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

Thanks for visiting.”

– Owen

TFSA or RRSP? Which One Is Best For You?

TFSA or RRSP? Which One Is Best For You?

Both the Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP) are tax-sheltered accounts offered to Canadians by the government as a way to help save and invest without the drag of income tax on annual returns.

Although both are great ways to help grow your money, it can be difficult to decide which one is best for you.

Often one type of account is better for an individual than the other. In most cases we would prefer to maximize one of these accounts before moving on to the next.

Which account we choose, TFSA or RRSP, will depend on a number of factors. These factors may change over time. It’s reasonable to assume that a new grad entering the work force would be better suited to maximizing their TFSA first but as their income grows they may prefer to start focusing on their RRSP instead.

This decision between TFSA or RRSP often involves looking at your marginal effective tax rate today and your marginal effective tax rate in the future. You marginal effective tax rate is your income tax rate PLUS the claw back rate you experience from government benefits.

Making the right decision between TFSA or RRSP can help save $100,000’s over time.

It can mean paying thousands LESS in income tax and it can mean qualifying for thousands MORE in government benefits (like the Canada Child Benefit (CCB) or the Guaranteed Income Supplement (GIS) or one of dozens of other government benefits that are available).

read more
Are Actively Managed Portfolios Guaranteed To Underperform Passively Managed Portfolios?

Are Actively Managed Portfolios Guaranteed To Underperform Passively Managed Portfolios?

Are actively managed portfolios guaranteed to underperform passively managed portfolios? That’s what William F. Sharpe argued when he wrote The Arithmetic Of Active Management.

The idea is quite simple, and the paper is quite short if you’d like to read it.

It presents a very simple argument for low-cost passive investing versus high-cost active investing.

Through simple arithmetic, Sharpe argues that it’s easy to see that passive portfolios will outperform active portfolios. The argument is built on a few simple concepts so let’s take a look…

read more
Never Get Surprised By An Unexpected Expense Again!

Never Get Surprised By An Unexpected Expense Again!

Some surprises are great… but one surprise no one likes an unexpected expense. An unexpected expense can really wreak havoc on your personal finances. Unfortunately, unexpected expenses are extremely common, especially for those who own homes and vehicles.

For those of us who own large depreciating assets like vehicles, homes, boats, RVs etc., planning for unexpected expenses is an important financial habit. We need to prepare for future repairs and upgrades, even if they’re not entirely predictable.

At PlanEasy we call these types of expenses “infrequent expenses”. Unlike your regular monthly bills, infrequent expenses are not regular and are much less predictable. It’s hard to predict both the size and timing of infrequent expenses but they are still expenses that we need to prepare for.

If you own a depreciating asset like a home or vehicle then you can be guaranteed to have some large expenses in the future. To prepare for these expenses you need to set aside a certain amount of money each month, otherwise you’ll feel a nasty cash flow pinch in the future, or in a worst-case scenario, end up in debt. For those with a large home and 1-2 vehicles, setting aside $500 to $1,000+ per month is a pretty common goal. How much are you setting aside for infrequent expenses? Is it enough?

To manage these infrequent expenses, we can use a “fund” or “funds”. A fund is a small pot of money that you contribute to regularly. It’s set aside in a high-interest savings account and waits there ready to help when these types of expenses occur. We don’t like to think of this as savings, and its not an emergency fund, this is future spending that just hasn’t quite happened yet.

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...

TFSA or RRSP? Which One Is Best For You?

TFSA or RRSP? Which One Is Best For You?

Both the Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP) are tax-sheltered accounts offered to Canadians by the government as a way to help save and invest without the drag of income tax on annual returns.

Although both are great ways to help grow your money, it can be difficult to decide which one is best for you.

Often one type of account is better for an individual than the other. In most cases we would prefer to maximize one of these accounts before moving on to the next.

Which account we choose, TFSA or RRSP, will depend on a number of factors. These factors may change over time. It’s reasonable to assume that a new grad entering the work force would be better suited to maximizing their TFSA first but as their income grows they may prefer to start focusing on their RRSP instead.

This decision between TFSA or RRSP often involves looking at your marginal effective tax rate today and your marginal effective tax rate in the future. You marginal effective tax rate is your income tax rate PLUS the claw back rate you experience from government benefits.

Making the right decision between TFSA or RRSP can help save $100,000’s over time.

It can mean paying thousands LESS in income tax and it can mean qualifying for thousands MORE in government benefits (like the Canada Child Benefit (CCB) or the Guaranteed Income Supplement (GIS) or one of dozens of other government benefits that are available).

read more
Are Actively Managed Portfolios Guaranteed To Underperform Passively Managed Portfolios?

Are Actively Managed Portfolios Guaranteed To Underperform Passively Managed Portfolios?

Are actively managed portfolios guaranteed to underperform passively managed portfolios? That’s what William F. Sharpe argued when he wrote The Arithmetic Of Active Management.

The idea is quite simple, and the paper is quite short if you’d like to read it.

It presents a very simple argument for low-cost passive investing versus high-cost active investing.

Through simple arithmetic, Sharpe argues that it’s easy to see that passive portfolios will outperform active portfolios. The argument is built on a few simple concepts so let’s take a look…

read more
Never Get Surprised By An Unexpected Expense Again!

Never Get Surprised By An Unexpected Expense Again!

Some surprises are great… but one surprise no one likes an unexpected expense. An unexpected expense can really wreak havoc on your personal finances. Unfortunately, unexpected expenses are extremely common, especially for those who own homes and vehicles.

For those of us who own large depreciating assets like vehicles, homes, boats, RVs etc., planning for unexpected expenses is an important financial habit. We need to prepare for future repairs and upgrades, even if they’re not entirely predictable.

At PlanEasy we call these types of expenses “infrequent expenses”. Unlike your regular monthly bills, infrequent expenses are not regular and are much less predictable. It’s hard to predict both the size and timing of infrequent expenses but they are still expenses that we need to prepare for.

If you own a depreciating asset like a home or vehicle then you can be guaranteed to have some large expenses in the future. To prepare for these expenses you need to set aside a certain amount of money each month, otherwise you’ll feel a nasty cash flow pinch in the future, or in a worst-case scenario, end up in debt. For those with a large home and 1-2 vehicles, setting aside $500 to $1,000+ per month is a pretty common goal. How much are you setting aside for infrequent expenses? Is it enough?

To manage these infrequent expenses, we can use a “fund” or “funds”. A fund is a small pot of money that you contribute to regularly. It’s set aside in a high-interest savings account and waits there ready to help when these types of expenses occur. We don’t like to think of this as savings, and its not an emergency fund, this is future spending that just hasn’t quite happened yet.

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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