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2 Key Differences between a Robo-Advisor and a Human Advisor

If you’ve contemplated investing at some point, you may have considered what kind of advisor would be the right fit for you – a human advisor or a robo-advisor. Well, to shed some light on the subject, here are some noteworthy differences between the two. Robo-Advisor A robo-advisor is a technology company that uses a specialized algorithm to invest your money into various assets that are appropriate for you based on four areas – goals, risk tolerance, timeline and constraints. In order to determine suitability, they will regularly rebalance the money to carry out the target mix of bonds and stocks. Robo-advisors normally work with exchange-traded funds (ETFs). Human Advisor In a conventional financial institution, usually you talk to an advisor before they invest your money. They ask you about the risk tolerance, goals, constraints and timelines. They provide you with advice about the investments (asset mix). They’ll invest the money in mutual funds. As time goes on, you and the advisor meet to talk about your life’s needs, the market changes and the most effective way to appropriate your investments. What Kinds Of Fees Would You Expect? Human Advisor An actual financial advisor charge is dependent upon the financial institution and the service received. At the lowest level, you pay for the invested products such as mutual funds, which are charged as a fee known as Management Expense Ratio (MER). These fees can vary – from under two percent (ideal) to more than two percent (terrible). Ask about the fees before you do any kind of investing to ensure you don’t pay more than you have to. Robo-Advisor...

Credits to Consider for This Tax Season

With the 2016 tax season behind us, now is a great time to start planning how to implement some of the tax credits listed below into your next year’s returns in order to minimize your tax liability. Here are some tax credits made available to you and therefore should be utilized in the forthcoming season to maximize your refund next year: 1. Claiming and Transferring Credits It is important that you don’t forget to highlight on either yours or your spouse’s tax return any donations you’ve made. You can be rewarded with tax reliefs once the donation exceeds $200. You should claim any medical expenses you incurred throughout the year once the amount you paid was over $2,237, or if it exceeds your income at 3%. A good tip is to claim medical expenses on the tax return of whichever spouse earns the least amount of income. Anyone of the age of 65 or over is entitled to a tax credit of up to $1,068 once you earn less than $35,927. If your income is $83,427 or more you will not receive any credit amount from the CRA. A disability tax credit also falls under this age bracket, whereby if you’re deemed disabled you can claim any expenses in structuring your home to make it disabled-friendly. This credit can be as much as $10,000. Tax credits such as pension, disability, age, family caregiver, education and tuition can be transferred to your spouse once you don’t require the credit to reduce your tax liability to zero. 2. Principle Residence Tax Newly introduced in 2016, you must now disclose the amount...

Four Ways Parents can Help Their Children become Financially Stable

It is a parent’s responsibility and obligation to provide financial stability to their child throughout their upbringing and ensure they can become financially independent. However, a parent must know when it is time to stop the bankroll. Here are four tips to help set them up financially: Setting Up a TFSA Account One of the best things a parent can do for their child is to set up a TFSA account. Parents can encourage their children to fund the TFSA by making a matching contribution. So, if a child contributes $100 to the fund, the parents will also contribute $100. This process can quickly generate growth within the account once diligently supplemented. Don’t Purchase “Extras” Of course, the generosity of parents should stop at world cruises, luxury cars and the most recent tech gadgets – these are things the children should be purchasing themselves. They need to understand debt just as much as they do wealth. Teach Them about Credit Cards Parents should teach their children about credit cards. Instead of dealing with the compounding interest on an outstanding balance, they need to impress upon them the importance of paying the card off before the balance is due, so as to not rack up unnecessary interest charges. Educate them on RESP’s One of the first steps parents should take when having a child is to set up a Registered Education Savings Plan. This can be an effective way of alleviating the financial burden of sending a child through their education and a great way of protecting the parents’ retirement nest egg.  Ensuring the RESP is consistently supplemented by the...

5 Simple Ways To Buy a Home Stress-Free

Preparing ahead financially can ease the cumbersome aspects of purchasing a home later on. Doing your research beforehand will allow you to go into the housing market with a clear head, side-stepping many common problems home buyers face. There are five key things to remember in order to buy your home responsibly: Create a Budget Figure out what your monthly expenses are, and then your annual expenses. Now compare that to your monthly income. The money left over can be used to determine the house price. While you’re doing this, use a mortgage calculator to figure out what the acceptable monthly amount is for the home. If you have no money left at the end of the month, ask yourself if this is the time for you to buy a home. Pay Debt Off If you have debt – credit card, student loan, auto loan, etc. – make sure you start paying it off or reduce it. Lenders won’t give people mortgages who can’t effectively manage their debt. You don’t need to be debt-free, but you do need to owe less than what you actually earn. Lenders will use a debt ratio to determine your monthly debt payments to the gross monthly income. Save Money Most lenders will want you to put some money down before they give you a loan – usually 10 to 20 percent. Saving money through an RRSP can stimulate your finances. You can reduce your monthly expenses, putting the extra money into a savings account. If you can handle it, work a second job for the extra money. Know and Increase Your Credit Score...

4 Strategies To Help You Pay Off Debt

Are you feeling the financial pinch? Do you feel bogged down by your debt? If so, then perhaps it’s time for a change. When it comes to your finances and successfully getting out of debt, it’s important to devise a plan that will help you to succeed. It doesn’t matter if you have a small amount of debt or a lot of debt, here are four key ways to help you become debt free. Create Goals If you want to pay down your debt, you need to create some goals to make it happen. Whether your goal is to relieve yourself of a particular debt or save money for a long overdue vacation, having structured goals in place is an excellent way to keep yourself on track and stay motivated. Keep an Eye On Your Money If you want to get out of debt, you need to know where your money is going. Track how you’re spending your money by using an app or a simple budget. Having a budget in place or using an app to track your inflows and outflows allows you to visualize where your money is going, and identify and adjust for any frivolous spending habits. Use the Snowball Method Once you know where your money is going and you’ve adjusted your spending to be within your budget, it’s time to pay off your debts. Write down all of your outstanding debts – from smallest to largest –and start paying off the smallest amount first. Once you’re done paying that amount off, apply what you’ve been paying to the second-largest amount. Fully paying your small...

Five Ways To Better Manage Your Holiday Spending

With the holiday season quickly approaching, it’s tempting to fall into the trap of overspending on gifts for family and friends. A gift is a great way to show thanks and appreciation to the people in your life that you hold dear, however it’s quite easy to overspend on gifts during the holidays. If you’re worried about how this extra spending could negatively impact your bank balance and debt levels, now is a good time to start planning on how to better manage your spending during this festive season. Here are five tips that can turn your holiday spending into a spending holiday: Give Yourself a Budget We find that one of the most important things is to create a holiday budget and stick to it. That way you can forecast the amount of spending you’re planning to do, while still staying within your financial means. To ensure that you’re checking off everyone on your list while still keeping things affordable, create a mini-budget for the season that includes the people you’re buying for, and the amount you’re willing to spend on them. With this budget in place, you’ll find that it’s much easier to avoid overspending this season. Make a List, Check it Twice It’s time to take Santa’s advice and make a list (maybe check it twice). It’s tempting to buy gifts for everyone in your life, but sadly for most people it’s not a feasible option. If your shopping list includes an excessive amount of family and friends, your list may need a little pruning. Make a list of everyone you’d like to buy gifts for, and...

3 Tips For Renewing Your Mortgage

Before you go jump the gun and re-sign with your current mortgage lender, it’s always important to consider shopping around to see if you can get a better deal. The biggest monthly expense for most people is their mortgage payment, yet a shocking amount of households just automatically renew their mortgages when the term is up. Shopping around is always a good idea, because you may be able to negotiate a better deal. Here are three tips to help you lower your mortgage payments come renewal time:   1. Get a head start What you definitely don’t want to do it wait until the last minute (i.e., when your mortgage is actually up for renewal) to start shopping around for new terms. Give yourself a little time and start shopping around for a better rate a couple months before your mortgage is up for renewal. This way, you’ll have plenty of time to search for and compare different renewal options.   2. It’s not all about interest rates Please don’t just fixate on interest rates – there are plenty of other factors that determine a good mortgage rate. Remember to factor in the amortization period, rate types (fixed rate or variable rate) and the flexibility of the payment schedule. These are all crucial factors in lowering the cost of your mortgage payments.   3. Shop around Before trying to negotiate a lower rate from your bank, find out what other banks and lenders are offering. There are quite a few websites that post current mortgage rates from banks, which can vary...

4 Steps to Comfortable Estate Planning

It might be uncomfortable to think of the day when your sun sets, but uncomfortable or not, it’s greatly encouraged to be prepared for that moment as much as possible. We all have a say in when, where and how our hard-earned assets are distributed. With that in mind, take a look at these four steps to comfortable estate planning.   1. Pay All Your Bills Including Debts and Taxes The beneficiaries of your estate will not see a dime until all your bills have been paid, this can’t be stressed enough. Take care of all your accounts so you take care of your loved ones. If you are deep in debt, chances are there will be little left of your estate for the people you intended to benefit once you pass.   2. Write a Will While it’s obvious, it’s amazing how many people omit writing a will all together. Your estate and how it is distributed is and should be your call. Sadly many estates are left in the hands of lawyers and judges. A good written will guides how your estate is distributed and to whom specifically. To put it bluntly, you get to determine how your estate is used even in death.   3. Establish an Executor You Can Really Trust Take careful consideration when deciding who is best for the task of executor. The trusted person should have the time, knowledge, skill and responsible attitude to carry out your wishes honestly. It’s often assumed the eldest child should handle this task, but it’s certainly not a concrete condition.   4. Properly File Important Documents...

4 Decisions That Can Lead to Stronger Financial Independence

Little decisions in the day-to-day can go a long way. We choose things by impulse, emotion and sometimes by ignorance. But some of these choices can be very costly. To help keep an honest perspective, here are four decisions that can lead to stronger financial independence.   1. Marry the Right Person You could lose half of your assets in just a few hours. That’s the worse-case scenario in a tenuous marriage. People often don’t think of financial compatibility when considering marriage, but the truth is it’s just as important as any other factor. Money mind-set can be a big predictor of relationship success. Many marriages have torn apart as a result of conflicting financial beliefs and habits.   2. Watch Your Costs Fixed costs are very easy to lose track of. From a gym membership, to a cell phone plan, to a subscription of your favourite magazine – it all adds up. The key is to stay ahead of all these and find those unnecessary expenses. When is the last time you have been to the gym? Do you really use four gigs of data? And, who really reads magazines these days? The point is there are always areas to trim and all it takes is a little attention and awareness.   3. Tune Out the Noise Given the volatility in the market there is a reason every day to pull out. But more often than not, these knee-jerk reactions usually prove to be very costly. Try to turn out the noise and think long-term. Also think about low-cost index funds as the investment of choice.   4....

4 Ways to Tap into Your Home For ​an Extra Source of Retirement Income​

Research has shown that more than half of Canadians aged 50 and older have collided with unexpected events that have impacted their finances and/or retirement plans. Whether you’re planning on selling your home or staying, here are four ways to tap into your home for added security during retirement.   1. Sell and Rent An easy way to get money out of your home is to sell it and put the cash into an investment that will boost your yearly income. But before you do so, factor in expenses (real estate agent fees, lawyer fees, moving costs, etc.). It’s also important to decide on the volume of risk you’re willing to take in investing. 2. Sell and Downsize Another effective way to boost your retirement security is to sell and downsize — it’s easy logic. However keep in mind that your needs might change as you age. For example, you might decide it’s absolutely necessary to avoid homes with a steep set of stairs. It’s imperative that you think strategically about your next destination. 3. Become a Landlord Ever thought of converting a portion of your home into an apartment? Well, doing so can increase your monthly income substantially. However you need to decide you’re cut out to be a landlord – that means being available all hours of the day and being able to find the right tenant. 4. Get a Reverse Mortgage This is a mortgage that is given to people who own property at 55 years or older. The borrower doesn’t pay back the loan until he or she sells the home.The loan is tax free...

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