What I Can Control and What I Can’t

Looking Behind and Ahead of 2023

In the world of investing and wealth accumulation, it is important to understand what we can and cannot control. 2022 was a challenging year for the markets with multiple factors such as the ongoing pandemic, the Russian war in Ukraine, rising interest rates and inflation and fears of a global recession causing volatility. While the future may be uncertain, there are certain elements of our financial well-being that we can control.

One of the most critical things we can control is our personal behaviour. This includes being mindful of the media we consume, and avoiding letting emotions sway our investment decisions. Instead, we should focus on developing and sticking to a well-thought-out plan that takes into account our savings, spending, portfolio construction, tax planning, and costs and fees. By making smart choices in these areas, we can maximize our chances of financial success.

On the other hand, there are many things that are beyond our control, such as inflation, stock markets, interest rates, the Federal Reserve, elections, the economy, corporate earnings, and geopolitical events. Trying to predict or control these factors is a futile task and instead, we should focus on what we can control. It's also worth noting that in times of market volatility, it can be tempting to make hasty investment decisions based on short-term news and market movements.

However, by focusing on what we can control, and sticking to a long-term plan, we can avoid emotional investing and increase our chances of success.

While we expect there will always be uncertainty and volatility in the markets, we expect the current volatility to continue for the next 6-12 months. We all have control over certain elements of our financial well-being by focusing on our savings, spending, portfolio construction, tax planning, and costs and fees, and avoiding being swayed by the media and emotions, we can increase our chances of financial success. Sticking to a good long-term plan is always a better option than trying to predict the unpredictable by staring into a cracked crystal ball.

Please reach out should you have any questions or concerns about market conditions and your portfolio is affected.

“The true investor welcomes volatility….a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.” ~ Warren Buffett

Graphic source: @mindfulenough | Infographic design by @agrassoblog for educational and motivational purposes

Health, Happiness & Success!

Deb, Kelly, James, Fiona & Jannine

Remembrance Day 2022

This poem was written one hundred and three years ago by Deb’s fraternal grandfather who fought in the trenches in Europe during the first World War.

Our team at Lifeview Financial thought we would share it with you as we celebrate Remembrance Day.

Deb, Gary and Kelly

RRSP to RRIF Conversion

Think of a Registered Retirement Income Fund (RRIF) as an extension of your Registered Retirement Savings Plan (RRSP). By the end of the year in which you turn 71, you must convert your RRSP into a RRIF.  Starting in the year you turn 72, you will have to withdraw at least the annual minimum amount based on a government-prescribed formula, although you’re free to withdraw more if you wish. 

If you remember when you put money into RRIF the government refunded the taxes you would have paid at your higher working tax rate. Now, when you are taking it out of your RRIF, the government wants you to pay taxes (usually at a lower rate) on the amount taken out of your RRIF.  Care should be taken with your advisor to plan RRIF income to suit you specific retirement income needs while minimizing tax consequences.

When converting from an RRSP to a RRIF, you may continue holding some or all of the same investments. Not only is this convenient, it also allows you to participate in the markets at a risk level that’s suitable for you. Sometimes these investments are adjusted slightly to accommodate the regular income you will now start getting from your new RRIF.

Your annual minimum payment is based on when the RRIF was established, your or your spouse’s age, and the amount held within the RRIF on January 1st each year. Keep in mind that RRIF payments can be flexibly changed, both the amount to withdraw as well as the scheduling of payments.

You can convert your RRSP to a RRIF prior to turning 71 if you want, or need the income.  The calculation for your minimum payment prior to 71 is as follows:

After the year in which you turn 71, your minimum payment is determined by a percentage of the market value of your RRIF. This percentage has been established by the Canadian government and can be referenced here:

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/completing-slips-summaries/t4rsp-t4rif-information-returns/payments/chart-prescribed-factors.html

A RRIF is just one way to create an income stream in retirement. We can help you develop a personalized plan that supports your retirement lifestyle and generates income in a tax-efficient manner.

“Wealth, like a tree, grows from a seed. The sooner you plant that seed the sooner shall the tree grow.”

-        George S. Clason

Congratulations to our winners of this years’ 9th annual Helping Hands Scholarship!!

Karina Rizzo won first place with her essay entry.  She is attending Western University for Medical Sciences.  This year, we asked our entrants to tell us about their life goals, to expand on themselves and their community involvement.

Below is an excerpt from Karina’s essay:

“The pandemic also had a significant impact on my outlook of life and allowed me to grow as a person.  In February of 2020 when the first lockdown commenced, I broke my ankle playing hockey and required surgery. This process allowed me to grow as an individual and taught me how to stay positive despite my circumstances. It tested my drive and work ethic because I had to go through the rehabilitation process with the absence of a physiotherapist. Therefore, I had to keep myself accountable. Due to my inability to walk, I could not exercise and was concerned that I would fall into an unhealthy spiral. I was able to eat healthy and do moderate exercises to remain mentally and physically fit. The process of rehabilitation during the pandemic taught me the power of consistency and discipline, two traits that I must exemplify to reach my aspired career.”

Carissa Dedes was our second-place winner this year.  She is attending Simon Fraser University for Kinesiology.

An excerpt from Carissa’s essay follows:

“Through volunteering in the Special Olympics, a slow pitch tournament for adults with disabilities, I discovered my sense of fulfillment when helping others. During my time volunteering at the Special Olympics, I helped to line the fields, score keep games, and give out food and beverages to the players. Through these simple acts of kindness by assisting people in need I realized that helping others is what I wanted to dedicate my career to. Volunteering showed me the joy of making someone else’s life that much simpler or less stressful. I believe I can achieve this gratification in my studies in health and fitness by pursuing a career such as a physiotherapist or a naturopath.”

All the best to both Karina and Carissa – we look forward to following you as you become successful in your chosen fields!!

Congratulations!

Deb, Kelly, Gary, James & Fiona

Benefits of setting up a Registered Education Savings Plan (RESP) early

As summer draws to a close and the kids are back in school, we’d like to encourage and inspire you to start early with planning for your child or grandchild’s post-secondary education.  It might seem crazy to start saving for College, University or an Apprenticeship program while the little ones have not even started elementary school; however, let us tell you it is never too early to start.  Education costs for kids attending school (tuition, housing & supplies) are typically between $20,000 and $25,000 per year in 2022.  At this time of year as we process RESP withdrawals for our clients, we are always amazed at how much you can accumulate in a RESP over the years by contributing enough to receive the maximum FREE matching amount from the government.

Starting in the year that your child or grandchild is born, you can contribute up to $2500 per year and receive a 20% matching grant from the Canadian federal government called the Canada Education Savings Grant (CESG).  Depending upon your family’s income level, there is another grant and bond that you may be eligible for.  Each child could receive up to $7200 of free CESG, plus any additional grants and bonds.  You are able to play catch up each year for one year (you can contribute $5000 in any one year that you have room to catch up).  Keep in mind the deadline is December for the annual contributions.

You can choose to open an individual RESP per child, or a family RESP where the money can be shared amongst all of the children.  Contributions into a RESP account are not tax deductible; however, they do grow tax free until the time of withdrawal. 

Flash forward to age 17 when the now young adult is ready to head off post-secondary school.  With proof of enrolment, the beneficiary of the RESP can withdraw funds for schooling costs as needed.  The contributions into the RESP come back out tax free.  The growth and grant portion are taxable in the hands of the beneficiary/student at their tax rate (typically lower than the parent or grandparent’s tax rate).

The above is just an overview of RESPs, and how beneficial they are in helping to cover today’s expensive cost of education.  As with any government subsidized program, there are a number of rules and restrictions to be aware of, but they are quite manageable.  Additionally, there are a couple of estate planning tips to be followed when RESPs are created.  RESPs are quite easy to set up and all that is needed is a Social Insurance Number for your child or grandchild.

If you are interested in taking advantage of the 20% matching government grant to help save for your child’s or grandchild’s education, please reach out to us to discuss RESPs in more detail.