http://www.nelsoncu.com Logically. Locally. en-us Copyright 2010 - Nelson & District Credit Union Fri, 03 Sep 2010 00:00:00 -0700 http://www.nelsoncu.com/financial_hike.php?id=19 http://www.nelsoncu.com/financial_hike.php?id=19 Thu, 01 Jul 2010 11:50:02 -0700 http://www.nelsoncu.com/financial_hike.php?id=16 http://www.nelsoncu.com/financial_hike.php?id=16 Tue, 07 Apr 2009 11:45:26 -0700 http://www.nelsoncu.com/financial_hike.php?id=15 http://www.nelsoncu.com/financial_hike.php?id=15 Wed, 15 Oct 2008 12:36:40 -0700 http://www.nelsoncu.com/financial_hike.php?id=14 http://www.nelsoncu.com/financial_hike.php?id=14 Wed, 25 Jun 2008 14:38:03 -0700 Diploma in hand, you're ready to take on the world. So what's your plan? Or, more to the point, your financial plan? Graduation is the launching point for an array of life-changing decisions and firsts. Whether it's a new career, car, marriage, house or just a whole lot of fun, there's planning to be done on the financial front. "Almost every decision you're making has a dollar value attached to it," says Ann Bowman, vice-president of communications and corporate relations of the Financial Planners Standards Council. "I would absolutely encourage a graduating student to learn as much as they can about basic financial planning concepts." Financial planners open doors With a lifetime of opportunity before them, now is the perfect time for graduates to team up with a financial planner and start plotting their future. But aren't financial experts just for people with money? Who'd want to take on a young person with little income or a pile of student loan debt? "That is one of the misconceptions that our body is battling," admits Bowman, adding there's a financial planner out there for everyone. "There are many Certified Financial Planner professionals who are looking for that next generation of individuals who are about to enter the next stage of their life." "It's never too early," stresses Jeanette Brox, a Certified Financial Planner, or CFP, professional with Investors Group in North York, Ont. She understands how overwhelming it can be for graduates, especially when they're drowning in debt, and says a financial planner can put things into perspective by encouraging them to define short- and long-term goals and helping map a path to reach those goals. It's not just about saving for retirement In other words, it's not all about forgoing fun in favour of planning for retirement, which can seem a long way off when you're just starting a career. "It encompasses so much more and is of broader value to those who understand the scope of financial planning," says Bowman. "Most of financial planning is about investor performance," says Bradley Roulston, a CFP professional with in Nelson, B.C., adding that too much emphasis is placed on investment or product performance. "Getting into the right habits when you're younger is so much easier than changing habits when you're older." And the major asset that young people have is time. A financial planner will help you look at the big picture and show you how you can save a bit of money and pay off debts at the same time. The B word "If you use time effectively, you can achieve all your goals," says Roulston, who regularly speaks with students at high schools and universities about financial issues. He's a big advocate of sticking to a monthly budget that allows you to have some fun while saving. It's OK to start small -- thanks to compound interest, even saving $25 a month has a lot of potential to grow when you begin squirreling it away from the age of 22. An important step is to take a hard look at where your money goes and decide where to curtail your expenses. Doing this from the outset will serve you well your entire life. "You're empowered, you're in control of your budget," says Roulston, who advocates an old-fashioned approach to getting what you want: saving. Two generations ago, people actually put aside between 10 percent and 20 percent of their income for a rainy day. Today's nest eggs usually come in the form of a line of credit. "Canadians spend three percent more than what they make, and (spending) is rising." If you can put aside 10 percent of your income and, once that income rises, live as though you're earning $10,000 less, your nest egg will flourish. Student loan debt Admittedly, saving for the future can be the furthest thing from one's mind when finishing university a daunting $40,000 in debt. If it makes you feel any better, experts say not to despair about student loans. "People need to understand that this is not such a bad form of debt," says Brox, pointing out that a student loan is essentially an investment in your future. Roulston agrees, further advising against consolidating student loans with banks, even when they offer a lower rate of interest. "There are all sorts of benefits if you keep it with the government," he says, pointing to tax credits on interest paid, interest relief options and loan forgiveness. Watch out for the loan ranger Instead of obsessing about student loans, graduates should pay off other forms of debt with higher interest, such as credit cards. While credit cards offer convenience, there's no reason for graduates to have more than one credit card. Credit cards have notoriously high rates of interest and balances should be paid in full each month. One of Roulston's primary messages is to avoid sinking into debt. "Debt equals slavery," he says, acknowledging that living debt-free can be a challenge in a society consumed by consuming. He especially hates to see people going into debt to buy an automobile and advises living without one by instead using transit or joining a car co-op. If a car is a must-have, he recommends buying "one that's a couple of years old -- let someone else take the depreciation hit, and run it into the ground." Another temptation is to rush into buying a first home and biting off more than you can chew. Roulston isn't a fan of the 40-year mortgage simply because of the amount of interest you end up paying over its lifetime. He suggests getting into the market early by purchasing a duplex or triplex with other like-minded friends or family members. Instead of overextending yourself for a $400,000 home, you take on $200,000 of a $600,000 property and get your foot in the door. How to find a planner If you're in need of a planner, a first step is to ask for referrals from family and friends. While the knee-jerk reaction might be to sign on with the first person willing to take you on as a client, don't. What you're hoping for is a long-term relationship and that takes research. It's OK to interview a number of people in your quest for the right fit. Of course, financial advisers have to be paid and there are generally two routes to consider: an annual fee or via commission (based on the products, such as mutual funds, that they sell you). The commission route tends to appeal to those with more limited resources. Experts agree that for recent grads, mapping your financial future is an intricate part of an overall life plan. Laying the foundation for a bright future is about starting early; in other words, don't be afraid to ask for help, even if your liabilities far outweigh your assets. With the right plan, it won't always be that way. Michelle Warren is a freelance writer in Toronto. http://www.nelsoncu.com/financial_hike.php?id=13 http://www.nelsoncu.com/financial_hike.php?id=13 Mon, 17 Mar 2008 13:48:31 -0700 A Few Highlights from the 2008 Federal Budget Bradley Roulston, CFP Tax-Free Savings Account Undoubtedly, the biggest treat for investors in the 2008 federal budget was the introduction of a new savings vehicle that will allow Canadians to save money, not just for retirement but for any purpose, on a completely tax-exempt basis. Starting in 2009, Canadians who are at least 18 years old will be able to contribute to a Tax-Free Savings Account (TFSA). Contribution room is $5,000 (indexed annually), will be cumulative and will be allowed to be carried forward indefinitely. For instance, if your contribution was only $2,000 in 2009, you can contribute $8,000 in 2010 ($3,000 carry-forward plus $5,000 of new room). Unlike the RRSP system, any amounts withdrawn will be automatically added to your TFSA contribution room. However, be careful not to over-contribute as excess contributions will be taxed at 1% per month. Unlike RRSPs, but similar to RESPs, contributions to a TFSA will not be tax-deductible from income. The big advantage is that any income and gains on investments held within a TFSA won't be taxed either while inside the TFSA or upon ultimate withdrawal. Further, since withdrawals are not considered income, they will have no impact on government befits or credits such as GIS, OAS on the Canada Child Tax Benefit or the Goods and Services Tax Credit. Since income earned inside the TFSA along with withdrawals are non-taxable, you won't be able to write off any interest expense on funds borrowed for the purpose of investing in a TFSA (similar to RRSPs). However, unlike RRSPs, you can use TFSA assets as collateral, which may facilitate investors in obtaining secured credit at more favourable rates. Income splitting is allowed as attribution rules do not apply to any income or gains earned in the TFSA derived from a spouse or partner's contributions. Assuming that you have limited funds and choosing between the TFSA or RRSP... While both are meant to be tax-neutral, RRSPs will make more sense if your tax rate is lower when you take the money out (I.e. retirement). Both vehicles work best when years of compounding interest are able to occur. People might be inclined to withdrawal money from their TFSA more regularly, hence sacrificing their retirement income. Other critics believe that the TFSAs are likely to be utilized more by middle and upper income earners. Dividend Tax Credit In response to the reduction in corporate tax rates from 19% in 2008 to 15% in 2012, the dividend gross-up factor and the dividend tax credit for eligible dividends will be reduced. By 2012, an eligible dividend will be gross-up by 38% (compared to 45% currently) and the dividend tax credit will be reduced to 15% from the current level of 19%. These changes will increase the effective federal tax rate on eligible dividends from 14.55% to 19.29% by 2012. Depreciation The manufacturing and process sector also received extended capital cost allowance treatment for investment in machinery and equipment. The accelerated depreciation that was introduced in the 2007 budget and which applied to investments made within a two year horizon has now been extended out to include investments made up to the end of 2011. For the first additional year, a 50% straight-line accelerated CCA treatment will apply, but for 2010-11, an accelerated treatment will be provided on a declining basis. Bradley Roulston, CFP is a manager of the Nelson & District Credit Union. For more information, contact broulston@nelsoncu.com http://www.nelsoncu.com/financial_hike.php?id=12 http://www.nelsoncu.com/financial_hike.php?id=12 Wed, 05 Dec 2007 09:50:32 -0700 http://www.nelsoncu.com/financial_hike.php?id=11 http://www.nelsoncu.com/financial_hike.php?id=11 Mon, 19 Nov 2007 16:33:02 -0700 http://www.nelsoncu.com/financial_hike.php?id=10 http://www.nelsoncu.com/financial_hike.php?id=10 Thu, 08 Nov 2007 12:40:30 -0700 http://www.nelsoncu.com/financial_hike.php?id=9 http://www.nelsoncu.com/financial_hike.php?id=9 Mon, 15 Oct 2007 16:17:05 -0700 http://www.nelsoncu.com/financial_hike.php?id=8 http://www.nelsoncu.com/financial_hike.php?id=8 Fri, 28 Sep 2007 16:22:27 -0700 Trekking the high road Align your investments with your values and put your money where your heart is! Social Responsible Investing is nothing more than integrating your values and social concerns into your investments decisions. Social Responsible Investments (SRIs) are normally considered as mutual funds that only buy stocks in companies that are socially responsible. Over the past 15 years the amount of assets invested in SRIs have grown exponentially! However, Nelson & District Credit Union term deposits are even more socially responsible since your money will be reinvested back into our own local economy and abide by our highest lending standards. You might have concerns over the nature of a business, environmental practices, labour issues, human rights, animal rights or community relations. Why not speak through your investment decisions? One should not have to sacrifice returns for ethics. Companies that exhibit diligence, prudence and responsibility for long-term social and environmental advancement are far more likely to succeed. For example, a company with a good environmental track record - saving money through good waste management, less litigation and speedy government approval will be more profitable. There are rewards for good behavior! Nothing speaks as loudly to government & corporations than where you spend and invest your money. As investment fund advisors, we are able to access all major mutual funds - including SRIs and naturally to our term deposits. With good planning, we ensure that your portfolio is in-line with achieving your viewpoints. Contact us at thehike@nelsoncu.com http://www.nelsoncu.com/financial_hike.php?id=7 http://www.nelsoncu.com/financial_hike.php?id=7 Fri, 14 Sep 2007 15:25:03 -0700 http://www.nelsoncu.com/financial_hike.php?id=5 http://www.nelsoncu.com/financial_hike.php?id=5 Tue, 21 Aug 2007 13:52:40 -0700 http://www.nelsoncu.com/financial_hike.php?id=4 http://www.nelsoncu.com/financial_hike.php?id=4 Thu, 26 Jul 2007 16:15:15 -0700 http://www.nelsoncu.com/financial_hike.php?id=3 http://www.nelsoncu.com/financial_hike.php?id=3 Wed, 25 Jul 2007 10:24:13 -0700