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Wealth consists not in having great possessions, but in having few wants.
~ Epictetus ~
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VIDEO: In this months video blog Dan discusses the world financial outlook, oil, the impact on the Canadian dollar and Pension schemes.
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DAN'S BLOG
This last month, I was involved in many meetings regarding the world economic situation.  From discussions in Toronto, board meetings with Manubank, The World Outlook Financial Conference and meeting with Bob Boyda, who is responsible for over $100 Billion in asset management out of Boston. What I will try to do in this blog post is give you a 30,000 foot view of what is going on in the world out there. In future blog posts, I will unpack these for you in more detail.
Canadian Dollar: I have written in past blogs that I feel the Canadian dollar could drop to the 55-60 cent level. I was stunned when Martin Armstrong at the World Financial Outlook Conference said the CDN dollar could drop to 49-50 cents. A groan went through the 1000 attendees at this conference. The issue here is that Armstrong has been the most accurate of Forecasters.
Stock Markets: With the Canadian dollar heading down, the Canadian Index will be bearish and we expect it to decline for some time. The U.S. market, however, we expect to have a very good second half to this year. Money continues to pour in from Russia, Germany, France and China as billions are escaping the risk of those currencies devaluating. We have recommended cash since July 6th and this has turned out to be a great move as the market is down -13.22% since that time. We are now heading back into the markets with a weighting more on the U.S. side to pick up the strength of the USD as the CDN weakens.
 Oil: I spent time last month in conference with Josef Schachter and his outlook for oil is still weak. There may be a bit of a bear bounce at this time, but lower lows are still ahead. Oil will be a good buy at any price long term but the sale price will continue to drop. Earlier, I wrote about a $23 barrel of oil when it was up around $50 - let’s see what happens. Bank of Scotland even stated it could go as low as $16?
Real Estate: I know many readers now are reading this from around the world but I live in the greater Vancouver area and still get many questions about our real estate prices here. We are living in a bubble of Mainland China investment driving up our real estate prices. I read a report that 70% of real estate purchases in Vancouver over $2 million last year went to Mainland China. China looks like their growth will continue through 2020 and as long as that happens, the real estate will continue to increase in value. This could change of course overnight with the Chinese government stemming the flow of capital out of China or an social economic event like war, etc.
 Interest rates: They have started up with the Feds increase and they need to continue up to save the pensions in the U.S. Most pensions were calculated for decades at 6-8% and now with 1-2% interest rates, 1/3 of all the pensions cannot meet there liabilities of paying out pensioners. Watch for more news in the media as this problem starts to heat up as municipalities, counties and cities start to default on their pensions.
While all this sounds really negative, there are still lots of opportunities in the world out there to make gains and to protect your assets. It may not be in following the masses and media but to those who are prudent.
“Be leery when others are greedy, be greedy when others are leery”
- Warren Buffett
For more information on how Loney Financial can help, contact us at 604.534.6003
or Email: dan@loneyfinancial.com
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RRSP DEADLINE APPROACHING QUICKLY
This year’s deadline to contribute to your Registered Retirement Savings Plan (RRSP) is fast approaching — the last day to contribute for the 2015 tax year is Monday, February 29, 2016, this is also the deadline for RRSP Loans through Manulife Bank.
With the recent market fluctuations it’s more important than ever to have a well-thought out plan in place to save for retirement. If you’re unsure of how to proceed, we can offer expertise to construct a portfolio that can help meet your goals and also ensure you sleep at night.
To find your 2015 RRSP contribution amount, please look at your last years Notice Of Assessment. If you cannot find it, CRA has a free online service to access your contribution limit.
If you would like to do a deposit and or loan application without meeting Dan at this time, please contact Denise Bailey at denise@loneyfinancial or phone 604-534-6003 ex 225.
To book a meeting with Dan (in person, online or telephone) please contact Alysha Smith at alysha.smith@loneyfinancial.com or phone 604-534-6003 to schedule a time…. but be quick as the deadline is approaching.
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  Congratulations to Russ Swaim who is our contest winner for January!
Russ wins a $50 Starbucks gift card for sending in a snapshot of Financial Checklist from last month’s newsletter.
Well done Russ from everyone at Loney Financial.
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 Please welcome to our team Lane Cuthbert. Lane has a passion for personal finance and helping people map out their financial futures and bringing the solutions that make this possible.
Lane is married and the father of soon-to-be 2. He understands well the challenges and solutions for couples establishing their financial futures. Lane is an avid hockey player and looks forward to betting our president, Dan Loney, in golf this spring.
As our team grows we thank you for you trust and confidence in Loney Financial. |
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Dan Loney presented with the 2016 IDC Worldsource Humanitarian Award
Ron Madzia is the president of IDC Worldsource and presented Dan with the 2016 IDC Worldsource Humanitarian Award. This presentation was made in Toronto at the National Awards Banquet. It was based on the efforts of Loney Financial working with children in Guatemala and advocacy for orphaned children in Canada.
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Mint.com is a fantastic tool. It is what I use to track my monthly budget for fixed and variable expenses. It will even track your discretionary spending if you want but most of the time my discretionary expenses (coffees, movies, eating out) are paid with cash. Check out this free service and if you use it you will be very impressed.
https://www.mint.com/
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RRSP TAX SAVINGS CALCULATOR
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Your RRSP is one of the most effective tools available to help you save for retirement . This financial planning calculator lets you estimate the tax savings on your RRSP contribution.
The maximum you can contribute to your RRSP is the lower of 18% of your earned income in the previous year. Your maximum allowable RRSP contribution for a year is stated on the Notice of Assessment for your tax return from the previous year’s tax return. The amount shown here will also include any unused RRSP contribution room you have accumulated in previous years.
Use this calculator to estimate the tax savings on your RRSP contribution. You can enter three different contribution amounts to compare the savings.
Click here to use the RRSP Tax Savings Calculator
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RRSPs vs. TFSAs:
Comparing Canada's 2 main savings plans
Registered retirement savings plans best for long term, but tax-free savings accounts have their uses, too
There is plenty of debate about whether RRSPs or TFSAs are the best place to park your savings, but financial advisers say if you understand the advantages and disadvantages of each, there is little reason not to use both.
"Both the RRSP [registered retirement savings plan] and the tax-free savings account form a very important role in an overall financial plan," explains Jared Webb, an adviser with Fernhill Financial in Victoria, B.C.
"They're both very effective.They're both fantastic tools. One is not better than the other, really. They serve different purposes. Like any tool in a tool chest, if you use the proper tool for the job, it's the most effective."
It's the tax treatment that's different, and that can make a difference when deciding which one is right for you.
"Tax-free savings accounts and RRSPs are simply just tax strategies," Webb said. "They're just telling the government how to treat, from a tax perspective, your holding or your investment."
In the case of RRSPs, the taxes on any contributions you make are deferred until you withdraw the money — hopefully, in your retirement, when you're making less income and are in a lower tax bracket.
For TFSAs, the contributions you make have already been taxed, but you aren't taxed at all on interest or other earnings within the account. Nor are you, in most cases, taxed when you withdraw the money — although there are some exceptions.
U.S. citizens also have to be careful about using TFSAs, which are more heavily taxed in Uncle Sam's hands. Under the new rules requiring Canadian banks to report the holdings of U.S. citizens, the U.S. Internal Revenue Service is scrutinizing all the holdings of U.S. citizens living in Canada.
'A huge impact'
RRSPs, which have been around for longer and have more contribution room, hold far more of Canadians' money at the moment — just over $1 trillion in RRSPs compared to $157.9 billion in TFSAs.
There are about 14.3 million TFSA accounts with an average balance of $10,996, according to Investor Economics. Statistics Canada's latest numbers for RRSPs shows just under six million Canadians made contributions in 2013, though the numbers don't say how many people have RRSPs but didn't make a contribution that tax year. The median contribution was $3,000.
In either case, these two savings vehicles can be key tools for helping you reach your savings goals.
"The biggest expense anyone faces in Canada is taxes," Webb said. "That's the largest expense by far that we all face. So, if we can reduce or defer those taxes for as long as possible, then it has a huge impact on someone's overall financial plan and your ability to achieve what you're trying to achieve."
Webb said, ideally, people would take advantage of both plans, but he knows that's not necessarily realistic.
So. which is right for you?
Reasons to save in an RRSP:
- You want a steady stream of income from your savings in retirement: An RRSP gives you the chance to save more (18 per cent of your income to a maximum of $25,370 in 2016). This can build, with savvy investment, into a nest egg for when you stop working. "It is basically a self-funded pension plan. That's the whole intent of it," Webb said.
- You want to reduce your taxable income: Any contribution to your RRSP comes directly off your taxable income, with the potential to push you into a lower tax bracket. "If you put $5,000 into a registered retirement savings plan, they would tax you as if you had made $5,000 less that particular year," explained Michael Hlinka, a CBC business columnist and an instructor at George Brown College in Toronto. "Any gains [that] would occur have no tax implications until you withdrew the money."
- You need to put your money somewhere you won't get at it easily: It's painful to withdraw from an RRSP. There is a withholding tax that can be as high as 30 per cent if you withdraw money before retirement, which should discourage you from using your RRSP funds for a vacation or other purchase you could easily postpone.
Reasons to save in a TFSA:
- You are young and your income is low: If you are in a low tax bracket, you get less benefit from the tax-saving aspect of an RRSP contribution. But if you save the RRSP contribution room until your 30s or 40s, when you are earning more, the tax reduction will pay off. Webb said TFSAs are a good place to put money away during your time as a student or early years of working.
- An RRSP isn't an option: There are two ways that can happen. Either you've reached your contribution limit on your RRSP or you've turned 71 and are no longer allowed to contribute to an RRSP.
- You have enough coming to you later in life that you're worried about clawbacks to Old Age Security: RRSP withdrawals are considered income, so that combined with, say, a strong pension could result in a clawback on your OAS if your income exceeds a set limit ($72,809 in 2015.)
Hlinka and Webb both said that all things being equal, the RRSP is the preferred choice for long-term savings, but that it always depends on the saver's personal situation. Hlinka said anybody wanting to map out their retirement should get a financial planner.
"What I feel comfortable doing ... is to offer some generic information," he said. "But I would not go on a talk show and talk to someone for 30 seconds and make that determination that one's better than the other."
RRSPs vs. TFSAs
http://www.cbc.ca/news/business/rrsp/tfsa-rrsp-tax-retirement-savings-1.3371418
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WHAT'S DAN READING?
The Productivity Project: Accomplishing More by Managing Your Time, Attention, and Energy
by Chris Bailey
 Chris Bailey has made the last ten years of his life a study in productivity. There are some great tips on dealing with procrastination and time management.
Some things are a bit to detailed for me but you might find a few nuggets that make you more productive in your day to day tasks.
One thing not covered is the power of assistant. When you have great assistants like I do with Denise, Alysha and Carling they make me much more efficient than I could ever be by myself.
Dan.
Purchase this book at Amazon.ca online.
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Click here to see the story of a 35 year dream come true and learn about Loney Financial’s support of rescuing homeless children in Guatemala. Thank you to all the clients and associates that have helped to make this a reality.
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CLIENT PHOTO
Each month we are featuring the best photos from our Clients. Please submit yours to Dan and we will include this in a future Newsletter.
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by Paul Lepik: Photographed in Hawaii
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COOKING WITH DENISE
Denise Bailey our Client Services Coordinator brings you a delicious monthly recipe from her renowned portfolio.
One Pot Creamy Ground Beef Strogonoff
This months recipe is brought to you by Carling.
This is a deliciously creamy and rich one pot take on a classic Beef Stroganoff recipe. Everyone will think you slaved for hours – they’ll never know it took around 30 minutes!
She says that it is quick, easy and her kids love it.
I think I am gonna have to try this one!
Enjoy
Denise
INGREDIENTS:
- 1 tablespoon olive oil
- ½ medium onion, chopped (about ½ cup)
- 1 pound lean ground beef
- 2 teaspoons minced garlic (or 1 tsp garlic powder)
- 1-15 oz can beef broth
- 1-10 oz. can Cream of Mushroom Soup + 1 can nonfat milk (about 1 cup)
- ½ pound (about 2-2/12 cups) small, dry pasta
- ½ cup sour cream, room temperature
- 2 tablespoons freshly chopped parsley
- Salt and pepper to taste
DIRECTIONS:
- Heat olive oil in a 4-5 quart pot or 12" skillet. Add onions and cook for 3-4 minutes, until they just start to become translucent.
- Crumble ground beef into the pan and cook until no long pink; about 5-6 minutes. Soak up most of the grease from the pan with paper towels. Season meat with a little salt and pepper.
- To the pot or skillet add beef broth, cream of mushroom soup + one can of nonfat milk, garlic and pasta. Stir to combine and bring to a boil over medium-high heat. Reduce heat to low, cover and cook for 15-20 minutes, or until pasta is tender.
- Sauce will be thin, but will thicken as it sits. To speed up the thickening, increase heat to medium-low and bring to a low boil for a few minutes, stirring often, until sauce is thickened to your liking. Stir in sour cream, chopped parsley and season to taste with salt and pepper.
- Divide into bowls and serve immediately.
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Solutions Magazine
WHAT’S YOUR MOTIVATION? - Stories to inspire, strategies to help you achieve your goals.
Read More (PDF) >
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Articles
A Guide to Not Retiring
Some people nearing retirement age simply don’t want to leave their jobs. But defying expectations can be difficult—in the office and at home.
It’s an inescapable reality of getting older: At some point, everybody expects you to retire. There’s your spouse, who perhaps is already retired and is looking forward to enjoying a relaxing life with you —
Read More >
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