All posts by Ben Kaye

October 2018

tip

Over the last six years, I’ve spent many days in the US. Initially, I had some “interesting” discussions with Rogers about roaming charges. In recent years, Rogers simplified matters by charging $5, $6 and then $7 per day.

A couple of months ago, I learned that Rogers had introduced a program where they charge a flat $10 per month if you’re making calls while you’re in the US. The representative at Rogers didn’t volunteer this information. I had to ask about the program.

Perhaps this is old news, but I suspect it might benefit some people reading this Tip. If anyone knows a downside to this $10 a month program, I’d appreciate you letting me know.

September 2018

tip

I’ve spent the last month rehabbing my knee replacement and have had plenty of time for reflection!

As I thought about my own investment strategy over the last six years, the most important aspect that comes to mind is diversification. Of course, it’s the standard stuff of not having too big a holding in any specific stock or industry, as well as having the appropriate blend of fixed and equity investments.

It’s about getting the right mix between Canadian, US and international equities, and not being too Canadian-centric, however comfortable that feels. It’s important to decide which industries you feel comfortable investing in. From a personal perspective, there are industries I avoid, as I don’t understand them.

I believe there’s a need to look outside the traditional markets. Mortgage funds, specific mortgages, rental property ventures and real estate development projects should be part of your strategy. In addition, adding one or two alternative investments should be considered. Of course, for these types of opportunities, you have to do your due diligence, not just on the investment but more importantly on the people behind it.

We’ve all been nervous about a correction in the equity markets and real estate for a very long time. For sure this will happen at some point. Make sure you have some liquidity in your portfolio for this eventuality. In the meantime, you need to generate returns and seek opportunities. Make sure that when the downturn comes, you’re so diversified that any investment that doesn’t work out as planned can be no more than a flesh wound to you!!

August 2018

tip

I had knee surgery at the end of July.  Prior to the surgery, I was reflecting on whether I had my financial affairs in order.  Here are the items I considered:

  1. Are my will and powers of attorney up to date?
  2. Are the beneficiaries of my RRSP, TFSA and life insurance correct?
  3. Have I documented a list of my assets?
  4. Have I provided a list of people to contact with respect to my investments?
  5. Have I created a roadmap of my investments?
  6. Is there a list of codes which provide access to all my on line accounts?
  7. Did I discuss with my spouse and sons health alternatives in the event of a problem?

July 2018

tip

The property market in the GTA seems to be taking some strange twists and turns in 2018. We recently moved thanks to a great Home Removal company and a great real estate agent, and our experience on closing the sale of our old home wasn’t “normal.”

Five days before the scheduled closing, our agent notified us the buyer wanted a one-month deferral on the closing date. It wasn’t a great call to receive! We had a four-month gap between the offer and closing dates, which concerned us. As part of the offer, the buyer agreed to provide a standard 5% deposit. At our request, the buyer agreed to pay a second deposit of 3% of the purchase price sixty days prior to the closing.

The bottom line is the buyer closed on the designated date. We don’t know the reason why the buyer wanted to delay closing. There’s no doubt in my mind a deposit of 8% of the selling price was very influential on the buyer closing on the specified date.

The moral of the story is the real estate market has changed in the GTA, and you need to do everything possible to ensure the buyer closes on the agreed date.

April 2018

tip

I’d been musing over what to write as my April Tip of the Month when I received a note from a contact of mine. My contact suggested that I should advise people to throw out credit cards they rarely use.

Taking this suggestion further, you should also close any investment accounts or bank accounts you rarely use. These accounts have a way of mushrooming over the years.

Check what you’re carrying in your wallet.  There are very few items you need to carry with you in today’s world. I have friends whose wallets look like George Costanza’s. Most of you know what happened to George’s wallet at the end of the show.

Having received this suggestion, it made me think there must be other useful tips that people might have. If you have a suggestion you think is worth sharing, I’d be pleased to include it as a Tip of the Month. Please send me a note if you have one.

March 2018

tip

It’s the right time of year to think about tax! CRA provides a pension credit of $2,000 to all taxpayers 65 years of age and older (it’s possible to receive this credit at a younger age).  CRA also allow spouses to split pension income between themselves. For the income to be considered eligible pension income, it needs to come from a source other than the government e.g. a RRIF.  Once you turn 65, consider converting part of your RRSP into a RRIF, which pays $4,000 per year for six years (both spouses would have to be over 65).

You’ll have eligible pension income, but because CRA provides a credit and not a deduction, it’s likely you’ll pay some tax on the income. If you and your spouse pay tax at the current highest marginal tax rate of 53%, the credit would reduce the tax rate to 29%. On the assumption you’ll continue to be taxed at the highest rate of tax until age 71, the tax rate on the RRIF income received between age 65 – 71 will be reduced by 24%.

For six years on $4,000 of pension income, even if you and your spouse pay tax at the highest rate, you’ll save $1,000 a year based on the 2017 tax rates.  While not a huge savings, the money is better in your pocket than CRA’s.

Everyone’s situation is different, and you should consider what rates of tax will apply to your income after you turn 71. You should also bear in mind that by receiving income earlier, you’ll be prepaying tax and the income earned on the RRIF proceeds annually will be taxable.

If you consider this suggestion to have merit, please contact your financial advisor to obtain your own tax advice. My Tip of the Month provides ideas for you to consider and discuss with your own professionals and should not be relied on.

February 2018

tip

Over the last six to eight years, we’ve seen substantial increases in the price of homes in Canada, particularly in Toronto and Vancouver.  We all know this is partially due to the low interest rate environment we’ve been living in.

Part of the huge debt levels Canadians are carrying is from substantial mortgages on their homes. The Canadian banks are very good at selling life insurance to cover the amount of the mortgage, should an untimely death occur. Be aware that as your mortgage principal is reduced, your life insurance coverage falls, but your premiums remain the same.

You’d be smart to obtain comparative quotes.  You’ll be surprised by how much cheaper the competition is!

January 2018

tip

Happy new year and all the best for 2018.  It’s hard to believe 2017 is in the rear view mirror. Time passes way more quickly these days!

Here’s a suggestion which has nothing to do with investing, insurance, taxes, wills or estate planning!  We’re all much more aware of identity theft these days. When it comes to preventing theft, one of the most overlooked aspects is the protection of valuable papers. Valuable papers insurance is an insurance policy that covers the cost of replacing important documents such as deeds, wills, and contracts in the event that they are lost, stolen, or damaged. Some banks will provide an alert where a text can be sent every time your credit card is used.  It’s a simple way of quickly becoming aware your credit card is being used illegally.

October 2017

tip
Investing should be a continuous process. I’m not just referring to equities and fixed income vehicles. Real estate and alternative investments should be part of your overall strategy. In the low interest rate environment we’ve lived in for the last decade, as well as for the foreseeable future, the push for investments which produce income has become paramount.
Diversification should be an important component of your strategy. Real estate investments should consist of properties which provide rental income, mortgage funds which yield interest income, private and public reits and properties which are being developed for resale. While I’m comfortable investing in reits and mortgage funds, I invest through property managers for my investments in rental properties and properties being developed for resale. I don’t have the expertise and time to do this personally.
You should decide what percentage of your investment portfolio you need to hold in fixed income investments. When investing in equities, you need to consider the mix between small cap and large cap companies, the split between Canadian, US and international companies, the appropriate mix of industries and how important it is to receive dividend income.
Investing is a marathon, not a sprint. You need a strategy and patience. You have to continually revisit all aspects of your investments. It’s your money and your responsibility to achieve the best results in your personal situation.

September 2017

tip

I’ve spent a considerable amount of time with clients reviewing life insurance policies. Most policies are far more complicated than the average person expects.

In the right circumstances, there’s a place for permanent insurance in the form of whole life or universal life policies. These policies usually have an underlying investment component, which is managed by the insurance company. The return on this investment component has dropped considerably over the last ten years. 

While the return on the underlying investment component could still drop a little further, the risk on these types of policies has reduced significantly. Projections are prepared using current rates of return, so the projections are considerably lower and more realistic than a number of years ago, when interest rates were far higher.

If you’re considering purchasing permanent insurance, make sure you have a complete understanding of the policy. This is a long-term commitment.