Tim Paziuk’s Blog

TPC in the News: CBC Interview on Financial Transparency

October 27th, 2016

CBC recently brought Tim onto the news to discuss a recent CIBC settlement, as well as the broader issues relating to financial literacy in Canada. Canadians are becoming increasingly frustrated with the lack of transparency with regards to their finances, which is why we are so dedicated to educating the country with clear and unbiased information.

See the interview below:

When Disclosure Fails to Disclose: CRM2

September 14th, 2016

There’s a new set of reporting rules coming to Canadian investment accounts soon, known as CRM2. If you haven’t heard of it you should sit up and take notice, because for a large portion of Canadians it will be nothing more than confusing and deceptive.

The Client Relationship Model – Phase 2 (CRM2) is a new set of industry regulations meant to provide Canadian investors with more details on their investment costs and performance. It was developed by the Canadian Securities Administrators, an organization representing Canada’s investment industry regulators.

CRM2 regulations have been phased in over the previous three years, with the final steps implemented on July 15th, 2016.

Specifically, starting July 15th, 2016 the following changes will be implemented:

1) Investment firms are […]

Are You Spending More Than Your Relationship Can Afford?

September 22nd, 2014

I read an article in the newspaper the other day which offered the following advice: don’t tell your spouse, “I went through the credit card statements and can’t believe you spent so much on stuff we don’t need.”

Is this good advice or bad advice?

Personally, I think it’s a little bit of both, depending on the couple.

My office frequently has clients send us copies of their bank and credit cards statements so we can monitor the activity in their accounts. On more than one occasion we’ve been shocked by the amount of activity on credit card statements. In one particular case that stands out, the statement averaged more than 20 individual charges per day. What individual needs to make over 20 […]

When it Comes to Pensions, Plan for the Worst and Hope for the Best

August 8th, 2014

If you’re one of the fortunate individuals that has a defined benefit pension plan, I predict that your employer may consider changing that to a defined contribution pension plan sometime in the next couple of years.

Before I go on, let’s review the difference between these two types of pensions.

A defined benefit pension is where the actual pension amount is defined (say $2,500/month). The actual dollars that have to be invested to pay out the pension is not determined up front, and the risk of running out of money is borne by the employer.

A defined contribution pension is where the annual contribution amount is determined in advance (for example 6 per cent of your gross earnings). What you’ll receive as a […]

What Effect Would Negative Interest Rates Have On Your Finances?

July 18th, 2014

A few weeks ago I did a lecture and mentioned during my presentation that there has been a lot of talk about negative interest rates.

In simple terms, think of this as paying a fee on the money you keep in your bank account. In addition to losing out on interest, you would have to pay a fee to store your money there.

As it turned out, the day after my presentation the European Central Bank adopted a negative interest rate policy for its member firms. To be clear, member firms are large commercial banks, and these rates don’t yet apply to regular consumers.

The main reason behind a negative interest policy is to discourage institutions from storing excess capital with the central […]

Reduce the Forced RRIF Minimum Withdrawal

July 7th, 2014

Minimum RRIF (Registered Retirement Income Fund) withdrawals should be reduced to at least their pre-1992 amounts.

Prior to 1992, the minimum RRIF payments were significantly less than they are today. At that time, the minimum withdrawal amounts were calculated using a pre-defined formula of 1/(90-Age). If you were a 72-year-old withdrawing funds from their RRIF, the minimum withdrawal amount would have been 5.55 per cent of the total value (1/18).

Today that same 72-year-old has a minimum withdrawal requirement of 7.48 per cent (an increase of approximately 35 per cent).This effectively forces seniors to take out more than their RRIFs are able to generate on their investments. In 1992, government of Canada bonds were paying 8.5 […]

Don’t Invest in Worries

June 13th, 2014

How much time do you waste worrying about things over which you have no control, while not spending enough time working on the things you can control?

If you’re an average Canadian, you probably own a principal residence and have a few dollars invested or saved somewhere. If you have money invested in stocks, bonds or real estate, you may be concerned about losing your money. This is a reasonable thought; although, depending on what you’re invested in, your concern (read: worry) is probably a waste of time.

If you’re going to invest, you have to assume some risk. Risk comes in many forms, but here’s a list if you want a reference:

Interest Rate […]

How to Think About Taxes

June 6th, 2014

Most people don’t spend enough time thinking about taxes.

Unlike the average Canadian, I consider myself a tax nerd. It’s front and centre in my thoughts for most of my waking hours. Now you might find that boring and weird, but it’s people like me who are trying to help people like you.

Here’s a simple example of how my brain thinks about taxes.

If I’m going to invest money outside of an RRSP, I have to consider the type of income I can expect. Basically there are four types of income: interest, dividends, capital gains and rental income.

Each type of income is taxed differently. Interest income is taxed at the highest rate, […]

Are You a Zombie Investor?

May 9th, 2014

Whenever I think about zombies, my mind immediately creates a picture of a group of blank face dead people walking around with no thoughts of their own. They settle on something or someone in their mindless state and collectively move in that direction. As a group, they have a goal, but not one of them can tell you what it is. Their failure or success can only be determined by their actions, either good or bad.

When you make an investment decision, are you basing that decision on facts gathered through a due-diligence process? Or are you mindlessly following the crowd?

History appears to support the latter. There’s a wonderful book written by Charles MacKay titled¬†Extraordinary […]

Forced Selling: An Offer You Can’t Refuse?

May 2nd, 2014

Sometimes, consumer protection doesn’t protect.

Many people are unaware that “coercive tied selling” is illegal in Canada (another name for this is forced selling).

According to the Financial Consumer Agency of Canada, “This means that banks are not allowed to unduly pressure or coerce you into a product or service from their affiliates as a condition for obtaining another product or service from them.”

“For example, if you apply for a mortgage at a bank, the institution cannot make you buy another product or service as a condition for obtaining the mortgage.”

They can require that you obtain life or fire insurance to cover the mortgage, but they can’t force you to buy it […]

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