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News and Info from the team at Loney Financial - #30 October 2016
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For further information on Loney Financial services please visit our website at www.loneyfinancial.com

180 WITH DAN

180 with Dan - October 2016
WATCH: This month Dan is with Richard Desroches, Principal of CORE benefit consulting ltd., and discusses the area of Employee Benefits.
"If you put the government in charge of the Sahara Desert,
there would be a shortage of sand in no time”
- Milton Friedman

DAN'S BLOG

Happy Thanksgiving!!!
 
What are you thankful for?

I often tell people one of the things I am most thankful for is my shower. I have traveled to different parts of the world and many times I am reminded of the simple pleasure of having a nice hot shower.

I can drive anywhere in Vancouver and not worry about my personal safety - not so in Guatemala or Barcelona. My children go to bed each night with their bellies full, many millions of children go to bed each night not having eaten enough to sustain their lives.

I don’t worry about bombs being dropped on my house while thousands of children are hiding in Syria and Yemen as bombs devastate their neighbourhoods and take the lives of their little friends and family.

I am thankful that I work with a wonderful team and have wonderful clients who have placed their trust and confidence in us. I  could go on and on about what I am thankful for but I think you get the message. My blessings far outweigh my challenges.

Next week, I will get back to writing about world economic events and my thoughts on the Foreign Investment Real Estate tax, the stock markets, the bond markets and the challenges in the pension industry etc. but for this week, I just want to be thankful.

Best regards,
Dan


For more information on how Loney Financial can help, contact us at 604.534.6003
or Email: dan@loneyfinancial.com

MATURITY MATTERS NEWSLETTER

Compliments of Dan here is a special edition of the Maturity Matters Newsletter.

In this edition you can read:
  • 4 Ways to Eat Healthy During the Holiday Season 
  • Seniors Tip: Mindful Eating Changes Everything
  • Joke or Quote of the Month:Always be True to Who You Are
  • Heart Healthy Recipe:Cranberry Chutney
  • Did You Know? Humor for Health
To read the Newsletter click here to view on Dan's Blog.

GUESS WHO? WIN A $50 STARBUCKS CARD

Who is number 11 in the Montreal Canadiens jersey?

Reply to Dan with your answer and you will be
entered into a draw to win a $50 Starbucks card.

Guess Who? Is it...
1. Walter Mitty   
2. Ryan Gosling
3. Ryan Walter  

Send your answers to dan@loneyfinancial.com

 

Last months winner was Paul Weme who guessed correctly with the founder of the Infinite Banking Concept Nelson Nash.

Nash is a firm believer in the “Austrian School” of economics (named after the origin of its founders), a school of thought stressing the economic benefits of individual liberty, sound money, and limited government.

FEDERAL GOVERNMENT CLOSES TAX LOOPHOLE, HIKES MORTGAGE SCRUTINY



Real-estate reform: What you need to know about Ottawa’s overhaul

What’s changing?

Finance Minister Bill Morneau has announced a major shakeup of Canada’s mortgage and foreign-ownership rules for real estate to take effect this fall. There are four big changes involved, The Globe’s Bill Curry explains:
  1. Expanding stress tests to all insured mortgages, not just high-ratio mortgages in which the buyer has put down less than 20 per cent of the purchase price. This may make it harder for some buyers to get insured mortgages, even if they make a larger down payment, because it ends a two-tier system where some mortgages were weighed differently against the buyer’s income to see whether the mortgage is affordable.
  2. Closing a tax loophole that some foreign buyers have used to claim exemptions in capital-gains tax for selling properties that they falsely claim as their primary residences. Now, home buyers must file taxes in Canada, as a resident, the same year they buy a home, before they can later claim the principal residence exemption on any gains for that year.
  3. Launching consultations to see if banks can take on added lending risks, which would lighten Ottawa’s obligations to pay for insured mortgages in the event of a housing crash – but could also lead to higher mortgage rates. (Here’s David Berman’s analysis, for subscribers, on how bankers feel about this.)
  4. Changing the restrictions on portfolio insurance, a type of bulk insurance for mortgages with down payments of 20 per cent or more.

Why are they doing this?

To crack down on foreign real-estate speculation: Investigations by The Globe and Mail over the past year have also shed light on how local and foreign buyers have been flipping Vancouver-area homes for profit, buying and selling properties in the names of relatives or corporations and collecting tax windfalls in the process. In B.C., fears of wealthy foreign buyers inflating Vancouver’s sky-high housing prices have led to tougher restrictions on how the market is regulated and taxed provincially (more on this below); now Ottawa is hoping to close the federal tax loopholes too, a move met with cautious optimism on Monday by the B.C. government.

To keep Canadians out of debt: Mr. Morneau hopes that applying the same stress test to all high-ratio mortgages will make prospective home buyers think twice about taking on more debt than they can pay for. “We want to ensure that we have measures in place to help them to take on risks that they can afford, especially in the situation where mortgage rates go up or their family income goes down,” Mr. Morneau said in an interview with The Globe.

To keep Ottawa off the hook: The federal government currently assumes the full cost of insured mortgages in the event of defaults. Mr. Morneau’s changes would mean Ottawa would pay less, and banks might pay more – costs that the banks might pass on to homeowners by raising rates. The changes to low-ratio mortgage insurance would put the government in less risk in markets with lots of residential mortgages worth $1-million or more, such as Vancouver and Toronto.



What have provinces been doing?

The federal government is part of a task force along with the B.C. and Ontario governments that is looking at housing prices in the Toronto and Vancouver areas. Here’s what those provinces have been up to in their own jurisdictions:

British Columbia: This summer, Premier Christy Clark’s government began more rigorous tracking of home buyers’ nationalities and instituted a 15-per-cent tax on home purchases in Metro Vancouver that involve foreigners. The number of foreign-involved transactions plummeted once the tax took effect on Aug. 2; more Vancouver housing numbers released on Tuesday showed a further drop in property sales in September.

Ontario: Premier Kathleen Wynne says the province needs more information about the factors behind Toronto’s red-hot real estate market before adopting a foreign-buyer tax like B.C.’s.

What happens next?

Here are some important dates to watch out for as the changes come into effect:

Oct. 17: The new stress-test rules come into effect for borrowers.
Nov. 30: The new rules for low-ratio mortgages come into effect.
April 30: For most Canadians, this is the deadline day for filing taxes. The new housing rules affect when you have to declare the sale of your home to the government.

www.theglobeandmail.com/news/politics/real-estate-reform-what-you-need-to-know-about-ottawasoverhaul/article32229066/
Did you owe money on your taxes this year?
Did you borrow in order to contribute to your RRSPs?

Why not pay yourself instead? 
Start a Pre-Authorized Contribution (PAC) into your RRSPs to save money, reduce taxes and avoid the hassle of borrowing at the beginning of the year.

Undeniable fact: Filling up your RRSP contribution room each year is a great way to maximize tax savings and the size of your retirement nest egg. But many Canadians have trouble coming up with a sizable chunk of money before the tax deadline.

There is an easy solution! So easy you just may forget you are contributing! As much or little as you want on a monthly basis.

A PAC delivers some significant financial benefits: The regular contributions have longer to grow, and thanks to the magic of compounding, it significantly adds to your nest egg, and you get to enjoy the benefits of dollar-cost-averaging – meaning that you can buy fewer units of an RRSP when prices are high and more units when prices are low. Over time, this strategy reduces the impact of volatility and usually results in a lower average cost to you and the accumulation of more units.

Contact us today to set up your monthly PAC and start saving! Just respond to alysha.smith@LoneyFinancial.com with the amount you would like to save monthly and I will send you the paperwork to sign and return to get started as soon as possible.
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/

MORTGAGE AFFORDABILITY CALCULATOR

Mortgage Affordability Calculator

When browsing real estate listings for a new home, the first step is to figure out how much you can afford. Affordability is based on the household income of the applicants purchasing the house, the personal monthly expenses of those applicants (car payments, credit expenses, etc.), and the expenses associated with owning a home (property taxes, condo fees, and heating costs). The calculator below will show you the maximum purchase price that you can qualify for.

You also need to determine if you have enough cash resources to purchase a home. The cash required is derived from the down payment put towards the purchase price, as well as the closing costs that must be incurred to complete the purchase. Ratehub.ca can help you estimate these closing costs with first tab under our affordability calculator.

Click here to use the Mortgage Affordability Calculator

WHAT A CARBON PRICING SCHEME MEANS FOR CONSUMERS

Gasoline, power and heating will all get more expensive to encourage energy efficiency.



As the political debate rages on about a federally imposed carbon price, it's useful to take a look at how this will affect consumers.

After all, the whole point of a carbon price is to change our behaviour, so that we use less fossil fuel. The price will go up for carbon intensive products like fuel for our vehicles and heat and (non-renewable) power for our homes, to give us incentive to use less energy. The less we use the less we'll pay.

Prices will also rise for items that we don't immediately think about, such as food and other retail goods, since they are often transported by diesel-burning vehicles.

In a study done in 2012,  Nicholas Rivers, an associate professor at the University of Ottawa, found that a $30 per tonne carbon price added taxes ranging from six per cent for gasoline to more than 100 per cent for coal, depending entirely on the carbon intensity of the fuel. With a $50 per tonne cost in the year 2022, that tax will increase proportionally.



In practical terms, by looking at Quebec (which has put a price on carbon since 2011), B.C. (which has had a tax since 2008), and Alberta, which is about to impose one, we can see the impact on a litre of gasoline, or a gigajoule of natural gas.

Price at the pumps

In B.C, a carbon tax of 6.67 cents per litre is added at the pump, making B.C. gasoline the second most expensive in Canada, after Newfoundland and Labrador. That is based on a $30 per tonne carbon price. In Alberta, when its $30 per tonne tax is fully implemented in 2018, the gasoline tax will be roughly the same.

Under the Liberal plan, when the carbon price reaches $50 per tonne in 2022, that will effectively add 11 cents per litre to the price of gasoline.

In Quebec, with its cap-and-trade system, it's a little more difficult to tease apart exactly how much the carbon tax adds to a litre of gasoline, depending, as it does, on the auction prices for carbon. In a blog post in March 2016, Roger McKnight, senior petroleum analyst with En-Pro, found that the tax was around six cents a litre.

Heating and powering your home

How much heating costs will go up with a carbon price will depend on how you heat your home. If it is with hydro-powered electricity, the carbon tax won't have an effect. If it's with natural gas or heating oil, it certainly will.

In Alberta, where most homes are heated by natural gas, it will mean a significant increase. Under the current carbon plan, in 2018, there will be a tax of $1.51 a gigajoule. In October, the price charged to Albertans for natural gas heat was only $2.66 a gigajoule.

In B.C., the tax was $1.49 a gigajoule. A researcher in Nova Scotia suggested a $30 per tonne carbon tax would add 8.4 cents per litre to the cost of heating oil. Again all these number would increase by two-thirds to capture the cost of a $50 per tonne carbon tax.

As for the cost of electrical power, it depends on the power mix in your province, if it's renewable, it's negligible; if it's coal based, watch out.

Impact on low-income families

In his study, Rivers found that low-income families were disproportionately hit by the carbon tax, which is  why provinces typically work to offset the pain. In Alberta, families with a household income of less than $95,000 will qualify for a rebate. In B.C. that threshold is lower, with payments decreasing once income exceeds approximately $38,000 for a family.

"The whole point of a carbon price is to raise particular costs so that it changes our behaviour, said Chris Ragan, chair of the Ecofiscal commission. But we need to be mindful of the impact on, in particular, low-income households.  

"Governments are going to be under pressure to make sure they are paying attention."

http://www.cbc.ca/news/business/carbon-price-consumer-impact-1.3789224

WHAT'S DAN READING?

The Golden Rules: 10 Steps to World-Class Excellence in Your Life and Work
by Bob Bowman
 

Bob Bowman is the coach that led to Michael Phelps becoming the most successful athlete in Olympic history.  

When I read this book, I began to see the pattern of how success is created. Bowman said “You can’t train to win an Olympic medal but you can train to achieve times that would give you a high probability of winning a medal."

Once Bowman determined what those times would be, he then deconstructed those times by working backwards from the Olympic date over 1500 days and mapped out a strategy of training each day to have Phelps achieve the desired times.  

When Bowman revealed the training schedule of 1500 days with no days off, Phelps replied: “no one can do this!”, to which Bowman replied: “you are right, no one except you!”

Phelps bought into Bowman’s faith in him and the rest is history - 28 Olympic medals. This book provides good advice that can be applied to almost every area in life.


Purchase this book at Amazon.ca online.
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.

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.
A sweeping panoramic view of the Gulf Islands from the Long Harbour peninsula on Salt Spring Island towards North Pender taken by clients Andrew & Clare Gray.

COOKING WITH DENISE & ALYSHA

Denise Bailey our Client Services Coordinator and Alysha Smith, Dan's Executive Assistant, bring you a delicious monthly recipe from their renowned portfolio.  


PUMPKIN MUFFINS


Ingredients:
  • 3.5 cups flour
  • 1 cup brown sugar
  • 4 tsp baking powder
  • ½ tsp cinnamon
  • 1 tsp salt
  • 1 tsp nutmeg
  • 1 ¼ cups pureed pumpkin (or one large can of pumpkin pie filling)
  • 2 eggs
  • 1 cup milk
  • 2/3 cup oil
     
Topping (Optional):
  • ½ cup brown sugar
  • 1 tsp cinnamon
  • 2 Tbsp melted butter
  • ½ cup chopped walnuts
Directions:
  1. Sift all dry ingredients together and set aside.
  2. In another bowl mix pumpkin, eggs, milk & oil…add flour mixture and stir until just moistened and mostly combined.
  3. Fill muffin pan with paper cups, and fill each cup about ¾ full.
  4. Mix together the topping ingredients and sprinkle on top.
  5. Bake at 350F for 20 – 22 minutes or until batter is set.

FINANCIAL PLANNING HUMOUR :)

Solutions Magazine


FINANCIAL RESILIENCE - How to manage the unexpected.



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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 —

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