Invesco Canada blog

Insights, commentary and investing expertise

Still not sure about RRSP vs. TFSA? Here’s how to use both


February 19, 2020

Subject | Tax & Estate

Learn how to maximize long-term tax benefits using tax-sheltered or tax-deferred registered plans.
 
One of the biggest benefits of registered plans in Canada is the tax-deferral opportunity on the compound growth inside the plans. In other words, registered plans generally allow investors to avoid the periodic tax on investment income generated; non-registered plans, in contrast, expose investors to annual taxation of income distributions. Without the annual “tax-drag,” investments in registered plans can grow faster than investments in non-registered plans. Given that, which registered plan is best to use? Here are key factors to consider when deciding whether to invest in a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).
 
RRSP contributions are deductible against income, and RRSP redemptions are 100% taxable as income. TFSA contributions are made with after-tax money, and TFSA withdrawals are tax-free. Funds grow inside both plans on a tax-deferred basis.
 
RRSPs and TFSAs are, in fact, designed to be tax neutral, assuming a constant marginal tax rate (MTR). When an investor has a constant MTR throughout his or her working and retirement years, there should be no difference between an RRSP and a TFSA in net after-tax income.

Continued

Comments Off on Still not sure about RRSP vs. TFSA? Here’s how to use both

The market impact of coronavirus has begun to spread


Global Market Strategist, Invesco Ltd.
February 18, 2020

Subject | Coronavirus impact | Macro views

The floodgates are opening. Companies are beginning to warn that the coronavirus outbreak will impact earnings, and stocks have begun to react negatively. Yesterday, Apple announced that the contagion will cause it to miss revenue forecasts for the quarter. The problems are on both the sales and production ends: Most Apple stores in China remain closed, and while Apple factories there have reopened, they are not operating at full capacity but instead are slowly ramping up production. In addition, Tesla and Alibaba have recently provided coronavirus-related earnings warnings. Alibaba has gone so far as to label the coronavirus outbreak a “black swan event.”

Continued

Comments Off on The market impact of coronavirus has begun to spread

Three key takeaways from the Fed’s Monetary Policy Report


Global Market Strategist, Invesco Ltd.
February 10, 2020

Subject | Macro views

In last week’s blog, I noted that what I would be following most closely that week was the release of the Federal Reserve’s Monetary Policy Report, because it provides insight on what the Fed is thinking. On Friday, the Fed released this semi-annual report in advance of Fed Chair Jay Powell’s Humphrey-Hawkins testimony before Congress on Feb. 11 and 12. As is customary, several special topics were covered in the report. Below, we focus on three key takeaways: U.S. manufacturing, the role of monetary policy rules in times of uncertainty, and the coronavirus epidemic.

Continued

Comments Off on Three key takeaways from the Fed’s Monetary Policy Report

Three issues that could keep global markets reeling


Global Market Strategist, Invesco Ltd.
February 3, 2020

Subject | Macro views

Last week was a momentous one for markets, with coronavirus fears gripping markets and creating a risk-off environment. Stocks sold off while yields on government bonds also fell. Over the course of less than two weeks, the yield on the 10-year U.S. Treasury fell from over 1.8% to 1.51%, and the yield on the 10-year German bund dropped from -0.22% to -0.44%.1
 
This week, I see potential for continued market volatility, both to the upside and the downside. Here are three key issues I’m watching:
 

Continued

Comments Off on Three issues that could keep global markets reeling

Assessing the market impact of the Wuhan coronavirus


Global Market Strategist, Invesco Ltd.
January 27, 2020

Subject | Coronavirus impact | Macro views

The outbreak of novel coronavirus in Wuhan, China, and in pockets around the world has garnered significant public concern, and the global financial market is on edge. We have received numerous questions about the potential impact to investors and how the economic effects of the coronavirus might compare to past outbreaks such as the spread of SARS (Severe Acute Respiratory Syndrome) in 2003. Below, we seek to answer those questions, given the best information that we have at this time.

Continued

Comments Off on Assessing the market impact of the Wuhan coronavirus

The U.S.-China trade deal presents a paradox for markets


Global Market Strategist, Invesco Ltd.
January 21, 2020

Subject | Macro views

Last week, the U.S. and China signed their Phase 1 trade agreement. This trade deal is a paradox – in my view, it is both inconsequential and yet extremely important.
 
It is inconsequential for two reasons: Tariffs will remain in place on a large amount of goods traded between the U.S. and China, and the deal doesn’t tackle many of the most important trade issues between the two countries. However, it is extremely important because of what it symbolizes: This trade deal suggests that friction between the two countries has peaked and is moving lower. The psychological effect is very significant, as it means that economic policy uncertainty has fallen. And, when companies believe economic policy is more certain, they typically spend more, especially on capex.

Continued

Comments Off on The U.S.-China trade deal presents a paradox for markets