Winter Chill: RRSP Deadline & Tax Season

February 16, 2024 | Lauren DiFlorio & Natalia Bastasic


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Hayes Vickers Private Wealth

As the winter chill starts to thaw, we have more than just a promise of warmer weather to look forward to, the days are also getting a little longer! This weekend marks the Family Day long weekend observed by most provinces across the country. The long weekend encourages us to pause and celebrate our friends and family and come together in enjoying outdoor activities like skiing or skating or indoors such as board games or baking yummy treats. Family Day serves as a reminder to pause, reflect and prioritize the relationships that matter most.

 

Market Update

A month into the new year and expectations that central banks will lower interest rates in the coming months have moderated while the global equity market is off to a reasonably good start, driven once again by the U.S. market.  The U.S. economy not only remains resilient but is showing signs of strengthening. The latest jobs report revealed an addition of 353,000 jobs in the month of January, nearly double the anticipated amount while figures for the prior two months were revised higher, and gains were spread across a variety of industries as opposed to a select few. While layoff announcements have attracted attention over the past year, the employment backdrop has yet to markedly deteriorate. The number of Americans filing for unemployment benefits remains stable, and relatively strong wage growth continues. However, there are some signs of moderation to keep in mind - an increase in part-time workers and a decrease in full-time positions, a lower number of job openings, and fewer people quitting their jobs. But as a whole, the U.S. labour market continues to display impressive strength.

Other recent indicators also signaling a favourable backdrop for the U.S. are better than expected manufacturing data with a particularly strong “new orders” component. The services sector also showed an acceleration in January, while other areas such as consumer confidence and construction spending also came in reasonably strong. An improvement in financial conditions – often measured by a combination of equity market performance and the cost of accessing credit – is supportive for business activity overall.  A lingering question is whether U.S. inflation can continue to moderate in the face of an economy that is potentially reaccelerating. With inflation largely trending in the right direction, the economy resilient as ever, and the U.S. central bank contemplating rate cuts, the U.S. equity market may continue to push higher for the time being.

With all the positive news we want to take a step back and look at the equity markets through a full business cycle. Volatility and corrections are very much a normal part of investing in equities and maintaining discipline through uncertain periods is crucial. This article, The cost of timing the market reiterates our message of investing for the good days rather than trying to avoid the inevitable bad days. The chart below shows us how much mistiming the market, even by just 10 days, can negatively impact an investor’s outcome. Staying disciplined and invested will help keep you on the trajectory towards achieving your long-term financial objectives. 

 

Invest for the good days rather than trying to avoid the inevitable bad days

 

Financial Health

While the Family Day weekend offers a chance to focus on the present moment, it's also an opportune time to plan for the future. Contributing to your RRSP can represent a key source of future retirement income for many across Canada. Contributions and the tax savings gained from your RRSP are only the first steps towards enhancing the growth, here are five strategies that can help increase your RRSP savings. Consider taking some time this long weekend to discuss your family's financial goals, you're never too young to start learning about investing. The concept of investing can feel overwhelming if you're just getting started, however A Rich Future: Essential Financial Concepts for Youth, by Noah Booth offers an undaunting view for young people. 

 

RRSP Deadline

The RRSP deadline is quickly approaching, the final day to make a contribution for tax year 2023 is Thursday February 29th 2024 by 4pm, however best to be safe to make it a few days in advance. If you are sending electronically your RRSP contribution by way of "Bill Payment" from a different institution (TD, BMO, CIBC) this needs to be completed five days in advance of the deadline. The payment needs to be completed by 5pm on February 22nd 2024. If you have any questions, please do not hesitate to contact us. 

 

Tax Season

The kick off to tax season is here!  While the thought of preparing and filing taxes may not be as enticing as a long weekend, it's part of being Canadian. The 2023 Tax Reporting Guide, summarizes important days and includes the mailing dates for various tax slips. To help make tax time easier, many tax slips are available through RBC Wealth Management online, simply log in to RBC Wealth Management Online to view your tax documents. If you would like access or have questions about this platform, please contact us.

 

As you gather with family and friends over this long weekend, take a moment to reflect on your financial goals and prioritize your well-being. If you are looking for a few things to do over the long weekend, here are fifteen things to do in Hamilton on Monday February 19th.

 

Wishing everyone a happy and healthy long weekend,

 

Hayes Vickers Private Wealth

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Tax Wealth Family Health