Susan Creasy Financial Inc.Susan Creasy Financial Inc.
613.384.1880

I want to help the best way I know

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In these uncertain times, I want to help the best way I know-how

All of our worlds came screeching to a halt overnight.

We are all dealing with minimizing the impact COVID-19 not only in our life but also in our community. At Susan Creasy Financial Inc., we are doing our part to minimize the spread by limiting our physical interactions with clients.

Like many of you, I am working from home while trying to entertain a child and working very different hours outside of the traditional 9-to-5. I am finding that I have to work later into the evenings or take time off in the mornings to play with my child. Things have changed in our lives, and I am sure that you are also feeling the same pinch and change to your schedule.

Rest assured, I am still working to provide assistance to clients and the community. As a seasoned financial planner with a large number of resources at my fingertips, I want to do my best to answer any questions you might have related to your finances. It could be about budgeting, paying down debt, minimizing spending, investing, or even how to plan for retirement when there is financial strain.

Here is my proposition to the community

I am opening my hours up from 9 am to 9 pm, 7 days a week. Yes, I will work weekends and late into the evening to meet when it is most convenient for you during this stressful time. All meetings will be over the phone or through gotomeeting video conferencing.  Follow the link provided to schedule your meeting or email me directly to set up a time.

I wish you the best and look forward to helping each and every one of you.

Schedule Appointment

Planning for your Retirement

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Over the last few decades, you have been saving regularly and built up your retirement portfolio; now what happens? When should you take your CPP and OAS? How does a Registered Retirement Savings Plan (RRSP) change to a Registered Income Fund (RIF)? What is the effect on my retirement from a market downturn? These are just some of the questions you might have during this life event. Having a full understanding on how and when to collect your income is extremely important.

Taxes in retirement

One of the prominent factors in retirement is being as tax efficient as possible. Your pension plan, RIF payments, RRSP withdrawals, CPP and OAS are all taxable income. Some of these payments have taxes withheld at the source, such as with your RRSP or RIF. Other sources of income, such as your CPP and pension, will have to be set up to have taxes withheld to ensure you don’t owe any additional money at tax time. Splitting your CPP with your spouse can help lower your taxes by transferring money from the higher income earner to the lower earner. Tax-Free Savings Accounts (TFSAs) do not count as income and will not affect your OAS claw-back. Utilizing this account can help save you thousands in retirement as well as save for the future.

When to collect

Figuring out the best time to start collecting your income as well as which sources to withdraw from not only helps to save on taxes but can also ensure that your income lasts through retirement. In certain circumstances, collecting your CPP and OAS early might make sense depending on your sources of income. Or vice versa, it might be in your best interest to wait to collect your CCP and OAS, and instead use other sources of income to fund your retirement. If your pension has a bridge component, it might be smart to wait to collect your CPP until the bridge ends at 65.

Investing

With the most recent market downturn as a result of the coronavirus, many retirees are concerned about outliving their money. When you convert your RRSP to a RIF, the year you turn 71, you are still investing your money. With the changes to the investment world, keeping your money only in Guaranteed Income Certificates (GICs) is no longer a viable option for growth. Rather, to achieve the returns necessary to maintain your income, you need a mixture of GIC’s, bonds, and equities. Depending on each client’s situation, different mixes and proportions of GIC’s, bonds and equities are appropriate. Another method to help protect your income during market downturns is to use a “cash wedge” to redirect your RIF withdrawals from your equities to GIC’s.

There are many questions that need to be answered before and during retirement. The one thing you want is to be confident that your money is going to last your full retirement, even during the downturns. You also want to ensure that you are being as tax efficient as possible. Working with a financial advisor can help confirm that you are on track to live the best retirement possible. Don’t wait until you retire to speak to an advisor; act now and better prepare yourself for the future.

5 Things to Know Before Investing

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When it comes to investing, most people will make mistakes along the way, which is part of the learning process. There is a lot to know before investing –  choices to be made, successes to be had and lessons to be learned. With investing, there are some things you want to be cognizant of and further detail to be given to them. This is your hard-earned money you are investing, and knowing a little more before starting and taking your time at the start can have great impacts in the future.

Explore your options

Your investment account options include a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). When looking to open your investment account, the first place you may think to go is a bank. However, there are other options available outside of the traditional bank route. An independent financial advisor can work with you to open all of the same accounts that a bank has to offer. In addition, an independent financial advisor can offer other valuable services, such as life insurance, critical illness and financial planning. There is also DIY investing that is completed digitally through robo-advisors, which have been growing in popularity because people want to invest for themselves without dealing with a bank.

Effects of risk and return

Many investors want to generate the highest return possible and therefore only focus on which funds could generate the highest return based on previous results. It should be noted that the higher returns on certain funds also have a higher risk of fluctuations in the market place. These funds carry a high standard deviation, meaning they can fluctuate greatly from one year to the next. One year they could generate a 20% return but the next it could be -10%. Lower risk funds can carry a more stable return without large fluctuations in the market place but tend to have a more conservative rate of return compared to the higher risk funds.

Researching the funds

You are in charge of where your money is being invested and what funds you are buying, so you should look into the funds and which companies they are invested in. Similar to the effects of risk and return, some funds are in speculative funds, meaning their performance may vary each year, whereas other funds are in more stable, long-term growth companies that you may be more familiar with. There can also be a big difference in your returns if you are invested in the Canadian, American, European or Asian markets, as each market has their own performance and they play off of each other. We see this same interplay between sectors, such as finance, energy, and health care.

Reviewing your investments

Your investments should be reviewed at least once a year to ensure that your portfolio remains properly balanced. As your investments earn money and are reinvested, over time your portfolio can shift and possibly be weighted towards a high-risk sector that you may not want to be in. Reviewing your investments each year ensures that your investments are still balanced to your risk tolerance and aligns with your changing lifestyle. If things change in a given year that could affect your investment style, your portfolio should also be changed to reflect that.

End goal

Similar to paying off debt, there needs to be a specific goal in place when investing. Regardless of whether your goal is retirement, vacations, or a house purchase, the way you invest your money should align with it. For example, if you are hoping to have a down-payment for a house in 5 years, the amount of money you should invest monthly needs to support reaching that goal.

Having an understanding of these items will help make your investment journey a successful one. Take your time, do your research, talk to friends and financial professionals to get a better understanding of what is out there. Don’t feel rushed into opening an account, take your time to review everything and make sure your opinions and goals are being met. A financial professional will take all of these items into consideration, present the best options available, and give you time to reflect. Ultimately you make the decision when you are ready.

Sustainable Investing

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The market has seen an increased number of consumers wanting to invest their money into companies that align with their values, and investors are choosing to invest in solutions that incorporate Environmental, Social and Governance (ESG) factors. There is also a growing desire for Sustainable, Responsible and Impact investing (SRI) solutions. It is not only pension funds and large institutional investors driving this increase; retail investors are also putting assets into the SRI sector.

What is ESG and SRI?

ESG refers to the three factors that measure the sustainability and ethical impact of an investment in a company. These factors are subsets of non-financial performance indicators that include carbon footprint, diversity in the workplace and donations to charities. The SRI sector is composed of companies that fall into six categories: clean energy, energy efficiency, clean technology, sustainable agriculture, transportation, and water.

Is there a performance penalty when going with ESG factors or SRI investments?

SRI investing combines the objectives of seeking positive returns and addressing global social challenges. There has been a notion that investing in ESG factors meant a sacrifice in returns, which is not the case. A study by Sebastian Rather in 2013, found that 72% of SRI funds do not show any significant performance difference when compared to their competitors; otherwise,   the SRI funds outperformed almost as often as underperforming.  There is an energy transition underway currently, as people move from fossil-based energy to renewable energy. Companies with greater gender diversity in senior leadership have experienced stronger performance and profitability. Looking at ESG factors and SRI investments as an addition to your portfolio, based on research, may tend to perform better financially in the long term.

Final Thoughts

Sustainable investing was once thought that investing your money based on your moral and personal beliefs would hinder your returns; this is no longer the case, as investment firms are starting to notice the long-term growth and success of these companies. Look at starting to add these factors in your portfolio to diversify your investments further and have the peace of mind knowing that you are investing in companies that you can be proud of.

TFSA or RRSP – Choosing One?

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Choosing whether to invest in a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) is easier than you think. Investing every year is the key to creating assets and a good financial future. Monthly deposits using a pre-authorized contribution plan from your bank account or payroll deductions makes saving money easy. Contribution amounts can be increased over time to keep pace with inflation and maximize the contribution limits of your TFSA or RRSP.

TFSA

The TFSA has an annual contribution limit of $6,000 for 2020, and a maximum contribution limit of $69,500 for those who were over the age of 18 in 2009. The annual contribution limit is set by the government each year, and any unused contribution room dating back to 2009 or the year you turn 18 can be carried forward. One additional benefit is that you can redeposit money into the TFSA the year following a withdrawal.  The TFSA investments grows tax-free and the withdrawals are tax-free, meaning there is no income tax deduction for any deposits.

RRSP

The RRSP allows for contributions up to the annual limit as noted on your income tax assessment each year. Any unused contribution room is carried forward to future years but withdrawals are not added back to your contribution room. The RRSP investment grows tax-free like the TFSA; however, at the time of withdrawal, the full withdrawal amount is taxable. The RRSP has additional benefits, such as the Home Buyers Plan and the Lifetime Learning Plan. Each plan allows you to withdraw a set maximum amount for the purchase of your first home or for post-secondary education, respectively. The amount you withdraw is not taxable income, but it must be fully repaid back into your RRSP over time. If you do not redeposit the money, this withdrawal will be taxed to you as income over the years.

Investing

TFSAs and RRSPs are savings plans that can hold a variety of investments based on your personal risk tolerance and financial goals. Investments within a TFSA or RRSP can include GICs, mutual funds, segregated funds through a life insurance company, stocks, bonds, and Exchange-Traded Funds (ETF).  TFSAs are beneficial for most Canadians and funds from a TFSA can even be transferred or moved to an RRSP in the future if tax breaks are needed. RRSPs are most beneficial for Canadians who are currently in a higher tax bracket but will be in a lower tax bracket at retirement.

Final Thoughts

In an ideal world, both TFSA and RRSP accounts are maximized to benefit your retirement and financial needs. The key thing is to start saving now with a monthly contribution that fits your budget and your financial goals. A review with your financial advisor each year will ensure that you are still on track to reach your goals. Don’t leave investing to the last minute; take steps today to secure your financial future.

Build a Budget, Take the First Steps

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It’s a new year and a new adventurous year is ahead for all of us. This might be the year you purchase a new house, a new car, take that dream vacation, welcome your first child, or take the plunge into entrepreneurship. There are countless opportunities, many roads to travel and so many memories to make. To make the most of the year and the goals you want to achieve, you should take note of what will need to be done, track your progress and adjust course if things change – in other words, have a plan and stick to it.

A budget is simply putting together a plan and being committed enough to stick with it, making adjustments as needed, to reach your end goal. Budgeting has gotten a bad rap over the years, with people assuming that you have lived a restricted lifestyle to save any cash. A budget helps you prioritize your wants and needs, focusing your spending habits on achieving the lifestyle you want without the burden of unnecessary debt.

Creating a budget is as simple as tracking your expenses, determining where you want to spend your money and adjust your spending accordingly. This does not need to be complicated – a simple spreadsheet will do.

Step 1: Identify your average monthly expenses:

Record your monthly income and your fixed expenses per month. Fixed expenses can include items like your mortgage or rent, utility costs (such as water, electricity, heating bills), car loans, monthly insurance premiums, car loans, phone/cable/internet plans, etc. These are all items that you pay each month and are fixed, meaning the amounts rarely change.

Next, record your variable expenses, such as entertainment, restaurants and take-out, groceries, gas, liqueur, your morning coffee, etc. These are the items that can change month to month.

Lastly, record any savings and/or debt repayments, such as any contributions to other accounts, such as RRSPs, TFSAs, OSAP repayment, average credit card debt, personal loans, etc.

Step 2: Identify whether you break even, have a surplus or a deficit and adjust your spending or saving as necessary:

Add all of your expenses, savings and debt repayment values together. Subtract that value from your monthly income; this may result in a break-even, a surplus or a deficit. If you have a surplus, determine where to channel that money, such as savings or debt repayment.

If you have a deficit, take a look at your variable expenses and prioritize them to see where you can save money. This might mean cutting the cable or eating out only once a month instead of every week. If you really want to live within your means with the budget you create, then you will find a way to make the necessary adjustments, even if it means a lifestyle change.

Take your time to create your personal budget and ensure it is the right fit for yourself. Don’t run into this and make quick decisions that you may not stick to. Make it a priority to track your spending and make plans to ensure your success for the new year.

Is a Group RRSP Enough

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Upon entering the workforce, one of the first things you are informed about is the amazing group RRSP or pension plan that your company has. If you put X dollars away each month, the company will match it, or you can receive a set pension for life.  Everyone looks at this as an amazing deal. You can get a 100% return on your investment or money for life in retirement. Why would you not take it? What they don’t tell you is that the group RRSP really has no guarantees and the company owns the policy.

My Experience

When I entered the workforce after university, I too took advantage of the amazing group plan. I put the maximum amount away, received the company match, and invested everything to start saving for my retirement. I thought this was guaranteed money and things could not get any better. However, after 3 years of working for this company, they changed their group plan without notice. The company match was lowered and the number of investment funds was decreased, which resulted in those amazing returns that I thought would continue long into the future to drop drastically. This is when I learned that I had to take my retirement plans into my own hands.

Real Life

The downfall of Sears Canada has recently brought this issue to light, with pension plans being frozen for many retirees as the company has fallen into financial disrepair. Now, with Sears Canada closing all of their remaining stores for liquidation, the pension plans are in limbo. Pensioners are not considered primary lenders and therefore, there is no obligation for Sears Canada to pay out any pension to them. All of the current pensioners and employees could lose all of their retirement savings and pension plans. All of their hard work and savings are now gone due to the company’s inability to succeed.

Group plans can be an amazing feature with company matches and can help you invest for your retirement. However, they should not be the primary or sole source of income for your retirement. Utilize personal RRSPs and TFSA to take personal responsibility and control over your money. Be smart with your money and have all of the angles covered to ensure your future is successful.

Is your retirement income at risk

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Throughout your career,  you have been investing your money on a regular basis into your retirement savings plan (RRSP), and think you have saved enough income to last your entire retirement. If you have planned properly, your RRSP, group plan, old age security (OAS), and Canadian Pension Plan (CPP) should meet your personal income requirements. Yet, there are many factors that can erode your retirement income faster than expected. 

What risks

Market risk can have a large impact on your RRSP or Retirement Income Fund (RIF). Poor performing stock market returns can impact your savings, amounts regardless of long-term rates of return. For example, losses in the first few years of retirement will have a larger impact on your retirement income than losses later on. 

Inflation risk will erode away your purchasing power as time goes on. This is a major concern for anyone on a fixed income, as a period of high inflation can be devastating. Relying on guaranteed income certificates (GIC) alone will not keep up with inflation with interest rates as low as they are now. A balanced portfolio with GIC’s as well as fixed-income funds is important to keep up with inflation at the least.

Longevity risk or outliving your money is a growing concern for many people. As life expectancy continues to increase, retirement income will need to last longer and longer. This means that planning for retirement needs to go beyond the typical life expectancy timeline; otherwise, there is a high chance your income will run out by age 90.

Withdrawal rate risk and spending too much income can limit your lifestyle later in life. Striking that perfect balance between over limiting your income and overspending is a delicate act. 

Investment behaviour risk related to making quick decisions emotionally can derail any retirement plan. Emotions play a large part when talking about finances; fear or greed can each have impacts on your savings and the end goal.

Final thoughts

These are just some of the risks that need to be addressed with building a financial plan for retirement. Working with a financial advisor can help find the correct investment strategy, support you through the financial roller coaster ride, and work to ensure your money can last. Book an appointment with us to review your current retirement plan, or help build one for you. 

Account Options when Saving for a House

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Saving money for the purchase of your first house can be an exciting time.  Setting a goal and putting a plan together can have a positive impact but, at the same time, it can be a scary time with numerous choices on how to tuck your money away.  There are three types of saving vehicles available, and each account has advantages and disadvantages. There is not a ‘one size fits all’ product – what will be best for you depends on your personal situation.

Registered Retirement Savings Plans (RRSP)

They have been around for a while and is most people start out with, especially when entering the workforce.  Investing in an RRSP has the added benefit of giving you a tax-break on your income as well as saving for the future.  The RRSP can also help with saving for a house with the first time home buyers program (HBP). This program allows you to withdraw up to $20,000 tax-free that is put towards the down payment on a house, with repayment starting the second year after withdrawal and 15 equal payments over 15 years.  Repayment is something many people overlook, so make sure to plan for it in your household budget. 

Tax-Free Savings Account (TFSA)

This relatively new option was introduced in 2009 and is available to all Canadians.  The TFSA allows you to invest $5,500 annually plus any unused contribution room. The TFSA is an investment account, where you can select funds of various risk levels. Any deposits and withdrawals are tax-free, meaning you can withdraw the money at any time without worrying about tax implications. Any withdrawal is not tied to the HBP, so there is no repayment schedule to worry about.  

High-Interest Savings Account (HISA)

This option is similar to a basic savings account but gives you a higher annual rate of return.  Do keep in mind that any interest earned is taxable and there can be fees associated with high-interest savings accounts, so be sure to shop around for what suits your needs.  The advantage of this type of account is the guaranteed annual rate of return and the ability to access the money whenever you need it. 

Regardless of which option you choose, the key factors to remember are: 

  1. Timeframe – is there a repayment schedule, how quickly do you need to access the funds?
  2. Risk tolerance – what is your comfort with investing and your risk tolerance level?
  3. Monthly contributions – any interest earned should be considered icing on the cake, not a necessity to reach your goals.

Purchasing your First House

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Looking at purchasing your first house is an exciting time; there are so many thoughts running through your head such as what location, size of the rooms and the interior finishes, yard size and potential upgrades. Even the joy of looking online and through magazines for potential ideas for your dream bathroom or kitchen can take priority. There are certain financial items that need to be considered prior to taking those first steps, and each has an impact on what you can afford. 

Financing

One of the first things many people do when considering purchasing a house is finding out how much they can afford. Finance calculators online can help give you a rough idea of your maximum purchase price. These calculators look at your gross annual income and debt to determine the maximum amount you can afford. There are two key items to consider when looking at what you can afford: that you are using gross income and the calculator provides the maximum amount you can afford. The calculator is calculating what you can spend based on your gross income; however, you actually take home less money due to taxes and possible benefit deductions. Instead of looking at your gross income, look at your actual net pay per month and ask yourself if you can afford the monthly expense. The calculator will tell you the highest-priced house that you can afford, but even if you can afford it, do you need it?

Comfort Level

This should be one of the top priorities when looking at purchasing your first house: how comfortable are you with paying that much per month for your mortgage, utilities, etc. and maintaining your current lifestyle? This is where having a budget and knowing what you feel comfortable spending is important. Having your budget made before purchasing a house and knowing what you want to spend goes a long way towards successful homeownership. The last thing you want is to over-stretch yourself and end up in debt or unable to do the things you love because you bought a house. Also, if you are planning to start a family in the future, remember that your income will drop while maternity leave, so having a budget set up where you can afford the house on one income could be beneficial.

Life Insurance

A mortgage is a large debt that has to be repaid to the lender, regardless of if something happens to you or your spouse. The smartest move is to purchase personally owned life insurance on yourself and your spouse to cover off the debt in case of death. This is different than the mortgage protection offered by your lender. Personally owned life insurance is owned by you, meaning you have control over it and the money goes to your named beneficiaries. Mortgage insurance is owned by the lender, so you have no control over it and all the money goes to the lender. You should consider personally owned life insurance when purchasing your first house to make sure if something happens to you, the house will be paid off in full. 

Repayment of HBP/Savings

If you are taking money from your RRSP for the Home Buyers Plan (HBP) or even money from your savings, you should consider how are you going to pay it back. The HBP has a set schedule of 15 years to repay the money back; otherwise, the annual repayment amount will be added to your income and be taxed each year afterwards. There needs to be a plan in place to pay this money back each year or, better yet, automatically each month. If you took the money from your savings account, although you do not technically need to repay it, you should consider what you want to save for retirement. You should still be able to put away up to 10% of your pay monthly into your investments for long-term savings. 

Emergencies

A house has lots of pieces that need to be in good working order to ensure that it lasts a long time, including the foundation, roof, windows, furnace and AC unit. Although most of these items should last a few years or longer, there is no guarantee that they will last that long and the unexpected can happen. Planning ahead for these unexpected expenses can save you from having to borrow additional funds through bank loans or credit cards. Plan to have upwards of $10,000 available in a high-interest savings account that you can access when needed. Having this money readily available will ensure that your unexpected expenses can be taken care of right away without falling into debt. When purchasing your house it would be wise to not use all of your savings, as repairs can happen sooner than later. 

Renovations/Upgrades

When you start to look at houses, it’s easy to start envisioning what you would change, whether it be the flooring, the wall colour, or the curtains. When you purchase your first house, you will spend time and effort to upgrade everything to fit your style and needs. Small changes such as painting can add up by the time you purchase paint, brushes, rollers, drop cloths, rags, and pans, you can easily end up spending $100. If you are looking at full renovations, such as taking walls down or installing new flooring or windows, the cost can end up being thousands of dollars. To prepare yourself and your budget for what is to come, take notes when looking at potential houses and write down what upgrades or renovations you would want to do. This will give you an idea of which ones are the most important and what the full cost of the house could be.

Each of these items should be considered when you are looking for a house. There is nothing wrong with purchasing a starter home for what you need today and moving to a larger one that fits your needs as they change. Take the first step of creating a budget and looking at what you are comfortable with spending, not what is the maximum that you can spend. A house is one of the biggest purchases you will make and knowing that you can comfortably afford it, even with renovations or unexpected expenses.

Ready to chat? Fill out the form below to let us know how we can help you.

Location

621 Norris Court, Unit 5
Kingston, Ontario, Canada
K7P 2R9

Phone

Tel. 613.384.1880
Fax. 613.384.4679

Business Hours

Mon – Thurs : 9 a.m. - 5 p.m.
Fri : 9 a.m. - 4:30 p.m.

Evenings and weekend
by appointment only