The inflationary environment in which we currently find ourselves, the uncertainty caused by the pandemic and its long-term effects, as well as the Bank of Canada, which is slow to raise its key rate, are elements likely to have many repercussions on portfolios. shift. Overview of different products to consider in this unique period with Dominic Paquette, financial planner and founder of Partenaire-Conseils.
The RESP
At the top of the list, the Registered Education Savings Plan (RESP). According to Dominic Paquette, this is one of the most underrated investment products. “The federal government injects a 20% subsidy, to which is added a 10% from the provincial government, for a total of 30%. The money grows tax-free and, for parents, the part of the capital invested can always be withdrawn in case of emergency. There is no better tool,” he says.
Like many registered savings plans, the earlier you contribute, the more you benefit from investment growth. “Parents who would not have had the privilege of contributing at a young age can retroactively recover the contributions they did not use,” adds the specialist. Besides, it’s not just parents who can contribute to an RESP. Grandparents, guardians or other relatives can open an RESP for a child.
The TFSA
It can be interesting to keep a cash cushion in a tax-free savings account (TFSA), but Dominic Paquette favors the TFSA that is diversified, balanced and above all risk-free. “People are buying risky products, tech, bitcoin, cannabis, and posting losses. But the capital loss cannot be found on the tax return. The TFSA should be seen as an emergency fund or a long-term accumulation tool. In this case, we try to promote dividends, interest income or other types of investments that generate recurring income. It’s much less risky. The amount you can contribute to a TFSA is limited by the contribution room. If, for a year, the saver does not reach the contribution limit, the unused rights carry over to the following year.
The group RRSP
When it is possible to do so, the financial planner encourages employees to register for the group savings program offered by certain employers: “The deduction is made at source. So if I have an income of $50,000 and I contribute $3,000 to my RRSP, the employer will deduct taxes on $47,000. This means that each pay period, the employee benefits from the tax refund immediately instead of waiting for the following year. In addition, with the periodic or staggered purchase, you buy investments at different times of the year and take advantage of fluctuations. Finally, these programs are often enhanced by an employer contribution that can take different forms. »
The call of the stock market
The arrival of online platforms that allow you to buy and sell shares from your smart phone without paying transaction fees has attracted many new investors of varying degrees of experience. Dominic Paquette calls for caution when embarking on a stock market adventure without tax strategies. “You need a real game plan, a long-term vision to put certain decisions into perspective. When it’s too easy to move, to sell, to buy, people react emotionally more often. Accompaniment by a professional helps to take a step back. I’ve seen a lot of people having fun doing it on the side [d’une stratégie d’investissement mise en place par un planificateur]. But I’ve also seen a lot of people give up and ask for help restructuring their portfolios. »
Too little, too late?
There is no age to benefit from good investment vehicles, as the financial planner explains: “It’s the strategy that changes, depending on the objectives to be achieved over time. As is currently the case, market fluctuations should not influence [les rendements outre mesure] for young people. But in full disbursement at age 70, we must be more careful and consider the impact of the current situation on all assets. »
And if we imagine that it takes a lot of money for a portfolio to benefit from the advice of a planner, the contribution of the financial professional remains relevant throughout the budgetary continuum, from debt management to that of surpluses, he continues.