The year in review | Thinking, Fast and Slow | Family
It's been quite the year! Most financial markets around the world have performed poorly, including the Canadian market. Commodities have also performed badly as they continued their multi-year slump. Much of this weakness can be derived from the slowdown of growth in China (perceived and actual), which, in recent years has made up for some of the tepid results in the developed world.
Although the markets have been relatively weak, I'm pleased our performance has been good in comparison. Our diversified approach and
has served well in these choppy waters. This allows us to prudently take advantage of lower prices while reducing the risk in our portfolios.
Looking ahead, I'm generally not a big fan of making predictions, as there are too many
that can affect global markets. Historically, securities have demonstrated a rather consistent
reversion to the mean
as investments that outperform over one period, often underperform over others. Our approach is designed to protect and take advantage of market ebbs and flows, without needing a crystal ball to make decisions.
One thing we do know with relative certainty is that going into 2016 the federal income tax rates will change for many Canadians. Thanks to the tax department at Raymond James, you can see
how each marginal tax rate
will be affected in every province. Broadly speaking, Canadians who make between $45,282 and $89,401 will happily see their tax rate fall. Conversely, those earning over $200,000 will see their taxes rise. Specifically, next year individuals in Ontario, Manitoba, Quebec, New Brunswick, Nova Scotia, and PEI, will see the provincial and federal income tax rate be over half the money they earn in excess of $200,000.
I applaud the government for cutting the tax rate for millions of Canadians. However, I believe that taking over 50% of every additional dollar someone earns is a significant disincentive to work harder. This burden is obviously increased when considering most Canadians also pay the harmonized sales tax on goods and services, not to mention property taxes.
If you're looking for ways to save on your taxes, those who received holiday bonuses may want to consider using them to top up their RRSP contributions. The deadline is just over two months away and it's never too soon to start thinking about. Also, as a reminder, the TFSA contribution limit has been adjusted back down to $5,500 for 2016. Although we'll be reminding you in the New Year, check out the
website to find out how much contribution room you have for both your RRSP and TFSA.
What I'm Reading
Thinking, Fast and Slow
As I mentioned in the last newsletter, I
a couple of weeks ago. What I didn't mention was the jet lag I struggled with given the adjustment to
crossing nine time zones. Given that I was often wide awake between
for the better part of the two weeks following my return, I figured it would provide a perfect opportunity to re-read Daniel Khaneman's classic2011 book
Thinking, Fast and Slow
This book is packed with insights on the human psyche and repeatedly shines a light on our propensity to fool ourselves through the numerous heuristics we aren't even aware of. It's not a short or easy read, but if you are interested in making better decisions while understanding why others often make dumb ones, then this is one of the first books you should pick up.
A friend who spent a few months in San Francisco recently told me about the
Farnam Street newsletter
It's named after the street Berkshire Hathaway is on and is a homage to the multidisciplinary-knowledge approach espoused by its two leaders, Warrant Buffet and Charlie Munger. And by multidisciplinary, I mean multidisciplinary. The articles include concepts used in physicists, economics, psychology, engineering, ecology, and many more.
Hard work is good for your family
My dad turned 80 last week, which to me was a pretty big deal. When we took him out for dinner, he asked my two sisters and I a rather poignant question, "Years from now, how do you think you'll remember your mother and me?"
There are countless trips, family dinners, little league baseball games, inside jokes, and other times when their love and support come to mind. However, one of the lasting legacies I think we will carry on is the work ethic my sisters and I learned from my parents. I'm fairly convinced that a substantial part of our success comes from not only this work ethic, but also the "grit" that accompanies it. I don't think this happened by accident-we were raised to work hard and often had family jobs and projects to work on.
As luck would have it, I came across
on how families that work hard together tend to be stronger than most, my family is living proof of this and this holiday season I'm especially grateful for it!
Have a safe and happy holiday season!
Matthew Lekushoff, CIMA
Raymond James Ltd.
T: 416-777-6368 | F: 416-777-7020
The views of the author do not necessarily reflect those of Raymond James. This article is for information only. Raymond James Ltd. Member-Canadian Investor Protection Fund
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