{"id":574,"date":"2023-09-03T19:19:39","date_gmt":"2023-09-03T23:19:39","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/?post_type=chapter&p=574"},"modified":"2024-11-28T18:24:31","modified_gmt":"2024-11-28T23:24:31","slug":"keeping-it-simple","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/chapter\/keeping-it-simple\/","title":{"raw":"Keeping It Simple!","rendered":"Keeping It Simple!"},"content":{"raw":"Investing is already a complicated manner for many Canadians.\u00a0 It\u2019s best to keep your investments and brokerage accounts as straightforward and simple as possible, especially when at the beginning of the financial literacy journey.\u00a0 Keeping the costs of investing to a minimum is ideal in order to have even more funds to invest further and compound the accumulating wealth.\u00a0 Strategies to keep investments as simple as possible:\r\n
    \r\n \t
  1. Lead with tax-advantaged accounts<\/strong>: These accounts allow Canadian tax residents to grow funds tax-free, reduce current tax liabilities, and defer taxes. It\u2019s difficult to select investments that have the consistent growth to overcome anything earned in tax-free accounts.<\/li>\r\n \t
  2. Keep contributing consistently<\/strong>: Set aside a similar amount each month for investing. Dollar cost averaging of investing will help one not have to time the market.<\/li>\r\n \t
  3. Keep the costs of investing as low as possible, based on your individual comfort and risk level<\/strong>. Review the MER of funds invested in.\u00a0 There\u2019s probably a lower cost index fund or ETF alternative that\u2019s 99% similar to the managed fund.<\/li>\r\n \t
  4. Diversify investments in order to reduce risk<\/strong>: Having a basket of funds such as mutual funds, index funds, or ETFs provides the investor with a broader range of Companies owned. If a few of those companies out of the entire fund\u2019s portfolio don\u2019t have a good financial year, then the impact won\u2019t be as high as there are other Companies in your investment portfolio already.<\/li>\r\n \t
  5. For taxable accounts, there are significant tax savings through earning income through capital gains and eligible Canadian dividends<\/strong>.\u00a0 The tax rate is approximately zero percent to fifty percent of some other types of investments<\/li>\r\n<\/ol>\r\n
    \r\n

    Tax Tip:<\/p>\r\n\r\n<\/header>\r\n

    \r\n\r\nFor tax-advantaged accounts, it is usually much simpler if one only has one-type of each kind of account. That would be each individual only having one Registered Retirement Savings Account (RRSP) and one Tax-Free Savings Account (TFSA), instead of multiple at different financial institutions.\u00a0 This approach makes it much easier to reconcile your tax balances with Canada Revenue Agency (CRA), and to ensure that an individual doesn\u2019t make excess contributions at any time.\u00a0 Over contributions to a RRSP account or TFSA account have punitive penalties and interest.\r\n\r\n<\/div>\r\n<\/div>\r\n ","rendered":"

    Investing is already a complicated manner for many Canadians.\u00a0 It\u2019s best to keep your investments and brokerage accounts as straightforward and simple as possible, especially when at the beginning of the financial literacy journey.\u00a0 Keeping the costs of investing to a minimum is ideal in order to have even more funds to invest further and compound the accumulating wealth.\u00a0 Strategies to keep investments as simple as possible:<\/p>\n

      \n
    1. Lead with tax-advantaged accounts<\/strong>: These accounts allow Canadian tax residents to grow funds tax-free, reduce current tax liabilities, and defer taxes. It\u2019s difficult to select investments that have the consistent growth to overcome anything earned in tax-free accounts.<\/li>\n
    2. Keep contributing consistently<\/strong>: Set aside a similar amount each month for investing. Dollar cost averaging of investing will help one not have to time the market.<\/li>\n
    3. Keep the costs of investing as low as possible, based on your individual comfort and risk level<\/strong>. Review the MER of funds invested in.\u00a0 There\u2019s probably a lower cost index fund or ETF alternative that\u2019s 99% similar to the managed fund.<\/li>\n
    4. Diversify investments in order to reduce risk<\/strong>: Having a basket of funds such as mutual funds, index funds, or ETFs provides the investor with a broader range of Companies owned. If a few of those companies out of the entire fund\u2019s portfolio don\u2019t have a good financial year, then the impact won\u2019t be as high as there are other Companies in your investment portfolio already.<\/li>\n
    5. For taxable accounts, there are significant tax savings through earning income through capital gains and eligible Canadian dividends<\/strong>.\u00a0 The tax rate is approximately zero percent to fifty percent of some other types of investments<\/li>\n<\/ol>\n
      \n
      \n

      Tax Tip:<\/p>\n<\/header>\n

      \n

      For tax-advantaged accounts, it is usually much simpler if one only has one-type of each kind of account. That would be each individual only having one Registered Retirement Savings Account (RRSP) and one Tax-Free Savings Account (TFSA), instead of multiple at different financial institutions.\u00a0 This approach makes it much easier to reconcile your tax balances with Canada Revenue Agency (CRA), and to ensure that an individual doesn\u2019t make excess contributions at any time.\u00a0 Over contributions to a RRSP account or TFSA account have punitive penalties and interest.<\/p>\n<\/div>\n<\/div>\n

       <\/p>\n","protected":false},"author":1780,"menu_order":6,"template":"","meta":{"pb_show_title":"on","pb_short_title":"Keeping It Simple!","pb_subtitle":"","pb_authors":["anne-lee"],"pb_section_license":"cc-by-nc-nd"},"chapter-type":[48],"contributor":[61],"license":[58],"class_list":["post-574","chapter","type-chapter","status-publish","hentry","chapter-type-standard","contributor-anne-lee","license-cc-by-nc-nd"],"part":166,"_links":{"self":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/574","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/users\/1780"}],"version-history":[{"count":4,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/574\/revisions"}],"predecessor-version":[{"id":1401,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/574\/revisions\/1401"}],"part":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/parts\/166"}],"metadata":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/574\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/media?parent=574"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapter-type?post=574"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/contributor?post=574"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/license?post=574"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}