Latest news with #financialliteracy
Globe and Mail
an hour ago
- Business
- Globe and Mail
GICs are simple and safe – and a lousy way to build wealth
This may be a naive question, but if I have $7,000 in cash to contribute to my tax-free savings account, why would I invest it in a dividend exchange-traded fund rather than a guaranteed investment certificate yielding 4 per cent to 4.5 per cent? GICs have their place in a well-balanced portfolio. Because their principal value doesn't fluctuate and their returns are guaranteed, they provide stability and peace of mind during periods of market volatility. That's why, for the fixed-income portion of one's portfolio, GICs are a good solution. However, that stability comes at a cost – several costs, actually. First, GICs don't offer any growth potential. If you invest in a five-year GIC that yields 4 per cent (a rate you'd be hard-pressed to find right now, by the way), you'll make 4 per cent annually – no more, no less. You'll feel like a genius if the stock market treads water or falls over that period, but if the market rises substantially, that GIC won't look nearly so appealing. History has clearly favoured stocks over GICs. Over the past decade, the S&P/TSX Composite Index has posted an annualized total return of about 9 per cent, including dividends. No GIC can keep up with that. True, the stock market had plenty of ups and downs over that period, but volatility is the price investors pay for the superior returns that stocks deliver. Your dividend and DRIP questions answered The financial – and emotional – benefits of dividend ETFs A second drawback is that GICs lock up your money for a fixed period. If you need the cash to buy a new car or replace your furnace, you won't be able to access your funds (exceptions are sometimes made in unusual circumstances, depending on the financial institution). For that reason, you should only purchase a GIC if you're certain you won't need the funds before the maturity date. A third downside of GICs is that the interest is taxed at your full marginal rate. This isn't a factor in a TFSA, registered retirement savings plan or other registered account in which investment earnings are not subject to tax. But in a non-registered account, the tax hit on interest tops out at more than 50 per cent in most provinces for the highest income bracket. On an after-tax basis, GICs may not even keep up with inflation. Dividend stocks and dividend ETFs don't have the same drawbacks. In addition to providing the potential for capital appreciation, dividend stocks and ETFs also typically increase their income over time. Many companies – such as banks, utilities and power producers – have been raising their dividends for years, driven by their growing earnings, out of which dividends are paid. The yield of a GIC, on the other hand, is fixed. Stocks and ETFs are also more liquid than GICs. If you need the money for an unexpected expense, you can always sell a portion of your holdings. Finally, dividend stocks and ETFs also win in the tax department. Thanks to the dividend tax credit, the income from dividends is generally taxed at much lower rates than interest from a GIC. In Ontario, for example, someone with $100,000 of income would pay combined federal and provincial tax of 31.48 per cent on interest but just 8.92 per cent on eligible dividends. In the lowest income brackets, the tax rate on dividends is actually negative in many provinces. According to an Ontario resident with taxable income of $52,886 or less would have an effective tax rate on eligible dividends of negative 7.55 per cent for 2025. Because the dividend tax credit is a non-refundable credit, the government won't send you a cheque for the negative amount, but you can use the credit to offset your other taxes owing. Let me be clear: I am not trying to steer you away from GICs. I own them myself. They are especially useful if you are saving for a large future expense, such as a home purchase or a child's postsecondary education, and don't want to put your principal at risk. Many investors also use GICs for the fixed-income portion of a balanced portfolio. Building a GIC 'ladder' – with maturities ranging from one to five years – can be a useful way to diversify your GIC holdings and control your interest rate risk. When the one-year GIC matures, you would roll the proceeds into a new five-year GIC, and so on. But for long-term growth of both capital and income, stocks and ETFs are the clear winner. So don't let your desire for safety prevent you from enjoying the historically higher returns that stocks offer. E-mail your questions to jheinzl@ I'm not able to respond personally to e-mails but I choose certain questions to answer in my column.
Forbes
an hour ago
- Business
- Forbes
Live Both: Mastering The Save Versus Give Paradox
Reducing, removing or overcome financial barrier, financial concept : US dollar bag on a maze ... More puzzle. The image depicting a situation how to overcome financial difficulties and avoid a financial distress. getty For as long as I've been interested in money, I've wrestled with a personal tension: I want to be generous with what I have, but I also want to be a wise saver. In theory, both goals make sense. But in practice, they often feel like opposites. Saving helps me achieve goals and manage life's inevitable risks, like losing income during seasons of unemployment or my elder years. Saving is satisfying to me because it is measurable and strategic. It helps me prepare for emergencies and invest in products and services that are a blessing to the world. On the other hand, giving is aligned to love. It is who I am as a Christian since it is who God is. 'For God so loved the world that He gave…' It creates connection, reduces isolation, and reminds me that money isn't just about me. Yet every dollar I give is a dollar I can't save—and every dollar I save is one I'm not using to make a difference today. For a long time, I treated this as a problem to solve. I searched for the right budget, the perfect ratio, the clean formula. What I discovered instead is that this is not a problem to solve—it's a paradox to navigate. Eventually, I found that the best way for me to make peace with this tension wasn't through spreadsheets or rules. It was through metaphors. These images helped me understand my relationship with money in a more human and creative way, and they gave me a framework to build a financial life that reflects both responsibility and generosity. Here are four metaphors that have reshaped how I think about saving and giving: 1. Water Stagnant water getty Imagine a lake that has no outlet. Over time, the water becomes stagnant. Nutrients build up. Salt accumulates. Life dies off. That's what happens in places like the Dead Sea. Compare that to a river or a lake that flows—it stays vibrant, oxygenated, and full of life. That image helped me see that holding onto all my money, even for good reasons, eventually becomes toxic. If there's no outflow, I lose something essential. I become overly cautious. I start to think I never have 'enough.' But the opposite extreme is no better. If water rushes out without being replenished, the stream dries up. I've been there too—giving more than I could sustain, eventually becoming resentful or dependent on others to meet my needs. This metaphor reminded me that a healthy financial life needs both inflow and outflow. Saving without giving becomes lifeless. Giving without saving becomes unsustainable. My goal is to find the flow. 2. Barn A beautiful winter scenic in Alberta, Canada. White horse and red barn. Rolling prairie. getty A barn isn't built out of fear—it's built out of foresight. Farmers don't build barns because they're selfish. They do it because they know winter is coming. They know that without storing seed and grain, they can't plant again in the spring. When I think about saving in this way, it no longer feels like hoarding. It becomes a way to protect my ability to contribute long-term. It's not about stockpiling money so I can escape the world. It's about preparing myself to remain useful, even when conditions change. I've learned that my version of a 'barn' includes an emergency fund, health insurance, and enough margin to say yes when an unexpected opportunity to help someone arises. 3. Tree Fruit tree getty A tree does something beautiful: it holds onto what it needs, and it gives away the rest. It stores nutrients in its roots, but it also produces fruit, gives shade, and releases oxygen. It serves both itself and everything around it. Trees also overproduce. They don't just generate one apple or one acorn. They produce far more than they need. That picture helped me shift from thinking about generosity as a loss to thinking about it as natural overflow. I don't want to be a tree that's either dried out or bloated. I want to be rooted and resilient, and fruitful. Saving helps me stand firm. Giving helps me reach outward. The two support each other. Red salamander (Pseudotriton ruber) getty I've always been fascinated by amphibians. They can live in two worlds: water and land. If they stay in the water too long, they suffocate. If they stay on land too long, they dry out. That's how I feel sometimes with my money. The financial planning world rewards discipline and saving. But the social world I live in—my relationships, my community—runs on giving and connection. If I lean too hard into one world, I lose touch with the other. Being an amphibian means learning to move between both. I spend time reviewing my savings goals, but I also look for ways to help others, share what I have, and experience the joy of giving. It's not about perfect balance every day. It's about becoming fluent in both environments over time. My Personal Strategy After years of trial and error, I settled on a simple principle that works for me. I decided that my giving rate should always be at least double my saving rate. This ratio reminds me to prioritize generosity, because it aligns with who I am as a follower of Jesus. I also need to view my savings as a tool to create a more sustainable flow of giving throughout my life, helping me avoid costly debt during seasons of hardship. This strategy may not be perfect or permanent. But it feels honest. It's rooted in the metaphors that help me make sense of money; and in the values I want to live by. Final Thoughts If you feel torn between saving and giving, you're not alone. It's not a simple decision, and it may never be. But it doesn't have to be a source of stress. Instead, it can be a creative challenge. You don't have to find the one right answer. You just need to find the rhythm that works for you. Metaphors can help. They give us new language. They slow us down. They turn pressure into perspective. Metaphors can also help with the paradoxes of investing, like whether to buy cheap and old or expensive and new. See my Forbes article that discusses using metaphor to navigate an age-old investing paradox here: Forbes Live Both: Mastering The Growth Vs. Value Investing Paradox By Shane Enete At the end of the day, I'm not looking for a formula. I'm looking for meaning. I want my money to reflect both who I am and who I want to become. And that means learning how to give freely while still saving wisely.
Yahoo
5 hours ago
- Business
- Yahoo
Ramit Sethi Tells Parents What They Should Never Say To Their Kids About Money: 'Your Kids Will Absorb It'
Children mirror their parents. The way parents act and speak will influence what their children become, and this truth branches out into all areas of your children's lives. With that in mind, financial guru Ramit Sethi revealed what parents should have said to their kids about money. Making this mistake can cause your children to endure financial hardships and have a more difficult time growing their careers. "Your kids will absorb it," Sethi said. Sethi shares what you shouldn't do and offers some suggestions of what you can do to make your kids confident with their finances. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Peter Thiel turned $1,700 into $5 billion—now accredited investors are eyeing this software company with similar breakout potential. Learn how you can Sethi says that you should never use this phrase in front of your children. Saying it once is bad enough, but if you repeat it, your child may develop negative thoughts about money. For instance, your child may view money as a scarce resource and feel like it's difficult to get ahead in their career. If your child has a successful career, they may avoid spending money in general, even when spending it would be a good thing. Children will look at your actions and words as guidance, whether it's for the best or for the worst. Make sure you are very careful about how you speak about money and working hard to achieve goals. Trending: Maximize saving for your retirement and cut down on taxes: . One of the concerns Sethi brings up is that kids who hear that their parents can't afford anything may be reluctant to spend money, even when they have more than enough. While saving money is a good habit, Sethi is against having millions of dollars in the bank and never tapping into it. He believes that people should aim to live rich lifestyles. That doesn't mean you go out and buy luxury cars and designer bags that you can't afford. It simply means being smart with your money but giving yourself some flexibility to make discretionary purchases that make you happy. For instance, he's against impulsive spending and buying things that don't make you happy. However, if you have wanted to go to Hawaii for more than a decade, he's the type of financial guru who would encourage you to make that trip once you have saved enough money. He's an advocate for frugal spending, which means being tight with how you spend money but being flexible with spending money on things and experiences that meaningfully boost your long-term happiness. However, he's against being cheap, which is the equivalent of a millionaire fasting for the sole purpose of reducing their grocery that your kids will absorb what you say gives you a great advantage. While some families talk about the things they can't afford, you can flip the script. Instead of saying that you can't afford something, you can teach your children valuable lessons about prioritizing how they spend money and building toward long-term financial goals. Serving as this type of mentor for your child can help them become more successful than you when they get older. You can encourage them to build good financial habits and explain what you are doing to move closer to your long-term goals. It's okay to talk about money with your children. Doing so can help them in the long run. However, parents talk with their children about money whether they know it or not. Your child will notice things like what quality of life you accept, how you feel about asking for a raise or leaving your current job for a better opportunity, and if you invest money. Being more intentional about how your children think about money can inspire you to work toward long-term goals, boost your income with side hustles, and attain a higher standard of living. Read Next: Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Ramit Sethi Tells Parents What They Should Never Say To Their Kids About Money: 'Your Kids Will Absorb It' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Khaleej Times
6 hours ago
- Business
- Khaleej Times
'Now I know how to plan': Sharjah women learn budgeting, saving through new initiative
NAMA Women Advancement has launched a financial literacy programme across Sharjah to help women build essential money management skills and take greater control of their financial futures. Nearly 200 women from Sharjah city, Kalba, Dibba Al Hisn, and Al Madam took part in the initiative, which provided practical training in budgeting, saving, and spending. Led by financial consultant Salah Al Halyan, the sessions aimed to equip women with tools to apply financial concepts to daily life such as creating monthly budgets or evaluating the risks of borrowing. Mariam Al Naqbi, a participant from Al Madam, began discussing savings habits with her children at the dinner table after completing the course. 'Money used to feel stressful,' she said. 'Now it feels like something I can plan and manage.' In Kalba, Latifa Al Mulla said the programme gave her a clearer picture of her monthly expenses. 'I used to feel overwhelmed. Now I know where the money goes, and I can make better choices.' For some, the programme opened new doors. One participant from Dibba Al Hisn said she had long put off starting a small business due to financial uncertainty. 'I used to think finance was too complex. But now I know how to plan and begin with what I already have.' The programme targets women at different stages of their professional and family lives and reflects NAMA's broader efforts to build long-term economic resilience through financial understanding. While focused on individual experiences, the initiative also aligns with national goals. According to the UAE Ministry of Finance, women now make up 54.7 per cent of federal financial sector employees and hold 42.8 per cent of leadership roles. Emirati women also account for over 75 per cent of the overall workforce in finance, with young women representing 78.12 per cent of youth in the sector. Under the leadership of Sheikha Jawaher bint Mohammed Al Qasimi, Chairperson of NAMA, the organisation continues to invest in initiatives that build women's capacity to actively participate in and lead the UAE's economic development. Participants have already begun applying what they've learned, drafting savings plans and managing their household budgets more carefully. For many, the programme has marked a turning point in how they think about and use money.
Zawya
10 hours ago
- Business
- Zawya
NAMA's ‘Financial Literacy Programme' empowers women across Sharjah to take control of their finances
Sharjah, As women in the UAE continue to rise as economic decision-makers, NAMA Women Advancement's Financial Literacy Programme offers a practical model for how strengthening financial skills can further elevate their role in society. When Mariam Al Naqbi, a mother from Al Madam in Sharjah, started teaching her children about saving during dinner, it was more than just a new routine. It reflected a deeper shift in how she viewed money, no longer just a source of stress, but a means to plan, learn, and even dream. She was one of nearly 200 women across Sharjah who recently participated in the 'Financial Literacy Programme' organised by NAMA Women Advancement (NAMA). Participants in Sharjah city, Kalba, Dibba Al Hisn, and Al Madam engaged in practical training designed to demystify personal finance and provide effective strategies for saving, budgeting, and informed spending. Building financial confidence Led by financial consultant Salah Al Halyan, the programme moved beyond theory, and participants were encouraged to apply what they learned in real-life scenarios, from creating monthly budgets to assessing the risks and benefits of borrowing. The sessions focused on building financial confidence, particularly among women at the early stages of their professional or family journeys. For Latifa Al Mulla from Kalba, the course offered something she had long needed: clarity. 'I felt like I finally had a roadmap,' she said. 'I used to feel overwhelmed by monthly expenses. Now I see where the money goes, and I feel in control.' The programme also instilled the confidence needed to pursue entrepreneurial ambitions. One participant from Dibba Al Hisn, who had shelved her dream of starting a small home business, said the training gave her both the numbers and the mindset to move forward. 'I always thought finance was too complicated for me. Now I know how to plan and start with what I have.' Such outcomes reflect a broader philosophy that drives NAMA's efforts, with the belief that true empowerment begins with understanding. The organization emphasises that financial literacy is not just a useful skill but is essential for long-term stability, security, and meaningful economic participation. UAE benchmark for balance and equal opportunity While the course was tailored to women's personal experiences, its relevance extends to national priorities as well. According to the UAE Ministry of Finance, Emirati women account for 54.7 per cent of employees in the federal financial sector and hold 42.8 per cent of its leadership positions. In total, they represent more than three-quarters of the workforce in this field. These figures point to a wider trend, the growing role of women in shaping the country's financial future. Among Emirati youth, 78.12 per cent are female, underscoring the importance of early, sustained investment in their capabilities. Under the leadership of Her Highness Sheikha Jawaher bint Mohammed Al Qasimi, Chairperson of NAMA, the organisation has prioritised financial education as a tool for personal growth and community resilience. Initiatives like the 'Financial Literacy Programme' are part of a broader push to equip women not only to participate in economic life, but to lead it. For Mariam, Aisha, and their fellow participants, the programme's impact is vividly clear. It's reflected in newly drafted savings plans, and carefully managed household budgets that now guide their financial decisions. This shift to informed action and confidence empowers their financial journeys, actively shaping their futures.
