Your portfolio represents your future, so it’s only natural to want to monitor how your investments are doing. How often you need to check largely depends on the type of investor you are. Active investors who constantly buy and sell individual stocks will monitor performance frequently, perhaps daily. But individuals with well-diversified managed portfolios investing for the long term have less need to check their portfolios on a constant basis.
For several decades as an investor, there was always a silver lining to a market downturn. That’s when investment managers purchased stocks at value prices so you could enjoy higher returns when the market rebounded. But that all changes when you’re close to retirement and once you’re retired.
Here’s a strategy especially effective during a period when one spouse has little or no earned income. For several years, the spouse earning the higher income contributes the maximum allowable amount to the spousal RRSP. Then the higher-income spouse stops these contributions and begins contributing to his or her own RRSP for two calendar years after the year of the last spousal RRSP contribution.
Now the lower-income spouse withdraws funds from the spousal RRSP. If withdrawals had been made earlier, during the two- to three-year waiting period, they would be taxable to the higher-income earner. But these withdrawals are taxable at the lower-income spouse’s favourable rate. The withdrawn funds can be used as contributions to the higher-income earner’s RRSP or to the couple’s TFSAs.
You can’t escape paying tax on income, but you may be able to split some of your income with your spouse. And if your spouse is in a lower tax bracket, you’ll pay less tax as a couple. Here are three scenarios that illustrate some of the tax-saving strategies available through income splitting.
If a parent bases post-secondary education savings on average costs, the amount needed for tuition would be $6,838 for each academic year, based on the 2018/2019 average for Canadian universities.1 But what if the child decides to pursue dentistry? The average annual tuition for dentistry programs in Canada is $23,474.1