Tax-Free First Home Savings Account

In Budget 2022, the government proposed the introduction of the Tax-Free First Home Savings Account (FHSA). This new registered plan would give prospective first-time home buyers the ability to save $40,000 on a tax-free basis. Like a Registered Retirement Savings Plan (RRSP), contributions would be tax-deductible, and withdrawals to purchase a first home—including from investment income—would be non-taxable, like a Tax-Free Savings Account (TFSA).

Eligibility:

• You must be a Canadian resident and at least 18 years of age to open an FHSA (you must be the age of majority in your province to open the account)
• You must not have lived in a home that you owned either at any time in the year the account is opened or during the preceding four calendar years
• You will be limited to making non-taxable withdrawals in respect of a single property in your lifetime. Once you have made a non-taxable withdrawal to purchase a home, you will be required to close your FHSA within a year from the first withdrawal and will not be eligible to open another FHSA

The current plan is for this account to be offered in 2023 however the exact date or quarter has not yet been defined because it is still in draft legislation. When things have been finalized, we will provide some additional information.

Cybersecurity and Fraud

October is Cyber Security Month so thought it would be timely to share some useful information with our clients. As more information and interactions have been moved online so have the opportunities for cyber criminals to take advantage of individuals. Please see below for a few of the top tips for safe computing and safeguarding your assets.

Top 5 tips for safe computing and online privacy

1. Protect your personal information. Be aware of schemes that ask for personal or financial information. Do not respond to unsolicited requests for confidential information.
2. Verify a message before you take any other action. Do not click on a link, call a phone number, wire money or take any requested action unless you have first verified that the request is legitimate. Verify it using information from a source other than from within the message itself.
3. Limit the online information that you make available about yourself. Be careful about including personal information online, on social networking sites in chat rooms and in unencrypted email as fraudsters may try to get at your information for their own benefit.
4. Be wary of pop-up windows. Don’t click on any action buttons within a suspect pop-up window, including those requesting financial or identification information and those offering to sell you something.
5. If it looks too good to be true, it probably is! Be cautious of emails and websites that promise incredible deals and monetary windfalls. You may end up giving your financial information to fraudsters or downloading malicious software by clicking on a tempting link.

Top 5 tips to safeguard your assets

1. Keep personal information confidential. Do not give out personal information on the phone, in an email or over the Internet unless you initiated the contact and know who you’re dealing with.
2. Protect your PIN and passwords. Do not reveal your PIN or passwords to anyone, including employees of RBC, family and friends. When conducting a transaction, keep your card within sight and shield the keypad when entering your PIN.
3. Unusual transactions. Beware of “too good to be true” or unexpected offers or requests such as, “You’ve inherited a large sum of money. To claim it, send us a deposit first.” Never agree to conduct financial transactions on behalf of strangers.
4. Review your transactions. Regularly review your financial statements to ensure that all transactions are authorized, and report any missing or fraudulent ones. Review your credit bureau file annually.
5. Contact the authorities. If you suspect you are a victim of fraud or theft, contact the authorities immediately

Please contact us if you would like to receive copies of the articles with the full list of tips to protect yourself when online and to help safeguard your assets. You may also visit this link with steps to increase your safety.

Protecting Yourself - RBC

Market Update

Carnage in global stock, bond and currency markets throughout the last quarter have resulted in negative returns not experienced since the global financial crisis in 2008 - 2009.

We are asked, pretty much daily, of the root cause of the market volatility.  In short, there are a number of factors weighing on the health of global economies and therefore, asset prices.

• Lingering effects of the global pandemic – both mentally & physically as well as the extreme financial burden of government deficits
• Rising interest rates – effectively tripling since Fall 2021
• Persistently high inflation – we are hopeful that the peak of inflationary pressures have passed however, only time will tell if this is the case
• Geopolitics – ongoing conflict in Ukraine coupled with increasing threat of nuclear escalation

The most effective strategy to help us through this difficult period is to ensure that we have a clear understanding of your cash flow needs in the coming 18 – 24 months.  We can avoid long term damage to portfolios by avoiding the need to sell when asset prices are depressed.   

Diversification has been a long term tool in protecting assets as typically different types of investments in different markets rise or fall at different times and to a varying degree. This has not been the case in 2022 as we have experienced very high levels of correlation between stocks and bonds for the first time, really, in about 28 years.  These make for very difficult markets for clients and cash seems like the only place to hide.  While effective for the short term, we do not advise holding above average cash levels for longer given inflation and the taxes associated with these investments.  The USD strength has been a bright spot for investors holding USD denominated investments, however, for those of us wanting to travel south, it appears US destinations will be costing more in Canadian dollar terms for the foreseeable future. 

We encourage you to take a close look at your finances, household budget and financial plan.  Even though times appear and actually are difficult, we ascribe to our clients that you must be fully informed at all times, irrespective of the state of the markets.

We are here for you and available to talk through any scenarios that might be of concern.