The past month has been one that we will never forget. The coronavirus and its related impacts are the largest stress-test that many of us have ever experienced and may ever experience. Our lives will continue to be changed forever, and we are finding ourselves with time to fill while we are social distancing or self-isolating. This article can hopefully provide you with some ideas to help make productive use of your time in the world of personal finance.
Social Distancing Financial Planning Ideas:
Refinance your mortgage
Interest rates have dropped significantly in recent weeks. The cumulative 1% rate cuts made by the Bank of Canada could leave you paying more interest with your current mortgage than you need to.
Refinancing your mortgage could allow you to realize some immediate savings and lower your monthly payments.
When refinancing, “break fees” or penalties are usually charged based on the terms that you agreed to with your lender.
Working with a mortgage broker can help give you access to multiple lenders, and the broker can help do the math for you to determine if there are attractive options for you, given your current situation. The big banks tend to charge more than smaller lenders, so when in doubt, use a broker. An added benefit is that working with a broker costs you nothing.
Consolidate your debt
If you are carrying multiple balances, you can explore options to consolidate your debt and reduce the interest rate that you are paying.
Credit cards may offer balance transfer options, or your bank could look to roll your debts into a line of credit.
If you are working on refinancing your mortgage, it is also a possibility to roll your other debts into your mortgage and take advantage of the low mortgage rates.
Rebalance your portfolio
Markets have changed dramatically over the past month. A typical balanced portfolio is down roughly 14% since the market peak in February. If you are managing your own investments, you likely now find yourself with your asset allocation out of line with your target allocation. Most likely, the equity portion of your portfolio has performed poorly, and you might be under-allocated to equity.
Contribute to your Investment accounts
If you haven’t made your annual TFSA or RRSP contributions yet, now may be a more attractive period to enter the market than it would have been at the peak on Feb 21.
To quote Warren Buffet,
“Be fearful when others are greedy, and be greedy when others are fearful.”
Make sure to always invest in line with your risk tolerance, and consult with a professional if you are unsure if investments are appropriate for you.
File your taxes
It’s not the most fun exercise, but it is that time of year. An added benefit of this step is that if you are entitled to a refund, you could get your payment sooner rather than later.
That said, investment income slips (T3s and T5s) are due to be sent out by March 30, so make sure that you have all the required tax slips before filing.
If working with a professional tax filer, they now have temporary approval to utilize electronic signatures by the CRA (welcome to 2020!) The deadline for personal tax filing has also been extended to June 1. You can read more about the Government of Canada’s changes on their website.
Novel is pleased to be able to offer tax filing services. Contact us for a no-obligation quote if you need assistance filing your tax taxes.
Develop a budget
Doing a review of your spending is never a bad idea. Given our current situation, and the income uncertainty that many are facing, there may never be a more appropriate time.
There are many products/services out there that can assist you
These apps can sync your various accounts and could void the terms of your bank or financial institution. Consider these risks before you make use of any of these types of products.
Shop around for insurance
If you have gone through a home or auto insurance renewal recently, your insurance premiums may have increased significantly. The insurance industry has been raising rates due to profitability issues all around.
That said, perhaps your carrier may have raised rates more than others.
As such, work with your broker to explore options with other carriers and bundle your home and auto for a multi-product discount.
When shopping for insurance, it is critical to compare options on an apples-to-apples basis. Coverage limits and deductibles should be similar (or identical where possible) to make sure that pricing differences are due to a lower price and not due to reduced coverage.
Get a will
Roughly half of Canadians don’t have a will, which is half too many.
There are many reasons why you need a will.
Schedule a video chat with your executor of choice, and those you wish to care for your children. Scheduling might also be easier right now, given everyone’s desire to fill some downtime.
Novel recommends Willful as its online will product of choice. Use the code Novel10 at checkout to save 10% off your will preparation.
If you go the online will preparation route, getting a witness for your will may take some time. Wills are not considered legal if they have an electronic signature. As such, once we can re-connect in person, you can get your will signed and make it final.
Don’t let the signature hurdle prevent you from putting the wheels in motion, however.
Develop a plan
Financial planning can be completed entirely virtually and digitally. What better time than now to take control of your financial future? Working with a planner will allow you to
- Re-evaluate your investment approach
- Identify opportunities to save on financial product fees
- Assess your insurance adequacy
- Critical Illness
- Long Term Disability
- Home/Auto Property and Liability
- Life Insurance
- Plan for education savings
- Plan for retirement
- Develop an estate plan
Contact us if you would like to schedule a free no-obligation consultation call.
Income Generating Ideas While Social Distancing
Learn a new skill
The world we live in will be a different place when we come out on the other side of COVID-19. Perhaps this is an opportunity for you to expand your skill set to better align with the needs of the job market.
Learn to code, graphic design, UX, web design, photography, copywriting, personal trainer, sell insurance, etc.
Skills that are in demand in 2030 may look very different than where we sit today at the start of the decade. Keeping up with the times in terms of your skills makes sure that you are marketable when the next wave of jobs becomes the norm.
Here are some free online course options available:
Start a side hustle
For those currently unable to work, government benefits may be on the way to assist. However, creating new income streams is something that someone can do even while fully employed. Diversifying your income also provides an insurance policy, of sorts, in the event that you were unable to perform your primary job due to injury, illness or change in circumstance.
Several side hustles can also be 100% virtual, which is of increasing importance right now.
Always wanted to be a blogger?
What about being a freelance ghostwriter or blog post editor?
Have you dreamed of starting your own YouTube or Twitch video game channel?
Thought of launching a virtual yoga or TRX studio from your living room?
Currently, content is king with people’s attention up for grabs. Be creative and go for it!
Prep for a garage sale/classified ads sale
Now that you are social distancing, maybe its time to go through your stuff and purge.
Meeting up with a buyer from a classifieds site isn’t recommended right now, but identifying items that you would want to sell is an exercise that you can go through any time.
Selling the goods online via a site like eBay and shipping them remains an option. At a minimum, now might be an opportunity to take all of the photos needed to post your ads when you are ready to sell.
The Brass Tacks
Collectively, we are going through a period that will change us forever. You can use this time as an opportunity to make positive changes in your life as well. There are several personal finance and financial planning opportunities that you can implement while social distancing or self-isolating. Stay safe, stay positive, and we will all get through this together.