“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

How RRSP Contributions Affect Your Government Benefits

How RRSP Contributions Affect Your Government Benefits

RRSP contributions can be a great tool to help manage your income taxes before and after retirement. They can also be a great tool to help manage your government benefits in a similar way. RRSP contributions affect government benefits like the Canada Child Benefit (CCB), Ontario Child Benefit (OCB), Guaranteed Income Supplement (GIS), GST/HST Credit, Ontario Sales Tax Credit etc etc.

What many people may not realize is that most government benefits have a “claw back” rate that acts like a tax rate. If you earn more income the “clawback” rate will reduce your government benefits. But the opposite also happens, if you make an RRSP contribution and your income goes down, then this “clawback” rate will work in reverse and it will increase your government benefits!

There are a couple situations where RRSP contributions can have a BIG effect on government benefits. Let’s take a look at two real life examples.

One example is a senior who is receiving GIS benefits. We’re going to plan some strategic RRSP contributions to help them maximize their GIS benefits. This is counter-intuitive, we’re always told that TFSAs are best for low-income individuals, but in this case we can use RRSP contributions strategically to maximize GIS.

The second example is a young family with three children. They’re receiving the Canada Child Benefit and the Ontario Child Benefit and we’re going to plan some strategic RRSP contributions to help them maximize their family benefits.

read more
Did You Give Your Investment Advisor A 10% Raise? How Generous!

Did You Give Your Investment Advisor A 10% Raise? How Generous!

Did you give your investment advisor a 10% raise last year? How generous of you!

With many investment advisors and portfolio managers compensated based on assets under management (AUM), an increase in portfolio value translates directly into an increase in compensation.

Despite the tumultuous year, investment returns pulled off an incredible recovery and ended the year much higher. Bonds, Canadian equities, US equities, Global equities, all higher than the year before. If you were holding VGRO or XGRO (two all-in-one ETFs with an 80/20 allocation) your portfolio would have grown 10.89% or 11.42% respectively.

With investment returns of 10%+ year over year that also means investment advisors are being paid more in 2021 than in 2020. How much more? Well, if their investment returns matched the market then their fees would also increase 10%+ in 2021.

Although there are many forms of compensation, many investment advisors and portfolio managers make a percentage of the portfolios that they manage. This could be 1.5% to 2.5%+ for smaller portfolios, 1.0% to 1.5% for portfolios of $1M to $2.5M, and under 1% for large portfolios of $2.5M+.

If portfolio values are 10% higher year over year, then these investment advisors and portfolio managers just received a 10% raise!

read more
What Is Joint First-To-Die Life Insurance?

What Is Joint First-To-Die Life Insurance?

What is joint first-to-die life insurance and why would you choose it over two regular life insurance policies?

Life insurance is meant to protect against an unexpected death. It’s meant to provide financial protection for those who may be dependent on the insured. This is very common for families with young children and also for households with dual incomes (especially when one income is larger than the other).

There are many types of life insurance but one of the most common types for the average Canadian family is called term life insurance.

Term life insurance covers the insured person for a specific length of time (the term). It’s typically less expensive than other types of life insurance because it only lasts for 10, 15, 20, 25 years. The cost of term life insurance is very low when purchased early. A young family in their late 20’s or early 30’s will pay very little for term life insurance because the probability of an unexpected death is very low.

Joint first-to-die is one form of term life insurance that is available to couples. A joint first-to-die insurance policy pays out when the first person in a couple passes away. Instead of having two term life insurance policies for $500,000 each, a couple could purchase a joint first-to-die policy that covers both for $500,000. A joint first-to-die term life insurance policy is typically less expensive than two similar but separate policies, so it can be attractive in certain situations. But what are the downsides of a joint first-to-die life insurance policy? And when might you choose a joint first-to-die policy over two separate policies?

read more

Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

How RRSP Contributions Affect Your Government Benefits

How RRSP Contributions Affect Your Government Benefits

RRSP contributions can be a great tool to help manage your income taxes before and after retirement. They can also be a great tool to help manage your government benefits in a similar way. RRSP contributions affect government benefits like the Canada Child Benefit (CCB), Ontario Child Benefit (OCB), Guaranteed Income Supplement (GIS), GST/HST Credit, Ontario Sales Tax Credit etc etc.

What many people may not realize is that most government benefits have a “claw back” rate that acts like a tax rate. If you earn more income the “clawback” rate will reduce your government benefits. But the opposite also happens, if you make an RRSP contribution and your income goes down, then this “clawback” rate will work in reverse and it will increase your government benefits!

There are a couple situations where RRSP contributions can have a BIG effect on government benefits. Let’s take a look at two real life examples.

One example is a senior who is receiving GIS benefits. We’re going to plan some strategic RRSP contributions to help them maximize their GIS benefits. This is counter-intuitive, we’re always told that TFSAs are best for low-income individuals, but in this case we can use RRSP contributions strategically to maximize GIS.

The second example is a young family with three children. They’re receiving the Canada Child Benefit and the Ontario Child Benefit and we’re going to plan some strategic RRSP contributions to help them maximize their family benefits.

read more
Did You Give Your Investment Advisor A 10% Raise? How Generous!

Did You Give Your Investment Advisor A 10% Raise? How Generous!

Did you give your investment advisor a 10% raise last year? How generous of you!

With many investment advisors and portfolio managers compensated based on assets under management (AUM), an increase in portfolio value translates directly into an increase in compensation.

Despite the tumultuous year, investment returns pulled off an incredible recovery and ended the year much higher. Bonds, Canadian equities, US equities, Global equities, all higher than the year before. If you were holding VGRO or XGRO (two all-in-one ETFs with an 80/20 allocation) your portfolio would have grown 10.89% or 11.42% respectively.

With investment returns of 10%+ year over year that also means investment advisors are being paid more in 2021 than in 2020. How much more? Well, if their investment returns matched the market then their fees would also increase 10%+ in 2021.

Although there are many forms of compensation, many investment advisors and portfolio managers make a percentage of the portfolios that they manage. This could be 1.5% to 2.5%+ for smaller portfolios, 1.0% to 1.5% for portfolios of $1M to $2.5M, and under 1% for large portfolios of $2.5M+.

If portfolio values are 10% higher year over year, then these investment advisors and portfolio managers just received a 10% raise!

read more
What Is Joint First-To-Die Life Insurance?

What Is Joint First-To-Die Life Insurance?

What is joint first-to-die life insurance and why would you choose it over two regular life insurance policies?

Life insurance is meant to protect against an unexpected death. It’s meant to provide financial protection for those who may be dependent on the insured. This is very common for families with young children and also for households with dual incomes (especially when one income is larger than the other).

There are many types of life insurance but one of the most common types for the average Canadian family is called term life insurance.

Term life insurance covers the insured person for a specific length of time (the term). It’s typically less expensive than other types of life insurance because it only lasts for 10, 15, 20, 25 years. The cost of term life insurance is very low when purchased early. A young family in their late 20’s or early 30’s will pay very little for term life insurance because the probability of an unexpected death is very low.

Joint first-to-die is one form of term life insurance that is available to couples. A joint first-to-die insurance policy pays out when the first person in a couple passes away. Instead of having two term life insurance policies for $500,000 each, a couple could purchase a joint first-to-die policy that covers both for $500,000. A joint first-to-die term life insurance policy is typically less expensive than two similar but separate policies, so it can be attractive in certain situations. But what are the downsides of a joint first-to-die life insurance policy? And when might you choose a joint first-to-die policy over two separate policies?

read more

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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