4 Must Know Financial Terms

4 Must Know Financial Terms

The holidays are upon us! And with the holidays comes the fun tradition of holiday shopping! Just as you should plan when shopping, you should also plan of when dealing with finances. Although Financial Literacy month isn’t until next year, we wanted to get a head start by celebrating Canada’s Financial Literacy month, November! Before meeting with your financial planner, check out these 4 must know financial terms:

Asset Allocation

This is the most widely utilized investment strategy and is a crucial step when developing a financial plan. Asset allocation aims to balance risk and is built based off an individual’s financial goals, risk tolerance, and investment horizon. There are three main asset classes-equities, as well as fixed-income, and cash and equivalents; which all have different levels of risk and return, so each will behave differently over time. Since everyone’s finances are different, there is no simply formula to find the right asset allocation. Meet with a financial professional to see what allocation method would be best for your unique financial situation.

Indexing Strategy

An investment strategy that allows you to closely mimic the performance of the index you’re invested in. This strategy allows you to participate in a percentage of upside potential and have little to no participation to the downside risk that you would normally see in the stock market. While there are several different Indexing Strategies out there, consult with a financial professional to find the best one for your financial goals.

Tax Deferrals

In short, Tax deferral is a legally acceptable way of putting off taxes. When you invest, the goal is to make a return on your money, and depending on tax brackets, you may have more opportunity for growth if you choose a Tax deferred account like a Roth 401(k). Tax deferral is all about long-term income and long-term planning. Tax deferral is a great way to maximize your hard-earned money but has many variables to consider like tax bracket and where you are on your financial journey.


There are two main types of Roth’s, a Roth IRA and a Roth 401(k). The main difference between a Roth account and traditional account is how they’re taxed. With a traditional IRA for example, you pay income tax when you withdraw the money, where as a Roth IRA, you would pay taxes up front and receive qualified distributions tax free. Depending on where you are on your financial journey, Roth accounts are a great way to minimize tax reductions on income in qualified plans.

Bottom Line:

There are thousands of financial terms, some more important than others. While this is only a short list of some prominent terms, it is best you consult a financial professional to better understand what these mean, and how they can be utilized to help you on your financial journey.

*Content derived from Investopedia.com and Wealthpilgrim.com

Disclosure: This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.

The post 4 Must Know Financial Terms appeared first on Adult Financial Education Services.

Provided by: Adult Financial Education


Five Things to Add to Your Financial To-do List

Five Things to Add to Your Financial To-do List

The weather is getting cooler, the colors are changing, and the scent of pumpkin spice fills the air signaling the beginning of fall and holiday season. But October isn’t just known for pumpkin carving and corn mazes, October is also the month for financial planning. It’s a great time to review the fiscal year thus far and begin planning for holiday spending and traveling. Before you break out the long sleeves and pumpkin spice lattes, here are five things to add to your October to-do list:


  1. Make a holiday budget: With holiday season comes an increase in spending. Before you shop, create a spreadsheet of your average monthly expenses so you can plan accordingly. Applications such as Mint by TurboTax, will help you track spending and develop a budget.
  2. Review Your Credit Report: Every 12 months, you can receive a free credit report from each credit bureau. After the Equifax breach last year, it is crucial that you keeping track of your credit accounts for fraudulent activities and incorrect reporting. In your report, look for credit lines opened without your knowledge and accounts that are closed but are still being reported as open. You can grab your credit report now on https://www.annualcreditreport.com.
  1. Fill Out The FASFA: The school semester is coming to an end, and with it, your child might be exploring college options for next year. On October 1st, the Federal Application for Student Aid will become available and once filled out, will determine your eligibility for financial aid. Because federal aid can be handed out on a first-come, first serve basis, you should submit this as soon as possible. Within a week, expect the Student Aid Report to arrive and show if you qualify for federal need-based aid such as work-study programs and Pell grants. After, you should head to the school’s website and use their net-price calculator to estimate how much school will cost after factoring financial aid.
  1. Do A Retirement Plan Check-Up: Whether retirement is around the corner or down the road, you should be making periodic updates and adjustments to your retirement portfolio. When reviewing, check investments and make sure they still reflect your risk tolerance and estimated retirement time. You should also consider how much you are investing and if you should increase or decrease based on your financial situation.
  1. Set Goals For Next Year And Beyond: October is a great time to start planning out next year’s financial goals so you can be set for success in the long-term. Look at your day-to-day finances and locate where you can improve and where you can save more. After, consider which goals are most important for your long-term success. Just as time changes, so should your financial plan. Things like marriage, children, and career can impact your financial goals, so make sure you are reviewing your plan at least once a year.

By implementing some or all the tips above into your October to-do list, you can carve your pumpkin in comfort knowing your financial future is good to go. If you go through these steps and do not like where you are financially wise, schedule a meeting with your financial professional to see how they can help you get your finances back on track.

*Content derived from consumerreports.org and cobizmag.com

The post Five Things to Add to Your Financial To-do List appeared first on Adult Financial Education Services.

Provided by: Adult Financial Education


5 Signs You’re Ready to Retire

5 Signs You’re Ready to Retire

You are nearing the average retirement age and each day it becomes closer and closer. The question is, are you ready to retire? Check out these 5 signs you’re ready to retire.

  1. Your Savings Exceeds Your Retirement Goals: At one time or another, you sat down and made an investment plan so you could retire happily. Now the time has come to see if all your savings has paid off. When calculating the savings you have and if it will be enough for retirement, consider using ‘Rule 25.’ This rule states you should have 25 times the value of your annual expenses.
  2. All Debts Are Paid Off: When entering retirement, make sure you don’t have any large payments you will have to make. Big expenses such as mortgage, loans, and large credit balances are things you want paid off before you consider retiring. Paying off large bills before retirement will allow your money to go farther so you can enjoy your life after work without worrying about saving for your next large payment.
  3. You Can Currently Live on Your Retirement Budget: More often than not, when you enter retirement you live off of fixed monthly income that is typically less than when you were working. Before retiring, consider living on your ‘Retirement Budget’ so you can determine if you can live comfortably on your new budget.
  4. Healthcare Is Covered: Regardless if you are on the verge of retirement of not, healthcare can be very costly. Simple things like blood tests and non-generic prescriptions can make your expenses skyrocket and cause you to not live the retirement you dreamed of. When exploring options, see if you can stay on your employer’s plan, if not your spouses. Does your company offer a Health Savings Account (HSA)? You can use this for tax-free distributions to pay for out-of-pocket medical expenses. If all else fails, sign up for private healthcare, just make sure the monthly cost is included in your ‘Retirement Budget.’
  5. Have a New Plan or Project for Retirement: Although it may seem like a distant dream now, retirement will be upon you before you know it; and while you might be looking forward spending long days doing nothing, research shows this can lead to an unhappy retirement. Before you retire, brainstorm some of the hobbies you enjoy and/or consider looking for a part-time position to pass the time. Do you like golfing? Replace your weekly meetings with weekly golf outings. Just like you should test-drive your ‘Retirement Budget’, take a week or two off from work and spend your days just as you would in retirement.

Deciding when to retire comes with a lot of considerations, from being healthy and debt-free to living on a budget; make sure you are more than well off before considering the move into retirement. After reviewing these signs and feeling confident about your decision to retire, it is always best to consult a financial professional to make sure you didn’t miss any areas and aren’t in for any surprises when you open the retirements doors.

*Content derived from Investopedia.com

Disclosure: This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.

The post 5 Signs You’re Ready to Retire appeared first on Adult Financial Education Services.

Provided by: Adult Financial Education