How Much Does It Cost to Raise a Child?

No matter what you do, where you live, or how much you earn, the simple fact is that raising a child in Canada is not cheap. As parents, our main duty is to deliver love, care, and support for our kids, helping to nurture them into well-rounded, civilized human beings. To do this, you must have adequate funds behind you to ensure your kids are well fed, clothed, and kept safe and protected.

In general, it’s estimated that you will spend between $10,000 – $15,000 each year on your child until they reach 18. While these numbers may seem alarming, there is financial support available which can be a huge help. To find out more, here is a guide on the costs involved in raising a child and what support is available to you.

Maternity Employment Insurance

If you are in employment, pregnant and need to take maternity leave, Canada allows you to do so for up to 15 weeks. However, depending on how long you’ve been in your position and how many hours you have worked, you have the option to take up to 63 weeks of maternity leave from your position. Your employer has an obligation to accept you back into your role after this period and provide the same rate of pay.

Maternity employment insurance can be a source of financial support during your time off work. The purpose of employment insurance is to cover 55% of your weekly earnings. However, this stops at $573 a week. If you are taking extended leave from work, your income replacement will decrease to 33% of your weekly earnings, stopping at $343 a week. Parents in Canada are now able to take up to 18 months of maternity leave, with the payments spreading out over this period.

Registered Education Savings Plan

While it’s not mandatory to set up a registered education savings plan, many people regard it as a cost towards raising a child in Canada. RESP is a government-sponsored initiative that helps to pay for your kids’ future post-secondary education. Each year, you can get $500 for free thanks to the Canadian education savings grant, which will give you a 20% match for the first $2,500 you save up each year until your kids turn 17. Bear in mind, however, that the maximum benefit you can receive is $7,200 per child.

If you’re a lower-income family, you may be able to get a higher match and potentially receive $2,000 which can be put towards kick-starting your kids’ RESP. If you want to learn more, Wealthsimple has a guide on what a registered education savings plan is, the benefits you can gain, as well as limitations you need to be aware of. Wealthsimple is made up of a group of world-class financial experts who can make your money go further and help you invest and save wisely.

Life Insurance

When bringing a new life into the world, it’s normal to put your full focus and concentration in keeping your baby safe and out of harm’s way. Having a life insurance policy in place is vital for ensuring your children are financially supported in the event of your passing. Your children will depend on your income to get by, which is why you must have a policy laid out to leave them with enough cash to support themselves until they reach adulthood.

If you are young, fit, and healthy, many life insurance policies open to you will range between $30-50 a month. In general, the amount you pay each month should cover basic costs like your mortgage balance, funeral costs, and post-secondary education costs. In addition to all the day to day costs involved in raising your child, you shouldn’t forget about taking out life insurance. You can look online for life insurance quotes to help you get a deal that works well for you. Make sure you have a will written too which will also provide financial security for your children.

Canadian Child Benefit

CCB (Canada Child Benefit) is governed by the CRA (Canada Revenue Agency). Canadian Child Benefit is a tax-free monthly payment given to eligible families to assist in helping with the cost of raising a child under the age of 18. If your child has a disability, the CCB could include child disability benefit. If your children are under six years old, you can receive up to $6,765 a year, whereas children aged between 6 and 17 are entitled to $5,708 per year.

Canada Child Benefit was designed to help lower-income families with day-to-day costs. If you are in a household that earns a significantly higher income, you won’t be able to claim as many benefits. With the country currently facing the coronavirus pandemic, the government of Canada continues to provide sufficient support to all families across the nation during these unprecedented times. In May 2020, families who already receive CCB were given a $300 boost per child in addition to their regular payment.

Daycare Costs

Where you live in the country will reflect on how much you pay in daycare costs. While many of us would love nothing more than to spend every waking hour with our children, work commitments are just as important, especially when it comes to keeping your children safe, happy, and healthy. If you and your partner work long hours and you don’t have friends or family nearby, putting your child in daycare is a factor you need to consider. There are licensed daycare centres in major cities like Toronto and Montreal which can cost you up to $2,000 each month.

With the costs of raising a child already incredibly high, you may want to consider having one parent stay at home for a longer period. Because of the COVID-19 pandemic, millions of Canadians are working from home already, which may be beneficial if you have recently had a child. While unlicensed home care is considerably cheaper than a licensed daycare, if you’ve decided on the latter for your child, there are limited spots available, so make sure you put your kid’s names on the waiting list as quickly as possible, otherwise, you run the risk of them losing out.

Technology

As your baby grows into a toddler, there are all sorts of equipment and technology you can purchase and make use of to help with their development. Naturally, as your child moves into their teenage years, there are all sorts of gadgets and tech they will want which will have a significant impact on your finances. Whether it’s purchasing a television, tablet, or smartphone, you need to factor in these costs. To save money, you may want to consider putting everyone on a family plan.

Clothes

Raising a child from birth through to their 18th birthday is expensive in many ways. One of the main necessities that your kids will need is clothes. While big piles of washing are inevitable, there are ways you can save money on clothing your kids. What you may find surprising is that it can cost roughly $15,000 to clothe your kids from birth to adulthood, and this isn’t even factoring in footwear!

If you want to keep costs down, knowing where and when to look for clothes can be a big help. When your child is young, accept and purchase second-hand clothes where you can. Doing so will be an enormous financial help and mean any money you save can be put into other things. As we live in the digital era, your children can benefit from technology. However, that is not to say you have to splurge out on the latest tech. You can purchase second-hand items that work as good as new and won’t have too much of an impact on your finances.

Food

We all understand the importance of eating healthily, so when you have children, setting a good example and teaching them to eat well is key for their development. Rather than spending a fortune on processed food, takeout meals, and McDonald’s, there are lots of healthy alternatives you can make from scratch in the kitchen which will cost a fraction of the price.

If you enjoy cooking and want to give your kids healthy, nutritious meals, learning the basics when they are young will be a tremendous help, meaning you can whip up tasty meals packed with the nutrients and vitamins they need to grow. It’s estimated that the cost of food for children amounts to roughly $1,800 per year. And when you factor in how much food you will need as parents, the total cost can soon add up and be alarming, making it more important than ever to cut corners and cook from scratch.

Bringing a child into the world and raising them to be respectable and hard-working adults takes a lot of time, care, and cash. Having a baby is a decision that shouldn’t be taken lightly, especially if your finances are all over the place. Therefore, reading the guide above should give you an idea of the costs involved in raising a child in Canada, as well as what financial aid is in place to support you along the way.

Unsecured Personal Loan Online

A personal loan is a form of credit that can help you make a big purchase or consolidate high-interest debts. Because personal loans typically have lower interest rates than credit cards, they can consolidate multiple credit card debts into a single, lower-cost monthly payment.

This article will get to know what are secure personal loans and what are unsecured personal loans. If you apply for a personal loan, you ask a financial organization, such as a bank or credit union, to borrow a certain sum of money. A personal loan can be used for various uses, while funds from a mortgage would be used to pay for a home and you can get an auto loan to finance a vehicle purchase.

To help pay for college or medical costs, to buy a large household object such as a new furnace or refrigerator, or to consolidate debt, you may obtain a personal loan. That is better from repaying credit card loans to repay a personal loan. With a personal loan, you pay fixed-amount instalments over a set period until the debt is completely repaid.

Here we will now discuss secured personal loans and unsecured personal loans.

SECURED PERSONAL LOAN

Secured loans are a company or personal loans that require some form of collateral as a condition of borrowing. For large loans for which the money is used to buy a particular asset or in situations where the credit ratings are not adequate to apply for an unsecured loan, a bank or lender may seek collateral. Secured loans will make it easier for borrowers to receive lower interest rates when they are present.

Loans may be guaranteed or unsecured, whether they’re personal loans or corporate loans. For an unsecured loan, to receive it, no collateral of any sort is needed. Instead, depending on the quality of your credit score and financial background, the lender requires you to borrow. On the other hand, secured loans need collateral for borrowing. The security for a secured loan may be the commodity that you use the money to buy in certain circumstances. E.g., whether you’re having a mortgage for a home, the debt is backed by the house you are purchasing. For a car loan, the same will be valid.

UNSECURED PERSONAL LOANS

An unsecured loan is one that is not necessary to obtain insurance or a security deposit. For an unsecured loan, applicants qualify based on their financial background and revenue instead of pledging money. Lenders do not have the right to take physical assets—such as a home or vehicle—if borrowers stop making payments on unsecured loans.

Usually, unsecured personal loans have higher rates of interest than secured loans. That’s because lenders mostly perceive unsecured loans as riskier. The lender will worry that you are less able to repay the loan as negotiated, without collateral. Generally, a higher cost for your loan means a higher premium for you.

What to take advantage of an unsecured personal loan?

When you need cash for a particular reason, an unsecured personal loan might be the best option. For instance, if you have high-interest debt, you may choose to consolidate it into a reduced interest rate personal loan to help lower your monthly debt payments. A personal loan may also help you pay for unforeseen emergencies in the middle of winter, such as repairing a faulty heating unit.

But money cannot be used only so it can be used to pay for items. It’s seldom a smart idea to use personal loans to pay for items you want, such as a holiday or a big-screen TV, instead of what you need. Taking on the excessive debt will bring your finances under a long-term burden and harm your financial wellbeing. It’s best to wait for luxuries, save money, and then make the order.

PROS AND CONS OF UNSECURED LOANS

The most significant advantage of an unsecured loan is the reduction in liability from the borrower’s perspective. You should not risk losing your savings if you take an unsecured loan and can’t afford payments; you just put your credit record at risk. For individuals and firms with unsecured debts, once you apply for bankruptcy, there is even a risk that the mortgage will be forgiven.

As no collateral is needed for unsecured loans, the lender takes on more risk, which typically translates into higher interest rates and less attractive terms. Although unsecured loans for the borrower could be less expensive, it is essential to realize how much more they will cost you over their duration. You can find that it’s more valuable to put an asset down as leverage than the additional money you’ll spend in interest.

The most significant advantage of unsecured loans is that they make it easy for everyone to borrow money; you can borrow money without putting up any collateral, whether you’re a tenant or a landlord. The best advantage of unsecured loans is that they make it easy for everyone to borrow money; you can borrow money without putting up any collateral, whether you’re a tenant or a landlord.

Since unsecured loans are backed only by confidence, the higher the risk for the lender, the higher the risk, the higher the cost of borrowing; lousy credit borrowers will face high-interest rates on an unsecured bad credit loan, but if you have a good credit rating, you won’t be so much of a problem.

CONCLUSION

There are particular benefits and pitfalls of both secured and unsecured personal loans. In the one side, with a lower APR, a guaranteed loan may arrive, but are you willing to gamble the property that you may have to position as collateral? And though defaulting on either unsecured or secured loans can mean that your credit is damaged, you can avoid putting up any property with an unsecured loan as collateral (but be prepared to pay higher rates than you might on a secured loan).

If you’re still unsure if your case makes sense with a secured or unsecured personal loan, you may want to speak to some lenders and figure out if you’re eligible. Ask prospective lenders regarding their rates and APRs and secured and unsecured loan maximum loan numbers.

5 Money Drains That Could Hurt Your Investment Returns

When you’ve had enough forethought to invest your capital, maximizing your return on investment will be a priority for you. Even the best portfolios can have hidden money drains that impede your progress, and knowing where they are will help you to decide what, if anything, to do about it. Sometimes, you might think that these “money drains” are worth tolerating – after all, every portfolio and every investor is different. However, it should be a conscious choice in which you’ve weighed your options and made a reasoned decision. Watch these money drains and decide whether you’re satisfied with them or not.

1. Your Fund Managers’ or Broker’s Remuneration

When people work, they must be paid. When you work through a broker, the fees you pay should be a known quantity. If you buy into a managed fund, it has fund managers, and your investments contribute to their remuneration. If your brokers, or the fund managers that run package investments, are  making you more money than you’d get from simply buying into funds similar to exchange traded mutual funds in Canada that track major indices automatically, it might be worthwhile.

The sad truth, however, is that many managed funds don’t make more money than those run by software. In fact, they can underperform when compared to benchmarks. That doesn’t mean that investment experts are underqualified or have poor business acumen. There are many factors that might affect their well-thought-out strategies. But if they’re consistently costing you money to earn you the same or less than you’d get from a “no-brainer” investment package, your contribution to their earnings is simply a waste of good money and you’d be better off putting it into a tracker fund.

2. “Lazy” Investments

To simplify this concept, let’s make the general assumption that most of the more secure investments aren’t big revenue spinners but can be relied on to bring in dividends and either grow in value or at least maintain it. Riskier investments have the potential for higher gains, but also may lose value if things don’t work out as planned. Of course, this is a generalization and there are exceptions to the rule.

Now, let’s suppose that you’re quite conservative investor – one who prefers the safer options, but you have an asset that’s not performing up to par. That’s a lazy investment, and the money you have tied up there would bring you more income elsewhere.

We often find this happening with property ownership. You have a property other than your primary residence and you’re probably renting it out, getting a (reasonably) secure monthly income from it. But is that income equal to or better than the income you could get from investing in stocks? Is the value of your property increasing sufficiently to make it worth hanging onto? If the answer to either or both of these questions is “no,” consider selling up and putting your capital into other investments instead.

3. Sore Losers

Nobody likes to see stocks losing value, and accepted wisdom is that it’s time to sell if a particular stock drops 8 to 10 percent of value when compared to the amount you paid to get it. But general rules don’t always apply, so do give this some thought before throwing in the towel. If the future looks bright in that asset class and for that investment, but current times are tough, you might want to hold on and wait for a recovery.  Remember, investment is a long-term game.

Let’s look at an extreme example. Following the diesel emissions scandal in 2015, Volkswagen’s stock prices plummeted by 32 percent. Just two years later, the company’s stocks had recovered their value and even exceeded pre-scandal values. Those who sold out at low prices would not have lost any of their original investment capital if they were willing to wait those two years out and investors that sold their stocks at rock-bottom prices lost half of their original investments.

Should they have held on? At the time, it was a matter of opinion. Many people thought that Volkswagen would never recover and, indeed, it was only through a complete restructuring and rebranding that it was able to do so. It’s also worth bearing in mind that investments in Volkswagen underperformed heavily during the recovery period. Would the capital have worked harder for investors even if they sold at the lowest value? That would depend on where they had reinvested.

The bottom line? Do your homework before selling out of a stock because of declining values. Then take an educated guess as to what the future holds and consider what your alternatives are. Now make your decisions based on that. You may be wrong. You may be right, but at least it’s a proactive approach rather than a knee-jerk reaction.

4. Failing to Evaluate and Rebalance Your Portfolio

A balanced portfolio spreads risk by diversifying investment across asset classes. It means that when one sector is doing well, you make up for any losses thanks to returns in sectors that are performing better. As a simple example: if all your investments are in the commodities sector, your investments will only do well when this notoriously volatile sector is also doing well. When it experiences tough times, so do you. So, instead of having all your eggs in one basket, you diversify into tech stocks, industrials, financials, property, and so on. You can also diversify across markets in much the same way.

However, a well-balanced portfolio can become unbalanced over time owing to market dynamics, and you should be ready to adjust the percentage of assets allocated to each sector accordingly. If you’re thinking this takes a lot of acumen and a lot of money to do effectively, you’re right! However, if you are investing in this way, whether on your own or with the help of a broker, you do need to keep your eye on the ball and rebalance, or call for rebalancing from time to time.

One way to escape all this is to buy into one of the internationally recognized funds that pools investment money and then distributes it in a balanced way. This allows you to have the benefits of a balanced portfolio without having to do the work yourself. These big investment funds also have massive resources that allow them to follow markets far more thoroughly than any single person or small brokerage company can. The theory is that you get the benefit of some of the world’s top money minds who are being fed information that few others would have the time or resources to collect and collate. Naturally, rebalancing the pooled investments they manage is part of that.

5. Tax

In closing, let’s not forget that tax can be a major financial drain. Since taxation laws differ from country to country, it would be difficult to give any specific advice other than to say that you need to be aware of the actions that will give rise to tax events and try to minimize their impact. Unless you are an expert in taxation, it would be advisable to consult with someone who is. Yes, these consultations have costs too, but the money they can potentially save you more than makes up for that. Of course, we must comply with the law, but there’s no point in paying more tax than you absolutely have to, and specialist input can save you from doing just that.

Investing in stocks – what you should really know

The stock market brings so many investment opportunities and you are probably already aware of that. If you aim to invest your money in stocks, apart from choosing the right broker there are other important things. Here are some tips that will help you streamline your investment.

How to find stocks to buy on the stock exchange

Start by buying stocks of companies you already know. Then turn to google finance to find companies that you don’t know but work in the same industry as the companies you know. Already this allows you to have an overview of companies in sectors of activity that you know.

Of course, just because you like a company and its products doesn’t mean it will be a good buy on the stock market, but at least you know what they are doing and why the products are good. The key is knowing what makes a business important to its customers and how much longer that will hold in the future. You should ask questions such as If oil prices keep rising over the next few years, which companies are likely to benefit?

What types of shares can you invest in?

If you are wondering in which sector to invest in the stock market, you might be overwhelmed. he truth is there are many sectors to invest in the stock market. There are different types of stocks on market. Apart from private and, public companies share, we can make a distinction based on their primary business activity:

  • Energy
  • Health
  • Raw materials
  • Financial actions
  • Industrial values
  • Information technology
  • Consumer discretionary
  • Consumer staples
  • Immovable
  • Telecommunications
  • Public services

There are also promising new alternative industries such as shares of related companies:

  • Crypto-currencies
  • Blockchain
  • The cannabis industry
  • Start-ups
How do you find the right time to invest?

How to invest at the right time? Finding the right time to trade or invest in the stock market is not always easy. If you want to analyze the stock markets, there are two main methods: technical analysis and fundamental analysis.

Technical analysis or the analysis of charts of the price of an asset

Short term traders especially appreciate technical analysis to determine when to enter and exit the market. This type of financial market analysis is based on three assumptions:

  • the prices displayed include all the information available
  • assets always evolve in trend
  • history tends to repeat itself

Technical analysis is, therefore, based on the analysis of price action. We often add to the latter technical indicators, support and resistance levels, trend lines and much more. The goal is to determine the future direction an asset will take and obtain buy and sell signals.

Among the most popular technical strategies for spotting good times to invest in the stock market, we will find the range, pullback, gap or even breakout trading. The most used technical indicators are moving averages, Bollinger Bands, RSI, and MACD.

Fundamental analysis or analysis of the intrinsic value of an asset

Fundamental analysis is geared more towards long-term investing to capture large moves. Indeed, this type of financial market analysis considers the evolution of economic, social, political and monetary forces that affect an asset’s price.

The basic principle of fundamental analysis is that an asset’s current price does not necessarily reflect its actual value. Fundamental analysts, therefore, seek to determine the intrinsic value of an asset. Then they compare it to the current price. The goal is to determine whether the asset in question is overvalued (potential sell signal) or undervalued (possible buy signal).

Among the fundamental factors to follow for a financial and accounting analysis of a company before investing in the stock market, we will find the announcements of results, the yield, the distribution rate, the prospects for growth, the performance of the company concerning its sector of activity, earnings per share (EPS), the price-to-earnings ratio (PER), etc.