Financial Needs of Newcomers to Canada
Good financial advice is tailored to the needs of the client, i.e., you.However, for that to be true your advisor would first have to understand your needs. For newcomers to Canada, finding an advisor who understands your financial past, current uncertainties and your future goals can be a challenge. Truth is that newcomers to Canada think about their finances very differently compared to those who’ve been here all their lives. The key difference is that as a newcomer, you’re testing the waters for the first few years and are not sure where you’re going to be ‘at retirement’ or when your kids go to university. Having made the move to Canada, you’re probably taking each day, week, month and year as it comes, feeling things out and treading cautiously with your financial decisions.
In all likelihood, even if you’ve been in Canada for six months to two years, you probably yet have funds sitting in your bank accounts or investment funds back home, not sure whether you want to keep it there or move it all here to your new home. Also, you most likely send money regularly to your family back home and plan to continue doing so for the foreseeable future. Further, even if you’re all in in Canada, you may want to continue investing some money back home since the interest rates are higher, the economy is opening up and the markets are booming.
For all these reasons, financial planning for a newcomer to Canada calls for an understanding of your situation and an ability to account for these factors while devising a workable but flexible plan. This requires knowledge of the Canadian financial landscape, but also an understanding of alternative systems and an ability to think beyond the usual solutions that first spring to mind.
For instance, as a newcomer, if you’re accustomed to investing some of your income towards retirement or other long term goals, you’d want to continue that here in Canada. However, the usual recommendation to invest within a ‘Registered Retirement Savings Plan ’ (RRSP) may not seem very prudent to you since you’re 28 to 35 years old and don’t honestly know where you’ll be when you’re 65! Given that the RRSP is most beneficial when the funds within it are left there until retirement and then converted into a RRIF or an annuity, there are alternative options that your advisor should be able to place in front of you.
As another example, you want to save for your child’s higher education or what you now hear being referred to as ‘post-secondary education’. You ask around and are immediately advised that a ‘Registered Education Savings Plan’ (RESP) would be perfect and that you must take advantage of it. While the RESP is a great program, it may not be the ideal solution for you as a newcomer. Since you’ve only just arrived, there’s probably another fifteen years before your child enters university and you want the best education for them, where ever that may be in the world. Unfortunately, the RESP may restrict your university options and that may not be acceptable to you.
At the end of the day, a newcomer sees things differently and any advice that does not take this into consideration will simply not be effective and may not work for you or your family.
To find out more about financial planning for newcomers, get in touch with me at email@example.com or check out my website