Christine Ibbotson

Christine Ibbotson

Ask the Money Lady

Christine Ibbotson is the author of How to Retire Debt Free and Wealthy. Visit her website at www.askthemoneylady.ca or send a question to info@askthemoneylady.ca

Recent articles of Christine Ibbotson

The ins and outs of investing in bonds

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The ins and outs of investing in bonds

Christine Ibbotson 4 minute read Wednesday, Aug. 10, 2022

Dear Money Lady,

I really can’t handle the stock market, so I wondered if you could write about investing in bonds?

Thanks,

Melanie

Wednesday, Aug. 10, 2022

Canada’s bond market is often overlooked but is far larger than the equities market and is certainly worth exploring.

An outside-the-box idea to boost income

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An outside-the-box idea to boost income

Christine Ibbotson 4 minute read Wednesday, Aug. 3, 2022

Dear Money Lady,

We simply can’t earn enough to save anything for the future. My husband works two jobs, we have three kids, and it’s just not possible to save.

We do own a home, but I honestly believe we will never have it paid off. Short of my husband getting another job, do you have any ideas on what we could do?

Candice

Wednesday, Aug. 3, 2022

This week, Money Lady Christine Ibbotson tells the story of a friend who started a homestay business and rented space in her home to students and academic travellers.

Preserving your capital in retirement

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Preserving your capital in retirement

Christine Ibbotson 4 minute read Wednesday, Jul. 27, 2022

Dear Money Lady readers,

Last week we chatted to Patricia about the benefits of dollar-cost averaging (DCA) and the pitfalls of reverse dollar-cost averaging (RDCA). As promised, here are the solutions to creating a lifelong income in retirement and ensuring you retain capital preservation.

Economists have always stated that, on average, most retirees should expect to endure at least three to five downward swings to the equity markets during an average retirement of 20 to 30 years. If your retirement income is withdrawn from a fluctuating asset class, such as equities, it is not unreasonable to expect to lose between 20 per cent to 50 per cent of your portfolio over a typical retirement horizon of 25 years.

Once you stop working, your investment portfolio converts from a savings plan to a distribution plan. Market swings during routine withdrawals create permanent and unrecoverable losses to your retirement portfolio. The problem arises when investment shares are sold to create income and are therefore no longer in the portfolio to participate in the recovery. Add the current problem of rising inflation and you have a toxic mix. Retirees will soon need to withdraw more than they originally anticipated due to reduced purchasing power.

Wednesday, Jul. 27, 2022

Enjoy a happy retirement by ensuring your savings and withdrawals can withstand market fluctuations and/or inflation.

The ups and downs of dollar-cost averaging

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The ups and downs of dollar-cost averaging

Christine Ibbotson 3 minute read Wednesday, Jul. 20, 2022

Dear Money Lady,

My financial planner keeps telling me not to change my investments, but I can’t handle the fact that I’ve lost so much money. I always invest and save monthly, but I am worried because I plan to retire soon.

Patricia

Dear Patricia,

Wednesday, Jul. 20, 2022

The dollar-cost averaging approach to investing always affects portfolios positively in the long term.

More interest rate hikes are coming

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More interest rate hikes are coming

Christine Ibbotson 3 minute read Wednesday, Jul. 13, 2022

Dear Money Lady Readers,

Are the rising rates keeping you up at night? Are you wondering if you can ever afford to buy a home?

Hang-in there, the change is coming,

The Canadian housing market is in a definite pullback, as July marks the fourth straight month of decline. New buyers have felt the pressure of interest rate hikes since March 2022, and it is anticipated they will go even higher. Current posted rates match the Canada Mortgage and Housing Corporation’s qualifying rate of 5.25 per cent, something we haven’t seen in over a decade. A five-year fixed mortgage rate now hovers between 4.79 per cent and 5.04 per cent. For many Canadian homeowners, this is the first time they have seen rates this high; many buyers believed they were paying too much when they were haggling for a mortgage rate of 2.5 per cent only two and three years ago.

Wednesday, Jul. 13, 2022

The two-decades-long “low-rate lending party” has now ended.

Do anything you want to do

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Do anything you want to do

Christine Ibbotson 4 minute read Wednesday, Jul. 6, 2022

Whatever their age, most people generally want to do better financially than their parents did — and most of us usually want to avoid making the same mistakes that we witnessed growing up.

It’s human nature, and an innate trait in all of us, to want to do better than the generations before us. This is the foundation of growth and prosperity that keeps our world evolving and forging ahead with new technological advancements, better qualities of life and the continuous improvement of our everyday existences.

Trying to be upwardly mobile is the basis of all personal and financial growth and something we generally have in common with others in our age group. If you were born between 1980 and 2000, you are part of the Millennial generation, a group of people that is, I believe, better poised for the future than any generation before it.

So how is this generation of Millennials, who continue to push the boundaries of the norm, doing today? How will they fare over the next 30 years?

Wednesday, Jul. 6, 2022

The Millennial generation is better poised for the future than any generation before it.

A message to our millennials

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A message to our millennials

Christine Ibbotson 4 minute read Wednesday, Jun. 29, 2022

Dear Money Lady readers,Whatever your age, everyone generally wants to do better financially than their parents, with most of us usually wanting to at least avoid making the same mistakes.

By the time we reach adulthood, most of us want to improve on some quality or trait they dislike about their parents. This is the foundation of growth and prosperity that keeps our world evolving and forging ahead with new technological advancements, better qualities of life and the continuous improvement of our everyday existences.

Part of constantly trying to be upwardly mobile is the process of taking ourselves from rags to riches or at least respectability. This is the basis for all personal and financial growth and something we generally have in common with others in our age group. If you were born between 1980 and 2000, you are part of the Millennial generation, a cohort of people who, I believe, are better poised for the future than any other generation before them.

So how is this generation of Millennials doing today? How will they fare over the next 30 years? Some want to make more money and be successful. Some view money and prosperity as second on their list and want to make a stand for equality, the environment, and social justice; others want to embrace the idea of “working to live” versus their parents’ motto of “living to work.” Whatever your views on the world today, and however you plan to challenge yourself by pushing through social or political barriers, you will still need to work, earn a living, and prosper over the next 30 years.

Wednesday, Jun. 29, 2022

The parents of today’s Millennials realize that this generation is poised for success and can’t wait to see how their children prosper.

Be a little aggressive to get the best returns

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Be a little aggressive to get the best returns

Christine Ibbotson 4 minute read Friday, Jun. 17, 2022

Dear Money Lady,We have decided to retire early. I am 56 and my husband is 59.

How can you make our money last?

CarlaYou’ve planned to leave the rat-race behind and retire early. Good for you.

I can guarantee it will take less than two months before you start thinking “what if we run out of money?”

Friday, Jun. 17, 2022

If you want to retire early and ensure that your money keeps growing, you may have to accept a little investment risk.

Don’t be afraid to be proud of yourself

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Don’t be afraid to be proud of yourself

Christine Ibbotson 3 minute read Wednesday, Jun. 15, 2022

Dear Money Lady readers,

I have received many emails from people depressed about returning to work after COVID, unhappy with their lives and financial situations, and many who are believing that they are not worthwhile.

Please STOP THAT! You need to be proud of your life so far.

In Canadian society we are taught to be humble, accommodating, and most of all, we are told to not show exaggerated appreciation of ourselves for fear of devaluing others around us by demonstrating a feeling of superiority. I say — forget about the social friction and be proud of who you are. This is the only way you will get ahead in life and move out of mediocrity and into extraordinary!

Wednesday, Jun. 15, 2022

If you demonstrate pride and self-confidence in yourself, your life and your accomplishments, people notice it and they see you in a different light.

‘Do I really have to return to the office?’

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‘Do I really have to return to the office?’

Christine Ibbotson 4 minute read Wednesday, Jun. 8, 2022

Dear Money Lady,I am 54, so not old enough to retire yet – but I want to. The thought of going back to my job from 9 to 5, Monday to Friday is killing me. I am supposed to return to work next month.

Have you got any ideas on what I could do instead?

Thanks,

MarleneMarlene, you are not alone. According to Statistics Canada, 78 per cent of working Canadians over 49 do not want to return to their pre-COVID work environments.

Wednesday, Jun. 8, 2022

Many Canadians dread returning to their pre-pandemic office environments. Starting a business or semi-retirement may be options for them.

So you want to be a millionaire?

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So you want to be a millionaire?

Christine Ibbotson 3 minute read Wednesday, Jun. 1, 2022

Dear Money Lady readers,Have you ever said to yourself: “I’ve never been a millionaire, but I know I would be great at it!”

With house prices now at an all-time high, you may indeed now be a millionaire, and if so, congratulations. For the rest of us still struggling to get there, and we can broad-stroke Canadians into two groups — spenders and savers, who, oddly enough, are often married to each other.

Now before you decide to toss this column aside, I am not going to advocate penny-pinching and coupon clipping. Saving 20 cents on a can of soup is one thing, but it will never get you to retirement as a millionaire. Now with inflation and the sky-high gas prices, it is easy to understand why families are stressed out. Most people, on paper, make decent incomes, but the average Canadian couple still lives paycheque to paycheque, even while bringing in six figures. They claim that they can’t save anything and that their life is completely normal — but is it?

There is only one true way to improve your monetary situation and change things around to find ways to save. This is the key to saving thousands of dollars every year and guaranteed will make you a millionaire by retirement. The trick is “mindful spending.” I know most of you think you already do this all the time, but even the greatest budget-minded savers fall off the wagon and spend too much on everyday life.

Wednesday, Jun. 1, 2022

The Barenaked Ladies (above) famously sang If I Had $1,000,000. Are you doing everything you need to ensure you have a million dollars?

Have you properly assessed your risk?

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Have you properly assessed your risk?

Christine Ibbotson 3 minute read Wednesday, May. 25, 2022

Dear Money Lady readers,Do you have enough insurance?

It surprises me how many working Canadians still have so little insurance to protect their families or lifestyles should something unforeseen happen. Even as we make our way out of the dreaded pandemic, I still see many people who simply feel it is too expensive to buy insurance.

Let me ask you a question – what do you think is your single greatest asset? It is not your home, your car, or your coin collection. It is you. Your single greatest asset is your future earning potential and your capacity to earn an income from employment or self-employment means.

Here’s another question to ask yourself – what are the chances of something happening in the future, that will have a substantial impact on your current lifestyle? Well, of course, short of gazing into a crystal ball, no one can answer that one. Most people believe they have adequate insurance coverage for their homes or vehicles, yet many fail to consider the risks associated with personal disability. Ask any insurance agent and they will tell you there is a much greater risk of you becoming disabled versus dying in an accident. Of course, many Canadians acquire disability insurance through their employers under a group coverage program, but many never check to see if it really is enough.

Wednesday, May. 25, 2022

Generally, our biggest assets are ourselves and our capacity to generate income. So, do you have insurance to cover your needs and lifestyle in the event of an accident and subsequent disability?

Planning for your retirement

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Planning for your retirement

Christine Ibbotson 4 minute read Wednesday, May. 18, 2022

Dear Money Lady readers, The word retirement is everywhere. You see it on TV, in the newspapers, on billboards, and advertised on social media. We seem to all be trained to plan for it, expect it, long for it, and take it for granted that it’s coming.

Many of us have our own visions of what retirement means. However, there are three major factors we all have in common that affect everyone’s retirement today.

These are:

1) Time management;

Wednesday, May. 18, 2022

Keeping happy and busy, making smart use of your biggest asset (your home) and planning your future income should be your biggest priorities when planning for your retirement.

When should you start CPP and OAS benefits?

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When should you start CPP and OAS benefits?

Christine Ibbotson 3 minute read Wednesday, May. 11, 2022

Dear Money Lady, Should I collect my government pensions at 60, or delay to when I am 65 or 70 to get a higher monthly amount?

Thanks,

Jacob.

There are two ways of thinking when deciding to take your government benefits. Most advisers will tell their clients to defer taking both CPP and OAS until they are 70 to get the maximum benefit from the government. There is quite a difference in these amounts, too — the maximum annual CPP benefit (2022) at age 60 is $9,628, at 65 it is $15,043, and at 70 it is $20,512. With OAS, the maximum annual benefit (2022) at age 65 is $7,784.04 and $10,586 at 70. But can you afford to wait until you are 70 to get more?

Wednesday, May. 11, 2022

Deciding when to begin receiving CPP and OAS benefits is a decision best made with your life partner, family and/or a financial adviser.

Explaining annuities

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Explaining annuities

Christine Ibbotson 4 minute read Wednesday, May. 4, 2022

Dear Money Lady,One of my friends put all their retirement savings into an annuity and said we shouldn too. What exactly is an annuity? Janice

I am often asked about annuities, it’s a strategy that is often recommended as a way to create lifelong income in retirement. Life annuities are designed for clients who have insufficient savings and/or a very low risk tolerance to investing in the market. There are four main types of annuities – straight life, joint life, term-certain and deferred.

Straight life annuities are the simplest. This annuity guarantees a periodic income for life with payments beginning immediately, minus a premium. Be careful with this one. This annuity does pay the highest amount for life, but when you die, payments stop and there is no payout to the estate. The benefit of this plan is if you live longer than your life expectancy, you will benefit from the funds left in the pool by those who died earlier. However, payments are fixed over time and do not compensate for inflation. Because of this, you can add an income-protection option called an increasing life annuity. You can also choose an indexed annuity (often less expensive) that will increase the payments each year in line with inflation (measured only by the Canadian Consumer Price Index).

Joint life annuities last as long as either partner is alive. There are a couple of options — you can buy an income-reducing annuity, which is less costly, whereby the payment from the joint annuity declines when the first spouse dies. There is also an option to guarantee the payout of the premium if you choose a cash payment provision. When the annuitants die, the difference between the premium and the payout can then be paid to beneficiaries.

Wednesday, May. 4, 2022

Several different types of annuities are available. Money Lady Christine Ibbotson explains the options.

An alternative to the reverse mortgage

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An alternative to the reverse mortgage

Christine Ibbotson 3 minute read Wednesday, Apr. 27, 2022

Dear Money Lady Readers,

I want to give you an alternative to reverse mortgage products.

I was overwhelmed by the response from readers about the previous column I wrote on reverse mortgages. There seem to be many Canadians considering such financial services products as a way of injecting much-needed funds into the later years of their retirement. Many of you had questions about other alternatives, so I wanted to provide you with one that I believe would indeed be a better option — a collateral charge.

The problem with a reverse mortgage is that you will often receive a portion of your home equity as a lump sum to do with as you wish, with no need for repayment until you either sell your home or die. Many people view the lump sum like a lottery win and, because they haven’t been good with money in the past, often burn through it faster than they anticipated. Remember, with a reverse mortgage, there are no payments made to decrease the principal debt or at the very least to keep on top of interest charges. So the debt grows quickly, especially with the help of a much higher interest rate than what is normal for a Canadian mortgage at your bank.

Wednesday, Apr. 27, 2022

Money Lady Christine Ibbotson suggests that those seeking access to credit in retirement may want to consider a collateral charge rather than a reverse mortgage.

Online iBuyers offer new real estate option

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Online iBuyers offer new real estate option

Christine Ibbotson 3 minute read Wednesday, Apr. 20, 2022

Dear Money Lady Readers,

I discovered something new and want to share it with you.

Do you know what an iBuyer is? I didn’t.

More popular in the U.S.A., an iBuyer (instant buyer) is a real estate firm that uses technology to buy and resell your home. When you sell through an iBuyer, you receive a cash offer without the traditional hassles of staging your home and showing it to potential purchasers. This solution to selling works because it is simple and extremely more convenient. The iBuyer company purchases your home for the market value based on an approved appraisal and then takes on the burden of owning, marketing, and reselling your home. Now you may be thinking that this is a way for someone to profit and “flip” your property – but apparently, it is not. The aim of the iBuyer is to find the next buyer, providing the vendor with the cash sale proceeds, and then charging a service fee, (typically similar to a normal real estate commission fee). Sound intriguing?

Wednesday, Apr. 20, 2022

Online iBuyer real estate firms will buy your home for its appraised price, then sell it themselves.

Doing taxes in retirement requires new mindset

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Doing taxes in retirement requires new mindset

Christine Ibbotson 4 minute read Wednesday, Apr. 13, 2022

Dear Money Lady,When do I have to file my taxes this year and how can I pay less? I am retired now and every penny counts. Thanks,

JaniceJanice, you must file your tax return with the Canada Revenue Agency by Mon., May 2, 2022.

You are not alone, Janice. Many wonder how they can earn more and pay less tax to make ends meet every month. It is not your gross income that counts, it is your take-home income or after-tax income that is most important. Yes, it is wonderful for those to say they have an impressive six-figure income; however, how much of that income are you paying out in Canadian income tax, not to mention all the taxes we pay on our basic cost of living?

I must admit that managing your taxes during your working years is relatively generic. You should maximize your RRSP contributions, purchase investments that attract the least tax possible on future investment income and, if you can, you should buy real estate to increase your net worth. Some even invest in rental properties to build additional wealth and use the ongoing expenses as tax write-offs to lower their marginal tax rates.

Wednesday, Apr. 13, 2022

Retirees can maximize their tax positions by making sure they hold off on converting their saving plans into income funds for as long as possible.

The benefits of forgiveness

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The benefits of forgiveness

Christine Ibbotson 3 minute read Wednesday, Apr. 6, 2022

Dear Money Lady readers,

I want to tell you a story of a dear friend of mine.

But first I want to ask if you ever look back over your life with resentment? A missed opportunity, a career failure, job loss, divorce, or even financial ruin. We all do, some more than others, and the longer you live, the more resentments you will have. It is hard to let go, especially when financial resentment can leave us open to even more self-sabotaging financial behaviour that grows over time if we don’t work to let it go. However, financial resentment is more of a mood than an emotional state and this behaviour often motivates more bad habits. For example, we sometimes overcompensate by spending money we don’t have in an attempt to right the injustices that caused our resentment.

I have a very dear friend who suffered career failure and literally overnight went from a six-figure income to being flat broke, and that wasn’t the end of her troubles. The same year, her husband left her for another woman and she went on to spend three more miserable years in mental anguish and resentment until one day her therapist said something that struck a chord. It was plain, simple, and true. He said: “You made it before, you were successful and happy once, so just change and become successful and happy again.”

Wednesday, Apr. 6, 2022

The ups and downs of day trading

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The ups and downs of day trading

Christine Ibbotson 5 minute read Wednesday, Mar. 30, 2022

Dear Money Lady,

I am now retired and considering day trading. Can you give me any tips?

Bryan

Dear Bryan,

Wednesday, Mar. 30, 2022

The worst thing you can do as a day trader is leap in without preparing. Learn how the market works, use a trading platform that gives you the information you need and, most importantly, never use money that you had earmarked for something else.

The pros and cons of a reverse mortgage

Christine Ibbotson 4 minute read Preview

The pros and cons of a reverse mortgage

Christine Ibbotson 4 minute read Wednesday, Mar. 23, 2022

Dear Money Lady,Could you write about reverse mortgages – I am not sure if I should consider one.

AlmaThat is a great idea, Alma, and I know others would like to know, too. Thank you.

I love the latest TV commercial with actor Tom Selleck about reverse mortgages. It must be his fabulous moustache and soothing voice. OK, joking aside, it is almost impossible to escape the cadre of aging male actors and athletes who’ve found a second career as pitchmen for reverse mortgages. Kurt Browning is the front man for Canada’s CHIP reverse mortgage product.

Reverse mortgages have their place as a viable equity product and there are only two lenders in Canada that offer them — Home Equity Bank and Equitable Bank. Most of the time this product is sold through a mortgage broker and is designed to meet the needs of aging homeowners who cannot qualify for a traditional home equity loan or line of credit because they no longer work or can’t make the monthly payments. This type of equity-take-out loan allows someone to access a portion of the value of their primary residence without selling it or making monthly payments to repay the debt. Now, before you get too excited, let’s discuss the pros and cons of this product.

Wednesday, Mar. 23, 2022

Retirees should carefully consider the interest implications of reverse mortgage loans.

We’re living longer, how should we invest?

Christine Ibbotson 3 minute read Preview

We’re living longer, how should we invest?

Christine Ibbotson 3 minute read Wednesday, Mar. 16, 2022

Dear Money Lady Readers,

I had no idea so many seniors were invested in the stock market.

Today’s seniors are part of the fastest-growing population group in Canada and those over 85 are the fastest-growing segment of the senior population. In 2006 there were 492,000 Canadians aged 85 or older and it is now projected that by 2041, 1.6 million Canadians over the age of 85 years old. If you don’t think that’s amazing – just wait, according to Statistics Canada we will have 2.5 million Canadians aged 85 and over by 2056.

The old way of aging was to save your money so that you could pass on an inheritance to future generations; however, with this increased longevity, we now have the concern of long-term care which will impact retirement savings.

Wednesday, Mar. 16, 2022

Canada’s population of over-85s is expected to increase, and so will its need for financial advice.

You don’t have to retire at 65 — many don’t

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You don’t have to retire at 65 — many don’t

Christine Ibbotson 3 minute read Wednesday, Mar. 9, 2022

Dear Money Lady,

I am 70 years old and still working. I feel great and don’t plan on stopping. You should write something for those of us who don’t plan to slow down yet.

Jim

OK, Jim – I will.

Wednesday, Mar. 9, 2022

Many seniors choose to continue working part-time, even after they retire from their lifelong careers.

The ins and outs of capital gains and losses

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The ins and outs of capital gains and losses

Christine Ibbotson 3 minute read Monday, Feb. 14, 2022

Dear Money Lady readers,

Each year many investors ponder repositioning their portfolios. For those who hold stock outside registered accounts, such decisions could have immediate tax implications. I have had many emails concerning the taxation of capital gains and losses, so today we will address this topic for everyone.If you sell securities that have accrued gains to modify your strategic asset allocation, you’ve essentially increased your taxable income.  

If, on the other hand, you sell a security at an accrued loss, you can then apply the capital loss against any gains for taxes. No one wants losses; however, they can be beneficial when used to reduce capital gains in other tax years. Tax-loss selling strategies are something that your adviser may want to do with your portfolio.  It is a good idea to speak to an income-tax professional regarding your own personal situation but here are some general tips on how this is typically done.

If your stock portfolio has declined in value to the point that the market price is now below your original cost, you now have an accrued loss for tax purposes. Of course, this is just a paper loss until you sell and then the loss is actually realized. A capital loss is not a basic income tax deduction. A capital loss is used only against capital gains and applied initially against any capital gain realized in the same tax year. Excess capital losses can be accumulated and carried back to any of the three prior years, or carried forward to any future years in which you may report capital gains.  

Monday, Feb. 14, 2022

Dreamstime.com
If you’re wondering whether or not to reorganize your stock and investment portfolio, you will want to consider the tax implications of the moves you make.