Oaken Update – November, 2018

A year-end TFSA gift awaits you!

Although there hasn’t been any official announcement as yet, it’s expected that the annual contribution limit for TFSAs is about to go up. If so, it will rise to an amount of $6,000 in 2019, which is an increase of $500 from recent years. This means that as of January 1, 2019, the total contribution room accumulated since TFSAs were introduced in 2009 will be $63,500.

The reason for anticipating this increase stems from the fact that contribution limits are indexed to inflation, using the Consumer Price Index provided by Statistics Canada, and rounded to the nearest $500. That’s good news for anyone who is saving, since it means you can now keep a little more of your nest egg protected from the tax man. And it also means that it’s time to start planning for your 2019 contribution. 

How to think about TFSAs

When preparing for the added contribution room, it’s important not to be distracted by some of the misconceptions about TFSAs that prevent people from making the most of them. First of all, despite its name, the TFSA is not really a savings account. It’s actually an investment account that can hold anything from cash and GICs to stocks and bonds. So you should always think of your TFSA as part of your overall investment portfolio, and not just as a place to stash some funds for a rainy day.

Secondly, the rules for TFSAs are very different from those for RSPs. You don’t need employment income to contribute to a TFSA, and you can withdraw money from it at any time without incurring a penalty. This certainly makes the TFSA very flexible, and is the reason for much of its popularity. However, that shouldn’t lead you to believe you don’t need to do a bit of tax planning when you’re preparing to make a contribution.

Broader tax considerations

Other things to keep in mind is that income from interest-bearing instruments (such as GICs) is taxed at your marginal tax rate, as are withdrawals from a RIF. Dividends from Canadian corporations receive favourable tax treatment, whereas dividends from foreign corporations don’t. And finally, only 50% of your capital gains are taxed when the time comes to sell an asset.

So looking at all those different tax rules should make it clear that just maximizing your contributions to a TFSA takes you only part of the way to true tax efficiency. You also need to match the right investment with the right account. To do that, you need to consider your asset mix, risk appetite and overall financial goals, and that’s best done with the help of a financial advisor or accountant. So two cheers for the new TFSA contribution limit, and add a third cheer for making the most of that limit with a sensible financial plan.


Surfing the GIC wave to the top

As interest rates continue to rise, fixed-income instruments like bonds and GICs are becoming increasingly attractive for savers. And Oaken is, of course, the place to be if you’re looking to capitalize on this trend. Since launching Oaken 5 years ago this month, we have consistently posted some of the highest rates in the country on GICs and savings accounts, and we’re committed to maintaining our position at the top of the pile.

But in saying this, it’s important to note that it’s not just us talking. Once again, we’ve been recognized for giving Canadians more bang for their buck, this time by RateSupermarket.ca. As one of Canada’s leading rate comparison websites, RateSupermarket recently announced its top financial products for 2018, and we’re proud to say that we picked up a big award. In the Banking and Investing category, we won Best GIC of the Year! Click here to see an overview of the awards, and the full list of winners. (We should mention that our parent company, Home Trust, also won an award in the credit card category.)

What this means is that if you’re with Oaken, you can rest assured that your money is working about as hard for you as it possibly could, and we look forward to keeping that going in 2019.


8 key apps for the senior lifestyle

Apps for mobile devices are all the rage these days. But is there more sizzle to them than actual steak? Turns out the answer to that question is often yes. An interesting thing about apps is that many of them are unnecessary. A 2016 survey from the U.S. found that 80% of apps are never activated after three months, and that 23% were abandoned after just one use! So if you’re not on the “cutting edge” of app awareness, don’t feel bad. It turns out most of us can get by with just a few apps, and you don’t need to get distracted by all the media hype surrounding the latest cool gizmo for your phone.

However, it’s also true to say there are also a lot of apps that are really quite useful. There’s no question that a good app can be extremely handy, which is why we like to bring you a selection in various categories from time to time. And in that spirit, our recent blog post covered what we consider to be the eight essential apps for seniors, which range from brain games to music to keeping tabs on the weather. Just click here to get the scoop!


Announcing our latest winners

We were delighted by the great turnout at both the ZoomerShow and the National Women’s Show in Toronto recently—two events that allow us to meet old friends, as well as make new ones. Both featured great speakers, live entertainment and a whole range of lifestyle exhibits, covering everything from money and finance to fitness, travel and wellbeing, and were certainly a lot of fun.

Two guests were also delighted, but for a different reason, as they each picked up a $250 Amazon gift card just for visiting the Oaken booth and entering our contest. The lucky winners were Gail Zaretsky from the ZoomerShow, and Karin Hui from the National Women’s Show. Both Gail and Karin submitted an entry when they stopped by for a chat with our Oaken team. Congratulations to both, and what a nice way to start the holidays early!

We’ve wrapped up our outings for 2018, but we’ll be back at it again next year. Look out for our announcements here in the Oaken Update, and remember that we regularly hold prize draws from among those who attend. And of course, don’t hesitate to drop by one of our Oaken locations for a coffee and a chat whenever you like, where you can also enter our quarterly in-store draw for a chance to win a $500 GIC. Our friendly team members are always ready and waiting to answer your questions.


Reading corner

Our reading roundup this month is a mix of big-picture economics, personal finance, and the challenge of developing good internet habits…

 

This post is intended for informational purposes only. It is not to be considered financial advice. Always do your research before making any investment decisions.

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