What Is OSAP (Ontario Student Assistance Program)?

The Ontario Student Assistance Program

First Published Date: Sep 29, 2011

The Canadian Government does not want any students stop going to college or university because of the lack of financial support. In order to prevent that, the Government provides financial assistance to eligible students in paying for their post-secondary education through various programs and services throughout Canada. OSAP or Ontario Student Assistance Program is the main source of assistance in the province of Ontario. OSAP is a student loan program which is made up of both federal and provincial funding for the eligible post-secondary students living in Ontario.

OSAP Loan Amount

The amount students receive will be based on their financial need. This amount is designed to cover expenses such as tuition, books, living costs, transportation costs, and so on. There are various factors that determine the loan amount such as parent’s income, marital status, student’s own or spouse’s income, course type (full-time, part-time) course length, and so on. There is a financial aid estimator or calculator available to give you an approximate idea of the amount based on your scenarios. To find out more, check Government of Ontario OSAP website.

OSAP Eligibility

There are many criteria that need to be fulfilled in order to be eligible for OSAP. Some of them are:
– You have to be a Canadian Citizen, permanent resident, or a protected person.
– You have resided in Ontario for the last 12 months
– You academic standing is satisfactory
Visit the OSAP site mentioned above for full eligibility criteria.

How to Apply For OSAP?

There are two ways to apply for OSAP: via paper application and online. Online application is quicker and therefore the preferred way. There is a cost of $10 to apply via paper application.

OSAP Loan Repayment and Interest

Once students graduate, stop attending school, or reach lifetime maximum, repayment of OSAP will start. Loan repayment starts 6 months after the student ends full-time status. The loan is interest-free and interest is paid by the government as long as students remain full-time.

Last Word

OSAP is no different than any other loan and as such, you should treat it with responsibility and care. Not handling the OSAP properly can affect your credit rating. If you have difficulties paying OSAP, don’t wait for the last moment. Contact the National Student Loan Service Centre (NSLSC) at 1-888-815-4514 or visit their website at NSLSC.

Quietly These New Mutual Fund Rules Take Effect in Canada

Canada’s New Mutual Fund Rules

First Published Date: July 23, 2016

Starting May 30, new mutual fund rules came into place that most mutual fund investors were not aware of. Any investment advisers and institutions selling mutual funds are required to give their clients a document known as Fund Facts before the sale or transaction happens.

This paper or document called Fund Facts should clearly show information about the mutual funds in a simple way such as funds’ investment objectives, managers, historical performance, and most importantly all the fees associated with the funds.

In the past, this information was available online at the fund companies’ websites and it was made available to the investors after the sale had gone through. However, the information was not presented in a clear manner easily understood.

However, under the new rules, investors will have precise and related information at their disposal and this will help them make better decisions.

Author/Copyright: Ahmed Dawn www.adawnjournal.com

The Fund Fact document is a two-page, double-sided document that does not take long to read. If you want, you can have this document long before meeting your advisers by going online or calling the fund company to mail it or fax it to you. This is all free.

Mutual funds in Canada have been known to have one of the highest fees compared to other countries and trends continue to switch from mutual funds to ETFs, which have much lower fees and transparent features that are easy to understand and easier to transact.

Mutual Fund Fees Can Cost As Much As A Small House

Avoid Mutual Fund Fees

First Published Date: August 17, 2016

It is an open secret that mutual fund fees can cost you quite a fortune in one lifetime, especially in Canada where fees are even higher than other industrialized countries. Given the fact that there are other low-cost options available like ETFs, investors often forget or ignore what they are paying in the long run.

Toronto-based digital wealth management firm Nest Wealth released some cold, hard figures to put the fees you will be paying holding mutual funds into perspective. For example, if you take a 25 year-old investor starting with a $10,000 investment and adding $5,800 for the next 39 years, at a rate of 6.5 percent return and 2.35 percent mutual fund fees, the investor would have a balance of $229,000, but the fees paid would be $323,654.50.

With those kinds of fees, it is possible to buy a small house in many Canadian cities. It always pays to pay attention to what you are paying for fees and what you can do about it. A study released by Environics Analytics found out that the average Canadian household’s liquid assets amount to $229,000. If you are paying annual 2.35% fees on investments, it will definitely take out a good chunk out of your retirement, considering many ETFs fees are below 0.50 percent.

Nest Wealth offers some neat calculators and portfolio-building tools on its website. You will be able to visualize how different fees or mutual fund MERs affect your investments in dollar terms and what kind of customized portfolios are suitable for you based on your scenarios.

Regardless, you are building your portfolios online or face to face with a qualified financial professional, always do your own research and make best-educated decisions that suit your needs and lifestyle.

Canada Savings Bond

The Amazing Canada Savings Bond And You

Published Date: July 22, 2010

When you want to build up a good, safe investment for yourself, or you want to save money for a retirement without losing sleep, you should look at the Canada Savings Bond. The Canada Savings Bond is an investment instrument created by the government of Canada and it sells between October and April of every year. Issued through the Bank of Canada, it offers a competitive rate of interest and there is a guaranteed minimum interest rate on it.

Created in 1946 as Victory War Bonds, it was a safe way to invest and to save for Canadians who did not want to use mutual funds. The Victory War Bonds were just one of four different types of bonds that were issued including the Canada – Dominion War Savings Certificate, the Canada Fourth Victory Loan and the Dominion of Canada Victory Loan.

These Canada Savings Bonds became very popular and a great way to invest and they would often be bought for younger children as a gift that they could redeem years down the road. However, lately, bond sales have begun to fall because of the low interest rate environment causing yields to be lower, which means more people are going to stocks and mutual funds in order to get more money for what they are spending. During the 1980s, rates were as high as 18 percent, which yielded big savings, but these days the interest rate has fallen by so much that Canada Savings Bonds held by Canadians were no more than 10 percent of people. In totally, Canada Savings Bonds are worth $19.2 billion in terms of bonds held by Canadians.

There are many types of Canada Savings Bonds that you can buy. These include:

·      Canada Savings Bonds are purchased with regular and compounding interest varieties and you can cash them at any time. They come in denominations of $100, $300, $1,000 and $10,000 with the interest guaranteed for a year and then fluctuating for the remaining nine years until the Savings Bond reaches its maturity date.

·      Canada Premium Bonds are purchased with the same choices in interest as Canada Savings Bonds but they can only be cashed on the anniversary of the issue date, or within 30 days after. Other than that, they are pretty much the same as Canada Savings bonds except the interest rates differ slightly. These bonds are sold with interest rates up to the third each, with each year after having higher interest and the interest rate fluctuates for the remaining seven years depending on the condition of the market until the maturity date is reached.

·      Canada Investment Bonds were available for a time between 2003 and 2004 and are were not redeemable until they matured, and each one had three-year maturities.

There are also several plans that are offered through the Canada Savings Bond, which include:

1.    The Canada RSP, which is a no-fee retirement savings plan that, uses compound interest Canada Premium and Canada Savings Bonds.

2.    The Canada RIF, which is a no-fee retirement income fund that holds Canada Premium and Canada Savings Bonds.

3.    The Payroll Deduction, which is when employees choose how much they can have deducted off their paycheques in order to put into a Canada Savings Bond under the Canada RSP.

In regards to the rates that are used in the Canada Savings Bonds, with the exception of when the rate is fixed at the start of the bond term, the rate is always dictated by the market conditions. An example of this was seen in 2009 when there was a very low rate in the market, which meant that those who purchased the Canada Savings Bonds in that year having very low rates. Low rates mean that your bond is not going to increase in value by much, which is why the Canada Savings Bond market is not doing as well in terms of the number of Canadians buying the bonds.

If you want to withdrawal from your Canada Savings Bond, you can typically do so at any point from most of the big banks within Canada. If you withdraw within three months of issue, you typically will only get the face value of the bond back. What is meant by this is if you have a $10,000 Canada Savings Bond, then you will get $10,000 back. After the first three months, you get the face value plus any interest you have received on the bond. With the Canada Premium Bonds, you can redeem them one year and 30 days after issue, which is important to keep in mind.

You are going to be fully taxed since the Canada Savings Bond is seen as income at your current tax rate. This is why it is a very good idea to take your Canada Savings Bond and hold it in an account that is tax-deferred, like your Registered Retirement Savings Plan.

The Canada Savings Bonds are a very safe way to invest and a good way to build up money that you can use for your retirement. If the Canada Savings Bond grows at the 18 percent per year as was seen in the 1980s, then a $10,000 Canada Savings Bond over that ten years will go from $10,000 to $52,338 by the time the ten years is over. Even at a low of four percent per year, your $10,000 would grow to $14,802.

A safe investment that can also serve as a good gift for someone, the Canada Savings Bond is what you should consider if you are new to investing, or you do not want to invest in the riskier investments of mutual funds and stocks. This way you keep your money growing, albeit at a slower ate, while at the same time increasing your savings using nothing but the interest rate that exists at the time. Look into the Canada Savings Bond and see your savings grow without you having to do anything.

Canadian ETFs Explode

WisdomTree ETFs Canada

First Published Date: May 15, 2016

The Canadian ETF market passed a milestone by adding 400 available ETFs trading on the Toronto Stock Exchange (TSX). As average investors are gradually realizing the significance of paying low fees on ETFs, they are ditching high-fee mutual funds in favour of low-fee ETFs. After all, why would someone want to pay a 2.50 percent MER on a mutual fund when they can obtain a very similar ETF with a 0.10 to 0.25 percent fee? It’s no wonder assets under management for ETFs on TSX have passed or are close to passing $100 billion.

Big mutual fund companies, which have been in denial of getting into ETFs for decades, are coming to the realization that there is no other choice but to enter the ETF arena. Their excuse was that, due to its low fees, no money could be made from ETFs. However, the change of heart happened when they finally (although they were late) realized that people are shifting from mutual funds and ETFs and if they don’t change now other providers will keep grabbing market share and they will be left out in the middle of nowhere. Big mutual fund companies like CI Investments and Mackenzie are now active in ETFs.

BMO (Bank of Montreal) deserves credit for recognizing ETF potential many years ago, before any other banks or mutual fund companies. And it has been awarded generously for its far-fetched decision. BMO is the second largest ETF player in Canada today after iShares and before Vanguard with $27 billion assets under management.

Also, WisdomTree, a major ETF provider in the US, has announced that it will launch its ETFs in Canada and is awaiting Canadian regulatory approval. You will see more ETF players from within and outside Canada to offer ETFs for Canadian investors in the future.

More players mean more choices, more competition, and better value; that’s good for everyone and that’s what we want in Canada.