Step 1: Reduce Banking Fee’s

In the last 5 years I have switched between the “big banks”,  ATB, TD, Scotia, and RBC. The one thing that these all had in common was monthly and service fees! I realized I had been spending upwards of $200 per year on banking alone. But the answer isn’t to keep your cash in the mattress. 95% of all my banking could be done via the internet, and banks like Tangerine pass the savings of not having branches, tellers and ATMs on to you!

Before you ask, IS MY MONEY SAFE? Yes, Tangerine is insured to protect your deposits like every other Canadian bank under the CDIC. In fact they are a subsidiarity of TangerineClientCardScotiabank; Scotia acquired ING Bank a few years ago and rolled it into Tangerine. They utilize Scotiabank’s  network of ATM’s, so you will never be far away when you have cash to deposit. Cheques can be deposited with the click of a photo on your cell phone. The wait time at your branch alone will be worth signing up with Tangerine!!!

Tangerine has every aspect of banking covered; business, savings, mortgages, revered low cost (1.07% MER) investment funds (more on these later), and no fee credit cards.

In 6 months, I have saved $90 in fees, money that I am able to put to work on my credit card debt. So why wait, everyday your money sits in a big bank, its costing you quarters and dimes! Open a Tangerine Account today with my Orange Key 44109967S1 and get a $50 Bonus! Visit tangerine.ca/referafriend

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Tangerine RSP loan @ 2.25%

RSP season is here ! Get a headstart on your rsp’s with $15,000 in loans from Tangerine!

https://www.tangerine.ca/en/products/borrowing/rsp-loan/index.html

RSP loans are a great way to get caught up on your Retirement savings. The best part is you will get back about 30% (depending on tax bracket) in your spring tax refund!

EXAMPLE:

You maximize the loan here to $15,000 …. at tax time you reduce your income from 65,000 to 50,000. This reduces your tax from $12658 to $8153 (for alberta) – a tax savings of $4,505 !!!!!

Remember the deadline for RSP’s is march 1! So apply for a Tangerine account today! Use my Orange Key 44109967S1 and get a $50 bonus!

Net Worth = $146,400

Its been a couple months, work has been very busy! I have been focusing on saving money to contribute more into my company as flow through shares. They should help with my reducing my tax load in the new year…..

 

Assets

$500,000 Home in NW Calgary  (City of Calgary assessed tax value – conservative market value)

$20,600    RSP & TFSA (Stocks, ETFs, and Mutual Funds)

$12,500 Flow through shares

$14,000 Car

$1800 Cash

=549,900 Total

Liabilities

-$386,900 Mortgage (3%)       Borrowing cost = $11,600 per year

-$5,000  Credit cards (10% on average)     Borrowing cost = $500 per year

-$6950 Car Loan (7.7%)        Borrowing cost = $535 per year

-$4200    Remnant Student Credit Line (5.2%)          Borrowing cost = $218 per year

-$400  RSP Loan (2.64%)                       Borrowing cost  = $11 per year

=403,500 Total

Net Worth = $146,400

Total borrowing cost =  $12,864

 

Net Worth = $134,888

Sold my car ($8500) and bought a work truck($14,000)! I was able to pay the difference in cash so I wouldn’t need additional financing .

Summary is below ….

Assets

$500,000 Home in NW Calgary  (City of Calgary assessed tax value – conservative market value)

$19,600    RSP & TFSA (Stocks, ETFs, and Mutual Funds)

$2,500 Flow through shares

$14,000 Car

$6000 Cash

=541,888 Total

Liabilities

-$390,000  Mortgage (3%)       Borrowing cost = $11,700 per year

-$5,331.29  Credit cards (10% on average)     Borrowing cost = $533 per year

-$6300 Car Loan (7.7%)        Borrowing cost = $485 per year

-$4500 Remnant Student Credit Line (5.2%)          Borrowing cost = $234 per year

-$837  RSP Loan (2.64%)                       Borrowing cost  = $22 per year

=407,000 Total

Net Worth = $134,888

Total borrowing cost =  $12,974     

*  Borrowing cost is down $844 from the last update ($13,818 per year)!!!

 

Flow through shares

The company I work for is a Private oil and gas company, and they offered their employees the opportunity to purchase flow through shares.  At first glance they may seem un-necessary to the average income earner, unless you have maxed out your TFSA and RRSPs. But this allowed me to buy into my company and potentially get some reward for my hard work!


Flow Through Shares
– Basically an investment that has intense tax advantages (which means you get a big refund come tax refund time)
-Primarily involves investments in the Oil and Gas Industry, the Mining Industry, and the Wind Power Industry
-The investment is 100% tax deductible against your income
-It turns fully taxable income into future tax advantaged capital gains
-You have to look at the Marginal Tax Bracket you’re in to see how much money you will get back come refund time
-The higher your pay (the more taxes you pay), the more you’ll get out of this

Here’s how it works:
As stated above, you get to claim the FULL amount invested against your income. However, when you sell, your adjusted cost base (ACB) is set to $0, ie. whatever you sell for is your PROFIT.

If you were to invest $10,000, and sell 2 years later for $10,000, your profit would be considered $10,000. So to calculate your capital gains, with a 40% tax rate, would be $5000 x 40% = $2000 tax payable. Even in the scenario where the shares don’t change in price, you will receive a $2000 gain ($4000 tax return – $2000 tax payable).

However, there’s a catch.
When you sell your flow through shares- let’s assume for simplicity’s sake that you neither make nor lose money on the $10,000 you invested, the adjusted cost base is $0- so the capital gain is considered $10,000.

It is recommended that Flow Through shares are not to exceed 5-10% of your portfolio, because they are so risky

For myself, the opportunity to buy into my company outweighed adding to my TFSA. For a lot of investors its best to keep to low cost ETFs, Robo advisors (Wealthsimple) or Mutual funds (Tangerine)

 

Watch those credit cards!

Recently I saw my RBC MasterCard interest rate had jumped up to 25%! 1 missed bill payment would be costly. In addition, the yearly fee went up from $100 to $120 per year. I was so astounded when i saw my bill that I called them up and closed my account. I fell into the trap and  had been blinded by perks of Westjet dollars (that I never use).  No amount of rewards can justify taking that much of my hard earned money.  There are many cards out there that have an interest rate in the sub 11% category. I will be using the ATB prefered rate 10.9% MasterCard from now on!!

westjet

 

Net Worth = $113,027

Take-aways:

Been working hard all summer building net worth. Hope to be under the 10,000 mark on the visa by the end of Sept!

Summary is below ….

Assets

$500,000 Home in NW Calgary  (City of Calgary assessed tax value – conservative market value)

$19,200 RSP & TFSA (Stocks, ETFs, and Mutual Funds)

$8000 Car

$3000 Cash

=530,200 Total

Liabilities

-$392,000 Mortgage (3%)       Borrowing cost = $11,760 per year

-$12,732 Credit cards (10% on average)     Borrowing cost = $1273 per year

-$6600 Car Loan (7.7%)        Borrowing cost = $508 per year

-$4785 Remnant Student Credit Line (5.2%)          Borrowing cost = $249 per year

-$1046  RSP Loan (2.64%)                       Borrowing cost  = $28 per year

=417,163 Total

Net Worth = $113,027

Total borrowing cost =  $13,818

*  Borrowing cost is down $562 from the last update ($14,380 per year)!!!

 

 

Net Worth = $100,300 — Update June 27, 2017

Here is a current update on my Finances … There is good news and bad news;

The good – I have increased my Net Worth by about $5000, since I have started my new job as Geology Consultant. I am so happy to be back working!

The bad – I have added some credit card debt by starting my own business. I hope to re-coup those costs soon! My cost of borrowing per year has stayed about the same in the last few weeks, about $14,400 per year.

 

Summary is below ….

Assets

$500,000 Home in NW Calgary  (City of Calgary assessed tax value – conservative market value)

$16,000 RSP  (Stocks, ETFs, and Mutual Funds)

$9000 Car

$3500 TFSA (Stocks and Mutual Funds)

$2,355 Cash

Liabilities

-$394,600 Mortgage (3%)       Borrowing cost = $11,838 per year

-$17,098 Credit cards (10% on average)     Borrowing cost = $1709 per year

-$6900 Car Loan (7.7%)        Borrowing cost = $531 per year

-$5063 Remnant Student Credit Line (5.2%)          Borrowing cost = $263 per year

-$1463 RSP Loan (2.64%)                       Borrowing cost  = $39 per year

Total Net = $100,300                                          Total borrowing cost =  $14,380 per year

 

Since the last update (April 18th), about 70 days, my net worth has increased $5300 (from $95,000 to $100,300). That is an approximate gain of $75/Day! 

New beginnings! Starting a Sole Proprietorship for under $1250

The last few months have been been a better economic climate for Calgary oil and gas companies. So, I am happy to announce I have found new employment! I will be working as a consultant Geologist for a Junior natural gas producer. I didn’t know how to react when I received my job offer, I had so many questions!

Starting work as a contractor is a seemingly daunting task. Should I incorporate? What insurance do I need? How about WCB and EI? After signing my contract, I quickly set out to complete all the necessary tasks.

I chose to go the sole proprietor route for a number of reasons. There has been a recent crack down by the CRA on single client contractors using an incorporated business (paying 15% tax) for tax aversion instead of taking a salary (~40% personal tax). In addition, I was concerned about the increased difficulty and expensive tax filing for corporations at year end. I did not have to register a name or number company, just had to request a GST number from the CRA (no cost).

Next I had to register with the WCB. This would protect me in the instance of workplace injury. The minimum premium for WCB is $200.

The final startup expense was the general liability insurance. Due to the nature of my work, and the risks I am subject to while at a drilling rig, the lowest premium I could find was $850/year.

I think I will start tracking expenses with quickbooks ($5/month or $60/year) to make book keeping easy and avoid the expense of an accountant at tax time. I have always done my own taxes and I the feeling of having control of my own finances.

Stay tuned for more job updates!

“Get rich slow, or get poor fast!”

I thought that I could have success in the stock market. I was wrong! When I started my trading account in 2014, it was easy to pick winners. It seemed like I couldn’t miss when buying stocks and ETF’s on the Canadian and US exchanges. I would buy shares because I heard positive stories from friends who worked at companies like SNC Lavilan, Westjet, CNRL, Bellatrix, etc that the time was now to buy stock. In that time frame the TSX was preforming well, and I enjoyed gains of 10-30+%. I was floored by my success, and my stocks that preformed poorly, I would ignore them by thinking my gains would surely outweigh them.

So today, amidst the economic slow down, I have this inadequate trading account that has lost 50% of its value. The lessons I have learned as an amateur investor,

  • DON’T PICK STOCKS
  • DIVERSIFY! Because I work in the oil and gas industry, the bulk of my investments should be in other market segments. (I call this the rule of ‘dont sh** where you eat’)

I began banking with Tangerine last year to reduce my overhead. Little did I know, Tangerine had retained some of the best index funds in Canada from ING direct. From a straight investing standpoint, the funds are still one of the best ways to become and index investor without any hassle. Yes, there are cheaper options available, but with the Tangerine funds, you can start indexing right away  and do you banking in one place all for a low cost.

One of the biggest benefits of  Tangerine’s investment funds have a management expense ratio (MER) of 1.07%,  whereas standard mutual funds charge a MER around 2.5%. That’s a huge savings over your investment lifetime.

What are index funds?

Index funds are essentially a type of mutual fund where its holdings are meant to match a certain market index. Since an index comprises of the stock of thousands of companies, it allows an investor to be well diversified. There are many different indexes, but the Tangerine investment funds try to mimic the following indexes.

  • FTSE TMX Canada Universe Bond Index – Canadian Bonds
  • S&P/TSX 60 Index – Canadian Stocks
  • S&P 500 Index – US Stocks
  • MSCI EAFE (Europe, Australasia and Far East) Index – International Stocks

There are 5 portfolios available at Tangerine, and they are allocated based on risk. Low risk meaning bonds and high risk meaning stocks. You can look at the distribution and holding on the Tangerine website.

I chose the Balanced Growth Portfolio for my RRSP. I chose a medium risk portfolio because I knew that I would hold this for many (30+) years, and could tolerate some fluctuations in the market. Disclaimer: To each their own, this isn’t for everybody, if you are saving for retirement vs other goals there are many other options to consider, and maybe one of the portfolios is better suited to you. 

tangerine rrspIn 11 months I have made $291.16, this is a 6.65% gain from my book value. Tangerine will collect their MER of 1.07%, so that leaves me with a modest gain of 5.58%. (In the other banks mutual funds you would be taking home 3%). These numbers aren’t overly sexy, but keep in mind that 2016 had been a down year in the markets. Here is where this gets interesting, IF I just maintain adding $100 per month to my RRSP (plus a nice tax rebate in the spring), at this current rate 5.6%, by the time I am in retirement, my savings will have increased to $117,323 !!! That is enough to buy the nicest Cadillac at the retirement home!

compounding yearly

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

If you have $100 or  $100,000  to invest there is no time better than now to start index investing for you future! There are lots of options out there, but I have had a positive experience with Tangerine, and it is really nice to have all of my banking in one place. If you want to get started banking or investing with Tangerine, read my other blog post: Step 1: Reduce Banking Fee’s . And don’t forget to put in my orange key for a $50 bonus!  Open a Tangerine Account with my Orange Key 44109967S1 and get a $50 Bonus! Visit tangerine.ca/referafriend