Investment

Your Cornerstone portfolio is more efficient, probably lower cost, and is designed specifically to meet your needs. However, a company investment plan can have one big advantage: employer matching. If your employer matches your contributions, that is effectively a pay raise, and you absolutely should take advantage of it.  You can usually transfer those assets to Cornerstone on an annual basis and win both ways.

Mortgage

This is mostly a matter of personal preference. The math says that you are better off in the long run by investing, because the expected return on your portfolio is greater than the interest cost of the mortgage – especially these days, with interest rates at historical lows. However, many people feel stressed by having debt, and paying off your mortgage feels good.  Your particular situation matters as well: if your debt levels are very high, relative to your income, reducing that debt reduces your risk of an unforeseen shock such as losing your job.  For many people, a great solution is to do a little of both.

TFSA or RRSP

This might be the most common question in our business.  And the answer is: it depends (sorry).  RSPs and TFSAs are both vehicles that are designed to help you save for your future.  They are tools.  Determining which one is right for you depends on your personal circumstances.

An RSP is tax-deferred, so where you are in your life matters.  Since you get a tax break now for contributing, the most important factor is current income – the higher it is, the greater the benefit.  Conversely, if your income is going to be higher in the future, it might make sense to save your contributions for a later date.  Age also matters – the longer you have until retirement, the greater the advantage of the tax deferral.  Contributing while in your 60s – especially your late 60s – makes little sense.

Terminology

The investment industry is confusing, frustrating, complicated, can lack transparency, and can be laden with conflicts of interest. Products often have multiple sources of high, and sometimes hidden, fees. Brokers that earn commissions are motivated to increase activity in your account.  Advisors that are paid trailer fees are motivated to sell the funds that pay the highest trailer.  Firms that have proprietary funds are motivated to promote those funds over others that may be more suitable.

Being your fiduciary means a commitment to only act in your best interests.  By eliminating conflicts of interest, and only being paid a clearly disclosed fee directly from our clients, we are free to act completely independently and always in your bests interests.