Five things you may not know about TFSAs

By Denise Barrett

After taking more than three years to get acquainted, Canadians still don’t know the tax-free savings account (TFSA) as well as they should. The TFSA lets you stash extra cash for just about anything – rainy-day savings, a new house or retirement – without paying any tax on the growth within the account or on withdrawals.

Still, since the TFSA was introduced in 2009, less than one-third of Canadians have opened one. Here are five of the most common misunderstandings about the TFSA.

1. It’s called a savings account, but can hold just about anything.

From our earliest days, a “savings account” was where our pennies went when they came out of the piggy bank. The name suggests deposits, safety and low rates. But almost any investment you can hold in a registered retirement savings plan (RRSP) can also go into your TFSA: bonds, stocks, mutual funds, exchange-traded funds, options, etc.

Personal finance expert and author Kelley Keehn is among those who wish the government had chosen a different name for the TFSA. “Many banks and financial institutions advertise a set percentage for their cash TFSAs and it’s very low,” she says. “Canadians see the 2% and think ‘those TFSAs don’t pay much.’ In reality, the TFSA is a savings shelter like an RRSP and you need to choose the investment that goes within it.”

catch the full article here: http://brighterlife.ca/2012/03/30/five-things-you-may-not-know-about-tfsas/?category-ref=money

Think Yourself Richer

When it comes to improving our finances we could all learn a few lessons from the world’s wealthy, says Iwona Tokc-Wilde

Financial independence can mean many things: being able to buy exactly what you want; living debt-free; being able to take a sabbatical from work. But, at its core, it means pretty much the same to all of us: complete freedom from financial worry.

So why do so few people attain it? It’s time to find out which of these psychological barriers is stopping you…

You don’t know the real value of money

A recent study shows that although 50 per cent of us have a savings account, more than a third don’t know what interest rate they’re currently earning. But it pays to pay attention to these details, says Kelley Keehn, personal finance expert and author of The Money Book For Everyone Else:

“The wealthy enjoy spending their money but they also respect it and know how to keep it – they read their credit card and bank statements, negotiate rates, ask for discounts and read their restaurant bill before paying. Billionaire Warren Buffet still drives his old Ford pick-up truck.”

Read the full article here: http://nwsense.com/think-yourself-richer.html

From Sense Magazine in the UK

Interest Rates Hit a New All Time Low - Why You Should Care

We Canadians have been pretty spoiled with relatively low rates for some time. But as of yesterday, The Bank of Montreal announced it is lowering its rate on five-year fixed mortgages to 2.99 per cent, an all-time record low in Canada.

This recent announcement is likely to spur competition with our rival banks according to a recent Huffington Post article.

The question is, why should you care?

Read the full article here: http://www.walletpop.ca/blog/2012/01/13/interest-rates-hit-a-new-all-time-low-why-you-should-care/

Kelley Keehn’s Top 5 Money Resolutions for 2012 - The Marilyn Denis Show

Click on the picture to view the video.

Kelley Keehn’s Top 5 Money Resolutions for 2012 - The Marilyn Denis Show (and a few more that weren't covered in the show)

1. Just say NO - no new consumer debt. Create a detailed family "needs"
and "wants" list for the year ahead.

2. Know when to reward yourself, but set the rules up to win. PLAN your spending as much as your savings.

3. Be smart about your rewards cards and read the fine print. Are you paying more in annual fees than your rewards are worth?

4. Spend less and save more. Start a RRSP or monthly forced savings now. Or, increase your mortgage payment by $50 a month.

5. Track your spending twice a year for a month with a friend and analyze each other's spending. Reserve judgment but offer and be open to constructive feedback.

6. Start a money club. Meet quarterly and talk all things money - books, resources and more.

7. Set your family's financial goals and create visuals like goal thermometers and incentives for each family member sticking to and reaching their goals.

8. Vow to flex your financial self-esteem muscles - negotiate, ask for a discount, track deals

9. Do a complete financial audit once a year - review areas such as insurance, phone, cable, cell bills, credit card interest rates and annual fees, etc. and see where you can trim the fat

10. Get organized - know the facts and figures of YOUR financial situation (what did your RRSP portfolio return last year? when does your mortgage renew and what's your rate?)

Canada - Let's Continue To Be Proud of Our Banking System - And Here's Why

If you've tuned out the past reporting of Canada weathering the financial crisis storm and wondered what all the fuss was about (the IMF naming us the strongest banking system in the world during the meltdown), here's an article that might just make you even more proud of our fine country and banking industry.

As quoted near the end of the article, I think this paragraph summarizes the author's argument best:

In my conversations with Canadian bankers, one of the things that struck me was how often they referred to mothers. Nixon [CEO of RBC] mentioned his mother and her good opinion when explaining why he gave back his bonus in 2008; Clark [CEO of TD] uses the mother-in-law test, as in “Would you sell it to your mother-in-law?” to help TD employees figure out if they should be hawking a product to their customers. In an era when Wall Street investment banks issue notes warning their clients they may be short-selling the investments they are marketing, this sounds like a charmingly Canadian attitude. But it is easier to be nice if you don’t need to be nasty just to make a buck.

Read the full article here: http://www.ft.com/cms/s/2/db2b340a-0a1b-11df-8b23-00144feabdc0.html#axzz1g9BnSeBz

Might I also suggest that you review the definition of securitization here, mortgage-backed securities here, and asset-backed securities here.

Catch Kelley Keehn on Marilyn Denis - The 7 Deadly Money Disorders

Catch part one here: http://www.marilyn.ca/Finance/segments.aspx/Daily/November2011/11_14_2011/MoneyDisorders

Catch part two here: http://www.marilyn.ca/Finance/segments.aspx/Daily/November2011/11_14_2011/MoneyDisorders2

Catch part three here: http://www.marilyn.ca/Finance/segments.aspx/Daily/November2011/11_14_2011/Shopaholic

Full episode here: http://www.marilyn.ca/Video.aspx#clip567666

Your Money & You - Part Two - The Cost of Learning

(This is part two in a five part CBC Radioactive series. Catch part one here and the audio interview from CBC Radioactive here).

Whether you're saving for your kids' education, putting yourself through university going back to school later in life, it all takes a large sum of money!

Let's start with the kids

I often get asked, when is the best time for parents to start saving for their children's education? And of course, the logical answer is as soon as possible. But how realistic is that? Considering what an expensive time it is in one's life to raise kids, now couples have to fret not only about paying down debt, starting an emergency account, topping up RRSPs but now school too?

I think a better question parents should ask is how much are they willing to save for their children's education and in balance with their own goals. That's a personal one up to your individual family needs. The second question should be, what's the best way to go about saving those dollars?

Read the full article here: http://www.walletpop.ca/2011/11/05/your-money-and-you-part-two-the-cost-of-learning/