TwitterThe Voice for Financial Reform in the USA Gets a Boost
Why Forgoing TFSAs or RRSPs Will Cripple Your Retirement
It's RRSP season and there are only a couple of weeks left to invest some cash to reduce your taxable income for 2009. Many people are looking for advice on how to spend any extra funds. Some ideas are coming out from so-called 'financial advisers' that are giving out, frankly, really bad advice. Take for instance this article from Yahoo! Finance Canada that suggests it's better to pay off your credit cards over investing in your RRSPs, and investing in TFSAs over RRSPs.
None of that is bad advice necessarily, but within the good advice are some sketchy ideas. Be sure to look at a number of sources when researching online folks! And be sure to chat with a financial advisor that provides instruments from a variety of companies rather than say, a bank who are obligated to offer primarily bank investments.
With these ideas in mind, let's review some reasons why forgoing RRSPs today will cripple your retirement in the future.
One of the main ideas from the Yahoo! article stemmed around reducing personal debt before considering long term investments.
...consumers with substantial credit card debts shouldn't get a loan to make a contribution to their registered retirement savings plan, with the hope of paying off the money borrowed with anything that comes back in the form of an income tax refund.
What is Universal Life Insurance?
Universal life insurance combines an investment component within a life insurance policy. They are often advertised as a tax shelter or as the best way to save on taxes.
Policyholders are able to choose investments in the policy. Premiums are flexible within the minimums and maximums stated in the contract. The Income Tax Act mandates a maximum investment return. Any gains above that are taxable. If only the minimum premium is paid it is difficult for the investment portion to make any gains.
There are many fees that policyholders must pay. Also within the first ten years of the policy access to invested funds is severely restricted. In all cases a person will pay more than they invested to cancel the policy or get back their investment.
Universal life insurance may be suited to taxpayers who have already maxed out their RRSP or who will have challenges paying tax on the sale of a second property or business. However, objective financial experts agree that investments and life insurance should be kept separate.
Alberta Conservatives Are Loosing Support – Heritage Fund Takes Beat Down
Great Oil Sands Article in the Globe Interviewing ex-Premier Peter Lougheed
**Re released after six months. Today the AB government, after years in power, have hit a new low stating a deficit of over 4 billion is to be expected this year. It's hard to swallow because of the immense wealth this province had and how short sighted conservative politicians spent it all. Those moves will come back to haunt this province.***
One thing that Albertans under the age of 30 just don't comprehend is why those over 45 are ripping the natural resources from the ground to fatten their already grossly overpaid bank accounts. What's even harder to swallow is the government in charge is doing everything in their power to facilitate the process.
There used to be a bumper sticker in the early 80's: "Oh lord, give us another boom and i won't piss it away." We got another one, and yes, the conservatives have pissed most of it away.
The development of Alberta's oilsands is in full swing despite economic recession. The breakneck speed is chewing up the oil while simultaneously ripping up the environment. That's a double whammy for the generations of tomorrow. Of course, to politicians and their voters it makes zero difference what tomorrow gives. Since the Lougheed there has been no attempt to reclaim the value placed in oil revenue for future generations. One could argue that Ralph Klein managed to eliminate the debt thereby paving the road to future investment in infrastructure, health, and of course the 'Heritage Fund' (endowment fund made of oil revenues). Read the rest of this entry »
Getting back on track after the spending season
A part of all you earn is yours to keep
This is the time of year when we reflect on possible seasonal excesses and think sober thoughts of cutting back, diets, etc. In the past I have mentioned variations of the dreaded 'B' word , and have provided a tool for keeping track of your spending.
Before you yawn and say 'Not again Scrooge,' let's look at finances from a fresh angle.
What does this saying mean to you? "A part of all you earn is yours to keep." (1)
Some of you may have seen the commercial of the young guy on the street where different strangers are helping themselves to money from his wallet. Eventually he is left with nothing except an old woman warning him she will be looking out for him, or more likely, his wallet.
'A part of all you earn is yours to keep.' Yet we willingly enable others to become richer and what does that do to our bottom line? It's red and thin and theirs is thick and black.
Company RRSP or Do it myself?
Here is a conversation that was posted in the finance forum before it closed.
"So basically after i get my pay cheque and decide to put my money into an rrsp, that money has already been taxed by the gov't so how does it really reduce my TI vs. having your employer take the money first to put it in a rrsp for you then taking the taxes off the rest of your paycheque?"
Job Losses for December 09 and 2009 Year All up for US and Canada
The expectations were wrong. Recovery is not imminent. Economic sentiment took another beating when labour numbers from both the US and Canada showed mounting losses across the board. The American jobless rate remained at 10%, whereas their Canadian counterparts stayed at around 8.5%. Overall, the numbers for December and last year's 2009 figures aren't good.
The bad news will make economists and markets re-think the timing of the so-called 'economic recovery' in both countries. Canada lost 2,600 jobs in December, after creating positions in three out of the four past months, Bloomberg expected Canada to create 20,000 new jobs in December.
The labour market remains 323,000 jobs below the peak hit in October 2008. Last month's job losses came after employers created 79,100 jobs in November. The bad news also suggests employers in both countries will continue to delay their plans to hire more workers. Key markets to loose in Canada were the transportation and public administration offset gains in health care and social assistance. Self-employment continued to grow, and employment among women aged 25 to 54 tumbled by 24,000. Youth joblessness continued to swell, hitting 16.1 per cent from 15.9 per cent a month earlier.
Among sectors, transportation and warehousing last month lost 24,000 jobs, and business, building and other support services posted losses of 23,000. Public administration shed 22,000 positions and finance, insurance, real estate and leasing cut 17,000 jobs in December. Factories also shed jobs.
Employment continued to climb in health care and social assistance, with 35,000 new jobs, one of the few since late 2008.
A similar story played out South of the border where job losses increased higher than expected. Read the rest of this entry »
Maximizing Your Gift Giving Returns
Deadweight Loss of Gift Giving>
Came across an interesting article that discusses Christmas gift giving from the perspective of economists. Why bother giving a $100 gift to someone who will only appreciate it at $50? There is a loss of half of a Christmas gift, can we not maximize our gift giving by taking care of that deadweight loss?
Turns out an economist has contemplated the best way to maximize gift giving and minimize deadweight loss. Check out some of the articles on the topic from UPenn and Freakonomics, and a link to the actual paper (JSTOR)
Health Care Reform: The Latest Developments in American Health Care Reform
Both the House and the Senate have passed separate versions of the new health care reform bill; online insurance quotes will be more competitive now. The Senate's version of the new health care reform bill passed with a strong 60/39 count.
New initiatives for reforming the healthcare industry will soon affect the online insurance quotes that you receive from major healthcare insurers.
President Obama's plan for American health care reform continues to gain positive ground. Last week, at 7:00 AM on Christmas Eve, when the Senate's version of the new Health Care Reform Bill went up for vote, it needed a basic majority of 51 votes to be passed - and it took only about 5 minutes to receive them. The final vote count was 60/39 in favor of passage. This impressive victory was the result of the second longest deliberation period in the history of the Senate: 24 straight days. Now, both the Senate and the House of Representatives have passed separate versions of the final Health Care bill.
Introductory Microeconomics Cost Formulas
Here is a list of some of the basic microeconomics formulas pertaining to revenues and costs of a firm. Remember when you're using these formulas there are a variety of assumptions, namely, that the the firm is profit-maximizing (making as much money as they can.)
Here are the basic formulas (work out your own algebra to find alternatives): Read the rest of this entry »