Financial Resolutions for 2024

Buying your first home; short-, medium- or long-term retirement planning; saving for your children’s education and more! Sébastien Mc Mahon and Ashleay Dollard share advice on how to take your savings to the next level in 2024.

Ashleay: Welcome to iA Financial Group's “In Your Interest!” podcast. My name is Ashleay, and this week we're giving you some financial tips to help you plan for the months ahead and take action. No matter what projects you have in mind, whether it's buying a house, planning your retirement, saving for your children's education, or simply reducing your financial stress, we're sharing our best tips to help you have a solid plan and maximize your savings. So, hi, Sébastien.

Sébastien: Hello, Ashleay.

Ashleay: As always, good to have you back.

Sébastien: So the year is about to end and neither of us are financial advisors, but we thought it would be good to look at a few good, maybe some of the best, financial advice that we've heard from the financial advisors that you and I know so well and share here with our audience, as maybe they're looking to plan the year ahead, which should be, once again, mightily interesting.

Ashleay: Absolutely. So, in the past year, let's say, if we'll just, you know, situate our listeners, we're recording right now on December 19th, 2023. And so, in the past year, some of you have felt that rising inflation and debt payments have swallowed up your savings. And today we're going to share some tips on how to maximize your savings, whatever your goal may be. So let's get started. Sébastien, why don't you start with people who are planning to buy their first home or property in the next few years.

Sébastien: Sure. So, I would say you need to take advantage of the new FHSA, so First Home Savings Account. Of course, this is a complicated product. I strongly encourage anyone here who says, well, “I will be buying a first house, maybe I could benefit from that”, to talk to your financial advisor, because there's many, multiple uses here and multiple conditions. But maybe just the basics here: it combines the tax advantages of an RRSP and a TFSA, making it a very attractive registered account for first time home buyers. So, very important note here is that the contribution end date for 2023 is on December 31st. Maybe you're looking at your clock or the calendar right now and saying, well, it's in a few days. Well, maybe it's a good time to talk to your financial advisor right now because you could benefit from a tax deduction in 2023 if you act right now and you're eligible to open an FHSA.

Ashleay: And what if you're not planning to be a homeowner or you're not sure?

Sébastien: Yeah, well, if you're not sure, you could still use the FHSA to buy your home eventually, or you can transfer the accumulated amounts to your RRSP eventually without any tax consequences, this is very important, and regardless of the amount of RRSP room that you have available. So, you must make sure that you make a direct transfer and there's no excess in your FHSA. There are a few things like that, but I would say that even if you well, if you don't have a home and you're not sure that you want to buy one, there's still a reason to open an FHSA.

Ashleay: Absolutely. And okay, so what if we want to save for our children's education?

Sébastien: Yeah, we should always think RESP. We've been pretty vocal here. It's one of the best savings plans out there—up to 30% government grants depending on the province that you live in. And it's probably one of the greatest gifts of all, of course, the possibility of putting your child in a position to realize their dream career. So, you can use also an RESP loan, which is very interesting maybe at this time of the year, because remember that to have the maximum subsidies you need to invest at least, well, maximum $2,500 in the plan. And if you have not invested fully every single year of your child's availability, well, you can always buy up to one year per calendar year. Thus, you can, you know, invest $5,000 this year and buy back, you know, one of the past years where you did not contribute. So, there's still time for that. The limit is December 31st. If you don't have enough savings to do that right now, but you still want to benefit from it, an RESP loan, maybe, you'll pay 7- 8% interest right now, depending on where the rate is, but you will get the full subsidy. So, in the end, it's still a good idea to always, you know, take the maximum advantage of your RESP.

Ashleay: Very good. And what about for people who are planning or approaching retirement?

Sébastien: Then, you should think RRSP and TFSA. So, of course, RRSP. The deposit limit date is March 1st, 2024, so it's not as imminent as the other elements that we mentioned. But you know, it's always good practice to have recurrent weekly deposits. So, you can think about that. Also, for the TFSA, the annual limit will rise by $7,000 in 2024 rather than $6,500. So, there’s going to be more room to save there. And of course, cost of living rising. That means that, you know, the annual rise in the limit also needed to follow. So, there'll be more room and ample tools to save for your retirement in 2024.

Ashleay: Fantastic. So, in summary, in all cases, what would you say?

Sébastien: I would say that the impact of compound interest is always the strongest, one of the strongest forces in the universe. So, you need to use it. So, exploit it to its full potential. So, you need to save often. You need to save early in your life and you need to save all through your life, so nothing changes there. The act of saving also provides a significant, let's say, a reducer of stress or financial anxiety, which is not negligible. So, knowing that we've maximized our RRSP or strengthened our TFSA, or we're saving for the future, having an emergency fund, not only makes us proud, but it also provides a sense of confidence or a peace of mind in the face of potential financial contingencies. So, do not ignore that. And finally, look at the options of pooling your assets and benefiting from reduced management fees. So, you know, not diversifying through multiple financial institutions, but maybe concentrating your assets with one firm typically helps you have more interesting returns over the long run.

Ashleay: Fantastic. Well, that's all for today. We hope these tips will help you maximize your investments and achieve financial peace of mind. So, thanks Sébastien and we will see you all next week. Wishing you happy holidays!

Sébastien: Happy holidays and a Happy New Year!

Ashleay: Love this podcast? Want to know more about economic news? Follow our “In Your Interest!” podcast, available on all platforms, visit the economic news page on ia.ca or follow us on social media.

About

Sébastien Mc Mahon joined iA Financial Group’s economy team in January 2013. Throughout his career, Mr. Mc Mahon has held various positions in several prominent financial institutions, notably at Quebec’s Ministry of Finance and the Autorité des marchés financiers, Quebec’s financial market regulator.

Sébastien Mc Mahon also serves as Vice-President, Asset Allocation, and Portfolio Manager for our subsidiary, iA Investment Management Inc. (iAIM), with assets nearing $15 billion. Mr. Mc Mahon is also a member of the firm’s asset allocation committee.

Sébastien Mc Mahon

Chief Strategist and Senior Economist

This podcast should not be copied or reproduced. Opinions expressed in this podcast are based on actual market conditions and may change without prior warning. The aim is in no way to make investment recommendations. The forecasts given in this podcast do not guarantee returns and imply risks, uncertainty and assumptions. Although we are comfortable with these assumptions, there is no guarantee that they will be confirmed.

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2024-02-27 11:44 EST
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