Switching jobs or starting a new job

One of the first issues to address is how to manage debt, especially student loans. At first glance, you might think that paying down your debt should be your priority. However, if the returns on your investments have the potential to be higher than the interest rate on your student loan, which is often the case, then investing your money becomes an attractive option. You must also take into account that you are eligible to a Québec tax credit on the interests paid on your student loans.

A range of investment vehicles are available to you, with the RRSP and TFSA being the two preferred options, each with their distinctive features. In a perfect world, you would be maxing out both your RRSP and TFSA, but in the real world, which account should you prioritize? It depends on your income tax rate. If you expect-like most people-to be taxed at a lower marginal rate when you retire, you should prioritize your RRSP.

Along with managing your debt and selecting an investment account, it might be wise to build an emergency fund in a specific account for this purpose. The amount in that fund should cover three to six months’ worth of expenses in case of an unforeseen event or sudden loss of income, especially if you are self-employed.

If you are a self-employed worker, you must take on important additional responsibilities. You have to pay the full amount of QPP contributions, not to mention that you do not qualify for Employment Insurance and must save for retirement by yourself. However, certain operating expenses of your business are tax deductible.

Other savings solutions may also be available to you through your employer. A group RRSP, deferred profit sharing plan (DPSP) and pension fund are all interesting savings options.
Need advice to make sense of it all? Our team can help you set your financial goals and will recommend you investment strategies that suit your needs.

If you received a severance package, make sure to use it wisely. Consider using it to:

• Repay all or part of your debts;
• Save for your future by transferring it directly to your RRSP (tax-free);
• Spend it on living expenses;
• Build an emergency fund for unexpected expenses (three to six months’ worth of living expenses);
• Generate income by investing the amount in an interest-yielding account.

If you have a pension fund, you can do the following:

• Withdraw the accrued amount now;
• Transfer the present value into a LIRA or an RRSP;
• Spend it on living expenses;
• Keep the money in the fund and make withdrawals when you become eligible;
• Deciding what to do is crucial and your decision will hinge on the minimum return you can expect on the fund.