February Is A Good Month To Do These Things

February is a busy month for your personal finances. You start to think about taxes, RRSP contributions, and making good on those January resolutions. Here are a few items to consider this month.

February is a good month to…

1. Get prepared for tax season

You should be starting to receive your T-slips this month. Gather up all the receipts you’re using to claim any deductions or tax credits – medical expenses, charitable donations, investment interest, job related expenses or moving costs and any other applicable receipts.

There are some changes to what you can claim on your 2017 return. Here’s a simple guide.

If you have a fairly straightforward tax situation, and you’ve previously been using a tax professional, why not try to complete your tax return yourself this year. There are several choices, including the ever popular Turbo Tax and UFile.

The Wizard questionnaires can be a bit lengthy and daunting at first, but just click through and you’ll be done in no time. The questions help you claim all the deductions you’re entitled to.

Create a CRA My Account (it may take a couple of days to get your code) and take advantage of the “Auto-fill My Return” feature to import your T-slips, RRSP amounts and other information directly into your return.

NETFILE begins accepting returns February 26. With an average processing time of ten days, if you are expecting a tax refund you could have it by early March.

2. Top up your RRSP

Ideally, you should have a plan in place for regular monthly contributions throughout the year. But maybe you’re a procrastinator, or you received a lump sum from a bonus or cashing in stocks from your employee purchase plan. You’ll want to get your contribution in before the deadline of March 1.

When I worked in banking we were always open extended hours in the last week or two of February for all those last-minute contributors. Double check your financial institution’s hours so you’re not knocking on the locked door on February 28.

Should you get an RRSP loan? It may make sense in certain cases, such as if you switched to a higher paying job and you need to “top up” to maximize your contribution room. If you do borrow, be sure to use your tax refund to pay off as much of the loan as you can.

Don’t immediately choose the product your financial institution suggests to you. If you do “park” your money in a savings or money market account temporarily, don’t forget about it. Make a choice within the next 30 days to properly invest according to your financial plan.

Related: You made an RRSP contribution. Now what?

3. Take a look at your investment fees

New securities laws require investment firms to provide clients with an annual investment report. This report details all operating, transaction and other fees and charges you paid, as well as the compensation received through third parties.

It’s important that you know the true cost of the investments in your portfolio, and the value of the service you receive from your investment advisor. Advice costs money – just know how much you’re paying for it and consider whether you feel comfortable with the service and results you are getting. Fees are not set in stone. Always negotiate and ask if there’s a lower fee option that’s right for you.

If you are a DIY online brokerage investor, you’re still paying fees. Don’t overpay transaction fees for small monthly purchases. Notice if you are paying annual account fees, small balance or inactive account fees. You may need to reconsider the type of account you are in for the investments you own.

4. Take advantage of Best Buys for February

Stores follow a yearly sales cycle. Here’s what you can expect to find on sale this month:

  • The Consumer Electronics Show takes place in January and retailers will want to clear their shelves for newer models. Save on home theatre products, small electronics and cameras.
  • Kick back to watch the Super Bowl and the Olympics. Big screen TVs and recliners are good buys.
  • Furniture is on sale, as well as mattresses, and appliances both large and small.
  • Winter coats and cold weather accessories; winter sports gear.
  • Romantic gifts for your sweetie – perfume, jewelry, lingerie and chocolates (best after Valentine’s Day if you dare wait).

Here’s hoping your local groundhog doesn’t see his shadow.

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10 Comments

  1. Gert on February 2, 2018 at 6:50 am

    Hi Marie,
    How do you know if your advisor is letting you know all the fees you pay and not just the obvious fees? Example: I pay a monthly fee of close to $500 on just under 400K invested (yearly returns after fees amount to about 21K. I’ve been noticing other fees that I’ve been told not to worry about, they say “you’re not actually paying those”.

    • adrian on February 2, 2018 at 2:24 pm

      You should get a CRM2 annual report soon that has all the fees you paid to the advisor and firm for the year. It would not have the MER if you have mutual funds and that amount is not directly docketed from your account, but would otherwise show all direct and indirect fees. If you have a fee based account then 1.5% is not to low and maybe even on the higher range.

      So it really depends on what service you get and how satisfied you are – but the CRM2 report is great to bring to the advisor and ask about fees and performance.

    • boomer on February 2, 2018 at 3:55 pm

      Hi Gert: It’s your advisor’s obligation to disclose all fees paid whether it’s fees for advice, transaction costs and even trailer fees (not separate, but part of your MER if you own mutual funds) that can affect his recommendations to you.
      When you make any other consumer purchase, you know exactly what you are paying for it, but a lot of people continue to stay in the dark about what it’s costing for someone to manage their perhaps largest asset. You need to have a conversation with your advisor and if he’s not forthcoming or you are not satisfied with his answers you should switch to someone else.
      Here’s a good guide from BC Securities:
      https://www.investright.org/wp-content/uploads/2016/10/Fees-Guide-v7_final.pdf

  2. CJ on February 2, 2018 at 9:08 am

    Gert, $500/mth is a 1.5% fee based on your total portfolio. That is actually pretty reasonable in Canada where its typically 2% or more. That makes me think that indeed those extra fees are coming out of your pocket.

    I would think that you need to ask more questions….how exactly am I NOT paying for those fees?? how does it work?? Its not fun or easy but its your money so you have the right to ask those questions. If you dont get the answers you want you maybe should think about a different advisor or try doing it yourself.

    good luck

    • Bob Lin on April 7, 2018 at 8:07 am

      $500 a month reasonable! Wow! It’s interesting how expensive just 1.5% really is when we see it in terms we can relate to. Over just 10 years that’s $60,000 in fees, and that’s before adding in fees embedded in the mutual funds and perhaps some trading fees. Wow!

  3. Ben on February 2, 2018 at 11:21 am

    Simpletax.ca is awesome for completing your own returns, and it’s free

    • Michael on February 2, 2018 at 2:08 pm

      +1 for Simpletax, this will be my third year I think – so very handy especially with CRA auto-fill (BUT BE SURE TO VERIFY).

    • boomer on February 2, 2018 at 3:56 pm

      Thanks Ben. I think StudioTax is also free.

  4. Pellrider on February 3, 2018 at 11:21 am

    Just wondering is the free tax sites are safe ? I use Ufile previous years.

    • Ben on February 3, 2018 at 2:22 pm

      This will be my 5th year with simpletax, no issues or complaints

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