Don Mackenzie -Mobile Financial Advisor



Advice from Don: Balance, perspective and seeing the big picture. 

I have a good number of our members asking me right now about RRSP’s and TFSA’s, which is natural – it’s that time of year. Our members are also looking for advice on term deposits – which ones are RRSP and TFSA eligible, what advantages and disadvantages each offer. All good questions, and it is so important to take the widest perspective possible when investing and saving, so you consider all of the data you can. Let’s start with the market:
when the market is as volatile as it is today, and with the Bank of Canada lowering growth expectations last week, it’s a great time to look at the big picture, take inventory of where your money is and consider diversifying if you haven’t already done so.

Balance is important, just as a competitive rate is important. Let’s look at fixed rate term deposits, as an example. The benefit of a fixed rate term deposit is that you know the return you’re going to get at the end of your term; there’s no risk to your principal or the return. It’s a good way to balance higher risk investments you might have in the market. Think of it as an effective way to bunt, rather than risk striking out trying to hit a home run. Plus, many of our term deposits are TFSA and RRSP eligible; these are two products that actually complement each other well. The interest you earn in a Tax Free Savings Account is, as the name implies, not taxable, allowing your savings to grow without paying taxes on the gains. Contributions made to an RRSP are tax deductible as well, and the income earned isn’t taxed until you withdraw from the account. At that time, you are likely in your retirement years and in a lower tax bracket, so the net benefit is heavily in your favour.

When you lower or remove risk, there is no bad time to invest, and it’s easy to get started. Even a little bit will help you build confidence, while you strengthen your position for the future. Because a term deposit is guaranteed, it’s a safe and smart place to gather interest and build your hand for a time when the market is less unstable. The peace of mind doesn’t hurt either, because knowing what you can expect on your return removes the guesswork and gives you a predictable financial future to plan for. Predictability is an asset to a planner; it’s harder to create a strong financial plan when you have a lot of question marks.

Our 3 Year Redeemable Escalator Term Deposit is a great option in a turbulent market cycle. With our Escalator Term Deposits you earn a higher rate of interest each successive year throughout the life of the term deposit and the 3rd year rate right now is excellent, you can earn up to 4% with no risk to your principal.

Term deposits are a great product for someone who’s just starting out, or a seasoned investor looking to diversify and balance. It’s just one piece of the financial picture, albeit one that guarantees protection of your principal investment. It’s all about getting started, and the sooner you start investing in yourself, the better off you’ll be. Each of us have unique goals and priorities, so perspective, balance and seeing the big picture are essential. If I can help you with that, it would be my honour. 

 

Sincerely,

Don

Get in touch with Don:
Call or Text: 604 989.7923
Email: DMackenzie@sunshineccu.net

 

 

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