Some of our clients call us nags and we thank them for the compliment.
Actually, because we believe in complete professional transparency, we tell prospective clients up front that nagging is part of our job.
As a result, 95% of our clients have well crafted Wills and Powers of Attorney. We know how important these documents are for individuals of any age and our value as advisors is diminished if this piece of the financial plan is not completed.
So we nag.
We even draft up instructions and deliver them to the lawyer for review and discussion with the client if that will move things along. Whatever it takes, really. It is just not good enough to think that our responsibility ends when the recommendation to get Wills and Powers of Attorney completed is given. We know that human nature often puts this task at the bottom of the "to do" list.
So what about the 5% who don't have these documents complete yet? Well, we are still nagging them.......!!
We just received our first electricity bill featuring the new Time-of-Use rates.
Since receiving the details of the new rates a few months ago, in our home we have
been trying to shift our energy usage to the off-peak times as much as possible. Why? Well, the cost of energy on peak is more than twice the cost of energy off peak.
So how did we do at our home? I give us a B+
Our overall energy usage in February and March was 34% lower than the same period last year. That's moving in the right direction.
64% of our usage was during off-peak hours
12% of our usage was during mid-peak hours
24% of our usage was during on-peak hours
That is a reasonable mix but not enough to earn an A+
The other reason why there is room for improvement is that the bill was still high at $183.
Granted, if we hadn't shifted some of our energy use to off peak hours, the bill could have
been as high as $250.
If you haven't familiarized yourself with the new rate system, go to
It's always exciting when the government delivers a tax saving mechanism to Canadians and one of the most recent tax reducers is the Tax Free Savings Account (TFSA).
Thousands of Canadians have opened these accounts over the past two years and many of them are making a tactical mistake by doing so. How can saving tax on investment income be a bad thing? It is when the alternative would grow your net worth faster.
The majority of TFSA accounts have been invested in low interest savings account vehicles. Many TFSA investors also still have debt on the books at rates that exceed their TFSA savings rates.
Here is how the math works:
$5,000 TFSA savings account earns 1% ($50).
$5,000 deposited against a mortgage or line of credit at 2.5%. This results in interest savings of $125.
I don't know about you, but at my house $125 beats $50 every time. Unless........and there is always an unless.
Unless you may have a short-term need for that $5,000 and the debt that you pay down with those funds is a conventional mortgage that you cannot then draw from in an emergency. Liquidity needs can trump the math.
So, if you can get a guaranteed rate of return on your TFSA investments that exceeds the interest rate on your debt then you are not losing ground. Unfortunately, these days it is very difficult to find guaranteed investments that exceed line of credit and conventional mortgage rates.
The reality is that many Canadians were not asked about their overall financial circumstances when the TFSA was recommended to them, and that is a mistake. We know this happens because we see it all the time.
Thanks to the government for the TFSA account because it's a wonderful gift. Just be sure that there isn't a better use for the funds each time you make a deposit.
Is it a business or a hobby?
One of the advantages of starting a home based business is that you can write off a variety of expenses related to the business. If the expenses result in a loss for the business, that loss can offset other income on your personal tax return.
Be careful though, after experiencing 3 years of losses, CRA may question whether or not the business is truly capable of making a profit and may deem that it is more of a personal hobby than a business. When they do this, they can deny the losses which will result in an unexpected tax bill for you.