I have a love/hate relationship with my birthday. When my mom went into labour, the doctor asked my dad if he wanted a New Year’s baby or a tax break. He chose the tax break and now my December 31 birthday is always a small part of New Year’s celebrations. Having a holiday birthday gives my family the benefit of buying Boxing Day special gifts for me while I have to pay full price for them. But it also provides me with plenty of motivation for introspection. Do I make resolutions? Absolutely not! I do however approach the year with a list of questions and then I set out to answer them over the course of the year.
November was Financial Literacy Month, but financial literacy is vital all year round. The key, I believe, is to ask questions. And investing through a professional advisor offers an easy avenue to have your questions answered. So, what should you ask in the coming year? Here are some suggestions:
- Should I review my portfolio? Yes! While returns are important, they’re not the only thing to focus on. Ask your advisor which investments posed more risk last year than expected, as well as how investment fees and costs affected returns.
- Have my investment objectives or tolerance for risk changed in the past year? Your personal financial circumstances or your job may have changed. You may have moved, taken on more debt or lowered your debt, you may have grown your family, gotten married, divorced, or reached retirement. Any of these factors can impact your objectives and risk tolerance, and your advisor needs to know.
- Do I have a budget and a plan – and am I sticking to it? Is paying down debt or saving a part of your plan? And are you taking advantage of the debt you paid off in the past year? Could you apply interest savings to other debt reduction, or redirect it to additional savings? And do you have enough savings in an emergency fund – typically 3 to 6 months-worth of expenses?
- Have I made an RRSP contribution? Yes, even before the end of the year. An RRSP contribution can lower your tax rate, taxes owing or maximize your tax refund – and there are tools to help you determine this. How about monthly RRSP contributions? It’s a smart way to spread out smaller contribution amounts all year long rather than scrambling in the new year.
- Am I giving? November 27 was Giving Tuesday, but philanthropy is something you can do anytime. Creating a plan at the beginning of the year enables you to make the most of charitable tax-deductibility and helps your favourite charities better execute their own plans.
- Do I have a Will? Too often, we assign the role of executor to family or friends and then keep them in the dark about our last wishes. Is your executor still able and willing? Do you still have guardians assigned for your minor children even though you just celebrated the birth of your third grandchild from your youngest child? Clearly, this is an opportunity to re-evaluate your Will and estate plans. Powers of Attorney are also often overlooked. Have you named a Power of Attorney for Health but have they moved and no longer live close by? Could they handle the responsibility if you’re incapacitated? What about your Power of Attorney for Property? If you’ve named your adult children, are they aware how you’ve structured your financial affairs? Would your Powers of Attorney even know where to begin to look to act on your behalf?
What other questions do you need to ask this year? What insights and information do you need to seek out or gather on your own or through the expertise of a professional advisor? What are you looking to achieve to change your financial situation, either for the coming year or the next season in your life? It’s December, which means it’s a perfect time to look ahead and make better informed decisions focused on goals that lead to greater confidence – for today and tomorrow.
John Tabet is a Senior Investment Advisor with iA Securities. The opinions expressed herein are those of Mr. Tabet alone and may not be aligned with the opinions and values of iA Securities or any of its affiliated companies. iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.