Author: kiara

In this article, we share some considerations regarding this common dilemma to help you decide which option is better for you: investing for retirement or paying down your mortgage.

Contributing to an RRSP and paying off your mortgage are choices that can seem equally important. After all, both address really important aspects of your financial life: your retirement and your estate. The right answer for will depend on your individual circumstances. Let’s take a look at each of these options.

Contributing to your RRSP

Contributing to an RRSP can have both short-term and long-term benefits. Contributions to an RRSP are made on a pre-tax basis, offering a tax benefit in the year the money is contributed. The maximum contribution to a RRSP for 2025 is 18% of your earned income, up to a maximum of $32,490. Any unused portion (also known as contribution room) of this limit can be carried forward to a subsequent year.

Additionally, money invested in an RRSP grows on a tax-deferred basis until withdrawn. Investment options typically include mutual funds, guaranteed investment certificates (GICs), ETFs plus individual stocks and bonds.

Besides the tax benefit of pre-tax contributions to an RRSP, the benefit of compound tax-deferred growth within the account may be the biggest benefit of investing in an RRSP.

Paying off your mortgage

Paying off your mortgage can eliminate one of the biggest monthly expenses in a homeowner’s budget. The issue for most people is where will the money to pay off the mortgage come from?

One strategy is to pay an extra amount towards your mortgage on a monthly basis. This will add to the amount of principal that you are paying down each month. Depending on your mortgage balance and the interest rate, this can help you pay off your mortgage several years earlier than if you made only the required payments each month.

Certainly if your mortgage carries a high interest rate it can make sense to pay it off as quickly as possible.

Issue to consider

Age. One issue to consider is your age. If you are older and closing in on retirement, then working to pay off your mortgage early can make sense. It can be very helpful to your retirement budget to eliminate this monthly payment from your budget prior to retiring.

For someone who is younger, it is often better to focus on maximizing contributions to your RRSP as the tax-deferred growth can then accumulate a large sum for retirement. While the returns will depend upon how you allocate your funds among various investments, the power of tax-deferred compounding of investment returns over time can be incredible.

Rates. When weighing an RRSP contribution versus a mortgage paydown, a huge consideration is also the rate you are paying on your mortgage versus the anticipated rate of return on savings in your RRSP. If your mortgage is locked in at 2.5% and you can get a higher rate of investment, an RRSP may be the route to go.

While it is always better to start contributing as much as possible as soon as possible, the power of compounding can still be a major advantage for workers further along in their careers.

Tax liability. Additionally, contributing to an RRSP offers an excellent tax break each year. This tax benefit can be the single largest tax break many people receive each year.

Liquidity. Another consideration is that money tied up inside of a home that is fully paid off is largely illiquid. While you could take out a home equity loan if needed to tap into some of that equity, this puts you right back in the same position as you were before with having a mortgage payment.

Why not do both?

Perhaps the best strategy is to do both.

Contribute as much as you can to your RRSP to take advantage of the opportunity for tax-deferred investment growth over the longer term. In an RRSP, if invested properly, your investments can help you build a solid nest egg for retirement. In the process, look at your monthly budget and determine if there is an amount that you can put towards paying down the mortgage balance each month.

Everyone’s situation is different of course. A good approach to this situation is to look at your monthly cash flow and determine how much you can contribute to your RRSP and how much you can comfortably allocate towards paying down your mortgage more quickly.

An alternative is to determine how much you are saving in taxes from making your pre-tax contributions to the RRSP and allocate some or all of that money towards paying down your mortgage balance early.

A major consideration here is what the interest rate on your mortgage is versus your expected return on your RRSP investments. For most people the RRSP return over time will likely be higher, but not in all cases.

Conclusion

The decision as to whether to focus on saving in an RRSP or paying down your mortgage will vary among people based on their unique circumstances. Talk with one of our advisors to develop a strategy that makes the most sense based on your situation and your goals.

With flowers blooming and sunlight lasting longer, spring is the perfect time to refresh not just your home, but also your finances. Just like your closet or garage, your finances can accumulate clutter—outdated strategies, neglected accounts, and missed opportunities. A financial spring cleaning can help you regain clarity on your goals, optimize your wealth, and set the stage for the rest of the year.

Here are some suggestions on how you can tidy up your finances:

1. Declutter Old Accounts
   Do you have un-used bank accounts, forgotten credit cards, or overlapping investment accounts? Consolidating can reduce fees, simplify management, and improve performance tracking.
2. Review Your Budget and Spending Habits
   Inflation and lifestyle changes can quietly dig into your savings. A seasonal review of your budget helps you identify areas where costs have increased, or even decreased, and redirect funds toward your priorities. Budgeting apps or spreadsheets are great tools to help with a monthly budget.
3. Refresh Your Emergency Fund
   With economic uncertainty still lingering, a well-stocked emergency fund is more important than ever. Determine how much you would need in your account to get you through 3-6 months. This should be in an accessible account where you can have easy access to cash. If you dipped into your emergency fund recently, create a plan to replenish it.
4. Shred Financial Clutter
   Go paperless where possible and securely dispose of outdated documents. Organize digital records for easy access during tax season or estate planning. Keep only essential documents and shred the rest.
5. Connect with your Rothenberg advisor
   We’re always here to support you! Questions about investments? Want to discuss your portfolio? We are always available to answer any questions, review your investments and discuss your goals.

Spring cleaning your finances isn’t just about tidying up – it’s about creating space for growth, clarity, and confidence.

Earth Day is a time to reflect on our planet’s health and the actions we can take to protect it. The 2025 Earth Day theme is “Our Power, Our Planet” and calls to promote renewable energy and energy efficiency. Here are some tips to help you save energy and lower your utility bills.

1. Upgrade to Energy-Efficient Appliances
   • Replacing old appliances with energy-efficient models can make a big difference by using less electricity and water. You can also Invest in renewable energy sources like solar panels which can lead to long-term savings on your electricity bills.
2. Install a Programmable Thermostat
   • A programmable thermostat allows you to set your heating and cooling systems to operate only when needed. For example, you can program the thermostat to lower the temperature when you’re asleep or away from home.
3. Seal Windows and Doors
   • Drafty windows and doors can lead to significant heat loss in the winter and heat gain in the summer. Sealing gaps with weatherstripping can improve your home’s insulation.
4. Use Cold Water for Laundry
   • Many detergents are designed to work effectively in cold water. Washing clothes in cold water can save a considerable amount of energy, as heating water accounts for a large portion of the energy used in laundry.
5. Take Advantage of Natural Light
   • Maximize the use of natural light during the day to reduce the need for artificial lighting. Open curtains and blinds to let in sunlight instead of turning on the light switch.
6. Perform Regular Maintenance
   • Regular maintenance of your heating and cooling systems ensures they operate efficiently. Replace air filters regularly, clean vents and ducts, and schedule annual inspections to keep your systems running smoothly.

Implementing these energy-saving tips can help you reduce your environmental impact and save money on your utility bills. By making small changes and investing in energy-efficient technologies, you can contribute to a more sustainable future while enjoying the financial benefits of lower energy costs.

 

Every day, Canadians across the country are targeted by scam artists. With tax season in progress, scammers may try contacting you, pretending to be your financial service provider or even the CRA.

How to protect yourself from scams
Cyber security is essential in protecting personal and financial information from fraud and scams. Below are key steps to protect your wealth and stay safe:

1. Use strong, unique passwords. Enable multi-factor authentication (MFA) where applicable.
2. Be cautious with links and attachments
   • Never click an unverified link or download an unknown attachment
   • Check for spelling and grammar errors: Phishing emails often have minor mistakes.
3. Verify emails and web addresses
   • Look for small differences in URLS
   • Check the senders email address
4. Confirm who’s contacting you
   • Confirm full phone number – don’t trust caller ID alone
   • Verify identity by contacting your financial services provider directly using their official contact information

AI makes fraud even harder to identify
As advancements in Artificial Intelligence (AI) have made scams more sophisticated, the risk of fraud has increased, and additional steps must be taken to recognize scams. The following are examples of AI-generated scams:

• Voice cloning: Scammers can mimic the voices of loved ones over the phone claiming they need financial help.
• Deepfake videos and images: Scammers can create realistic videos or images to impersonate family members or coworkers.
  You can protect yourself from these AI generated scams by implementing these additional tips:
• Create a safe word or phrase that only close family members know which can be used to verify emergencies
• Be skeptical of urgent requests
• Verify unexpected calls or messages by calling a contact back using a known number to confirm

How to identify CRA scams
It is important to know when to be suspicious and how to recognize a scam. The CRA website outlines how you can protect yourself against fraud. The CRA may contact you by phone, automated message, letter, or email. The CRA will NOT:

• Send you refunds by e-transfer or text message
• Demand or pressure immediate payments by e-transfer, Cryptocurrency, prepaid credit cards, gift cards
• Threaten to deport or arrest you
• Use aggressive or threatening language
• Set-up an in person meeting in a public location to collect a payment
• Charge a fee to speak with a call centre agent
• Ask for personal or financial information in a voicemail or email

If you are unsure or suspicious:

• Do not click any buttons, links, or reply to the message
• Do not provide any personal or financial information
• Hang up and contact the CRA directly for any tax-related manners.

There is no need to stress or worry about scams, however it is important to stay vigilant, recognize the signs and know how to respond if you are ever contacted by a potential scammer.

For further details contact a Rothenberg Wealth Management advisor.

Information in this article was taken from the Canada Revenue Agency’s website: https://www.canada.ca/en/revenue-agency/corporate/scams-fraud/recognize-scam.html

It’s that time of year again, and you might be asking yourself, “Should I contribute to my Registered Retirement Savings Plan (RRSP) or my Tax-Free Savings Account (TFSA)?”  Ideally, contributing to both is the best strategy, but if you’re forced with making a decision between the two, this article can help guide you.

Here are a few important elements to consider when deciding between RRSPs and TFSAs:

First consider your marginal tax bracket.

Start by looking at your marginal tax rate. If you’re in a higher tax bracket, contributing to an RRSP can lower your taxable income and offer a substantial tax break. In contrast, TFSA contributions don’t provide an immediate tax deduction since they are made with after-tax dollars. However, the growth within the TFSA is entirely tax-free, and withdrawals won’t be taxed either.

The second factor to consider is the contribution limit.

Contribution limits are also important to keep in mind. For TFSAs, the contribution limit is $7,000, with a cumulative total of $102,000 if you’ve been a Canadian resident since 2009 and were 18 years old at that time. That’s a significant opportunity for tax-free growth over time.

For RRSPs, the contribution limit is 18% of the earned income you reported in the previous year, up to $32,490. If you don’t use your full contribution room in any given year, it carries forward, allowing you to contribute more in the future.

Third factor and an important one, are the withdrawals.

Withdrawals are another important consideration. RRSPs are designed specifically for retirement savings, and any amount you withdraw is subject to income tax. Contributions can be made up to the age of 71, at which point you must convert your RRSP into a Registered Retirement Income Fund (RRIF).

On the other hand, TFSA withdrawals are completely tax-free. Plus, when you withdraw from a TFSA, the amount is added back to your contribution room in the following year, so you can re-contribute it later. TFSA accounts also don’t have an age limit, and there’s no need to convert it to a different account type.

Conclusion

Both RRSPs and TFSAs offer excellent opportunities for tax-free growth, but they serve different purposes in your wealth-building strategy.

RRSPs are ideal for long-term retirement savings, particularly if you’re in a higher tax bracket now. TFSAs, however, offer more flexibility and are great for both short- and long-term goals, whether you’re saving for a major purchase or looking for another option to grow your retirement savings.

The right choice depends on your personal financial situation—your income, goals, and timeline. There’s no one-size-fits-all answer, but by understanding these key differences, you’ll be in a better position to make the best decision for your financial future.

For further details contact a Rothenberg Wealth Management advisor.

In this article, we share some insights on what to expect in 2025.

Broadening Equity Market Returns

Equity markets delivered strong returns in 2024, driven by the earnings growth of a few players—the Magnificent 7, which includes Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, NVIDIA and Tesla. The rest of the market is expected to catch up in 2025 and deliver more balanced and diverse growth within and across sectors.

Policy Uncertainty

Economic uncertainty will be a defining theme in 2025:

• With Prime Minister Justin Trudeau stepping down, the fate of important policy proposals, such as the planned increase to capital gains tax, is now unclear. The upcoming leadership transition will play a key role in shaping Canada’s future economic policies.
• Trump’s proposed 25% tariffs on all Canadian exports, if implemented, could disrupt cross-border supply chains and have widespread economic ramifications, both for Canada and globally.

Interest Rates

After five consecutive interest rate cuts in 2024, Canadians can expect continued rate reductions in 2025 as the Bank of Canada seeks to stimulate economic growth. Lower rates should improve borrowing conditions, benefiting both consumers and businesses by lowering financing costs and stimulating demand.

Continued Growth of Private Markets

With many unknowns, asset classes that are uncorrelated to market fluctuations will continue to demonstrate value to investors as sources of risk-adjusted returns. In particular, lower interest rates and healthy economic activity are expected to be positive for private equity.

Conclusion

As 2025 unfolds, staying informed will be crucial to navigating an uncertain environment, capitalizing on emerging opportunities and turning potential challenges into avenues for growth.

If you would like to discuss investment opportunities and how to position your portfolio for the year ahead, contact us today and start a conversation.

Tax-loss harvesting, also known as tax-loss selling, is a powerful strategy that can enhance the tax efficiency of your investment gains. This strategy involves selling underperforming investments and realizing a capital loss that can then be used to offset capital gains from other investments.

As a brief refresher:

• Capital gains are triggered when you sell an investment for more than the price you purchased it for (profit).
• Capital gains are triggered when you sell an investment for less than the price you purchased it for (loss).
• Capital gains are included in your annual taxable income and taxed at your marginal tax rate. For individuals, the inclusion rate is 50% for capital gains up to $250,000 and 66.6% for the remaining amount above this threshold.

While the idea of intentionally selling a losing investment may seem counterintuitive, this can be a smart way to reduce your tax liability or in other words, the amount of taxes you owe.

Tax-Loss Harvesting Example

Suppose you purchase 100 shares of XYZ at $10-per-share, for a total of $1,000. Over time, the price of XYZ falls to $6-per share, and your 100 shares are now worth $600. You choose to sell all XYZ shares for $600 and realize a loss of $400 on your initial investment. This loss is considered a capital loss and can be applied against any capital gains realized in the same tax year, thus reducing your total taxable capital gains.

Say you also realize $2,000 in capital gains in that same tax year. Your $400 loss can be used to offset part of those gains. After netting the capital gains and losses, you would pay taxes on $800 of your earnings at the 50% inclusion rate for capital gains ($2,000 – $400 = $1,600 * 50%).

Had you not used tax-loss harvesting, you would report $2,000 in capital gains and pay taxes on $1,000 (50% of $2,000). In this example, you are reducing your reported capital gains by 20% using tax-loss harvesting.

Key Considerations

The above example provides a simplified illustration of tax-loss harvesting. In reality, most investors hold diversified portfolios with investments across account types, asset classes and sectors that require regular rebalancing and are subject to different tax treatments. This interplay can make tax-loss harvesting even more nuanced. Several other considerations should be kept in mind when tax-loss harvesting.

1. Eligible Investments

Tax-loss harvesting only applies to realized capital gains and losses in non-registered accounts. Losses within registered accounts, such as RRSPs and TFSAs, cannot be used for tax purposes, as gains and losses within these accounts are not taxed until withdrawals are made. In other words, capital losses in registered accounts cannot offset capital gains in non-registered accounts.

Alternative and private investments, such as private equity or private real estate, may also benefit from tax-loss harvesting, though challenges like liquidity, valuation, transaction costs, lock-up periods and differing tax treatments must be carefully considered.

2. Superficial Loss Rule

The Superficial Loss Rule prohibits you from claiming a tax deduction on a capital loss if you repurchase the same or identical investment within 30 days before or after the sale.

The Superficial Loss Rule is an important consideration when tax-loss harvesting, but with careful planning, you can sidestep it using strategies such as waiting 31 days before repurchasing the same investment or buying a similar but not identical investment.

3. Carry-Back & Carry-Forward Rules

Capital losses can be carried back three years or forward indefinitely to offset capital gains in those years.

For example, if you realize a capital loss in 2024, you could carry that loss back to offset any capital gains from 2021, 2022 or 2023 by filing a T1 Adjustment Request. If the loss isn’t used in the current year or carried back, it can be carried forward to offset capital gains in future years.

Final Thoughts

Tax-loss harvesting is often associated with year-end tax planning, as investors try to reduce their tax liability for the current year. However, it can be done throughout the year, especially if there are market fluctuations that create opportunities for harvesting losses. It’s important to work with an experienced financial professional like a Rothenberg Wealth Management Advisor to assess whether you can benefit from tax-loss harvesting and how you can implement this strategy to maximize your portfolio’s tax efficiency and reduce the amount of taxes owed.

Are you interested in tax-loss harvesting? Contact us by using the form below.