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ANALYSIS: News Year’s resolutions have been made and broken by now, but these three will put you on track for a better 2016 – and a better life.
1. Pay down debt
If you’re like many Canadians, your debt has grown this holiday season. If that debt is a balance owing on a credit card it could be accumulating interest above 20 percent. If that’s the case a big chunk of your payments will go toward interest and not the actual amount owing.
Make a list of all your outstanding debt and the rate of interest it attracts. If you have a decent credit rating most banks can extend a consolidation loan at less than 10 percent. That loan can be used to pay off the high interest debt while eliminating more of the principal.
If you own a home the best borrowing rate usually comes from a secured line of credit, using the home as collateral.
2. Contribute to a TFSA
Effective Jan. 1, this year’s tax-free savings account contribution limit has been lowered from $10,000 to $5,500. It remains a great opportunity to invest more of your money without any tax on the gains.
If you’re like most Canadians and have not contributed the maximum amount, the total contribution limit since the inception of the TFSA is now $46,500.
3. Make an RRSP contribution
You can lower your 2015 income tax bill by contributing to your registered retirement savings plan before the February 29 deadline.
Contributions can be deducted from the top level of your taxable income. The more you make, the more you save.
Those contributions can be invested and grow tax free until withdrawn in retirement – ideally when you’re in a low tax bracket.