Not everything is about money.
But Canada's 150th birthday is an ideal opportunity to consider our good fortune in living in this country. In the personal-finance realm, here are six things to be thankful for as Canadians.
The tax-free savings account
All Canadians can unite behind the TFSA, which is brilliantly simple and helpful to all. Millennials can use TFSAs to save for near to medium-term goals such as travel and home buying, and Gen Xers and boomers can use them along with registered retirement savings plans to save for retirement.
Once in retirement, TFSAs allow you to generate a steady flow of tax-free income that won't trigger clawbacks of a pair of income-tested benefits, Old Age Security and the Guaranteed Income Supplement. The annual contribution limits on TFSAs mean they won't satisfy all of the savings needs for many people. But TFSAs, introduced in 2009, are already this country's favourite savings vehicle. Sorry, RRSPs.
The Canada Pension Plan
Next to universal health care, this may be the most important part of the Canadian social safety net. Bank on the CPP as one of the three pillars of retirement saving, along with OAS and personal savings through RRSPs, TFSAs and company pensions or group RRSPs.
CPP has its flaws – the pension paid to the surviving spouse or partner of a deceased contributor is notably poor. But over all, it's a well-monitored, well-run megapension that offers a good start on the road to sufficient retirement income. Stop worrying whether it will be around when you retire and start thinking about how much you need to save to top up your CPP and OAS.
Canada Deposit Insurance Corp.
Home Capital's recent problems helped expose some misconceptions about this federal government agency – that it lacks the financial resources to make good on losses if a member bank goes down, that it only gets involved when a bank is a smoking ruin and that money can be endlessly tied up before it's paid out.
In fact, CDIC is a well-funded, pro-active organization that understands its mission is basically to sustain confidence in our banking system. By all means, pay attention to the stability of any bank or trust company you deal with. But, provided you keep to the coverage limit of $100,000 in combined principal and interest for eligible deposits at a CDIC member, you are protected from bank failure. Note: Credit unions have their own provincial deposit-insurance plans.
Great Canadian dividend stocks
Canada's pool of blue-chip dividend-growth stocks can't compare to the United States for breadth and diversity, but we do have a roster of companies that have strong records of paying a rising dividend to shareholders over the years. Owning these stocks over decades has meant a strong total return of both dividends and share price gains.
Many of these companies are bedrock Canadian – Royal Bank of Canada, Canadian National Railway, Canadian Tire and TransCanada Corp. Check the portfolios put together by mutual fund managers and other investing pros – they're often stuffed with these stocks.
Our national banking network
Banks are so ingrained in our national culture that we sometimes think of them as public institutions more than businesses selling financial products. This is partly because the banks are so ubiquitous. Their branches and ATMs can be found everywhere from Vancouver Island to St. John's, frequently in those quaint old neo-classical buildings (pillars and such) that populate our downtowns.
Linking all our banks together is an electronic network that ensures you can withdraw money at an ATM and pay for stuff by debit with no issues. In most cities, you have a fighting chance of finding your own bank's ATMs and thereby avoiding the fees associated with using other bank machines.
The loonie and the toonie
Practicality, Canadian-style. These two coins are great for vending machines, they keep your wallet from being overrun by $1 bills and they're the foundation of an essential savings program no one talks about.
Keeping a change jar would be a nickel-and-dime saving strategy if not for $1 and $2 coins. Dump your change every night and watch those loonies and toonies pile up. Count them once a year and use the money for a vacation.
Rob Carrick