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Should Aiden, 25, pay off his mortgage or invest in stocks?



Aiden wants to retire at age 55 with lifestyle spending higher than he has now and enjoy the good life – skiing in the winter, concerts and travelling.Todd Korol/The Globe and Mail

Aiden is 25, single and the proud owner of his first home, a half duplex in Alberta. He’s enjoying his second career job, earning $85,000 a year in public relations. He previously worked for the government.

“I saved my salary while I worked from home and lived with my parents during the worst of the COVID-19 pandemic to make the down payment,” Aiden writes in an e-mail. He also emptied his tax-free savings account. He put 20 per cent, or $85,000, down on a house that cost $425,000 in 2021. With the improvements he has made, including a basement apartment, he thinks his house could be worth $550,000 now. He has about $323,500 remaining on his mortgage.

Should he pay off the mortgage or invest for the future?

“Traditional personal finance wisdom suggests I pay the house off ASAP,” Aiden writes. His mortgage rate is low – 1.74 per cent – but he is averse to debt and concerned about having to pay a higher interest rate when his mortgage comes up for renewal in 2024. He could probably earn a higher rate of return in stocks – or even a guaranteed investment certificate, Aiden adds. Should he use his surplus cash flow to pay off the house or invest for the long term?


He also wonders whether it is worthwhile to open a registered retirement savings plan (RRSP) given that he has substantial contribution room in his TFSA.

Long term, Aiden wants to retire at age 55 with lifestyle spending higher than he has now and enjoy the good life – skiing in the winter, concerts and travelling.

We asked Jason Heath, an advice-only financial planner at Objective Financial Partners in Markham, Ont., to look at Aiden’s situation.

What the Expert Says

Aiden has roughly a $250,000 net worth, which is pretty good for a 25-year-old, Mr. Heath says. Granted, nearly half of that has come from home price appreciation on the house he purchased in September, 2021. “He bought a house he could afford, he has an emergency fund in his TFSA, and he has monthly payments he can manage while continuing to save,” the planner says. “So good on him.”

Once Aiden is done paying off an interest-free loan from a relative for his student debt, he will have an extra $1,000 a month to use to pay down his mortgage or invest, the planner notes. “Aiden asks whether he should pay down his mortgage more aggressively but is leaning toward buying stocks.” If his 1.74-per-cent fixed-rate mortgage renews at an assumed 4.5 per cent in September, 2024, Aiden’s payments would need to rise by $455 a month to $1,855 to maintain the same amortization.

Some of Aiden’s mortgage interest is tax deductible because he rents out his legal basement suite, so this makes his cost of borrowing a bit less, Mr. Heath says. If Aiden thinks he can earn a higher rate of return investing in his TFSA than the borrowing rate on his mortgage, he may come out ahead by investing. “That said, the new normal of higher interest rates makes investing rather than debt repayment less compelling.”

In the long run, there may not be a compelling advantage to paying down his mortgage versus contributing to his RRSP or TFSA, assuming the mortgage interest rate and investment returns are similar. Both investing and debt repayment are good because they increase your net worth (net worth = assets minus liabilities). Aiden mentions being debt averse, so considering a lump-sum payment against his mortgage at renewal, or increasing his payments, should be considered.

Aiden has never contributed to a registered retirement savings plan. “He is just on the cusp of going from a 30.5-per-cent marginal tax bracket to 36 per cent, so this is the tax refund rate he could expect on his first dollar of RRSP contributions as an Alberta resident,” the planner says. It is likely he will withdraw money from his RRSP at a 30-per-cent tax rate in retirement, making RRSP contributions advantageous for him if his income continues to rise.

Once Aiden pays off his student loan later this year, he should consider directing at least some of his $1,000 of extra monthly cash flow to RRSP contributions, Mr. Heath says, “especially given he has a healthy TFSA balance of $30,000.”

Aiden’s budget seems light on planning for future home repairs and renovations, as well as an eventual car replacement, the planner says. In preparing his forecast, he added in $500 a month for each item to bring Aiden’s monthly expenses up to $4,045 a month, excluding debt repayment, saving and taxes.

Aiden’s $12,000-a-month desired after-tax spending in retirement is “way higher” than his current spending, adjusted for inflation, Mr. Heath notes. Even with the extra $1,000 a month added to his spending, assuming a 2-per-cent inflation rate, his current after-tax spending would be about $6,500 a month by his age 50. “It is not unreasonable to want to spend more in retirement, especially in the early years for travel, for example, but that’s nearly doubling his current standard of living,” the planner says.

Aiden saw his parents retire at 55 and would love to retire by 50 if he can. “I made some assumptions beyond the $4,045 per month of living expenses (including renovation/repair and car budgets),” Mr. Heath says. These include a modest 2-per-cent annual increase in his salary, bonus and basement rental income, 65 per cent of the maximum Canada Pension Plan benefit at age 65 (low because of early retirement), maximum Old Age Security, his small government defined-benefit pension at age 65 (adjusted for 2 per cent inflation from now until then), 6-per-cent returns on his self-directed stock portfolio, 2-per-cent inflation (as inflation subsides), and a 4.5-per-cent mortgage rate for the balance of his mortgage after the 2024 renewal.

“The result is his investments are projected to be depleted by about age 87 and he may need to borrow about 10 per cent of his home equity by age 95,” Mr. Heath says. “Obviously, if he wants to significantly increase his spending to his $12,000 after-tax monthly target, he will have to work way past age 50.”

Given Aiden’s current age and stage, and how much can change between age 25 and retirement, the main thing he can do is just maintain the good trajectory he is on currently. Life changes, such as a relationship or a family, could be material in his long-term planning, Mr. Heath says. Aiden may not always want a basement tenant either.

Because Aiden is financially dependent on himself, he should consider disability insurance, which he presumably does not have available through his employer, the planner says. “The odds of him becoming disabled are much higher than dying [prematurely].” A disability insurance policy that would replace Aiden’s income if he was disabled and could not work is an important risk-mitigation goal for him to consider.

Client Situation

The Person: Aiden, 25.

The Problem: Should he pay down his mortgage or invest for the future? Should he open an RRSP? Can he retire early?

The Plan: Consider opening an RRSP to take advantage of his unused contribution room. Monitor interest rates when deciding whether to pay down the mortgage or invest. Plan on spending much less in his later years if he wants to retire at age 50.

The Payoff: The rewards that come from good spending and saving habits.

Monthly net income: $5,150 (plus $1,150 gross rental income).

Assets: Bank account $1,000; TFSA $30,000; estimated present value of defined benefit pension $21,400; residence $550,000. Total: $602,400.

Monthly outlays: Mortgage $1,400; property tax $300; water, sewer, garbage $110; home insurance $150; electricity $100; heating $130; maintenance, garden $170; transportation $440; groceries $500; clothing $25; interest-free student loan to relative $1,000; gifts, charity $170; vacation, travel $250; political donations $100; dining, drinks, entertainment $400; sports, hobbies $50; subscriptions $20; health care $30; communications $100. Total: $5,445.

Liabilities: Mortgage $323,500; personal loan $7,000. Total: $330,500.


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IN FOCUS: 'No room for complacency' as fight for global investments heats up. What can Singapore do? – CNA



Apart from the US Chips and Science Act, the US Inflation Reduction Act is another incentive programme “that will compete for the same sorts of investments that Singapore would be interested in”, EDB chairman Beh Swan Gin told reporters at a press conference in February.

The US Inflation Reduction Act comprises billions of dollars of subsidies for the purchase of electric cars and other eco-friendly products that are made in America. This has rattled many European nations who fear that companies may choose to relocate or at least prioritise investment in the US.

In response, the European Commission has presented a Green Deal Industrial Plan with higher levels of state aid to help Europe compete as a manufacturing hub for clean tech products.


Then, there is BEPS 2.0 which is advocating a minimum effective tax rate of 15 per cent for multinational groups with annual group revenues of at least 750 million euros (US$818 million).

Currently, Singapore’s headline corporate tax rate is at 17 per cent but the effective tax rate of many businesses may be lower than that, or even the proposed global minimum, due to tax incentives given to those seen as beneficial to the country’s economic development.

Singapore has said it will implement a domestic top-up tax for these large multinational enterprises – about 1,800 of them currently meet the revenue threshold – from 2025. 

Already, these firms are having concerns about how the new global tax rules will erode their tax savings in Singapore and mulling whether they should be looking at relocating or making new investments in other countries, said Mr Baik.

“Certainly, tax is just one of the factors in this evaluation process but recent global tax developments have undoubtedly elevated the tax benefits consideration among the factors.”

Meanwhile, the cost of doing business in Singapore has crept up the list of concerns for businesses.

Beyond the inflationary push in operating expenses such as electricity, firms are increasingly mindful of the cost of living here, said Dr Lei Hsien-Hsien, chief executive officer of The American Chamber of Commerce (AmCham) in Singapore.

The Singapore International Chamber of Commerce (SICC) said global companies are most concerned about the elevated rental costs for residential and commercial premises.

The former, in particular, is “making living here much less viable for many expat executives and prohibitive for others”, and this impacts a company’s ability to relocate talent to Singapore.

While Singapore continues to stand out for having low risks of doing business, SICC said “there is no room for complacency” as its regional peers can now better manage risks than before.

“When combined with lower business costs, regional markets will remain attractive to investors based on their risk appetite and their specific business requirements,” the chamber said.

A separate survey, released this week by the European Chamber of Commerce Singapore, also showed that 69 per cent of companies are ready to relocate their staff out of Singapore if there is no relief from rising rental costs of residential and office spaces.

Mr Wong, who is also Finance Minister, has warned that multinational firms are “mobile and … have options” for their next investment projects. Already, firms are “making this clear” in consultation sessions with policymakers.

“Because of BEPS, they will no longer enjoy the same tax advantages in Singapore. Meanwhile, other countries in the region are cheaper, while their home countries are offering very generous incentive packages,” Mr Wong said in his Budget round-up speech on Feb 24.

“So they ask us: what else can Singapore offer to stay competitive?”

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Months after its launch, Canada's new investment industry regulator finally has a proposed name – The Globe and Mail



Three months after the launch of Canada’s new investment industry self-regulatory body, the organization has proposed a moniker for itself: Canadian Investment Regulatory Organization.

The organization has been nameless since it was formed out of the amalgamation of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) on Jan. 1. It has been temporarily using the name New Self-Regulatory Organization of Canada.

Now, in a proxy circular distributed to the industry on Friday, the New SRO board is requesting that the organization’s members, who include investment and mutual fund dealers, vote for the name change on April 24. If approved, the name will become official on June 1.


“We recognize the importance of establishing a new name and brand that reflects the values, purpose, and goals of New SRO,” New SRO chair Timothy Hodgson writes in the proxy. “Therefore, we have committed to an accelerated timeline to complete this important task and are confident that the chosen name will resonate with all stakeholders and foster a strong sense of confidence in the New SRO’s mission.”

The shift to a single self-regulatory organization happened after more than two years of industry consultation that began in 2019, when the Canadian Securities Administrators – an umbrella group for provincial and territorial securities regulators – announced it was considering an overhaul of the regulatory framework that governed IIROC and MFDA.

The two self-regulatory organizations had long been criticized by investor advocates and the investment industry for having overlapping areas of oversight, as wealth managers were increasingly serving customers buying both mutual funds, overseen by MFDA, and individual securities, which were IIROC’s responsibility.

In the fall of 2022, the merger was approved by the CSA, which also approved the combination of two investor protection funds – the Canadian Investor Protection Fund and the MFDA Investor Protection Corporation. The new single fund is independent from the new regulatory organization.

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Lefebvre announces new committee to help spur investment



A new committee of Greater Sudbury city council is being set up to find the “best way of streamlining and of encouraging investment in Sudbury.”

So described Mayor Paul Lefebvre, who used Thursday’s Fireside Chat event with the Northeastern Ontario Construction Association to announce the new five-member committee.

“It’s a big exercise, but I think it’s a positive way of affecting change,” he told after delivering his address at Verdicchio Ristorante, adding that his goal is for the committee to present recommended changes to municipal bylaws by the end of the year.

The committee would host five to seven meetings this year to learn from local industry leaders, with priority given to those with experience working for other municipalities.


“What is going on elsewhere?” Lefebvre asked. “How are they doing things different from what’s going on here, and why is that the case, so we have a better understanding.”

Lefebvre said that with many regulations provincially mandated, he wants the committee to narrow in on what the municipality can actually accomplish.

In concert with the committee’s work, Lefebvre said an internal team at city hall will work with their counterparts in other municipalities to dig out best practices for Greater Sudbury to adopt.

Reflecting on Lefebvre’s address, Northeastern Ontario Construction Association executive director Mark Kivinen told he is “very optimistic,” and that Lefebvre has “hit the ground running” since he was elected to head city council on Oct. 24, 2022.

“He is so engaged with the community and understands what the community wants and needs, and also has the ability to not stay stagnant, to open up and don’t be just locked in your little bubble,” Kivinen said, adding that the upcoming committee should aid in this effort.

“There are other municipalities that are doing things better than us, and we are doing some things better than them,” he said. “I think we understand now that if we’re going to promote growth, we’ve got to open up the city a little more.”

Thursday night’s speech and subsequent question and answer period highlighted an ongoing concern within the local construction industry of so-called “red tape” at city hall, which Lefebvre said city council’s upcoming committee will strive to suss out.

Ward 5 Coun. Mike Parent has also addressed “red tape” in a motion greenlit by city council in February, which will see the city partner with the Greater Sudbury Chamber of Commerce to investigate ways of streamlining processes for businesses.

During his speech, Lefebvre cited recent progress on the Employment Land Strategy and a $1.25-million interim fix approved for Fielding Road, which services one of the city’s industrial hubs, as recent signs of city council support for tackling economic growth.

“We’re serious about this,” Lefebvre said, adding that the work on Fielding Road is a solid investment that will help ensure clients and those working in the area won’t have to wear a mouthguard while navigating the pothole-filled road.

Earlier this week, city council approved a public consultation plan for a new tax incentive called the Employment Land Community Improvement Plan, which Lefebvre cited as another recent move toward spurring economic activity. will be publishing an in-depth report on the proposal soon.

Tapping into the value-added market when it comes to battery-electric vehicles, the city’s infrastructure deficit, its collection of aging facilities, a need for housing across the continuum, and a need for employees in a local economy in which there are approximately 3,500 unfilled jobs right now, were also hot topics during tonight’s speaking engagement.

Lefebvre said all of these issues and more will need to be dealt with to help meet his ultimate goal of increasing Greater Sudbury’s population to 200,000 within 20 years.

Tyler Clarke covers city hall and political affairs for



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