If you feel confused when you look at your investment statements, you’re not alone. We often get asked how to read and understand the information on these statements. In this video, Kelley Doerksen walks you through the key information you will typically find on your statement and what it represents.
On a typical investment statement, you’re going to start by seeing the book value. The book value represents the cost of your investment, so the amount that you’ve purchased as well as any additional dividends or distributions that have been added to that particular position or security. That book value is going to be all of those contributions less any withdrawals that you’ve made on that security.
You’re also going to see the market value, which is the amount that particular position or security would sell for on the given day. Book compared to market value is important information when you’re looking at an investment in a Non-Registered account particularly because that’s going to indicate some of the taxation information that you might need to know.
The difference between book and market is going to be your gain or loss. If you’ve got an unrealized gain or loss, it means that you haven’t sold that position, and you are going to eventually realize that gain or loss when you make a disposition.
Our clients will also see income on current positions on their statements. This represents for most of our clients, the dividends that they’re earning on that particular holding. It could also represent the interest income that you’re earning on the bond position.
Another really important piece to your statement of course, is the performance. So, on your statement you’re going to typically see a net result – what your portfolio has done less fees have already been considered. That’s typically going to be a percentage, and you’re going to see that indicated for short, mid-term, and long-term performance. The most important indicators tend to be the longer-term history of your portfolio performance because it shows how consistent your performance has been and what a job your portfolio manager has done for you.
You’re also going to hopefully see fees in a clear and transparent way. Your statement should show what you’re paying for the cost of fund management and for the cost of advice that you’re receiving.
Another important element to your statement is going to be the asset allocation. That’s going to show you the amount of stock versus bond, or fixed income that your portfolio holds. Every client has a different asset allocation depending on their needs and their level of growth desired, and this is going to be indicated on your statement. You will typically see a listing of all of your stocks together with a percentage that you hold in stocks as well as a listing of your fixed income posted together with a percentage there as well.
We often get asked what the differences are between a TFSA (Tax-Free Savings Account) and RRSP (Registered Retirement Savings Plan) account.
We’ve put together this summary to review the primary differences and rules pertaining to each account. If you have any questions, please reach out to us here.
TFSA (Tax-Free Savings Account):
There is no deduction available, but no tax on withdrawals
TFSA contribution limit is cumulative, less contributions; withdrawals provide room back (including growth) in the new calendar year
Can be used for short-term savings, mid-long term, and estate planning
Can name spouse as successor owner, and beneficiaries for estate planning
Withdrawals do not generate a tax slips; drawing money out does not impact income-tested benefits
You must be 18 years old in order to open a TFSA, and can contribute and withdraw based on the plan rules for your lifetime
Can invest using many of the same types of investments as within an RRSP or Non-Registered account
You might be required to pay non-resident withholding tax on US situated investments
There is no need at any time to convert your TFSA to an income plan, it can be held as-is until your death if desired
RRSP (Registered Retirement Savings Plan):
Deduction provided against T4 earnings; suitable if you are earning employment income, not dividends
Contribution room is limited to 18% of previous years’ earned income, less adjustments for pension contributions, up to a maximum specified by CRA each year. Accumulates if you don’t use it
Access available through the Home Buyers Plan or Lifelong Learning Plan without immediate tax consequences
Naming beneficiaries on an RRSP other than your spouse can have unintended tax consequences and it’s important to speak with your Financial Planner, Accountant, and Lawyer to determine your best course of action
Withdrawals are taxed as ordinary income
On death, an RRSP may be eligible for a “spousal rollover”, shifting taxation of the RRSP to the death of the recipient spouse
When withdrawing from RRSP assets once retired, most individuals are in a lower tax-bracket than during their working years which could result in favourable tax outcomes
Depending on your situation, a spousal RRSP could be used to accomplish long-term income splitting
You must convert your RRSP to a RRIF (Registered Retirement Income Fund) by age 71, and you must begin to withdraw a CRA mandated minimum at age 72
Both TFSA & RRSP Accounts:
You can’t deduct interest costs related to borrowing to invest in either a TFSA or RRSP
You can’t deduct investment management fees in either a TFSA or RRSP
You can’t claim a capital loss in either a TFSA or RRSP
Please reach out to us for further information regarding these accounts, or if you have a specific question pertaining to your individual situation.
Here are the contribution limits and cut-off dates for RRSP and TFSA contributions if you are planning to make one this year and have not already done so.
What is the contribution limit and deadline for RRSP accounts?
The cut-off date for your RRSP contributions to count toward reducing your income for 2021 is Tuesday, March 1, 2022. In order to meet this deadline, you should make your contribution by February 25 to allow for your deposit to clear your bank account. The contribution limit for the 2021 taxation year was 18% of your taxable income up to a maximum of $27,830, whichever is less. The contribution limit for the 2022 taxation year is a maximum of $29,210. If you have unused contribution room from previous years, you may use this room as well.
What is the contribution limit for TFSA accounts?
If you would like to contribute to a TFSA for 2022 the limit is $6,000 for the year, unless you have not maxed out your contributions. The maximum one could have deposited into their TFSA account since 2009 is $81,500 as of 2022. Please note that the Portfolio Managers will be processing these contributions between January 15 – February 11.
How To Make an RRSP or TFSA Contribution? Contributions can be made through one of the following methods:
Transfer from Non-Registered Account: If you have a Non-Registered account set-up with enough funds in it, you can simply send your Financial Advisor an e-mail indicating the amount you would like transferred from this account to your RRSP or TFSA. Instructions must be sent to us by 11:00am on Friday, February 25 in order to meet the deadline.
Online Banking Transfer (Bill Payment): Add your Custodian (“Credential Securities” or “National Independent Network”/”NBIN”) as a “Payee” through your online banking and enter your account number as the bill account number. If you need assistance finding your account number or are unsure who your Custodian is, please contact your Financial Advisor. If you choose this method, please also notify us with the amount you are contributing, so we can have your Portfolio Manager watch for it. Please note this must be submitted before midnight on Monday, February 28 in order to meet the deadline.
EFT from your Bank: You will just need to sign an EFT form if you have not already done so, which allows your Custodian (Credential or NBIN) to take the money directly out of your account with your consent. Once you have signed the form, you will need to email your Financial Advisor to indicate the one-time amount you are authorizing the Portfolio Manager to withdraw from your bank account and which account (RRSP or TFSA) you would like it deposited to. We must receive these instructions by Friday, February 25 at 3:00pm at the latest in order to process before the deadline.
If you have any questions or would like to book a video or phone appointment to review your accounts, please contact our office.
Our office will be closed for the Holidays from Thursday, December 23 at 4:30pm through Friday, December 31. We will also have reduced staff working in our office beginning December 22.
As a friendly reminder, if you have any upcoming requests, please send them to our team by Monday, December 20 to ensure we can process them before the Holidays. If you need anything during the dates we are closed, I am still available via email and phone.
We will resume regular business hours at 8:00am on Monday, January 3.
On behalf of our BDF Team, wishing a Happy Holidays to you and your family, and all the best for 2022!
It is with heartfelt congratulations that we welcome Kelley Doerksen, CFP®, CIM® as partner in Blackburn Davis Financial Inc.
Kelley has been a Financial Advisor for 13 years. She achieved her Certified Financial Planner designation in 2010 and her Chartered Investment Manager designation in 2017.
She has just qualified to be registered as a Portfolio Manager which allows her to manage client assets on a discretionary basis. This is the gold standard of financial advice in Canada. She is also currently working on her Trust and Estate Practitioner designation (TEP).
Obviously, self-development and education are a cornerstone to Kelley’s success. What is more remarkable is she has been able to accomplish these milestones while being a dedicated mother and outstanding Advisor.
She is a thoughtful, empathetic, and highly skilled planner who acts as our go to resource for many of the more technical financial planning issues we face. Congratulations Kelley and thank you for your dedication and service.
Stephen MacDonald, CFP®, CIM® & John Davis, CFP®, CIM®, CLU®, TEP