Financial Planning Archives - Page 6 of 8

Whether you are facing a job loss or going through a lengthy divorce, these huge changes don’t just affect you personally, they also have a major impact on your finances. If you are lucky, you will have enough time to discuss and prepare for these life-changing events by putting together a financial plan. Unfortunately, these types of life changes tend to happen right out of the blue. Either way, it is important to be certain you are prepared to deal with any potential scenario. We have provided a few tips on how to keep your personal finances intact through a number of trying life events:

Job Termination

In the unfortunate event where your company deems your position expendable, what should you do? You will have a decent severance package to get you through the next few months, but you’ll need to find gainful employment quickly. If you happen to land a new job quickly, you can invest the money from your severance or use it to pay down debt. You could even use it to help kick-start a business venture you’ve been thinking about. You’ll land on your feet quick enough, but sitting at home with a few weeks’ worth of severance on your hands can help you re-evaluate your career and your life aspirations.

Separation and Divorce

Divorce not only involves personal consequences, but financial ones as well, especially if you have children together. You will need to update your will and your beneficiaries on any savings plans or life insurance you may have. If you need to start providing child support, you could need term life and disability insurance to protect those future payments. If you eventually re-marry, you may need to create a spousal trust so that your new spouse will have income while still leaving some inheritance for all of your children.

Taking care of a special-needs child

Caring for a child with special needs will require a lot of time and attention. Parents need to be devoted to their child’s development and health every step of the way. This situation also has financial repercussions. You might want to open a Registered Disability Savings Plan (RDSP) to ensure your child’s financial security. You may also establish a trust fund in their name.

When you experience a life change, contact The Beacon Group of Assante Financial Management Ltd. and they will help adapt your financial plans to fit the changes in your life.

Naming Beneficiaries for Your Financial Assets

September 29, 2016

by Estate Planning Financial Financial Planning Inheritance

When naming a beneficiary for each of your financial assets, the obvious choice may not always be the best choice. You should consider tax and estate planning implications, among other things. We have listed important items you should consider when naming beneficiaries for major financial assets:

Tax-Free Savings Accounts

With a Tax-Free Savings Account (TFSA), you can name a beneficiary, a successor holder, or both. Only your spouse can be named as the successor holder. This means your surviving spouse can take ownership of the assets in your TFSA without affecting their own contribution room. A beneficiary can get your TFSA assets tax-free and can apply them to their contribution room if they have enough space. It’s important to note that any increase in the value of the TFSA between your death and the date of the transfer will, unfortunately, be taxable to the beneficiary

Registered Retirement Plans (RRSPs and RRIFs)

When you name your dependent child or your spouse as the beneficiary of your RRSP or RRIF, the plan assets roll over on a tax-deferred basis. The same is not true if you name an adult child or anyone else as the beneficiary. When transferring your retirement funds to someone other than a dependent child or spouse, the tax liability for the transfer will go to your estate. This will reduce the amount of money you have to give through your other non-registered assets.

Segregated Funds and Life Insurance Policies

In some situations, you may want to consider using a testamentary trust instead of naming a spouse or child as a beneficiary of life insurance or segregated funds. When you name a minor as a beneficiary, the proceeds of the policy or investments must be paid into a trust in their name. If you name your own testamentary trust, you can control where your trust will be held and who will be managing your funds. This is especially a good idea in blended families. You can guarantee each child and spouse gets exactly what you desire, even if they are a minor.

The implications and rules of naming a beneficiary are complex and can very daunting to work out on your own. An estate planning expert at The Beacon Group of Assante Financial Management Ltd. can help you review your personal estate planning goals in order to name an appropriate beneficiary or successor holder for your registered and non-registered accounts.

Minimizing Financial Conflict with Siblings

September 26, 2016

by Estate Planning Financial Planning Inheritance

It’s the sad reality of the world we live in, but conflict surrounding money within families is all too common. There are no set rules or guidelines when it comes to siblings and money. We have listed three typical situations that you may find yourself in that involve your family and money, and some strategies to help get through them while keeping everyone happy.

Inheritance

It is common practice for a parent to name one of their children as executor or estate trustee of a will. Unfortunately, this may cause some discord between siblings. A sibling that is not the executor may feel that key decisions should be made together, which could cause some conflict. The money involved in inheritance can also be a point of contention. One sibling might feel like the assets are being split up unevenly. These matters aren’t usually resolved overnight and can lead to delays and family conflicts lasting years. The best way to prevent this problem is by making your will as fair as possible. You should consider naming someone other than one of your children as executor as well. Speak with your financial advisor at The Beacon Group of Assante Financial Management Ltd. about your estate planning options.

Lending money

What do you do if one of your siblings comes to you and asks for a loan? It’s easy enough to give a loved one some help in their time of need, but you need to consider what the money is going to be used for. If your sibling is living a troubled life, giving them more money will enable them to continue. You aren’t likely to get this money back in this scenario either. If your sibling is looking for help to send their child to university, you will be helping them immensely and you are likely to get your money paid back. It is okay to put the loan and the repayment terms in writing. This will help legitimize the lending and help protect your relationship. You are allowed to say “no” to your family too. Either way, you should only loan money out if you can afford to lose it if it’s not repaid. There are so many choices when it comes to lending cash to siblings, but at the end of the day, you need to do what feels right to you.

Caring for a disabled sibling

If you have a sibling with special needs that requires lifetime support, what happens to them when your parents pass away? Is another sibling going to pick up the slack? Caring for your sibling could require bringing them in to live with you or organizing and handling the finances involved in caring for them. This is something you need to discuss with your parents long before they have reached the end of their life.

The financial advisors at The Beacon Group of Assante Financial Management Ltd. can help you with any financial matters concerning your family.

Are You Prepared for the Unpredictable?

September 12, 2016

by Financial Planning Life Changes

Try as you may, you are not able to control everything life sends your way. A major life-altering event like sudden job loss or serious illness can throw you and your family for a loop. You can’t prevent these types of things, but the one thing you can do is prepare financially so you are ready for any possible scenario. We have outlined the steps you should take when a life-changing event suddenly crops up:

Sudden Job Loss

The first step you need to take when receiving the news that you will be let go is to seek legal counsel. Contact your lawyer to confirm that the terms of your termination and your severance package are acceptable. You should speak to a financial advisor to see if any portion of your severance is eligible to roll over to your Registered Retirement Savings Plan. You should also consider the possibility that the taxable amount can be split between two years instead of one. If you are lucky enough to find a new job in a timely manner, your severance package becomes a windfall. If you are still seeking employment after a month or two, your severance could run out and you may need to start using your emergency fund along with your Employment Insurance benefits.

Disability

To protect yourself from the financial repercussions of a debilitating injury, disability insurance can help. This type of insurance replaces a portion of your regular income if an illness or injury prevents you from going to work. You may have disability insurance under your employer’s group benefits plan, but you will want to check the level of coverage. If their definition of disability is restrictive, or if the income provided wouldn’t be enough, you want to consider personal coverage to supplement it. If you are self-employed, you should consider purchasing insurance that will replace a percentage of your income.

Critical Illness

Similar to disability insurance, there is also coverage for critical illness. Disability insurance replaces your income, but critical illness insurance covers the expenses associated with your illness. Heart attacks, strokes, and cancer are the most common conditions that are covered by critical illness policies.

If you want to make sure you’re prepared for any life-altering events, you should contact a financial advisor at The Beacon Group of Assante Financial Management Ltd. Having the peace of mind that you and your family are protected from the unpredictable is invaluable.

How to Cope With the Sandwich Generation Squeeze

September 8, 2016

by Aging Education Financial Planning Inheritance Investment Planning Tax Planning

Picture a sandwich. The top slice of bread is the responsibility of taking care of your elderly parents. The bottom slice is your young adult children who have boomeranged back home or are involved in post-secondary education. You are the meat stuck in the middle, trying to take care of both while working towards your retirement. This, in a nutshell, is the crisis the “sandwich generation” faces today. If you find yourself in this situation, take heart that you aren’t alone and you have people fighting for your best interests. The following are steps you can take to manage being stuck in the middle of caring for two generations:

Eldercare

The health insurance provided by the government leaves many elements of care uncovered or only partially covered, including nursing care at home. If one parent is still independent of you, you may wish to ask this parent to sell their home in order to downsize for extra monthly cash flow. If you are personally assisting your parent with their care, there is community care available in most regions and there is always private caregiving assistance.

Kids’ Education

The cost of post-secondary education is rising every year. Parents with two children that are close in age really feel the squeeze when both kids are enrolled at college or university.

The first step is to plan ahead and start investing early in Registered Education Savings Plan (RESP). You should consider supplementing the RESP with Tax-Free Savings Account (TFSA) investments, family trusts, in-trust accounts, or a combination of these. The Beacon Group of Assante Financial Management Ltd. can help you reach your education savings goals.

Boomerang Kids

25.9%[1] of young adults in Canada between the ages of 25 to 29 live at home with their parents. This boomerang generation can burden their parents with extra cost or prevent them from a planned downsize of their home. The key to handling this situation is communication. Talk openly with your adult children about their plans, responsibilities, and expectations to help maintain a healthy relationship with them.

Contingency fund

Nobody can predict the future. You should consider setting money aside during your prime working years to cover the potential costs of supporting your parents or adult children. The Beacon Group of Assante Financial Management Ltd. can develop a plan to help alleviate the pressures of being in the sandwich generation while setting your family up for future care as well.

[1] Statistics Canada, Living Arrangements of Young Adults Aged 20 to 29 (2011 Census)

Why Naming a Power of Attorney is Important

September 5, 2016

by Estate Planning Financial Planning

It’s hard to ever envision anything bad happening to us, but it’s important to look beyond our own fears so that we can look out for ourselves in the future. Whether it’s renewing insurance, dealing with your investments or any other important decision, it’s imperative that we all take some time to consider the possibility of not being able to make our own decisions. This is where planning ahead and naming a power of attorney is so important. Here are the two main reasons why.

Your Finances

You’ve worked your whole life to achieve what you have – whether it’s your home, a company, investments or anything of financial matter. It’s important that if you ever suffer from some unforeseen health or medical condition, and are unable to make the decisions yourself, someone you know and trust can make them for you. This is why planning for the future is so important.

Power of attorney means you get to select someone who may act on your behalf. This not only ensures that your needs and desires are properly taken care of, but also that they are done promptly and accurately. Without this, it would require an individual to apply to become your representative, which may not be someone you desire to oversee your decisions in the first place.

Your Healthcare

There’s nothing more important than health and the people who can makes those tough decisions for you when you no longer can. Whether it’s treatment, or even housing, the person you select to be your appointed representative can offer you the comfort of knowing how you wish to be treated. This also incudes any preferences for life support or resuscitation. Additionally, you can also select what restrictions your power of attorney has.

Having a person appointed to deal with your desires and needs at a time when you may be suffering can offer you that sense of comfort and peace knowing that things will be taken care of.

When it comes to long-term planning, we must never exclude the possibility that we may not always be able to make our own decisions. It’s imperative to see beyond our fear and look towards the peace and comfort of having someone we can trust to make those hard decisions for us. We can’t predict how life may change. We can only do our best to plan for it, which is why naming a power of attorney is so important.

Consult The Beacon Group of Assante Financial Management Ltd. for expert advice on estate planning, tax planning, retirement planning, or investment advice.

3 Common Reactions to the Market Cycle

August 18, 2016

by Financial Financial Planning Investment Planning

Sometimes in life you find out the hard way that reality doesn’t always meet your expectations. This can be especially true when dealing with investments. You might think that you are comfortable with a temporary drop in your investment value, but when it actually happens, you may not be very comfortable with it. There are three common reactions investors have when dealing with the market cycle.

You become anxious and lose sleep

Your shiny new investment takes a dip in the first week, and dealing with it is way more difficult than you expected. Risky investments aren’t worth it if they cause you enough stress that you can no longer sleep at night. In this case, we recommend that you move your money into more conservative investments. You can talk with your financial advisor about adjusting your portfolio to be better aligned with your actual risk tolerance.

You don’t like it at first, but you get used to it

Your investment takes a dive and you start to worry. You talk to your advisor and they assure you that if you wait it out, you won’t regret it. You just have to be patient while seeing your investments through the market cycle. Once your investment rebounds, you experience the market cycle for yourself. This makes you more comfortable with accepting risk. You may even want to target more aggressive investments, or you may be happy with what you are doing. Talk to your financial advisor either way.

You don’t think twice about it

You keep an eye on your portfolio from time to time, but in general you realize that it’s not a good strategy to time the market and micromanage your investments. You and your financial advisor came up with an investment plan and you are going to stick with it. You don’t need to change your portfolio and you can sleep easy knowing your investments are in good hands.

No matter what your reaction is, every investor needs a good financial advisor to help them with their investments. This is true for investment veterans and for rookies. You should contact a financial advisor at The Beacon Group of Assante Financial Management Ltd. They will help your investment portfolio match your unique needs and personality so you can sleep easy if the market makes you nervous, or you can take some risks if you are more aggressive.

Are You Prepared for the Unexpected When it Comes to Retirement Planning?

August 15, 2016

by Aging Financial Planning

The simple fact that Canadians are living longer and longer means that we are more likely to come face-to-face with unexpected events that can have financial consequences. A Canadian in their 60s has a very good chance of making well into their 80s. This increased longevity means that Canadians need to plan to have their retirement income last for at least 25 to 30 years. Unfortunately, a lot can happen within those 30 years of retirement that can affect a serious effect on your savings. Read on to learn more about how to best prepare for the unexpected when planning your retirement.

Long-Term Health Care

Canadians can expect to experience at least one major life event that will upset their financial life in their senior years. The most expensive events typically involve the cost of health care. Depending on your situation, you may face higher than expected health care expenses because you are no longer covered under your employer’s group health insurance. This may lead to you facing costly expenses such as dental, vision, and prescription expenses that are not covered by government plans. The largest potential health expenses you will need to plan for is long-term care. The government only foots a minor percentage of that bill, so most of it will need to be paid out of pocket. A stay of even a couple of years can put a major dent into your savings, which is why it’s a smart idea to allow for these potential expenses by planning accordingly. You should purchase long-term health care if you won’t be covered by your employer anymore.

The cost of living

It’s easy to convince yourself that your cost of living will decrease during retirement. Expenses like transportation will go down because you are no longer commuting, but you will see an increase in many other ways. Your time spent travelling and participating in recreational activities needs to be factored in as well. You can’t forget about inflation either. Even low-level inflation will devalue your savings somewhat. The key is to be a bit aggressive and aim for investments that will outpace inflation, instead of being completely safe and having inflation cut into your retirement savings.

Expect the unexpected

Retirement savings is all about planning for the expected and accounting for the unexpected. If you want to be sure that you have everything covered, you should talk to a retirement planning advisor at The Beacon Group of Assante Financial Management Ltd. to get started.

Finding Investment Common Ground with Your Spouse

August 11, 2016

by Aging Financial Financial Planning Investment Planning

It can be hard to find common ground between two unique individuals, even when they are in a relationship. This kind of dilemma can occur when dealing with investments. Just because you love each other doesn’t mean you have the same risk tolerance as investors! You may not be able to sleep at night if the market has taken a hit, while your spouse may be sleeping soundly right next to you, knowing your investments are bound to go back up. If you find yourself in this kind of situation with your loved one, we can help. Here are three approaches that can help you find investment common ground with your spouse.

Agreeing on a goal and timeline

There are three key factors to take into consideration when creating an investment portfolio. They are called investment objective, time horizon and risk tolerance. Even if you and your spouse don’t have the same risk tolerance, you may be able to come to an agreement because of your circumstances. For example, if you want to save for a down payment on the home of your dreams, you may be able to convince the aggressive investor to stay away from high-risk investments knowing that your home purchase may rest in the balance. You both can agree on your objective and time horizon and come to an agreement on your risk tolerance for this investment.

Meeting halfway

You may be able to find common ground with your spouse by creating a diversified portfolio. This means you can adjust the risk level of the investment to please each spouse. You should be able to find a mutual fund with an agreeable mix of equities and fixed income that creates a suitable compromise for each spouse’s risk tolerance. This would eliminate the more aggressive and conservative holding, allowing you both to meet halfway. This strategy can be very beneficial as diversifying your portfolio is a smart investment strategy.

Separate portfolios

You won’t always be able to come to a compromise, so you may just have to agree to disagree. If this is the case, you may have to each keep your own separate portfolio. This actually isn’t a bad investment strategy; it can be considered a well-rounded approach to investing. You may be able to strike a nice balance between the two of you. One portfolio could focus on long-term growth while the other focuses on capital preservation.

If you and your spouse need help with your investments, you should talk to a financial advisor at The Beacon Group of Assante Financial Management Ltd.

How Do You Use Your TFSA?

August 8, 2016

by Financial Financial Planning Tax Planning

The recent federal election brought the Tax-Free Savings Accounts (TFSA) into the spotlight. The Liberals promised to lower the contribution limit from the Conservative Government’s $10,000 to $5,500. The Liberal government followed through with their promise, so the 2016 TFSA limit is now $5,500. Thankfully, Canadians aren’t losing the contribution room they’ve accumulated, so somebody opening an account today would be able to put in $46,500. The real question isn’t about how much room you have, but rather how to properly make use of the tax-free incentive. Read on to learn more about how to best use the TFSA to your advantage.

The Holistic Approach

We find that a lot of Canadians have “tunnel vision” when it comes to the TFSA. It’s much more effective to take a look at the big picture when deciding how to use the TFSA. You need to take your life goals and long-term financial plans into consideration first, and then make investment choices that will help you meet your objectives on time with an acceptable amount of risk tolerance. With that in mind, it will be easier for you to determine the securities you need to invest in, and if they are to be allocated in non-registered or registered accounts.

Short-Term Goals

If you are planning on, for example, purchasing a new car in the next five years, it would make a lot of sense to use some of your TFSA room for that goal. It would not make sense to then invest aggressively, as a risky investment could mean that there won’t be enough money in the account when the time comes for your purchase. It would be better to invest in conservative holdings to ensure some growth but also to have peace of mind knowing you will have the money when it’s needed.

Long-Term Goals

If you are looking to use your TFSA as a source of retirement income, or for other long-term goals, it would be wise to take a holistic approach instead of just focusing on one kind of account or one type of investment. In order to best save for your retirement, it’s a smart idea to build your nest egg strategically, with fixed income holdings and equity spread across different accounts. Investors should make the best use of the Registered Retirement Savings Plan (RRSP), TFSA and non-registered accounts to ensure tax-efficiency and flexibility.

Navigation through the world of registered and non-registered investments can be tricky. If you need help with your investment planning strategy, you should contact The Beacon Group of Assante Financial Management Ltd. today.