find your new RRSP limit on your Notice of Assessment.

Question: What happens to my RRSP space if I don’t use it? Do I lose this space?
Answer: No. Any contribution space that you do not use in a given year will be carried forward indefinitely.

Question: What happens to my RRSP space if I don’t use it? Do I lose this space?
Answer: No. Any contribution space that you do not use in a given year will be carried forward indefinitely.

Question: I have a workplace/group RRSP, how is this treated at tax time?
Answer: An important benefit of a workplace RRSP is that you receive the tax saving at the time of the contribution. Your employer will take gross income and contribute it to your work/group RRSP. In addition, most (but not all) work/group RRSPs will contain an employer matching component. For this reason, it is almost always advisable to maximize any workplace RRSP prior to contributing to an external RRSP.

Question: What if my working income is the same as, or lower-than, my RRSP income?
Answer: If this is the case, and you don’t foresee a situation where your working income will ever exceed your retirement income, you may not derive a meaningful tax saving in the present, but redemptions at retirement still count as income. The TFSA may end up being best for you. We can assist you in determining what makes the most sense given your specifics.
However, if you feel that over time, your working income will increase and there will be a subsequent tax advantage versus your projected retirement income, you can always contribute to your RRSP and carry over your contributions until your income and marginal tax rate have increased.

Question: I’d like to save up to buy a house, so I need my savings prior to retirement. I suppose I should just contribute to my TFSA then, right?
Answer: Not necessarily. There is a provision called the Home Buyers Plan (HBP), which allows you to withdraw up to $25,000 for use toward the down payment on your first home. Think of this as an interest-free loan to yourself. Of course, the loan must be repaid to your RRSP over time. You have a 2-year grace period, at which point you must repay a minimum of 1/15^th of the balance withdrawn per year, over 15 years.
Consider Suzie from our previous example. Suzie withdrew $15,000 via HBP to fund a portion of her down payment. After her 2-year grace period, Suzie will have to repay her RRSP $1,000 per year for the next 15 years.

Question: Is there a provision for people returning to school?
Answer: There is! The provision is called the Lifelong Learning Plan (LLP). You can redeem up to $10,000 in a calendar year, and up to $20,000 in aggregate, to help fund your continued education. Repaying the LLP is similar to the HBP, but you have to repay 1/10^th per year over 10 years.

Question: I have over-contributed above my RRSP limit. What are the consequences and what do I do?
Answer: Every person has a cumulative “buffer” amount of RRSP space. This amount is $2,000. So, over-contributions less than $2,000 don’t require any action. If you have contributed in excess of this $2,000 buffer amount, you will have to pay a penalty of 1% per month on any excess above the $2,000 buffer. This 1% per month will add up fast, so if you even think you may have over-contributed, you’re better off investigating right away.

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

The post Back to Basics: Registered Retirement Savings Plan (RRSP) appeared first on Smof Investment Manager, LLC.

Here are the various ways you can fund your RRSP account:

1: Pre-authorized debit (PAD): If we have your banking information on file, the funds can be taken directly from your chequing account. PADs take a few extra days to setup, but we can use this method right up until deadline day. As long as the request is submitted by the deadline, the investment companies will code the purchase as a first 60-day contribution, even if the funds come out of your account afterwards.

2: Cheque: You can mail or drop-off a cheque to our office.

3: Bill payment (nominee accounts only): If you have a nominee RRSP, you can fund your account with a bill payment with your financial institution’s online banking platform. The payee is Fundex Investments and the account # will be your RRSP account number (it starts with an N and contains 9 digits). 

You will also need to sign an order entry form to make the purchase. Contact us anytime for more information.

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

The post How do I make my RRSP contribution? appeared first on Smof Investment Manager, LLC.