As we approach the end of 2020, we would like to take this opportunity to wish you and your families all the best for the coming year. 2020 has brought significant change, and while it has proven to be unexpected, each one of us have adapted our lifestyles to meet the new demands. Many of us are beginning to turn our attention to the promise of a new year, and a new set of resolutions.
A good place to start is with retirement plans and your RRSP. Retirement can seem like a distant objective until it is looming before you; it is never a bad idea to review if your plan is on track. The deadline for eligible tax deductions from RRSP contributions for your 2020 tax return is March 2, 2021.
The Tax Free Savings Account (TFSA) is now in its 12th year. This means that you have been able to contribute $69,500 to your plan up to this point in time. The contribution limit for 2021 will be $6000 plus any additional carry forward which you may personally have. What had started as a maximum $5000 account is now an investment vehicle with serious investment and tax savings potential.
If you are trying to decide whether it is better to put extra savings into your TFSA versus your RRSP this year, then it is worth considering how each may benefit your short- or long-term goals. That being said, choosing where to place your funds is only the first step in this process.
Deciding what to invest in is going to prove to be another important decision. Interest rates near historical low levels have created a challenging environment for many investors.
If you are a homeowner with a mortgage, then you are probably enjoying the current situation. However, today’s low interest rates can be tough for retirees and others who rely on lower risk investments like term deposits and Guaranteed Investment Certificates (GICs) for income. If your portfolio contains investments in GICs or High Interest Savings Accounts as a cash wedge, then you may want to consider looking at a strategic income mutual fund as an alternative. A strategic income fund can provide a better opportunity for income while maintaining a low risk profile.
We would like to thank you for your business and support in 2020. It continues to be a pleasure to work with each of you and we look forward to maintaining this partnership in the coming months and years ahead. Again, we wish you glad tidings for the Holidays and a Happy New Year!
