Happy holidays to one and all
With the year winding down, we wanted to take time out from our regular business to convey a special message for the holidays: Season’s greetings and a very happy new year, from all of us at Oaken!
As always, it has been a great pleasure to serve you throughout the year. We sincerely appreciate your loyalty to us, and we’re proud that you have chosen Oaken. Our goal, as ever, is to help you plant for your future, and we look forward to doing so once again in 2018.
We know that things can get rushed for people at this time of year. So we wanted to mention that we’ll still be around to serve you during the season, except we’ll be closed for the public holidays on December 25, 26 and January 1. In addition, please be aware that our Oaken stores in Toronto and Calgary will be closing at 1:00pm on December 22 & 29. Aside from that, it’s business as usual. So if you’re nearby, feel free to drop in for a coffee and a chat.
And you can always get in touch with us through our customer service centre at 1-855-OAKEN-22 (625-3622), from Monday to Friday between 8:00AM and 8:00PM ET. Plus, of course, Oaken Online Banking and our website are available around the clock, on every day of the year.
Have a safe and joyous holiday season!
Interest rates still on hold
It’s official—interest rates for 2017 will remain unchanged. Early this month, the Bank of Canada announced that it will keep its key overnight rate at 1.00%, continuing a long ride of extraordinary fiscal stimulus for the country.
Most analysts believe the rate will continue to hold through the new year. Economic data has been meeting the Bank’s expectations for the latter part of this year, and there is still considerable uncertainty hanging over some key areas of the economy, such as NAFTA. The Bank’s next announcement will be on January 17.
Low rates and the housing market
The Bank’s interest rate affects everything, from how much you have to pay on credit card balances, to how much you can earn on a GIC. But its single most important impact is felt in housing, because it’s the key driver of mortgage rates. Does that mean, then, that low rates will keep the heat on for our housing markets? And does that also mean that now is a good time to get into the market? Or get out?
There’s no crystal ball that can answer those questions. But you definitely shouldn’t assume that things will tick along as they always have, because there are new rules for the housing market in 2018. Starting in January, uninsured borrowers will be subject to a “stress test”. Instead of qualifying on the basis of current rates, they will actually have to qualify based on rates that are two percentage points higher. And there are a lot of people who might be able to afford a mortgage at 3%, for example, but who wouldn’t be able to at 5%.
What this means is that a large number of buyers will have to look for a cheaper home than they had hoped for, while others will simply have to drop out of the market altogether. Both of those factors will have a negative impact on average home prices. Although it’s possible that competition for houses in the lowest end of the market could heat up.
When you combine the effect of the new rules with the likelihood that we’re coming to the end of a period of unprecedented low rates, it’s important not to be complacent about the future cost of borrowing. What’s even more important, though, is that if you’re deciding to buy or sell a property, your decision should be guided by your overall financial and personal situation, and not by just one economic measure.
Resolve to keep your resolutions
We’ve all made new year’s resolutions at one time or another, and we’ve all broken them. But just because we’ve failed, doesn’t mean we should give up. There’s a lot to be said for resolutions. As a form of goal setting, they not only allow us to clarify where we want to go in the year ahead, but also help us figure out how we’re going to get there
To help you with this, we’ve put together some basic tips on how to make your resolutions for the new year—and how to keep them:
Make the right resolution, not the wrong one. You should resolve to do something because you want to. Not because society or your friends are telling you to do so.
Be specific. There’s nothing worse than a resolution that’s vague or ambiguous. “Lose weight” may be a good idea, but it’s not very specific. How much do you want to lose, and how quickly do you want to do it? “Maximize my TFSA and eliminate my credit card balance by June”? Bull’s-eye: that’s a clear target to hit!
Keep track. Having a goal that’s specific isn’t enough, though. It also needs to be measurable. Putting $458.33 into your TFSA every month will get you to that annual allowable amount of $5,500 by the end of 2018, and you can easily measure your progress throughout the year. Every resolution should be that easy to track.
Don’t shoot for the moon. One of the biggest reasons we fail at keeping resolutions is that we’re not realistic. Big changes in life occur gradually, and trying to do too much too quickly is a recipe for doing nothing at all. “Take two cooking courses this year” is doable. “Become a master chef by December” is not.
Be positive. Choose a goal that makes you feel good. If you want to get in shape because it will make you sleep better and let you rediscover your love of tennis, go for it! But if you’re doing it because other people tell you to exercise, that’s not so great. You’ll lose motivation quickly and end up on the couch again by March.
Above all, take baby steps. Resolutions almost always involve big changes in our lives, and big change doesn’t come easy. Little by little is the way to develop new habits, which is really what you’re aiming for. So make your resolutions now, and reach for a better you in 2018!
A few last-minute reminders for 2017
As we noted in last month’s Oaken Update, the deadline for any tax-loss selling you want to claim on your 2017 tax return is coming up. December 22 is the last date for selling an asset that will allow you to register a capital loss, which can then be used to offset capital gains. Remember that if you sell after this date, the loss will still be available, but not until your 2018 tax return.
The deadline for RESP contributions is always the end of the year, but the last business day this year is Friday, December 29. Contributions made to an RESP by that date will count for 2017. Your annual contribution room is $2,500, and you receive a grant of 20% of your contribution from the federal government. There are additional grants available to lower-income Canadians (Additional Amount of Canada Education Savings Grant—CESG), as well as residents of Quebec (Quebec Education Savings Incentive—QESI). Note, however, that the Alberta Centennial Savings Plan was terminated in 2015.
TFSAs and charitable contributions also have a year-end date for tax purposes, but again you need to make your contributions by December 29. However, with TFSAs you have plenty of wiggle room, because whatever unused contribution room remains from 2017 (or any other years) can be rolled over indefinitely to the future.
As you wrap up those presents we’ll wrap up the year for you, with these little treats to accompany your holiday eggnog…
- The tax aspects of charitable giving, courtesy of the Financial Post.
- A little bit of help with keeping those health resolutions, from CNN.
- The mortgage industry weighs in on the new stress test, in this article from CBC.