Staring with video of sky view of Port Dalhousie, into a view of a farm. Water flowing over Niagara Falls. 

0:11
Multiple coins stacking, while “Taylor Wealth Group” “February 2024 Webinar” shows. Fades out and Wes Taylor shows on screen 

0:18 
Hey everyone, it's Wes with the February webinar. I can't believe it's almost the end of February. So it's time for another video.

0:26
Today I'm going to do something a little bit different. The markets have been a little bit back and forth. I can talk about the markets next month in more detail. The only quick note I have there is yesterday we got the new Canadian inflation numbers and we cracked into the 2% range for the first time in a few years. If you want a lot more information on inflation and interest rates and what's in store for 2024, I would suggest looking at my last video and you can see kind of where that two-part 2.9% number which we got yesterday fits into the bigger picture. But today, I want to talk about some common themes or common questions that I get as an investment advisor or financial advisor, and I want to address them in reverse order

1:14
by age. So the first one will talk about is typically somebody who's heading into retirement would have this question. Then we'll go down from there to somebody who is a little bit younger. Not first question is when to take CP. It's a biggie. I get it a lot. And so we'll look at some numbers. The second question is what's a better savings vehicle for retirement? Is that the Registered Savings Plan, the Registered Retirement Savings Plan or the Tax Free Savings Account? So we'll look at some math there and go through an example. And the third question is how do I save up for a home? It's not that easy in Canada, but there are some strategies that we can use some different accounts that we can use to get folks further ahead when they're doing that.

1:30
Corresponding image description: “When Should I take CPP?” appears on screen in front of Wes 

1:36
Corresponding image description: “RRSP vs TFSA, Which is Better?” appears on screen in front of Wes 

1:47
Corresponding image description: “Saving for a Home, Where do I Start?” appears on screen in front of Wes 

2:01
So we'll talk about that too. So some of these might not be of interest to you, but there might be a family member or a son or daughter that finds one of these three questions interesting. Please pass the video along to whoever you think might benefit from it.

2:16
Corresponding image description: Screen goes black, “When should I Take CPP” shows in the middle of the screen. A green moving line arrears on the screen underneath/behind the words.

2:19
Let's look at some numbers here.
Corresponding image description: 
    Age 60    Age 65    Age 70
Reduction or Increase in Benefits     -36%    0%    +42%
Monthly Benefit  (using 2023 average amount)     $485.32    $758.32    $1,076.81
Total Accumulated Benefit 
By Age 70    $58,238.40    $45,499.20    $0.00
By Age 75    $87,357.60    $90,998.40    $64,608.60
By Age 80    $116,476.80    $136,497.60    $129,217.20
By Age 85    $145,596.00    $181,996.80    $193,825.80

2:22
So here we've got three different scenarios. You can take it at the normal unreduced retirement age, which is age 65, you get your normal CPP payment. In Canada, the average person who collected their CP started at age 65, received a payment of $758 a month. And so if we do the math, if you take the reduced amount at age 60, you get $485 a month. And if you delay and take it as late as age 70, then you get $1076.00 a month for the rest of your life. So let's Fast forward here. At age 70,

2:38
Corresponding image description: Circled “$758.32” on the chart and note saying “*Average CPP Payment is 2023” 

2:44
Corresponding image description: Circled “$485.32” on the chart

2:49
Corresponding image description: Circled “$1,076.81” on the chart

2:59
the winner is the person who took the payment early. At age 60, they would have received $58,238 of payments.

3:01
Corresponding image description: Circled “$58,238.40” on the chart

3:10
The person at age 6545 thousand 499. And of course the person at age 70 is just starting up their payments. They haven't yet received anything.
Corresponding image description: Circled “$45,499.20” on the chart

3:20
Another five years go by. You're now 75 years old. Now the UM,

3:27
the person in the lead is the one who took their payments at the normal retirement age of 65, and that early CPP taker is falling behind.

3:30
Corresponding image description: Circled “$90,998.40” on the chart

3:38
And then if we go another five years, now we're age 80 again, age 65 wins here. So the normal amount, the normal age is the winner. Although that person who took it at age 70 and delayed is creeping up there, They're catching up, They're not too far behind. And the one who took it at age 60 is falling behind the pack here

3:42
Corresponding image description: Circled “$136,497.60” on the chart

3:50
Corresponding image description: Circled “$129,217.20” on the chart

4:02
at age 85. Now we've got a new winner, and it's the person who delayed taking their CPP payment until age 70. And so from there on out, the person who delayed and took it at age 70 will be the winner. They're going to get the most money every month, and they've also received the most money up till that point.
Corresponding image description: Circled “$193,825.80” on the chart

4:25
So what does this tell us? Well, on an individual level, not a whole lot. It really depends on your unique circumstances. If let's say you have a shortened life expectancy, let's say you have an illness or a reason to expect that you're not going to be around into your 80s, then I would suggest looking at taking the CPP payments earlier rather than later. Or perhaps you need the cash flows. If you don't have other sources of income in retirement and you just want to start that CPP cash flow, then by all means that that possibly makes a lot of sense for you.

4:35 
Corresponding image description: “Factors to Consider: -Life Expectancy -Income Needs” appears on screen in front of Wes 

5:04
However, if it's just down to the math and you have no reason to expect that you're not going to live well into your 80s, then I would suggest at least waiting until age 65 and taking the normal amount.

5:16
The sweet spot for most Canadians is probably between 65 and 70. Maybe it's 67 and 68 years old,

5:25
but we can see that if you do live into your 90s, let's say, and you don't need the cash flow to start up in your 60s, maybe you've got a pension or other sources of retirement income that you can live on. That's where it starts to make sense to look at delaying your CPP.

5:41
So hopefully this is an interesting little table. Sometimes it's good just to look at the numbers and see what the effect of making this kind of a decision has overtime. But the breakeven is somewhere between age 80 and 85 for most Canadians. And I'll just say this, if you want to find out your specific CPP entitlement at age 65, you can do so. You can log into your My Service Canada account, You can do it online and it'll tell you what your CPP entitlement is. If you want to go through that number together and go through this scenario using your specific information, that's the way to do it and I'm happy to do so with you.

6:21
Corresponding image description: Screen goes black, “RRSP vs TFSA” shows in the middle of the screen. A green moving line arrears on the screen underneath/behind the words.

6:24
And the next one is what's a better savings vehicle for retirement? Is it the RRSP account or the Tax Free Savings account? The short answer is use both if you can,

6:36
but if it's one or the other it becomes an interesting scenario.

6:40
Let's just look at this example here. We've got a $100,000 per year income earner who lives in Ontario.
6:43
Corresponding image description: “$100K Income”

6:47
So they're looking at a scenario, they've got $5000 they can put into an RRSP or they could put that $5000 to work in a tax free savings account and they're going to do it for 25 years.

6:50
Corresponding image description: “$100K Income, $5K to Contribute”

6:52
Corresponding image description: “$100K Income, $5K to Contribute. RRSP TFSA”

6:59
So if they put it into the RRSP, they don't pay anything on that contribution amount. In fact, they get a tax refund or tax savings of $1574 based on their income levels and the amount that they're putting in.
7:02
Corresponding image description: “$100K Income, $5K to Contribute. Under RRSP Amount Invested =$5,000. Tax Savings= $1,574”

7:13
So that's the RSP scenario. If we look at the Tax Free Savings account, that money's put in after tax. So you pay the tax bill on your income on that $5000 and your tax paid on that amount would be $1083 and Ontario, which leaves you with $3917.00 That can be put into the Tax Free Savings Account and invest it.

7:19
Corresponding image description: “$100K Income, $5K to Contribute. Under RRSP Amount Invested =$5,000. Tax Savings= $1,574. Under TFSA, Amount Invested = $3,917 Income Tax Paid = $1,083”

7:36
So now let's Fast forward

7:38
25 years later.
Corresponding image description: “25 Years Later…”

7:40
Let's just assume that both accounts have grown at a 6% annual rate of return to keep things simple every year.

7:48
So now the RRSP balance is $290,781.00, which is higher than the TFs A balance at 227,798. However, you haven't paid tax yet on any of that RRSP money, so if you were to go in, withdraw it at the same tax rate, then your after tax amount that you've got is 227,798. The TFSA balance you can withdraw without paying any tax because you've already paid tax. You pay tax every year before you put the money in, so there's no tax bill left to pay when you go and take the money out. And so you actually end up being awash here. If the tax rate is the same when you put the money in and it as it is

7:50
Corresponding image description: “25 Years Later…, RRSP $290,781 arrow points down to $227,798, TFSA $227,798 arrow points down to $227,798”

8:36
when you take the money out, then there's no advantage between the two accounts. However, most folks when they're putting money into an RSP are earning an income and there are during their career years and then when they go in, withdraw from their RRSP. Typically they're in a lower tax bracket. So let's look at that scenario. If your income has dropped 25 years later to 60,000 at the time of these withdrawals, the after tax RRSP amount available to you is now $244,140.00 versus the TFSA at 227,000. So it becomes the winner. So if your tax rate is expected to drop in retirement,

9:01
Corresponding image description: “Income When Contributing = $100K, arrow pointing down to Income When Withdrawing = $60K. RRSP After- Tax = $244,140. If your tax rate is lower in retirement, the RRSP is the better option”

9:24
the RRSP becomes a better retirement savings vehicle for you than the TFSA does.

9:30
Also, all those RRSP contributions during your working years would have generated tax refunds of around $40,000, just a hair under.

9:38 
Corresponding image description: “Income When Contributing = $100K, arrow pointing down to Income When Withdrawing = $60K. RRSP After- Tax = $244,140. If your tax rate is lower in retirement, the RRSP is the better option. Cumulative Tax Savings = $39,350”

9:41
And so it's up to you what you do with that money. You could put it into TFSA's, you could spend it, but it is an additional layer there that we have to think about.

9:52
But if the opposite is true, if you put money into an recipe all through your working years, and then you're in a higher tax bracket in retirement than you were during your or during your those working years, then the TFs actually becomes a better vehicle. And so the success of the RSP really depends on you being in a higher tax bracket when you're working and a lower tax bracket in retirement.

10:18
Corresponding image description: Screen goes black, “First Time Homebuyer: Where do I Start Saving?” shows in the middle of the screen. A green moving line arrears on the screen underneath/behind the words.

10:20
The third question is how the heck do I save for a house in Canada? Well, firstly, it's not an easy task. Homes are very expensive in Canada. As we all know right now, the cost of borrowing is very high. So housing affordability is a big issue. However, there are some things that we can do to kind of help

10:41
save for a house.

10:43
There are three accounts to consider when saving up for a down payment. One is the Tax Free Savings account, the other is a new account. It's the first Home Savings Account that was launched last year by the government, and the third account is the RRSP. The RSP is often overlooked because people think of it as I put the money in and I don't touch it until retirement. And there's good reason for that. The withdrawals from an RSP are typically taxed, so you don't want to be taking it out when you're earning a lot of income and you're at a high in a high tax bracket. However, one exception is for the purpose of buying your first home
10:48
Corresponding image description: “TFSA FHSA RRSP” appears on screen in front of Wes 

11:17
Corresponding image description: “RRSP” appears on screen to the right of Wes

11:21
each. Each RSP holder can take out $35,000 of RRSP savings tax free when they're buying their first home. They do, however, have to put that money back into the RRSP over a 15 year. But there's no interest charged in the meantime.

11:25
Corresponding image description: “RRSP $35,000 can be withdrawn using the Home Buyer’s Plan” appears on screen to the right of Wes

11:40
The advantage of using that program, called the Home Buyers Program within the RRSP account is that that $35,000 that you can put in there and then take out is tax deductible. So you're going to get a tax refund on that amount, whereas with the Tax Free Savings Account you don't get any tax refund. Likewise, this new FHA account operates in a similar way. You can put up to $8000 per person per year into this account for up to five years. So if you do it for five years, you'll have forty $40,000 of money that went into this account that can then be withdrawn to buy your first home tax free.

12:02
Corresponding image description: “TFSA $8,000 contribution limit/year for 5 years” appears on screen to the right of Wes

12:22
So again, you get a contribution receipt, you get a tax receipt for the money that you put into the FHSA and the RRSP. You don't get that with the Tax Free Savings account. All three accounts you can pull money out for the purpose of using for a down payment and you don't pay any tax on those withdrawals. So if I'm going to choose between the three, I'm going to favor the ones that give me a tax refund on my contributions, which is the RRSP and the FHSA. A good third option would be then the TFSA,

12:58
Tried to keep it brief, but that was a an overview of some of the more common questions we get asked at different stages of life. If you have any questions for me, of course for each out, if anything that I talked about today you want to go over about your particular information and review together. Happy to do so. Thanks everybody. Talk to you next month. Bye.

13:21
Corresponding image description, the final slide shows the Disclaimers: 
CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc. 
This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2024. 
Wes Taylor is an Investment Advisor with CIBC Wood Gundy in St Catharines. The views of Wes do not necessarily reflect those of CIBC World Markets Inc 
Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.
Please note that rate of return projections are for demonstration purposes only. They are based on a number of assumptions and consequently actual results may differ, possibly to a material degree.

Staring with video of sky view of Port Dalhousie, into a view of a farm. Water flowing over Niagara Falls. 

0:15
Multiple coins stacking, while “Taylor Wealth Group” “January 2024 Webinar” shows. Fades out and Wes Taylor shows on screen 

0:18
Hello everyone.

0:19
This is Wes.

0:20
With the first webinar of 2024, I thought it would be a good time to touch base with folks and bring people up to speed with what's been going on in the market since I last did a video.

0:32
And then we can talk a little bit about what 2024 has in store for us.

0:37
So there's three big themes or three topics I'd like to talk about today.

0:41
The 1st is what's been going on in the markets.

0:44
As many of you might have seen from your statements, things are looking better than they have in the last little while.

0:47
Corresponding image description “1. Market Update” appears on screen in front of Wes 

0:51
Corresponding image description “2. Inflation and Interest Rates” appears on screen under “1. Market Update” appears on screen in front of Wes

0:51
The second thing is where are things, where do things stand with interest rates and inflation?

0:57
And the third is what are the big themes coming for 2024.

0:59
Corresponding image description “Big Themes for 2024” appears on screen under “2. Inflation and Interest Rates” and “1. Market Update”

1:01
So on the first topic, we really saw a change in tone in the markets in the last few months of 2023.

1:08
And that was because in mid-October central banks across the world, but most importantly here at home in Canada and South of the border in the US made it pretty clear that they were done raising interest rates.

1:22
And so the market was able to stop asking itself this question of are we going to get more interest rate hikes and start asking the question of when and how many interest rate cuts are we going to get.

1:36
And that's a heck of a lot of a better question to be asking.

1:40
So the market does what it does best and it threw itself a nice little party to end the year.

1:45
So the question now is, you know what's behind it.

1:49
So as I just implied, the path of interest rates now is looking like it will move lower from current levels into this year.

1:59
The expectation by most analysts and economists right now is that we'll start to start to see central bankers move down the interest rate at some point in the spring of this year and then continue interest rate cuts through to the end of the year.
2:03
Appears in top left on screen, “Current Interest Rates: Bank of Canada 5%. Federal Reserve 5.25%. European Central Bank 4.5%. Bank of England 5.25%.” source: ca.investing.com

2:14
The when and the how many of how of those interest rate cuts is the big question for the year.

2:21
But in the another piece of the backdrop here is the inflation story.

2:26
Inflation has been the big enemy that central banks have been trying to combat now for really since the pandemic and the peak of inflation was at 8%.

2:38
Now we're at 3.4%.

2:40
So a lot of progress has already been made on the inflation front, but 3.4% is still above the target level of 2%, and central bankers would really like to see inflation come down to that 2% level before they start lowering interest rates.

2:44
Corresponding image description Chart with a line graph plotting inflation. Date range on the X-axis is 2020 to 2023. The Y-axis shows inflation percent ranging from -2.00% to 10.00%. Chart shows a slight decline then a raise in early 2022 then slight decline again, beginning at about 2.00% rising to a high of 8.00% then dropping back down to 3.70%. “Target Level” written on chat beside 2.00%

2:58
Whether or not they'll get there remains to be seen, but for a number of reasons, some of which I'll talk about later.

3:04
It's more likely that inflation will still be above the 2% level, but interest rates will also be coming down when they are cut later this year.

3:16
So that's the landscape with the inflation story.

3:19
The economy in Canada is slowing.

3:22
I think in conversations with clients, many people feel that whether it's at the gas pump or in the grocery store or hearing about folks that they know getting laid off, We are in a slower economic environment and partly by design, the purpose of raising the interest rate to the level that the central banks did is to slow down the economy and thereby slow down the inflation number.

3:48
So there's not a lot of surprise there in seeing that our economy has slowed down in Canada.

3:55
I think the big question now is how long will they wait before they start introducing interest rate cuts.

4:03
So I think we're going to see the next few months, the next few central bank meetings.

4:09
Interest rates are probably going to stay at current levels.

4:13
And Cibc's view is that it's most likely going to be the case that we get our first interest rate cut in June of this year and then from then on to the end of the year, projecting a total of 1.5% rate cuts this year.

4:30
So we're currently at a 5% Bank of Canada rate that would bring us down into the 3 1/2 range.

4:38
Now, the central banks are not that direct.

4:39
Corresponding image description Appears in bottom right on screen to the side of Wes, “BOC Interest Rate 2024 Schedule: January 24 (Held), Mar 6, Apr 10, Jun 5, Jul 24, Sep 4, Oct 23, Dec 11.”

4:40
They don't come out and say we're going to cut interest rates 1 1/2 percent ahead of time.

4:46
They go meeting by meeting and they make individual interest rate policy announcements.

4:51
So time will tell whether or not the market has gone a little too far on its expectations of interest rate cuts this year.

4:59
But for now, the Bank of Canada and the US Federal Reserve are holding firm and I think that they're trying to allow inflation to come that much closer to its their 2% target before ultimately they do start introducing interest rate cuts.

5:16
So that's kind of what's going on in terms of the interplay between inflation, interest rates and the economy and central bank policy making decisions.

5:27
2024 is also an interesting year, not only because it's a change in in tide from rising interest rates to potentially now lower interest rates, but it's also interesting for a number of other reasons.

5:39
One of which is about 2/3 of the global population that is currently under a democracy votes in 2024.

5:47
There is a massive swath of elections going on across the globe this year, which could potentially add political volatility to the to the global landscape and have some effect on financial markets.
Corresponding image description “2024: The Ultimate Election Year Around the World” Underneath it says ”National elections are scheduled or expected in at least 64 countries, as well as the European Union, which all together represent almost half the global population” World map pictured underneath that has some countries in red that expected to have elections this year.
Source: Time.com 

6:00
So it's something that we have to watch very closely.

6:03
And then the other thing too is we really need to see how the Canadian consumer fares.

6:10
Like I was mentioning, the Canadian economy, especially relative to this to our neighbours to the South is worse off.

6:19
And part of that is because of our interest rate sensitivity as a country.

6:25
I've explained to many folks that we're not the same countries when it comes to how we're affected by higher interest rates.

6:33
And there's a couple of reasons for that.

6:35
One of them is structural.

6:37
If we look at the housing market in the US, for those folks who bought a home in 2020 or 2021 whose interest rate was very low, if they don't plan to move from that home, they actually don't need to face those higher interest rates.

6:53
They don't need to renew their mortgages.

6:55
Whereas in Canada, the longest we can go is five years before we're forced back into the mortgage market.

6:58
Corresponding image description. A chart with a line graph plotting “Interest rates changed for new and existing lending by chartered banks” Date range on the X-axis is 2020 to 2023. The Y-axis shows values for Month-End, Rates in Percentages ranging from 2.0 to 6.5. The graph shows a decline in 2021 than a sharp rise in 2022-2023 with the value beginning at about 3.0, dropping to about 2.0 the rising and ending at about 6.5.

7:03
And we have to face wherever the interest rates are at that time.

7:06
And as of now, they're a heck of a lot higher than they were even two or three years ago.

7:13
So as a country, we have more turnover of people of Canadians who are facing higher interest rates.

7:21
About half of Canadian mortgage holders have already faced these higher interest rates, but the remaining half are those whose mortgages were more than likely taken out in the years when interest rates were at their lowest, meaning that the difference between when they took out their mortgage and potentially what their new mortgage amount could be is more dramatic.

7:24
Corresponding image description “Canadian Residential Mortgages up for Renewal”. Billions of Dollars, by renewal year. Billions of Dollars represented by 100. 2024 is about 190, 2025 is about 310, 2026 is about 400, 2027 is about 360 and 2028 is about 250.

7:43
And so the consequences of leaving interest rates at current levels on that whole cohort of soon to be mortgage renewers could have more dramatic economic consequences here at home if interest rates are left at current levels.

7:58
So I think that there is a very clear incentive for the Bank of Canada to start moving interest rates lower sometime during 2024.

8:08
And this is the key point, even if inflation isn't quite at the target 2% level.

8:15
So I think that's a good general overview of what's been going on in recent months and and what we can look forward to in 2024.

8:23
Just a couple of brief, brief housekeeping items.

8:27
TFSA contribution limits are $7000 per person in 2024.

8:32
So if you haven't already made your TFSA contribution and you'd like to do so, please let us know.

8:38
And the RRSP deadline for contributions for 2023 is coming up in a month.

8:44
It is March 1st.

Corresponding image description, the final slide shows the Disclaimers: 
CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc. 
This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2024. 
Wes Taylor is an Investment Advisor with CIBC Wood Gundy in St Catharines. The views of Wes do not necessarily reflect those of CIBC World Markets Inc