Welcome to another recap post. Lots happening these days that we’ll get into. It’s tax season so that means I’ll be offering up some tips to (legally) reduce your taxes!
Yes we have much to discuss, but first my disclaimer: this post contains affiliate links where the blog may receive a small commission on any sales from EQ Bank, Scotiabank, Questrade and Tangerine.
Tax Season is Here
For most of us the most dreaded season is, of course, tax season. I’ve been roughing out my taxes for the year and I gotta pay in :(. But that’s okay because I hate getting tax refunds…I’ll explain this later.
For anyone earning more than $60k, the easiest way to get a tax deduction and save for your future retirement is to open an RRSP and start making annual contributions to it.
Nowadays there are lots of options for this, but if you want to save money on investing fees I’d look at Questrade. You can check out my Questrade Review if you interested. Also, you get $50 in Free Trades when you signup for Questrade through this link.
If you earn over $100k then you need to start looking beyond a simple RRSP. You should probably consider borrowing to invest.
This could be buying a rental property to get the appreciation and tax write offs. Or it could be taking out a loan to buy a basket of high quality dividend stocks or ETFs.
Both offer ways to build wealth in the most tax efficient manner possible.
Over the years I’ve done both. I will say that it works, but given that we are at historically high real estate and stock prices, I’d wait until a meaningful pullback of at least 20% or more before attempting this.
Why I Hate Tax Refunds
If you find that you get annual tax refunds of over $1000 then you should consider a t1213 form that is a request to reduce your taxes that your employer takes off your paycheck. I do this every year.
I consider a tax refund an interest free loan to the government…no thanks! I take the upfront tax break and use the extra cash to invest.
This works for me, but if you think you’d spend the money then maybe the tax refund is a better bet.
The Largest Asset Bubble in History?
Speaking of high asset prices, if this isn’t the largest asset bubble in history then I’d say we’re pretty close.
Houses are insanely expensive by historical standards from coast to coast here in Canada…and worldwide.
Bankruptcies and consumer proposals are currently at levels not seen since the financial crisis of 08-09 according to this Financial Post article.
Central banks around the world are pumping cash into the system to stave off a recession.
Meanwhile investors just seem to shrug this stuff off. Now I’m not saying we need to panic, but I think the average person isn’t prepared for the kinds of losses that could be on the horizon.
No matter how much cash they print, at some point things will revert towards the mean.
When this stuff comes to pass hopefully all you guys will keep a level head and not panic and sell. The coming crash will certainly be a time for buying if you’re not scared.
Cash Back Credit Card Deal
I mentioned this cash back credit card last week and it’s such a great deal that I’m mentioning it again. If you’re in the market for a Cash Back Credit Card, the Scotia Momentum Visa Infinite card has a pretty sweet deal on until February 29.
You get 10% cash back for 3 months and the annual fee waived for the first year. This card is consistently ranked in the Top 5 among cash back credit cards and frequently is voted #1. Follow the link below to signup!
Sign Up for a Scotia Momentum Visa Infinite Card Today!
February 2020 Torex Coin Auction
For all you coin collectors out there this is the week! It’s finally here: the February 2020 Torex Coin Auction. I can’t wait! I need 4 more coins to make a complete date collection for a particular denomination. Fingers crossed.
Cheers! And have a great week everyone!
In case you’re wondering here’s where I park my money and some financial services that I use:
For my Daily banking and no-fee cash back credit card I use Tangerine. Curious? Check out my Tangerine vs Simplii Financial review and the Tangerine Money Back Credit Card Review.
For my Savings I use the EQ Bank Savings Plus Account. Never heard of it? Click the link to check out my EQ Bank Savings Plus Account Review.
For investing I use a combination of TD Waterhouse (for legacy investments) and Questrade (low cost stock purchases and free ETF purchases). If you haven’t done so already, check out my Questrade Review to see why it’s the best deal around. Get $50 in Free Trades when you signup for Questrade through this link.