Odette Morin

Odette Morin

Recent Posts

When to avoid RRSP

For most people, RRSPs are pretty hard to beat however they are a few instances that quickly come to mind when RRSPs are not the way to go.


  1. When you need the money in the short term, you should avoid contributing to an RRSP.  Not only you will owe the tax refund back, but you will also lose your deduction limit. Some tax advisers would recommend a short-term RRSP when your tax rate is high and will drop in the following year to benefit from the tax difference but again, I do not advocate this because eroding your contribution room is quite costly. The tax free compounding is very valuable over the long-term.
  2. When your income is going to be higher at retirement.  This is very rare but if you anticipate your income to be higher at retirement than it is today, you should avoid making an RRSP contribution. Avoid a situation where you obviously have to pay more tax later than the tax saving today.
  3. When you are close to the GIS qualification. If your savings are modest and you anticipate having very low income at retirement, it would be best to avoid RRSPs which could jeopardize qualifying for the Guaranteed Income Supplement.
  4. When you expect a very large RRSP at 71. If you calculate that your RRSP will be so big at age 71 that the minimum annual payment might clawback your Old Age Security (OAS) benefit it would be best to stop contributing to your RRSP.

If you meet one of these situations, you may be best to contribute to a TFSA or make a non-registered investment.

Careful calculations and projections must be made to plan properly.  Make sure to discuss these few points with us at your next annual review meeting.


RRSP or not

Three main reasons why Markets are volatile

  1. The end of QE in the U.S is in sight. So it’s natural to expect some volatility as this unfolds gradually.
  2. The price of oil dropped unexpectedly in a big way. When unexpected events occur, the markets react.  The price of oil is expected to come back to the more normal level of $80 a barrel within a few quarters.
  3. Global Growth is slowing.  We have seen tremendous growth in the past 3 years following the financial crisis. The recovering economies are still expected to grow but at a more moderate level.  Any type of slow down affects the markets.

Always remember that equity investment returns are closely tied to corporate earnings growth and the price you pay for those earnings. Historically, over the long term corporate earnings have been fairly stable and have grown along with productivity gains and inflation. Stock valuations though are more volatile than earnings since they are influenced by investor sentiment, which swings between optimism and pessimism. Learn to live with market volatility by focusing on your investment earnings yield instead of your investment market value.

RRSP, TFSA, Mortgage. What should you focus on this year?

RRSP or else








RRSP, TFSA, Mortgage, Kids education.  What should you focus on this year?  RRSP deadline is coming up soon and every year, you are debating whether you should make a contribution and for how much.  There are so many bills to pay, things to buy and retirement seems so far away.

A study conducted by ING direct last year stated that retirement was cut short for 30% of older Canadian retirees in 2013. Having to “Un-retire”  and go back to work  is a very sad and unpleasant life event. One, nobody should have to go through.  This happens  with  lack of planning. 

The true answer to the question  above is that you have to do a bit of everything.  Just like a mortgage, you need to pay into your retirement over many years.

The amount of saving required is huge to provide an indexed income from age 60 to 90 or more. Most do not have a pension plan or if they do, it may not be enough to cover the current lifestyle.  Planning way ahead and saving systematically, every month or every year, for retirement will ensure that the saving required is manageable and retirement will be stress free and comfortable.  If you wait too long, the amount of annual saving gets bigger and bigger. If you start early, the interest compounding  takes care of it.

Your annual review meeting will determine how much you have to save to:

  • have the retirement lifestyle you want
  • have the mortgage paid off by retirement
  • how much to save for the kids education
  • how to save for an emergency fund
  • get all the tax savings you are entitled to
  • whether RRSP or TFSA is best for you
  • and a whole lot more.

Never underestimate the power of planning early and saving systematically!

Pinch pennies without feeling a thing

New Year’s is a time for resolutions. Some are made and many are broken. Personally, I think this happens because we try too hard to overhaul certain behaviours.

That’s why I propose a financial New Year’s resolution that’s easy enough to commit to and yet effective enough to work.

Essentially, my suggestion is to put the following six tips into place.

5 top tips for saving money year-round

1. Have a tangible goal.

David Weliver, from Money Under 30, suggests that you aim for what he calls “weeks of freedom”. For instance, let’s say you want to take a year off work to go travelling. That means your goal is “52 weeks of freedom”.

To accomplish this, simply estimate how much money you need to take a year off from work then divide that by 52 weeks. In other words, think of savings as “weeks of freedom” and set goals to them.

 2. Reward yourself.

Don’t deny yourself life’s simple pleasures. Instead, take a balanced approach.

For instance, I love fine wine and I get to enjoy them by not letting Terry convince me that we need a new car (though it’s eight years old!).

Another strategy is to cut back on your indulgences without fully cutting them out.

3. Make a conscious choice.

Before you decide that you need that new television or iPhone, imagine someone offering you the choice between your purchase and the money it would take to buy it.

If you choose the money, then just keep it and don’t spend it. Your purchase is not worth the cost.

4. Spend money where you spend time.

A great way to prioritize spending money is to focus on areas where you spend the most of your time.

For instance, if you spend a lot of time at your computer, then invest in a good chair. If you spend a lot of time in your car, then invest in comfort and safety versus appearance.

5. Credit card cover.

Instead of cutting up your much-loved credit card, I suggest you take out the scissors and scotch tape then craft yourself a credit card sleeve.

Doing so creates just enough of a barrier to delay an impulse purchase. You can even add a message like “oh no you don’t”.

One bonus tip

My final suggestion is to invest in RRSPs. Every dollar that goes toward an RRSP contribution reduces your taxable income. As such, you save money by spending less on taxes.

I bring this up now because the deadline for making your contribution is March 2nd.

If you’d like, you can call us today (while you’re in the mindset of saving!) and we’ll defer the payment until then.

Happy New Year everyone and let’s celebrate financial good health!

Penny pinch