COMMERCE 1E03 Study Guide - Final Guide: Tim Hortons, Sales Process Engineering, International Brotherhood Of Teamsters
28 Dec 2017
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Appendix D- Textbook/Lecture Slides ONLY
6 Steps to Controlling Your Financial Assets
1. Take a financial assets inventory
2. Keep track of all your expenses
3. Prepare a budget
4. Pay off your debts
5. Start a savings plan
6. Borrow only to buy assets that increase in value or generate income
Building Your Financial Base
● Tax-free savings accounts (TFSAs)
● Real estate
● The stock market
● Learning to manage credit
Building Your Financial Base: TFSAs
- Effective January 2009, TFSAs became another savings instrument for Canadian residents that
reached the age of majority in his/her province, has a Social Insurance Number, and is a
Canadian resident
If one was 18 in 2009, the total maximum contributions as of 2017 is $52,000
- Anything that might go into an RRSP can go into it up to the maximum of $5,500 a year
- The interest and income from investment gains accumulates tax-free
- Money can be withdrawn at any time without penalty but replacing it must wait until the following
calendar year
- Young investors are putting money into a TFSA rather than a registered retirement savings plan
(RRSP) as this is an ideal long-term savings plan until the day when their salaries rise and the
higher tax bracket that will put them in means an RRSP makes more sense for tax savings
Protecting Your Financial Base: Buying Insurance
- Variable life insurance
- Disability insurance
- Homeowners or renters insurance
- Other insurance: car and liability insurance
Planning Your Retirement
Pillar 1: Old Age Security (OAS) Pension Program
Pillar 2: Canada Pension Plan (CPP) and Quebec Pension Plan (QPP)
Pillar 3: Employer Pension Plans (EPPs) and Registered Pension Plans (RRSPs)
EPPs cover approx. 38.4% of working Canadians
The Three-Legged Resources Stool
Leg #1: Government Sources
Old Age Security (OAS) - Estimated Income: 15%
Canada Pension Plan (CPP) - Estimated Income: 25%
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Leg #2: Employer Sources
Company Registered Pension Plan - Estimated Income: 30% to 50%
Leg #3: Personal Resources
RRSPs / Annuities / Registered Retirement Funds (RRIFs) Savings and Investments Employment or
Business Income - Estimated Income: 20% to 60% (no employer sources)
Planning Your Retirement: RRSPs
- Ottawa introduced a tax-sheltered and tax-deferred investment vehicle in 1957 to encourage
people to start saving for retirement
- An RRSP is designed to give you income after you retire
- Money deposited into an RRSP can be deducted from earned income for tax purposes
- You can put your money into a wide variety of investments including term deposits/GICs, bonds,
stocks, mutual funds, etc.
Benefits of an RRSP
1. We are living longer and have to plan for our support
- Government pensions were designed to replace only 40% of pre-retirement income for individuals
who were earning the average national wage
- Some financial planners says that you will need about 70% of your pre-tax earnings to maintain
your standard of living in retirement
- e.g., if one earns $60,000 now, one might aim for $42,000 of income in retirement from
all sources
- Registered/Employment Pension Plans (RPPs/EPPs) are provided only to approximately 38% of
all employees
2. There are tax benefits for RRSP contributions
- RRSP contributions are tax-deductible
- Once inside the tax-sheltered environment, the investments can grow faster than they would
outside an RRSP, where they would face tax on their gains
A suggestion is to keep fixed-income investments (e.g., GICs and bonds) inside the
RRSP, and equities (e.g., stock) outside the RRSP
- When the time comes to start to draw down on your RRSP savings, your tax rate will probably be
lower than it is during your working years, therefore reducing your tax burden
Why Else Withdraw From an RRSP?
1. The Home Buyer’s Plan
- you can borrow up to $25,000 in a calendar year from your RRSP to buy your first home
- the money must be paid back to the RRSP account over a 15 year period, with
participants required to repay a certain amount each year - generally 1/15 of the total
amount withdrawn
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if the money is not repaid each year, that year’s repayment becomes taxable
income
2. The Lifelong Learning Plan
- you can borrow up to $20,000 for full-time education
3. Living expenses, vacation, paying off debt, out of work, etc.
4. Covering the gap between retirement and when they must convert their RRSP to a registered
retirement income fund (RRIF) when they turn 71
Videos
(won’t be tested on videos)
Financial Planners
Financial Planning:
- Will
- Power of Attorney
=> Decision they need to make before they have their assets.
Abbreviations
SWOT: (Strength, Weakness, Opportunity, Threats)
PRIMO-F: (People, resources, Innovation & Ideas, Marketing, Operations, Finance)
PESTLE: (Political, Economic, Social, Technological, Legal, and Environmental)
HRE’s: (Health care-Related Emergencies)
PMI: (Pluses, Minuses, Interesting Points)
CEO: (Chief Executive Officer)
COO: (Chief Operating Officer)
CFO: (Chief Financial Officer)
CIO: (Chief Information Officer)
CKO: (Chief Knowledge Officer)
R&D: (Research and Development)
SIEID: (Science, Innovation, and Electronic Information Division)
PET: (Positron Emission Tomography)
ATM’s: (Automated Teller Machines)
UPC: (Universal Product Codes)
CORE: (Centre for Outsourcing Research and Education)
IT: (Information Technology)
MRP: (Materials Requirement Planning)
ERP: (Enterprise Resource Planning)
JIT: (Just-In-Time)
SQC: (Statistical Quality Control)
SPC: (Statistical Process Control)
PDCA: (Plan, Do, Check, Act)
ISO: (International Organization for Standardization)
CAE: (Canada Awards for Excellence)
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Document Summary
Effective january 2009, tfsas became another savings instrument for canadian residents that reached the age of majority in his/her province, has a social insurance number, and is a. If one was 18 in 2009, the total maximum contributions as of 2017 is ,000. Anything that might go into an rrsp can go into it up to the maximum of ,500 a year. The interest and income from investment gains accumulates tax-free. Money can be withdrawn at any time without penalty but replacing it must wait until the following calendar year. Pillar 1: old age security (oas) pension program. Pillar 2: canada pension plan (cpp) and quebec pension plan (qpp) Pillar 3: employer pension plans (epps) and registered pension plans (rrsps) Old age security (oas) - estimated income: 15% Canada pension plan (cpp) - estimated income: 25% Company registered pension plan - estimated income: 30% to 50% Rrsps / annuities / registered retirement funds (rrifs) savings and investments employment or.
