ManifestingWealth

Market Turmoil and future prospects.

noreply@blogger.com (Dave) — Thu, 11 Aug 2011 18:03:00 +0000

Here we go again. A 20% drop and then the buyers step in and we get gains, followed by further failures of confidence and more turmoil.

Why it's happening
- Concern that the US will fall back into recession
- Political infighting in the US over the debt ceiling and the downgrade in the debt rating
- Policy tightening in China and the possibility of a slowdown their
- Europe's spreading debt problems - France being the latest

Why this is not 2008 over again
-Monetary policy is not restrictive today as in 2008. it as loose as possible
-US housing is still weak, it can't get much worst?
- The banking system is in better shape - toxic loans have been reduced

So what will be the result.
The global economy is not very robust, but corporate balance sheets are in good shape, with cash available. The drop in energy prices and low interest rates should contribute to growth going forward.
The official unemployment rate is the US is still hovering around 9% and there is a lack of confidence in the recovery. If you don't have a job you are not going to be purchasing goods and services. Consumer purchasing drives 70% of the economy so the economy remains slow.

Jobs in the US is the key to getting the North American economy moving, when companies that have cash are confident they will have a market for the goods they produce the economy should start to grow.

If you are aware of the research by Harry Dent into demographics,his view is the aging population of North America with the huge baby boomer generation moving into retirement will lead to slower growth. This is one of the factors that has resulted in a decade or more of no growth in Japan.

The aging population does not need to buy the big ticket products that drive the consumer economy. Harry Dent predicts the same scenario as occured in Japan, for North America, a decade of slow growth, low interest rates, and a lackluster economy.

This may be what we are starting to deal with, and is the reality of our new economy! Time will tell and in the meantime, have a plan for your own investments and stick with it. Don't try to pick market bottoms and don't be ruled by fear. Quite often doing nothing is the best option if you have plan based on good advice.

The Taxable Benefit of Reward and Loyalty Programs.

noreply@blogger.com (Dave) — Fri, 07 Jan 2011 18:01:00 +0000

Reward and Loyalty Programs in which you collect points and redeem them for a benefit may be considered a taxable benefit by Revenue Canada.
Below is a copy of the section from the Revenue Canada Guide

Loyalty and other points programs

Your employees may collect loyalty points, such as
frequent flyer points or air miles, on their personal credit
cards when travelling on business trips, even though you
reimburse them for the amounts they spend. Usually, these
points can be exchanged or cashed in for rewards (goods or
services, including gift cards and certificates).
Your employees do not have to include in their income the
value of the rewards they received or enjoyed from the
points they collect on these business trips, unless any of the
following applies:
■ The points are converted to cash.
■ The plan or arrangement between you and the employee
seems to be a form of remuneration.
■ The plan or arrangement is a form of tax avoidance.
If any of the conditions above are met, the employee has to
declare the fair market value of any personal rewards he or
she received on an income tax and benefit return.

Note
If you control the points (such as when an employee
uses a company credit card, you have to report on their
T4 slip the fair market value of any personal rewards he
or she received from redeeming the points.

In the case of a self employed business owner that charges purchases to reward cards to collect points and redeems them for flights or merchandise, Revenue Canada may deem this to be an alternate form of renumeration or tax avoidance.The fair market value of the benefit would be considered income. The result could be that even if the Airline had seat sales or cheaper flights the full value of a regular ticket would be considered the fair market value. This is a bit of a gray area, but the question is would it make economic sense to fight this type of assessment if the situation comes up?

This is something that you need to be aware of and consider how you use reward programs.

Make Your Investment Income More Tax Efficient - Tap into the TFSA

noreply@blogger.com (Dave) — Mon, 20 Dec 2010 18:36:00 +0000

TAP INTO THE TFSA

The TFSA is a must-have investment for investors looking to maximize investment returns in a low-rate environment. Investment earnings in this account, including interest, dividends and capital gains are tax exempt! Its benefits are therefore as clear as its name: you earn the income it produces tax free
Investors must be 18 to contribute up to a maximum of $5,000 and they must have "TFSA contribution room”. To get some, simply file a tax return. The plan has been available since 2009, so file prior returns if you missed reserving the TFSA room.
Also, your TFSA contribution room may be carried forward to future years, if you can't afford to contribute now. However, unlike the RRSP, contributions to a TSFA do not result in an income tax deduction.
There is no other age or income barrier, which means you can contribute annually for the rest of your life. This makes the TFSA a great option for further tax sheltering if you are an RRSP-ineligible investor. It's really worth it to check out this investment for every adult in your family.

Family Income Taxes

noreply@blogger.com (Dave) — Mon, 15 Nov 2010 19:24:00 +0000

When it comes to getting the best return for money, it is important to file all family returns together, and get to understand them too, by keeping an eye on income levels and sources. This will help you make better investment decisions...like when to contribute to RRSPs and the Tax Free Savings Accounts-and get more cash back from tax credits and social benefits.
If you are working with a professional advisor, enlist their help before year end. There are three simple steps you'll want to know more about:

1. Review each return separately and make sure it's prepared to the individual's best tax benefit, starting with the lowest income earner and working you way up the the highest.

2. Now look at the results on each return from a family, rather than individual, viewpoint. Did you claim all transferrable deductions and remember to split family income?

3. Now tweak your tax and financial plans, to make the best investiment decisions for the family unit as a whole.

Possible 24% Housing Price Decline in Canada

noreply@blogger.com (Dave) — Sat, 06 Nov 2010 19:21:00 +0000

11/06/20100 Comment(s) Breaking News - This report was published just recently. It is most likely not that much of a shock to discover that housing is overpriced in Canada. I personally have had a home listed for a few months now and recently dropped the price. There has been very little activity on this listing even with a price drop. Our place is in Chilliwack , BC. It is not a major center , but is growing with new residents moving from the cities and other parts of Canada and there is demand, but the buyers are looking for deals.
Housing Prices: A 24% Decline Coming?

Over the years, the wealth of Canadians has grown due in great part to increases in housing values. But, as the Governor of the Bank of Canada, Mark Carney, pointed out last month, a correction to the housing market in Canada is a distinct possibility. An increase in interest rates and a housing correction could change things in a hurry. Canadians should pay attention to debt reduction as a sure way to increase net worth.

This is backed up by a report by The Economist, which has just published a survey of global house prices in which it compares the ratio of current house prices with rents: http://www.economist.com/node/17311841?story_id=17311841&CFID=146602169&CFTOKEN=17636472 .
It determined that Canadian houses are overvalued by almost 24%. Certainly a decline in housing activity would diminish the net worth of many Canadians, yet another potential blow to those contemplating pre-retirement.
According to Statistics Canada, the benchmark of housing affordability is 30% of income. One in five Canadians exceed this threshold with single people, single-parent families, renters, home owners with mortgages and recent immigrants making up a large part of this group. More Canadians own homes than rent them and this has increased since 1986. However, household debt increased to $145 for every $100 of disposable income in 2009, up from $139 in 2008.

Now is the the time to find ways to shore up wealth by minimizing costs and debt, and increasing tax efficiency of income—both passive and active. There are several ways to increase tax efficiency of investments and protect you capital. For more information contact us!

Possibility of Double DIp Recession Increases

noreply@blogger.com (Dave) — Mon, 25 Oct 2010 23:50:00 +0000

Economic News

The announcement by the Bank of Canada that it is holding its key policy interest rate (also referred to as the "target for the overnight rate”) at 1% for a protracted period of time confirmed what many people already thought to be true – the global economy, including the Canadian economy, is still struggling to recover from the economic contraction of 2008-2009 and the odds of a double dip have increased.
What does this mean for financial advisors and their clients? First, the struggle to find positive rates of return continues. For the risk adverse client used to buying GICs and T Bills, the news is dismal indeed. Today's low interest rates are likely here to stay for at least another year, maybe more. This is creating a real strain for many seniors who don't want to dip into their capital but who are being forced to because of the extremely low yields available in the market.
From a planning perspective, it also throws into question the correct assumptions about an appropriate real rate of return to use on a go forward basis. The lower the real rate of return, the more money people have to save to ensure they have sufficient capital prior to retirement. For example, if a retiree wants $5,000 a month of actual purchasing power for a 25 year retirement and real rates are expected to be 5%, they need to have saved $855,000 as of their retirement date (assuming they will exhaust their capital at the end of the 25 year period). However, if real rates are only 2%, they need almost $1,200,000 of savings. And with today's real rates hovering around 1%, they would need about $1,327,000 of savings.
Unfortunately, the problem doesn't end there. High real rates prior to retirement make the process of saving for retirement easier. With today's extremely low rates, much more of the heavy lifting has to come from actual savings and much less can be expected to come from compounding within the portfolio.

As if this were not enough, the final problem is the rapid rate at which Canadians are piling up debt. Induced to take on more debt by today's extremely low interest rates, the average individual in Canada has debt equal to 146% of disposal income, which is approximately equal to the debt carried by US citizens prior to the meltdown of 2008/2009.

However, whereas the US consumer has rediscovered the virtues of thrift and the value of saving money, Canadians are continuing to add to their debt loads at a rapid pace. When interest rates eventually start to normalize, the increased burden of carrying this debt will reduce their ability to spend on other goods and services, potentially putting a drag on Canadian growth rates for several years in the future.

US PRINTS MORE MONEY.

noreply@blogger.com (Dave) — Mon, 25 Oct 2010 23:46:00 +0000

QE2 To The Rescue - Keeping Assets Afloat

The Federal Reserve announced at its most recent meeting that it stands ready to unleash even more money (money printed out of thin air, thereby called Quantitative Easing) in the bond market if the economy slows. This sets up yet another bizzaro universe scenario where any and all news only drives the equity markets, commodities, and precious metals higher, as good news is seen as, well, good, and bad news is seen as further reason for the Fed to act.
So far, the Fed has used the funds rolling in off of its mortgage portfolio to buy treasury bonds, which keeps treasury prices high and yields low, thereby affecting all assets (like mortgages) priced off of treasury yields, and also keeps liquidity flowing. As long as new liquidity flows into the market, there is the continued devaluation of all dollars already in the system, thereby leading to the increased prices for metals, other commodities, and equities.
Make no mistake, the Federal Reserve is redrawing the economic pie when it prints new dollars. Their share gets bigger, all outstanding dollars get smaller. Every single dollar in your pocket is worth less.

So what’s the goal? What could possibly be of such importance that it makes theft by the government an appropriate course of action? Your well being, of course.

The government has clearly outlined a strategy that is intended to save all of us from…pain. Financial pain, to be more precise. To save us from falling home values, equity values, incomes, etc., the government has embarked on a massive program to prop up all valuations. But the government cannot do this on its own, as it has no funds. In order to do this the government must get the economic horsepower from somewhere. The US government in the form of the Treasury Dept could borrow the money, but that would require messy Congressional approval for a number that is over 3 times the size of the stimulus package. Instead, the Treasury relies on the Federal Reserve to do the heavy lifting, purchasing $1.7 trillion in assets so far, with another round of purchases estimated to by right around the corner. If the new round fo QE comes in at the estimated $500 billion , then a full $2.2 trillion will have been printed out of thin air to prop up the rickety assets in the US.
Where does the economic force behind these new dollars come from? From savers, of course. Every one who has a US greenback to their name pays the price. Each dollar gets nicked, so the more dollars you have, the more you get nicked.
We are in the midst of what could become the greatest forced wealth transfer in the history of the US.
What happens when it doesn’t work? What happens when the Fed has printed $2 trillion plus and the jobs market does not pick up? Companies don’t rush out to advertise in the help wanted section? Individuals don’t charge up their credit cards or take on new loans?
We are already here. The Fed has spent approximately $1.7 trillion, and that’s on top of the US government’s $700-800 billion stimulus, and unemployment is still hanging right about 10%. Credit outstanding in the US is still falling. The overwhelming weight of deflation is still pressing on the markets.
At some point, this disconnect between the Fed’s stated goals and the reality of the economy will have to be recognized. Then the pain that the Fed was trying to avoid will descend on us anyway. Except, we will have squandered some of our purchasing power ahead of time, making the situation even worse than it would have been

Income Tax Update 2009 Canada

noreply@blogger.com (Dave) — Wed, 30 Dec 2009 20:29:00 +0000

Income Tax Update for 2009

The Canada employment credit increases from $1019.00 TO $1044.00. This credit is available to all tax payers that have employment income. This is a non-refundable credit equal to the amount of the claim times the lowest tax rate.

Personal amounts and other Non – refundable Tax Credits are indexed to inflation so that most credits are increased by 2.5%.

The Basic personal amount and spouse or common-law partner amount were increased from $9,600.00 to $10,320.00

The Federal Tax brackets have been increased so that you can make more and pay less in 2009 than 2008. The lowest bracket on which 15% tax is paid was increased from $37,885 to $40,726, and 22% payable on $40,726 to $81,452, 26% on $81,452 to $126,264 and 29% on income in excess of $126,264.

Canada Child Tax Benefit – The net income level at which the Child Tax Benefit, and Disability Benefit Supplement begins to be phased out was increased to$40,726 for the July 2009 to June 2010 benefit year. Because the amount of the benefit is based on income, taxpayers must file returns in order to receive it. If a person is married or living common law, both spouses must file returns. The basic Canada Child Tax Benefit for July 2009 to June 2010 is $1,340 for each child plus an additional $93.00 for the taxpayers third and each additional child. These payments are not included in income and are thus not taxable.

Universal Child Care Benefit- This is a benefit of $100.00 per month for each child under the age of 6 years and is paid for the purpose of reducing child care costs. This is a taxable benefit and must be reported by the Spouse or Common law partner with the lower net income.

Employment Insurance Clawback- The net income threshold at which EI benefits must be paid back is increased from $51,375 to $52,875. An exception is made for first time claimants who are defined as having received less than one week of EI Benefits in the last 10 years. The clawback is equal to the lesser of 30% of regular benefits and 30% of net income in excess of $52,875.

Home Buyers Plan- The maximum that first time home buyers can withdraw from their RRSP under the Home Buyers Plan has been increased from $20,000 to $25,000. The change applies to withdrawals made after Jan 27 2009. The maximum repayment period remains at 15 years.

First Time Home Buyers Tax Credit- New for 2009 for first time home buyers on homes with a closing date after Jan 27 2009 a personal amount of $5,000 may be claimed. This is a non-refundable tax credit and therefore results in (5000 x 15%) a tax credit of $750.00.

****Also note our previous Blog on the Home Renovation Tax credit – new for 2009

Age Amount- This credit was increase by an additional amount of $1000 above the inflation indexed amount and is $6,408 for 2009.

Repayment of Old Age Security Benefits- The net income threshold at which the tax payer becomes subject to the clawback is increased from $64,718 to $66,335 for 2009.

This is a summary of the major changes for 2009. To sign up for our no hassle income tax preparation service for 2009 click here or for more information click here.

Home Renovation Tax Credit - Income Tax British Columbia

noreply@blogger.com (Dave) — Wed, 16 Dec 2009 02:56:00 +0000

The home renovation tax credit – A great way to save on tax if you have planned on a home renovation, now may be the time.
This is a tax credit which means that you receive a 15% tax credit for expenses greater than $1000. To qualify for the maximum $1350 tax credit you must spend at least $10,000 of which $9000 is eligible for the tax credit ($9000 x 15% = $1350). This is a temporary tax credit and home improvements must be completed between Jan 27 2009 and Jan 31 2010. Expenditures made in Jan 2010 must be claimed on the 2009 tax return.
Amounts above $10,000 are not eligible for the tax credit, but depending on your marginal tax rate the home renovation tax credit may be a better alternative than other tax saving measures. For example at a 30% marginal tax rate you would need to contribute approximately $4,500 to your RRSP to generate a tax refund equal to the maximum credit available for the home renovation tax credit.

The renovations must be made to a personal use property such as a home, cottage, or condominium. The types of home renovations that qualify, generally must be of an enduring nature and integral to the dwelling. The expenditures include building materials, labour, equipment rentals, and the cost of permits. Examples given by revenue Canada include Renovating a kitchen or bathroom, new flooring, decks, retaining walls, a new furnace, water heater, or painting the exterior or interior of the house. Expenditures that cannot be claimed include normal repairs, carpet cleaning, furniture or appliances, financing costs, or tools that retain a value after the renovation.
If you are condo owner you might be eligible for the credit even if you don’t spend any money on your unit. The share you have in spending on improvements to the common areas of the condo also qualify for the 15% credit. Ask your condo manager to find out if this applies to you.
The credit is also limited to one per family, which includes the tax payer’s spouse or common –law partner and any children under the age of 18 throughout the year. If the taxpayer who claims the credit cannot fully utilize it the unused portion may be transferred to one or more of the other family members.
To further increase the amount of government subsidies that you could receive, determine if the renovations are eligible for the eco-energy retrofit-homes grant. Grants of up to $5,000 are available to offset the cost of making energy efficient home improvements such as adding insulation, and replacing windows and doors. If you are considering a new energy efficient furnace or heat pump, the home renovation tax credit, and eco-energy grant could result in a big saving.

noreply@blogger.com (Dave) — Sat, 02 May 2009 21:57:00 +0000

I just revisited Robert Allen’s book which I read when it first came out in 2000. I wish now I had actually followed his ideas. I also wish some of the people in the banks had read the book had followed his ideas. He hit the nail on the head when he says on the first page “did you ever in all your years of public education, attend a class entitled “Money 101”. The truth is we don’t learn about money in school and if we are lucky our parents teach us and we listen. If not we make a lot of money over our lifetime and end up with little or nothing.
The main idea of the book , that you should have more than one source of income is very relevant today with the unemployment rate soaring. If you had a second source of income you have an immediate way to continue earning income if you lose your main job. This “plan b’ could save you from bankruptcy or from losing your home.

Robert Allen covers a number of different ideas including stock market investing, online businesses, real estate, and even network marketing. There are opportunities in all these fields and the beauty is that some businesses can be almost fully automated, and take very little time to operate. You can check out some online business ideas at my website http://www.manifestingwealth.weebly.com/ on the Wealth Building Internet Page You can also pick up a copy of Robert Allen’s book from my site on the Success Library Page.

My site was free to develop and host. You can learn how to do your own design using the templates provided and reading the help pages. If you want to learn more about developing an online business go to my web site.

Do You Need A Job?

noreply@blogger.com (Dave) — Sat, 02 May 2009 21:50:00 +0000

This is a question that a lot of us are asking these days, and I am one of them. What is the answer? The answer is we don’t need a job, but we do need a way to produce income, so we can continue to enjoy and lead a reasonable life. The income we make from our job or business comes from other people who buy a product that they need or desire.

I was a financial planner with a major institution and was laid off due to the current economic downturn. It seems odd that when people are most in need of help that they now have less planners to give them that help. I will still be their for my customers, working as an independent advisor with my own business. The rate of pay will take a major downturn until I get things up and going again, but at least now I control my own life. At the same time I am also starting an online business with the current skills I have. This was my Plan B, something we should all have in case we lose our job.

You need to assess the skills you have and get a Plan B in place if you haven’t already. There are so many opportunities today with web based business’s that anyone can start, with very little cost. An online business produces income 24 hours per day 7 days a week. The problem is there is so much information on the web and so many people selling ideas for online businesses, which information do you believe. What if there was one place where you could get a group of experts together that are actually doing what they say and making millions online. What would that be worth?

If you start looking at the price to start a business there are a few of the less expensive franchise businesses around that cost you $20,000 to start. This is for a business where you will be putting in long hours and lots of work for a few years until it starts making you money. You could spend up to $500,000 for some of the more expensive franchises and still put in long hours and years to start to make a profit. You can start an online business for a fraction of the cost and a fraction of the time. There is no free lunch, it still takes effort and work and knowledge.
If you want to start on your Plan B and you want an online business there is conference coming up in July of this year where you will walk in the door and get one on one help to start your online business and walk out the door with an operating business and the knowledge to make it a success.

Go to my web site and on the home page click on the link for the 5 days in July conference to get the details and take the first step to getting your Plan B.
Click here http://www.manifestingwealth.weebly.com