year-end investing

Year-End Financial Housekeeping, Buffett Style

As we approach the final months of the year, why not derive inspiration from one of the greatest investors of our time? Here are a few quotes from renowned investment guru, Warren Buffett, throughout this article.  

Get ahead with your retirement savings

While a pandemic has consumed most of our attention for the past 10 months and for the foreseeable future, don’t let that dissuade you from continuing to build your portfolio for your goals. Have you maxed out your tax-advantaged accounts? Consider contributing to your Tax-Free Savings Account (TFSA)Or, don’t wait until the last moment: make Registered Retirement Savings Plan (RRSP) contributions for the 2020 tax year. You still have until 60 days after the calendar year to make RRSP contributions to impact your 2020 taxes.  

“Do not save what is left after spending; instead spend what is left after saving.” 

Improve your savings

Improve your savings by employing tax strategies, such as income splitting. If you have a spouse1 in a lower marginal tax bracket, there may be a variety of ways in which to do this. In general, if you are a business owner, it may include paying reasonable salaries to spouses for services provided. Or, you may elect to split eligible pension income with a spouse on your tax return. It may also be achieved by way of an investment loan. If you are 65 years old or older and don’t have eligible pension income, consider purchasing an annuity or opening a small Registered Retirement Income Fund (RRIF) to claim the federal pension income tax credit.  

 “The most important thing to do if you find yourself in a hole is to stop digging.” 

Consider transferring capital losses

Consider realizing capital losses to offset realized capital gains for 2020, or take advantage of the carry-back rules to recover taxes paid on taxable capital gains realized in three preceding taxation years. If you have a spouse,1 there may be opportunities to transfer capital losses. In doing so, be aware of the superficial loss rules (please get in touch to learn more). 

“I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.” 

Invest in Education Savings

Fund a Registered Education Savings Plan (RESP) to support the education of kids or grandkids. Consider making a contribution before year end to potentially benefit from the Canada Education Savings Grant (CESG) for the year.

“If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.” 

Make a Charitable Donation

Eligible charitable donations made before Dec. 31 can benefit your 2020 taxes. Remember that gifting publicly-traded securities with accrued capital gains to a registered charity not only entitles you to a tax receipt for their fair market value, but also eliminates the associated capital gains tax. 

“The most important quality for an investor is temperament… You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” 

Being a disciplined investor often means resisting the temptation to act on emotion: during bull market times, it may be greed; during bear market times, it is often fear. Markets will always have ups and downs and your plan has been put in place to meet your goals throughout the inevitable cycles. Look forward with confidence. 

As always, if we can help with these, or any other investing matters, please get in touch 

Thank you to Warren Buffett for providing permission to use his quotations.  


1 Including common-law partner;
2 Unused amounts can be carried forward.

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