First time buyers
Planning for good things...........
The Average Cost of a Wedding is $26,327
University tuition increases at an average rate of 6.3% per year. Although a great expense, it is also a great investment. University graduates average a much higher salaries than people with only a high school diplomas (men–69%, women–73%).
The most common methods of paying for an education are:
• Student loan: Enables the student to pay back the loan after graduation.
• Pay-as-you-go: Eliminates the obligation and added expense of repaying aloan, but generally involves a strong financial sacrifice at the time.
• Advance investment: Parents invest money in a program dedicated to collegeexpense. It involves advance financial commitment but generally appreciatesin value. RESPs may be used for education and allow you to take advantage oftax savings while you save.Don’t overlook another method of defraying educational expense—scholarships.A surprising variety of academic, athletic and other scholarships exist, somewith quite reasonable qualifications.Last, be sure to investigate the tax deduction possibilities:• School expenses (tuition and books)• Student loans (interest only)
• Employer assistance
By planning today, you have the advantage of shaping your future with well-informed decisions on what will benefit you and your family best. Planning ahead also helps prepare you for life’s milestones—home remodeling, children,university, wedding, vacation home, travel. There are a number of ways to save and invest that will enable you to enjoy the big moments without affecting your retirement.
Make Savings Automatic Plan your paycheque. Deposit a specific amount into savings account or other savings instrument. If you have difficulties with this, your bank or employer can set up amethod of depositing it automatically. This is a convenient method of saving and keeps your contributions continuing on a regular basis. Even if you start with a small amount, be diligentand establish a routine. You can increase your contribution as your income grows.
Invest in Your RRSP Deductible RRSP contributions can be used to reduceyour taxes. Income earned in the RRSP is usually exempt from tax for the time the funds remain in the plan. You only pay tax on the amounts you withdraw. A spousal RRSP allows you to put all or part of any allowable RRSPcontribution into an RRSP in the name of your spouse or common-law partner. As a contributor, you benefit from the tax deduction while building a retirement nest egg foryour spouse or partner. When you both withdraw fromyour RRSP savings during retirement, the combined income tax you pay as a couple may be lower than whatyou would pay if all your savings were in a single RRSP.
Invest in Your Registered Pension Plan (RPP) Contributions to an RPP are tax deductible for both the employee and the employer.Contributions to the plan and gains on underlying assets are tax deferred, so the funds are taxed when they are withdrawn from the plan.
Good Insurance for the Future When evaluating life insurance plans, consider that many companies offer a participating policy(also called “with profits”). This allows the insured to participate in the insurance company’sprofits while maintaining an active life insurance policy. This is a wise way of having lifeinsurance coverage while making long-term capital growth.
Compound interest
The most prevalent form of interest is compound interest,which calculates interest accrual not only on the principal but on the unpaid interest as well. As a result, an account with compounded interest will grow faster than the less common simple interest account. Naturally, an amount will increase faster the more frequently the interest is compounded. Many consumers will be familiar with compound interest,which is used by credit card companies and financingagencies. However, compound interest can also work for you in the form of a savings account or money market account, which will reward more the longer your funds remain untapped. For additional information regarding compound interest, check with your bank or financial adviser. A general theory called the Rule of 72 can be used to figure out roughly how long it will take to double your original principal. If you divide 72 by your average interest rate, your answer will be the number of years it will take to double the principal. However, this does not take into account several factors such as taxable growth (if applicable) and inflation
A handy form that will compile your compound interest, given principal, interest rate and length.
Will help determine your post-secondary education cost.
Envelope Budgeting – http://www.mvelopes.comAn entire site devoted to the art of envelope budgeting, which involves setting aside money on a regular basis to be used for aspecific purpose.
