This new savings vehicle was just introduced in Canada in January and most financial institutions already offer it. While the best way to choose the right product for you is to speak with your advisor, it is a good idea to have an understanding of how it works and what your options are.

On a daily basis we hear about the fluctuations in the stock market prices and the fact that experts are predicting it won't stop. If you already have investments you know that your stock may only be worth 50% of what it once was, and stock prices do not seem to be going up; the point is not to panic.

We often see advertising and hear radio commercials screaming that this is a good time to buy real estate. You can even read articles explaining why this is the case. But anyone with a trace of intelligence can immediately understand that those are written or paid for by realtors and, therefore, completely disregard them. So is this a good time to buy real estate?

A corporate bond is a debt instrument issued by a corporation to finance an expansion, a major project or a working capital shortfall. Some corporate bonds are traded on exchanges, but most are dealt with by the dealers in so called over-the-counter markets. Individual investors very rarely own corporate bonds directly, but rather as part of a portfolio held in a mutual fund. Some bonds have a fixed maturity date, while others may be “called” by the issuer at any time.

Defined Benefit pension plans are not as common today as they used to be. Unlike a Defined Contribution pension plan, with Defined Benefit the sponsoring company guarantees its employees a certain level of retirement income regardless of the investment performance of the contributed money. In other words, the company assumes the investment risk, while with Defined Contribution plans this risk falls entirely on the employee. Very few companies in Canada still have Defined benefit plans, with a few exceptions. Nobody likes to carry the investment risk unless it is absolutely required. You can hardly get such a plan today, but there are still many of them out there.

As foreclosures south of the boarder continue to set new records, many Canadians are anxiously waiting to see whether mass foreclosures are coming to Canada. I can only smile at hearing statements like “it is different here”. History shows that it’s not. Decade after decade, Canadian economy has been following American almost precisely with an eighteen month lag. It has always been this way, and it will always be, unless something changes fundamentally and our tiny economy all of a sudden becomes dramatically less dependent on the US.

As thousands of people in Canada get laid off every month and the situation is expected to get worse, more and more people turn to Employment Insurance (EI) for help. EI has nothing to do with charity. The benefits are not funded by the government. The program is, as suggested by its name, an insurance program funded by the premiums paid by employees while they are employed and the companies they work for. Therefore, there is nothing shameful in receiving unemployment benefits. This is something you have been paying for, perhaps for years, and something you are entitled to, as opposed to welfare which is funded by other people’s taxes and is, arguably, unfair. Employees pay 1.73% of their insurable earnings and their employers pay 2.42%, subject to certain maximums.

The value of post-secondary education has diminished significantly over the last couple of decades. The law of supply and demand works in the labor market just as well as it works with commodities, real estate and everything else. Twenty years ago college education could guarantee you a better living standard. This lead to a disproportionate number of people pursuing higher education and today, a typical college grad in Canada starts at $12 to $15 an hour while uneducated assembly line workers make $70 and some skilled tradespersons as much as $100 an hour. There are some exceptions, and certain occupations that require post-secondary education, such as dentists, lawyers and accountants, still earn higher incomes. But with the large number of students enrolling in these programs today, a few years from now those professionals will be a dime a dozen.

Snowballing is a common debt management technique intended to accelerate reduction of the overall debt burden for people with several different loans. A person or a family dedicates a fixed amount every month to go towards debt repayment. Out of that amount, the minimum required payments are made on all the loans first, and whatever is left goes towards reducing the smallest debt. Once the smallest debt is completely paid, the amount available to pay off other debts becomes larger, because we are keeping the total amount fixed and one debt is now out of the picture. At this stage, the next smallest debt becomes a priority, and once it is paid, the amount available for the remaining debt becomes larger. This way, we eliminate debt after debt, beginning with the smallest and going up. Because fewer and fewer debts remain and the amount we dedicate for debt repayment is fixed, the repayment process accelerates.

When you turn 71, your RRSP has to mature. And the maturity options include RRIF (Registered Retirement Income Fund) or an annuity. With a RRIF, you are forced to make withdrawals calculated using a special formula taking into account your age and your account balance. But you also have an option to withdraw more, or even everything as a lump sum. You can also decide how your money will be invested. The annuity option is different.