Frequently Asked Questions
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Investments and insurance
Where can you invest your money?
There are many places to invest your money and many different investment vehicles to get you to your retirement goal. We understand that it is tough to assess risk factors, analyze your personal financial status and future goals, research the market, and understand its fluctuations. Which ones are right for you? That is why we are here to help you understand where to invest and why, how much should you invest now to be able to live the same or better lifestyle in retirement.
A Financial Needs Analysis can give you the full information to make an informed decision about what is best for you and your family, schedule a complimentary one today.
Is life Insurance worth it?
The pros and cons of investing in permanent life insurance
Life Insurance is something you may consider adding to your financial plan if you’re interested in providing a measure of security for your loved ones. Proceeds from a life insurance policy can be used to pay final expenses, eliminate outstanding debts, or cover day-to-day expenses. Whether life insurance is a smart investment may depend on what you need and want a policy to do for you.
- Whether or not life insurance is a good investment for you depends on your individual finances as well as the length you’ll need coverage.
- Term life insurance can make sense if you want to be covered for a set time period, while permanent life insurance can cover you for life.
- The investment portion of permanent life insurance grows tax-free. You can also borrow against the cash value to buy a house or pay for your children’s college costs, tax-free.
- Alternatively, with term life insurance, all of your payments are put toward the death benefit for your beneficiaries, with no cash value and, therefore, no investment component; this means small premiums in exchange for a large death benefit.
What is the difference between an RRSP and TFSA?
Two of the most common investment questions are: “What’s the difference between an RRSP and TFSA?” and “Which one should I choose?”
The differences between a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA) are outlined below. Which one you should choose depends on a few factors: your current tax rate, your reason for saving, and your future tax rate.
TFSA vs. RRSP
An RRSP is mainly intended for retirement savings.
- Annual contributions are tax-deductible.
- Your contribution limit is based on earned income.
- Your contribution room begins at whatever age you begin working and filing a tax return.
- The contribution limit for 2021 is 18% of the earned income reported on your 2020 tax return, up to a maximum of $27,830.
- If you do not contribute to an RRSP, your contribution room accumulates and you can contribute even larger amounts in the future.
The TFSA was introduced by the federal government in 2009, as a way for anyone 18 or older to set money aside tax-free throughout their lifetime.
Annual contribution limit amounts have varied over the years.
- From 2009 to 2012, the maximum for each year was $5,000.
- From 2013 to 2014, the amount increased to $5,500 for each year.
- In 2015, the amount increased again to $10,000.
- From 2016 to 2018, the amount decreased to $5,500 for each year.
- From 2019 to 2021, the amount increased to $6,000 for each year.
TFSA contributions are not tax-deductible and contribution room accumulates if unused. Anyone who was 18 or older in 2009, and has not yet contributed, will have $75,500 of contribution room available in 2021.
How does life insurance and investments work together?
Retirement savings and investments help you dream big, plan for the future, and protect against what-if scenarios. Life insurance helps financially protect your family if you can no longer be there. They can pay off the mortgage, maintain their quality of life and cover education costs without tapping into savings. Critical illness is another insurance tool that can help sustain you ― and your family ― in case of a debilitating illness that leaves you unable to work.
What kind of insurance should you have?
There are many kinds of insurance available in the marketplace, some different insurance offerings are:
- Life insurance
- Insurance Tax Shelter
- Home insurance
- Disability insurance
- Auto insurance
- Health/Dental insurance
- Critical Illness
- Cancer Guard
Money that you earn is a valuable asset that needs to be invested right. Our well-trained experts conduct extensive research to give you the best recommendations. We believe in always doing what is right for you and your situation every time.
How Can I Save Money When Buying Life Insurance?
Buying a term life or a combination of term and permanent insurance may help you pay a lower premium. Buying a policy early in life is also a good way to ensure a lower premium.
The older you are, the higher the premiums, and the more risk you have of developing a health condition that could increase your premium even more or disqualify you from getting coverage at all.
How much life insurance do I need?
To determine how much life insurance you need, it’s best to look at your surviving family’s immediate, ongoing, and future financial obligations, and compare that with your financial resources. Below are examples of each type of need:
- Immediate: funeral costs, medical bills, taxes.
- Ongoing: mortgage payments, utilities, food.
- Future: college tuition, retirement funds.
Financial resources can include your partner’s income, savings, income-producing assets, and investments. Considering all these obligations and resources, the difference between the two is how much life insurance you need.
How does compound interest work?
- Compound interest is when the money you earn starts earning money.
- Compounding is the easiest way to become wealthy.
- The sooner you begin investing, the more time your earnings have to compound.
Compound interest is an investor’s best friend. Compounding is simply when the money you earn starts earning money. This means your stash is growing faster than if you were simply adding a lump sum every month.
So many people say “I can’t afford to start investing.” The truth is, you can afford not to start investing because time is the issue here, not money. Compound interest is the real silver bullet when it comes to growing your wealth and the earlier you start, the more powerful it becomes.
Do I need life insurance?
Life insurance aims to provide a solution for those who seek income replacement, mortgage protection, estate planning, leaving a legacy, or burial expenses. However, if someone you love is dependent on you financially, you need life insurance.
How much should I put away in an emergency fund?
You should plan to save six to nine months of your monthly recurring costs.
What does it mean when a policy is “fully paid up?”
“Fully paid up” means that you have paid enough premiums to cover the cost of the policy for the rest of your life, and the company will use the cash value to pay your premiums until you die.
What Is Final Expense Life Insurance?
Final expense life insurance refers to specific protection individuals purchase to cover charges and affairs that are associated with your such as burial, funeral service, or final medical bills. Final expense policies are whole life with a fixed premium amount that lasts for as long as the insured lives.