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Posts from the ‘Investing’ Category

Are Life Insurance Premiums Ever Tax Deductible?

Considering that the proceeds of a life insurance policy are received tax free upon the death of the life insured, it is not surprising that the premiums of the policy are not tax deductible.  There are two circumstances, however, where premiums would be deductible for income tax purposes:

  1. If the life insurance policy is assigned to a lending institution that requires the assignment as a condition for a loan, for either investment or business purposes.
  2. If the life insurance policy is donated to a registered charity and the donor continues to pay the premiums on behalf of the charity.

Life insurance policies used as collateral security for a loan

The conditions under which the owner of a life insurance policy would be entitled to a collateral insurance deduction are as follows:

  • The loan advance must be made by a qualified financial institution that is in the business of lending money. This includes banks, finance companies, trust companies, credit unions or insurance companies.  It does not include private lending arrangements such as with friends or family members;
  • The lending institution must require the assignment of the policy owned by the borrower as a condition for granting the loan and a formal assignment of the policy must be made. There should be a letter or other documentation on file to substantiate the lender’s requirement for the life insurance assignment;
  • The proceeds of the loan must be used for investment or business purposes the income of which would be taxable to the borrower;
  • The life insurance policy assigned can be either an existing policy or one taken out for this specific purpose.

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Index Funds vs Actively Managed Funds: what are the main differences?

There are significant differences when it comes to Index Funds and Actively Managed Funds. Deciding between the two will depend on various factors including your risk appetite, the ROI you are looking to achieve and the timeframe in which you are looking to achieve this. When weighing up these factors it’s useful to know what each type of fund entails, what the main strengths are as well as some of the potential drawbacks of investing in them.

Index Funds

An index fund (also known as a Tracker Fund) is based on a particular market index and aims to track that specific index as closely as possible. The most recognized of these indices are possibly Standard & Poor’s 500 Index, consisting of 500 of the largest US companies that’s listed on the NYSE. Read more »

Why an advisor makes a difference in net returns over DIY investors

It’s a common question in recent times, especially in an age when technology and algorithms can make decisions at a fraction of the cost. Is it worth it to hire a financial advisor? Or is it better to save the fees and go for a DIY strategy?

It depends who you ask but there are many – often not so obvious – factors that could make a difference to your net returns when putting your trust in a financial advisor.

Proper financial planning goes beyond how and where you invest. Good financial planning can increase your standard of living throughout your life.

Even for a complete novice it is possible to start investing in products without the help of professionals. The problem with this option is the lack of knowledge. Knowledge is crucial when it comes to investing. Read more »

Supporting adult children takes its toll on boomers’ retirement plans: survey

As baby boomers approach retirement while their children look for financial help, many are feeling the financial strain.

A new TD survey found 62 per cent of boomers can’t save enough for retirement because they’re supporting adult children or grandchildren. Those kids, however, aren’t taking that money obliviously: 44 per cent of millennials who rely on their parents’ or grandparents’ support said they know that help means fewer retirement savings, and 43 per cent said they’d cut costs rather than asking for financial help.

Read: Canadians postpone retirement to support children

“As a parent or grandparent it’s natural to want to help our kids and grandkids who may be facing financial challenges such as finding full-time employment or paying their day-to-day expenses,” Rowena Chan, senior vice-president at TD Wealth Financial Planning, said in a news release. “It’s important that this desire to help is balanced with the goals you have when it comes to retirement.” Read more »