Banking

Banking Script, Activity, and FAQ

Slides for the script can be accessed here.

Script

Introduce yourself (your name, your school/job and what makes you coming to volunteer)

Introduce today’s agenda: 

  1. Canadian Banking System Overview
  2. Credit Unions
  3. Personal Account Types
  4. Setting Up an Account
  5. Credit Score
  6. Loans
  7. Mortgages

Activity 1* - “Big Five Banks”

These are the five largest banks in Canada:

  1. Bank of Montreal (BMO)
  2. Bank of Nova Scotia (Scotiabank)
  3. Canadian Imperial Bank of Commerce (CIBC)
  4. Royal Bank of Canada (RBC)
  5. Toronto-Dominion Bank (TD)

According to a ranking produced by Standard & Poor's, in 2017, the Big Five are among the world's 100 largest banks, with Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce at 26th, 28th, 45th, 52nd and 63rd place, respectively.

Canadian Banking System

  • Canada has one of the world’s most stable financial system which makes depositing and investing in Canadian banks safer

  • Here is an interesting fact: Canada’s financial system was able to handle the pressure after the Financial Crisis better than the U.S. The U.S. had 14 banking crises over the past 180 years while Canada has never experienced systemic banking crises.

  • Other banks in Canada includes National Bank of Canada, HSBC, PC Financial and Tangerine (Owned by Scotiabank). These banks usually offer more incentives to clients in order to compete with big five banks.

  • Credit unions in Ontario are collectively owned by the people who belong to them. Every member is a shareholder and every credit union is a cooperative that answers to its members exclusively. You have a say in how your credit union is governed. They usually offer lower interest rate for borrowing compared to banks because they are not-for-profit. Here are three credit unions in Toronto (there are more ) : Meridian, DUCA, Alterna Savings

Personal account types

The chequing account is the most common type of bank account. It is a deposit account that allows withdrawal through checks, ATMs and debit card.  Here is an example of a cheque from a Canadian bank.  

Savings Accounts

A saving account is an interest-bearing deposit account held at banks and other financial institutions that provides a modest interest rate. There is usually a fee if you withdraw cash directly from your saving account. Most banks allow clients to move their money from saving account to chequing account free of charge.

Other Types of Accounts

  • Tax Free Savings Account - Delay tax payable on investment held in this account which allows clients to invest pre-tax income)
  • GIC - provides guaranteed return of the principal but the return is usually modest compare to other investment alternatives)
  • Direct-Investing Account/Self-Directed Investment - DIY account for clients to invest in stocks and funds by themselves. You may not receive any investment advice but the cost is significant lower than a full-service broker)

It’s very simple: First, you need to decide which financial institution you want to work with, then locate one of their branches. You may need to book an appointment with a financial advisor or you can just ask the front desk at a branch. Remember to bring 2 pieces of ID with you: Government issued ID with photo such as driver’s licence and your SIN number.

Debit Card vs. Credit Card: They are both physical cards you can carry in your wallet. Debit card allows you to make withdrawal of your money deposited in a financial institution while credit card allows you to borrow money (with a limit) from a financial institution. Using a credit card regularly helps build your credit history but remember to pay back in 30 days to avoid interest charges.

  • It is important to keep a healthy credit score. It helps when you need to apply for a loan or mortgage.

Activity 2*

  • Loan: What is a loan? Loan is an act of giving a large amount of asset in exchange of future payments of amount borrowed plus interest

  • Mortgage: A legal agreement by which a bank lends you money at an interest in exchange for taking title of your property (ie. house). It’s a common practice in purchasing large capital items such as houses. Fix interested is set and will not change. Variable interest rate adjusts periodically.

Activity 3* - Any questions?

Activities

1: Can you name some of banks you have heard of in Canada?

  •    Can you name some features and benefits of banks?
  •    Have any of you opened an bank account in Canada already?

2: What are some advantages of using credit cards? Debit Card? What are the risks you can think of that are associated with credit cards?

3: $2,000 loan at 2% annual percentage rate is repaid at the end of 1 year, how much would you be paying in total? (Amortization Formula and TD Mortgage Payment Calculator)

FAQ

1. Are big five banks the only financial institutions that offer personal banking services? Many smaller banks and credit unions offer personal banking services. Most of them offer more incentives to their clients/members compared to big five banks.

2. Do I have to book an appointment to set up a bank account? An appointment is not necessary. However, by booking in advance you can make sure there is financial advisor available at the time you visit the branch.

3. Do all of personal banking accounts come with physical cards? Many smaller institutions offer online banking. For example, Tangerine’s saving account does not come with a physical card but clients can transfer their money online from the saving account to any chequing account free of charge.  

 

Tax

Tax Script, Activity and FAQ

Slides for the script can be accessed here. 

Script

  • Introduce yourself (Your name, your background, your school/profession)
  • Introduce the agenda for today’s workshop:
  • Tax in Canada
  • The importance of filing tax
  • How to get started
  • Calculating your own tax
  • Resources available

Tax professionals follow Income Tax Act. The CRA website provides interpretations of the Income Tax Act. The Canadian income tax system is a self-assessment regime which means taxpayers assess their tax liability by filing a return with the CRA by the required filing deadline. CRA will then assess the return based on the return filed and on information it has obtained from employers and financial companies, correcting it for obvious errors.

What is taxable income? Simply put, it’s the amount of income you have to pay tax on. Taxable income is generally described as gross income or adjusted gross income minus any deductions or exemptions

Employment income can consist of amounts you receive as salary, wages, commissions (see line 102), bonuses, tips, gratuities, and honoraria. Employment income is usually shown in box 14 of your T4 slips. Here is a example of what a T4 looks like. (You should obtain it from your employer)

 

Activity 1Let’s talk about taxable benefit.

Here are some examples: Board and lodging provided to employees free or at a reduced price, Gifts from employer (over $500 value is taxable), Personal use of the employer’s motor vehicle, Public transit passes provided to employees.

The next category is business income. A business is an activity that you intend to carry on for profit and there is evidence to support that intention. Include all your income. For example, if you earned income by tutoring and you are not employed by a tutoring company, then the income you earned is considered business income. If you do not report all your income, you may have to pay a penalty of 10% of the amount you did not report after your first omission.

Capital gain. Example of capital items: Houses, cars, equipements, stocks, boats. Usually, you have a capital gain or loss when you sell or are considered to have sold capital property. The following are examples of cases where you are considered to have sold capital property: You exchange one property for another, you give property (other than cash) as a gift, you settle or cancel a debt owed to you. (Please consult tax professionals if you are not sure if you have a capital transaction)

The importance of filing your tax: If you fail to submit and pay your taxes before the deadline (April 30th), then the government can take action against you to recover what is owed to them. (ie. charging interest).

If you earn an income, and are a Canadian citizen, you can earn contribution room for your RRSP (Registered Retirement Savings Plan) for up to 18% per year. This allows you to save for your future and claim the tax deduction when it benefits you the most. (Delay the payment of tax) GST rebate is available to be paid to lower-to-middle income Canadian citizens each quarter…  It is a nice little income boost!

How do you start filing taxes? It requires Social Insurance Number. If you do not have a SIN number yet, you may visit a Service Canada branch to obtain one. You can file online via Canada Revenue Agency web application (CRA website). You can file electronically using tax software and send to CRA. You can also prepare a paper copy of the return and mail it to CRA. Professional preparers and tax clinics can electronically file on your behalf. It can take weeks for the filing to be processed and any refunds to be issued. We recommend that your first tax return should be filed by a tax professional to avoid CRA issues.

Calculating your tax: Tax deduction vs. tax credits. Tax deductions are often viewed as more valuable since they can generate bigger savings.

Deductions are subtracted directly from your taxable income, so you do not have to multiply this deduction by a percentage. For example, if you earned $20,000 and made a $1,000 RRSP deduction, your taxable income would then be reduced to $19,000. Here is the CRA website that lists all tax deduction and credits.

Tax credit: a deduction to your tax payable. Most tax credits are non-refundable, therefore, they can’t generate a tax refund on their own. You need to owe income tax during the year in order to gain the tax return benefit. Unfortunately, you also have to multiply them by 15% before you apply them to the tax owing. For example, if you claim $5,000 in tax credits, you will receive a return of $750 from the tax that you have already paid. These tax credits are contained on Schedule 1 of the T1 return. Some tax credits can be carry forward if not used in the year.

Common tax credits - Basic credit : $1,721 (equivalent to $11,474), Caregiver, Pension, Employment credit, Dividend tax credit.

Filing Deadlines: April 30 for most individuals, June 15 if the taxpayer or spouse carries on a business in the year

Pose this Question: Can anyone think of an example of benefit you received from work that it’s not in the form of salary, bonus, commission or wages?

Resources: There are many tax clinics organized by CRA.

Here us a list of available tax clinics in Toronto: http://www.cra-arc.gc.ca/tx/ndvdls/vlntr/clncs/toronto-on-eng.html

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FAQ

  1. If I don’t have enough income to pay tax this year, do I still have to file my tax return? If you are under age 65 and single, you must file a tax return if you earn $10,400 or more, which is the sum of the 2017 standard deduction for a single taxpayer plus one exemption. If you income is low, it is still recommended that you file your tax to make sure you get available tax benefits and keep information for future reference.

2. What is the consequence of a late payment to CRA?

  • Any payment that is late or not made will result in interest owing to CRA
  • The interest charged by CRA is at the “prescribed” rate + 4% compounded daily
  • The prescribed rate is set each quarter by CRA and is based on the government of Canada T-Bill rate for the previous period
  • Prescribed rates are published on the CRA website
  • This interest is not deductible as an expense for tax purposes

3. Is there any free resources for me? CRA website provides interpretations of the tax act. There are many community tax clinics that provide free tax consulting service near you.  

 

Presentation Tips

Activities and Tips to help your presentation

Activity 1 - Climbing the Stairs

Sometimes when presenting a particular topic, the tone of our voice has a drastic effect on our presentation. Addressing problems versus discussing solutions to these problems should have different tones.

When addressing problems, our tone should become more serious, and when presenting our solutions we should present them in a happier and more cheerful way.

The activity climb the stairs allows us to do this. For a happy and inspiring script, imagine that with each word you are saying you are climbing one step of the stairs. So each word is a bit ‘higher’ than the other.  For a serious, and a sadder script we ‘climb down the stairs’, each word is a bit ‘lower’ than the other.

TRY THIS OUT with a few excerpts of newspaper articles underneath:

“Climbing up the stairs”

The Gates Foundation talked to engineers to figure out how we could use technology to tackle these issues. Peter Janicki, CEO of Janicki Bioenergy, developed a machine that converts sewer sludge into clean drinking water, electricity and pathogen-free ash in a matter of minutes.

The processor can help developing countries both by providing clean water and energy, as well as employing entrepreneurs to run it in the regions where it's needed most.

From: http://mashable.com/2015/12/20/social-good-innovations-2015/#cWjIlt8Og8q8

“Climbing down the stairs”

The inequality crisis is worsening. 82 percent of the wealth created last year went to the richest one percent of the global population, while the 3.7 billion people who make up the poorest half of humanity got nothing.

Our broken economy is widening the gap between rich and poor. It enables a small elite to accumulate vast wealth at the expense of hundreds of millions of people, often women, who are scraping a living on poverty pay and denied basic rights.

From: https://www.oxfam.org/en/even-it/5-shocking-facts-about-extreme-global-inequality-and-how-even-it-davos

Activity 2 - How Do I Sound?

This is a very simple activity, where you record a voice recording or a video in order for you to see how you sound. Be aware of moments you speed up, or stumble into words. Highlight the parts of the script that these moments happen in order for you to be more prepared when the actual presentation comes. Recording yourself will also give you an average idea of how long the presentation takes, and how long you will have for questions and answer. There are several ways to record yourself, here is a website that provides this service: https://online-voice-recorder.com/

FAQ

How do I overcome anxiety or becoming nervous? It is normal to be nervous, or be anxious. The best way to minimize this is by practicing and becoming familiar with the material that you will present.  

Eye contact makes me nervous how should I go about that? Try finding a few people in different parts of the room that are constantly smiling, people who are giving you positive feedback. Look more at these people, who will make you more confident and less nervous.

What to do if I don’t know the answer of a question? Be honest, and tell the person that you will look into the question and let them know later. This is better than giving incorrect information, or just avoiding the question.

How can I practice for the Q&A period? We provide a page of frequently asked questions for all the different topics. You can try out by having someone ask you the FAQ questions (before you look at them and their answers). This way you will see if you are prepared for the usual questions you may be asked.

Overall what makes a good presentation? A good presentation is clear and concise. The main message to your audience is clear. Remember to enjoy the presentation, have some fun, smile and take deep breaths. If you are familiar with the topic you will do a great presentation!

Networking & Volunteer Opportunities

Networking & Volunteer Opportunities Script, Activities & FAQ

Slides for the script can be accessed here.

Slide 1: Introduce yourself (name, school, job, position in Catapult) and the topic

Slide 2: Introduce today’s agenda:

  • Networking and its benefits
  • Networking Do’s
  • Networking Don’ts
  • Benefits of volunteering
  • Volunteer opportunities
  • Activities
  • Questions

Slide 3: What is networking and what are the benefits?

  • Networking: Interacting and connecting with people to exchange information and develop contacts
  • Benefits of networking: Sharing information: learning from other people’s experiences and knowledge
  • Connections: expanding your opportunities and meeting contacts
  • Promotion: promoting yourself and/or your business, which will help launch your career
  • Credibility: improving your reputation
  • Self-esteem: giving yourself confidence to talk to others and promote yourself

Slide 4: Networking Do’s

  • Attend networking events (volunteering opportunities, local newspaper, company events)
  • Build a social and business-networking profile on LinkedIn
  • Dress for success - always check the dress code beforehand
  • Research the company, employer, job opportunities and qualifications; If possible, find out who is attending the session and complete background research on them
  • Have a purpose. Before you arrive at an event, ask yourself what you are hoping to achieve (job, meet clients, socialize, etc) and what you need to do to achieve it
  • Prepare questions before-hand for discussion. Ex: What are some of the things you are looking for in this job? What are some of the tasks that are expected of me in this role? How is your experience in your role and organization?
  • Have good and open posture (head up, don’t cross arms or legs, don’t look down.)
  • Shake hands with people and practice a firm handshake before you go to the even
  • Introduce yourself to people - try to introduce yourself to at least 5 people
  • Smile! This conveys happiness, openness, and confidence!
  • Prepare a 30 second biography (elevator pitch) including: work experience, background/origin, skills, hobbies, languages you speak - This will help you answer the common question: What do you do?
  • Bring business cards to the networking events
  • If you are interested in a position, ask for an email or business card to contact them later. Make contact within 72 hours of the event; name the event that you met them at to help them remember where they met you!
  • Immediately after the event, take notes on what to do next time, what you learned, some tips for yourself, etc
  • Message your connections to meet for coffee, where you can discuss job openings, learn about their experiences, learn about the company, etc
  • Reach out to people you already know or have been introduced to.

Slide 5: Networking Don’ts

  • Don’t be late
  • Don’t ask about the person’s salary
  • Don’t be nervous
  • Don’t be shy - business people are at the networking session to network too!

Slide 6: Benefits of Volunteering

  • Connections: you can meet other people and make valuable connections
  • Skills: develop transferable skills that can be used in future jobs
  • Resume: volunteering shows dedication, willpower, and determination on a resume

Slide 7: Where to look for opportunities

Other opportunities - email community.engagement@gtaa.com

Activities:

  1. Name some of the things you should do at networking sessions.
  2. Name some of the things you shouldn’t do at networking sessions.
  3. Is this an example of something you should or shouldn’t do? Act out slouching or having good posture
  4. Give an example of a bad/limp handshake versus good handshake

FAQ:

1. If it is past 72 hours, should I still message the employer?

  • Although sooner is better when it comes to messaging employers, it is still acceptable to reach out later on
  • Don’t message them after two weeks

2. How often should I volunteer?

  • Try to volunteer at least one hour a week
  • Don’t take on a crazy about of hours - ease into it; Add one hour of volunteering when you feel comfortable with it, so you know that you are on top of your work as well as volunteering

3. If I am late to a networking session, what should I do?

  • Depends on how late you are. If you are only a few minutes behind, you can simply act like nothing happened - most people will not ask
  • If you are an hour late, explain your absence to the registration desk and enter the event as if nothing happened - most people will not notice

4. How do I know how to dress for networking sessions?

  • Normally, the event will have a dress code. You can find examples of ways to dress by searching it up on google
  • Example searches: business casual women, business dress code men

5. How should I decide where to volunteer?

  • Volunteer at a place that relates to what you want to do in the future
  • If you want to become a veterinarian, volunteer at the Toronto Wildlife Centre, or similar places

 

 

Loans

Loans Script, Activity, and FAQ

Slides for the script can be accessed here.

Script

  1. Introduce yourself and the topic today (loans)
  2. Introduce the topics for today
  3. A loan is an act of providing leverage to another party in exchange for future repayments of the amount borrowed plus interest either. Forms of such leverage may be:
    • Large amounts of money,
    • A property, or
    • Other owned goods

Note that a loan consists of the repayments (called principal) and interest

A personal loan provides you with the credit you need:

  • This helps with large expenditures that require up-front payment (ie. tuition for school or to start a business)
  • These typ es of loans vary in size, rates, options, and payment schedules depending on the provider and your financial situation

 

Mortgages is another type of loan

  1. It’s a legal agreement by which a bank lends you money at an interest in exchange for taking title of your property (ie. house), where the house acts as a collateral
  2. A mortgage requires a down payment, which is a portion of the amount of the house upfront
  3. The remainder of the amount for the house will be paid off by monthly mortgage payments, which consists of repaying the amount of the house plus interest
  4. The interest depends on your credit history and economic conditions (such as the overnight rate determined by the Bank of Canada)
  5. There are 2 options for a mortgage:
    • Fixed rate mortgage where the interest rate is set and payment amount remains constant from month to month
    • Variable rate mortgage where interest rate adjusts periodically, leading to fluctuations in monthly payments
    • If cannot make mortgage payments, may result in foreclosure

 

Interest Rates

Interest rate is the proportion of the outstanding loan charged as extra to the borrower as a “fee” for borrowing. This represent a fee for you to use someone else’s money for a period of time

The interest rate is usually expressed as an annual percentage of the loan called the Annual Percentage Rate (APR):

  1. This is the annual interest rate
  2. Prime rate is the lowest rate that commercial banks charge their customers
    • Usual loan interests are quoted based on this rate in a “p + x”% charged for your loan
  3. The interest and repayment terms will vary based on loan amount and your financial situation

 

Interest Rate Activity

Goal: to distinguish between simple interest rate and compounding interest rate

Question: $2,000 loan at 20% APR is repaid at the end of 1 year, how much would you be paying in total? APR is the annual percentage rate, which is the rate that’s usually quoted on statements

Simple Interest Rate:

  • The principal payment is $2000
  • The interest is 20% of $2000, which is $400
  • So the total payment at the end of the year is $2400

Compounding Interest Rate:

For this example, go to the link: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

 

This is actually how banks will calculate your payments (a compounding basis)

 

  • Current principal: 2000
  • Annual addition: 0
  • Years to grow: 1
  • Interest rate: 20
  • Compound interest: 12 (this means it compounds monthly)
  • Make additions at: start
  • Click calculate
  • Future value of $2438.78 is the amount you pay at the end of the year
  • This consists of $2000 as principal and $438.78 as interest

From this exercise, note that the payment amount with compounding interest is higher than the simple interest. This is because compounding interest  means that interest is calculated more often and involves both the principal and interest amount in recalculating the new interest. This leads to a higher interest payment

 

FAQ

1. Why do I need a loan? A loan is beneficial in times when you have a shortage of cash. For example you may need a safety net for when your business experiences cash shortfalls for a few weeks. This allows you to collect your funds within a short period of time and continue your business. A similar situation can be applied to your personal account.

2. What do I need to get a loan? A credit score (typically provided by Equifax), personal income statement or payslips (ie. your T-4), and any existing accounts. A loan is typically offered at your financial institution and can vary based on your needs.

3. How much loan can I get? The loan amount will vary greatly depending on your needs and the financial institution issuing the loan. This also depends on your credit history and how much interest you are willing to pay. Speaking with a financial advisor will provide you with the details of the loan.

4. What do I do if I cannot afford my loan payments? Speak to your lender as soon as possible. Try to ask for special arrangements if possible to pay off your loan. It is encouraged to understand the payment schedule before committing to a loan, and ask about options if you cannot make payments as per the loan schedule.

5. What is a collateral? A collateral is a something pledged as a security for repayment of loan. This reduces the risk the lender faces in case that loan payments are not received. Note that not all loans have a collateral. An example of a collateral for a mortgage is your property.

 

Investing

Investing Script, Activity, and FAQ

Slides for the script can be accessed here.

  1. Introduce yourself and today’s topic – Investing
  2. Ask the class: What do you think investing means and what is an investment?
  3. Begin with what you will cover: What is investing, why invest, types of investments, common terms, risks of investing, investment strategies, and how to buy and sell investments
  4. Investing: a commitment of funds to obtain future benefits. Simply put, you would put in money you have right now, to gain more money in the future. This is what most people aim for in investing
  5. Future benefits are usually in the form of interest, dividends, premiums/gains, and pension benefits (which can come from the three prior items)
  6. Explain the investment terms shown on the slides. Slides 5-10
  7. Types of investments: This is not all the possible kinds of investments, but just an example of some of the more common ones.

KEY TERMS

Annuity - An annuity is a type of investment contract that pays you income at regular intervals, usually after retirement.

Bond - A bond is a certificate you receive for a loan you make to a company or government (an issuer). In return, the issuer of the bond promises to pay you interest at a set rate and to repay the loan on a set date.

Canada Savings Bond (CSB) - is a government bond, but no longer available. The government does not plan on issuing any more after 2017.

Exchange Traded Fund (ETF) - An exchange traded fund is an investment fund that holds diverse stocks, or bonds. Exchange traded funds trade on stock exchanges and have a value that is like the total value of the stocks they contain. This means that
the value of an exchange traded fund can change throughout the day. It is similar to a mutual fund since it is a pool of many stocks traded altogether under one fund in the stock market.

Guaranteed Investment Certificate (GIC) - an investment that protects your invested money. You can buy GICs at a bank, and then you are guaranteed to receive what you paid, plus interest at maturity. GICs can have either a fixed or a variable interest rate.

Mutual Fund - A mutual fund is a type of investment in which the money of many
investors is pooled together to buy a portfolio of different securities. A professional manages the fund. They invest the money in stocks, bonds, options, money market instruments or other securities.

Stock - a unit of ownership in a company which is bought and sold on a stock exchange. Stocks are also called “shares” or “equities”. As you are an owner of the company you make money when the company is successful and lose money if it is not.

Treasury Bill (T-bill) - a short-term, low-risk investment issued by a federal or provincial government. It is sold in amounts ranging from $1,000 to $1 million and must be held for a fixed term which can range from one month to a year. It is like a bond.

OTHER TERMS

There are many other possible kinds of investments, they do not have to be stocks or bonds. Stocks and bonds are the main types of investments for most people, but other examples of investments could include: investing money into a new business/start-up, buying foreign currency, buying items of value that are not traded on a market (eg. Art).

Low-Risk Investments – these are investments you would look into investing in when trying to save your money. They offer a very low chance of losing your money, and often the initial investment and returns are guaranteed at a set interest rate. These safe investments include GICs, T-bills, and bonds. Your repayment is almost always guaranteed unless the entire company or government crashes, which is highly unlikely.

High-Risk Investments – there are many risks associated with investing in these. The risks generally involve losing the money you invest. Stocks are an example of high risk investment. Another example is forex, which is the trading of foreign currency, since the prices go up and down very quick.

High-Risk Investment activity –See the chart of Monster Digital Inc. If you were to buy 1000 shares, (1000 units of ownership in the company) at $1.50 per share (point to March on the chart), how much would you have paid? Now imagine you decide to sell your 1000 shares today, what is the price you will get now? (show the current share price at the top of $0.63) That means you have lost over $800! This is why you should always do research when investing in risky stocks, and be prepared to lose some money at times.

On the chart, you can also explain volume – the amount of shares that are being traded each day. 1-day range – the lowest and highest stock price for the day. EPS – earnings per share, how much the company is making per share that they have (net income /number of shares). Mkt. Cap – market capitalization, which is the market value (today’s stock price) of all the shares the company has issued (all of the shareholders together).

Risks of Investing – all investments have some risk. You have to do research and see how much risk you are comfortable with facing. Risks include the loss of your investment money, which is the one most are concerned with. Other risks include: delay in repayment, no payments of interest, or having uncertain amounts of returns.

Risks vs Return – stocks are very popular even though they have a high risk because they have a possibility of high returns to balance their risks. The idea of portfolio diversification minimizes the risk of loss, because if you own many stocks it is less likely that they will all lose money at the same time.

To buy investments on the market there is usually a cost. Mutual funds will have fees when you either buy them, or charge a percentage for the management fees of the professionals, or both. Stock brokers will also charge fees when you perform a trade (buying or selling stocks), this is called a commission and will be either a flat fee or a percent of the amount of money you are using.

Short term investment strategies include buying on margin – borrowing money in order to be able to buy more stocks. There is a margin requirement which the bank will have, meaning a percentage of the stocks you buy have to be with your own money. 50% margin requirement means that you have to pay at least 50% of the purchase with your own money in order to be allowed to borrow.

Short selling is another short term strategy. You are selling stocks you believe will go lower in price that you do not currently own. You borrow these stocks to sell with the intention of buying them back later at a lower price. Refer to the slide example.

Long term – reiterate diversification

Dollar cost averaging is to buy the same stock at different times, to lower the average cost of the stocks. The price each time is different but will average to a certain price, which hopefully is lower than if you were to buy all the shares at the same time.

Buy and hold – buying a stock and holding it for a long period of time, usually with big companies, the stock price generally trends upwards over the long term. When you buy and hold, do not worry about the short term fluctuations in price. You may be losing money on some days and be tempted to sell, but if you are holding for the long term, the strategy is just to wait out the small dips in price.

Getting started with trading – Questrade. This is an example of a brokerage that you can use to invest. You can also start a trading account at the bank that you use.

Questrade offers two types of accounts:

  • Self-Directed
  • Managed.

Instructions:

Because we’re going to be directing our trades ourselves, we want to select “Self-Directed.” For the Self-Directed Account Type, we are going to pick a normal non-registered account “Standard Individual.” (We talked about RRSP/TFSA accounts in the past few weeks). We won’t be messing with options at all, so pick “No” for the Options trading.

After that, you’ll be asked for your name, address, SIN, etc. Go ahead and fill that out and complete your application.

Once you’re done your application, though, there’s still paperwork you have to mail into them. Questrade requires a “Statement of Acceptance,” which you have print out, sign, scan, and upload back to them. They also require a bank statement (I just download mine from Tangerine and uploaded it), as well as an “Attested ID” Basically, you have to photocopy your passport and get a CPA, lawyer, doctor, etc. to sign the paper attesting that you are who you say you are, and then you mail it to their headquarters in Toronto. Alternatively, if you live in Toronto, you can just pop by their head office near Finch Station and show them your ID there.

Conversely you can also open up an account at your local bank branch, and they will help you set up your account there.

Buying & Selling: You can use many different broker options which will charge different amounts of commission fees, with full-service being the expensive option and online being the cheapest ($9-$15 per trade). Most people use online brokers through their bank or third party brokers such as Questrade. There is also the option of investment advisors who can give you investing advice or help you invest, if you give them permission. The advisor will either be paid a fee or may take a portion of your returns.

Investment tips: Try to buy things with low fees to maximize gain, minimize the number of trades you do to minimize fees, passive investment is generally the way to go unless you are very knowledgeable, and do your research before investing, there are many resources online about stocks which are useful, but also make sure to do you due diligence before blindly investing. It is also good to invest in an industry or company you are interested in or know a lot about, because then it can be easier to predict how the stock prices will move. Lastly, buy low and sell high, not the other way around! It is easy to be panicked when your stock drops a little bit, but it is not always good to sell as the stock drops. Over time you will start to develop your own ideas and strategies.

 

FAQs

What is Bitcoin? Should I invest in it?

A: Bitcoin is a new form of investments, which are cryptocurrencies. These are digital currency, similar to the Canadian Dollar or US Dollar but do not have a physical form. Your digital coins are stored as secure code. You can exchange your Canadian Dollars for Bitcoin or other cryptocurrencies, much like exchanging CAD to USD. Then when the value of the currency you invested in goes up then you can sell back to CAD to make a gain. There is no clear answer to if you should invest, and you should do your own research, however Bitcoin is very hyped right now and as a result is volatile (unstable) so it would be a risky investment.

What should I invest in?

A: Investing is different for everyone, and everyone has different goals. You should first understand what your goals are. If you are trying to save money and do not want to lose it, you can look into GICs or bonds. On the other hand, if you are okay with the idea of losing money and want to make quicker or bigger returns, you can invest in stocks or other more risky investments. Before doing so, you should make sure to read some articles about what you want to invest in, and keep up with the news of those topics, and do your own research before investing. There is no definite “best” investment.

How can I become an owner of the company just by buying stocks?

A: Stocks are issued by companies to exchange a portion of ownership for your money. So you are actually an owner of that company if you buy their stocks. It does not seem like you are an owner because the company usually has millions of issued stocks, so you are only owning a small fraction of the company, along with many others. Since you are not a big owner, that is why it does not seem like you own the company. However, all shareholders (owners) get a chance to vote on company decisions at shareholder meetings. As a small shareholder you will generally get a letter in the mail and can vote on management decisions through a mailed ballot.

Why should I buy a mutual fund or ETF if it will charge me fees?

A: Although it charges you fees, if will save you a lot of work in researching stocks and help you diversify your portfolio. They allow you to own many different stocks at once, which you may not be able to afford on your own. They are also professionally managed, so you do not have to do as much research on your own about all the different stocks. If you invest on your own, it can cost you a lot of commissions to buy and sell many different stocks at once and requires a lot of researching time. It is ultimately up to the individual to determine if these benefits are worth the fees.
 

Grants

Grants Script, Activity, and FAQ

Slides for the script can be accessed here.

Government Grants – Script

  1. Introduce yourself and today’s topic of Government Grants
  2. Today we will be covering: What are grants, how to get grants, examples of the kinds of grants available, and resources to help find grants
  3. What is a grant: a financial award (Meaning does not have to be repaid) given to eligible people by the government, as well as other public funds. This financing can be also in the form of contributions (For example RESP contributions for education), and subsidies
  4. Many grants especially for students and entrepreneurs, if they meet the eligibility requirements
  5. The key to obtaining grants is that they have to be applied for, which is why many grants go unclaimed
  6. Entrepreneurs’ biggest challenges involve financing, so looking into grants is a good way to start
  7. Outside of students and entrepreneurs, there are many grants aimed at a multitude of people, for example, Canada Ontario Job Grant for employers, new immigrant grants, first nations grants, and grants for women. You are encouraged to go on the Canadian government’s grant finder website to look for grants that apply to you, there is almost a grant for everyone. Benefits finder:

http://www.canadabenefits.gc.ca/f.1.2cw.3zardq.5esti.4ns@.jsp

As well as the government benefits finder, there are many that can be found through an online search, which will also include non-governmental grants that work in the same way.

From here you can go through a couple other grants, such as the COJG, women in skilled trades and IT training, etc.

OSAP is an example of a very popular grant. This is the Ontario Student Assistance Plan, for students living in Ontario regardless of age. You can apply through the OSAP website and get grants for going to post-secondary school. The grant portion of OSAP consists of 30% of tuition and other grants based on income. This is important because it does not need to be paid back, and is extra money put in your bank account.

Scholarships is another example of a grant, which is based on merit (eg. The student’s own accomplishments) and are tools to help pay for education which do not need to be paid back. There is an application to be done to be able to receive them, just like the other grants.

Introduce resources for different scholarships and how to apply. In conclusion, grants are essentially free money based on your eligibility and application. If you do receive a grant, you do not have to repay anything. You are encouraged to research about grants and apply, because many are not well-known, and a lot of money can go unclaimed. Also make sure to read clearly about the grant’s requirements and conditions before you go and apply

Activity

  • Open up the Canada benefits finder with the group: http://www.canadabenefits.gc.ca/f.1.2cw.3zardq.5esti.4ns@.jsp
  • Have the group fill out the information on the website (Does not have to be real information) and submit.
  • When the information is submitted, the site will show the amount of benefits you are eligible to claim.
  • Click on some of the benefits and read them over as a group, to demonstrate an example of the process of getting grants. Should demonstrate that the terms are clearly read before applying, and that you only apply for things that you are eligible for.

FAQ’s

How come I do not have to pay the grant back? What is the catch?

A: There is no catch when it comes to grants. It is a sum of money given to individuals with the goal of helping them to reach their goals. However, this is why you have to read the terms and conditions of each grant clearly in order to make sure you are eligible and meet the conditions when you apply, to make sure you do meet all the obligations of the grant. A grant is not the same as a loan, only a loan requires you to repay. Make sure that when you are looking for a grant, you do not accidentally apply for a loan!

How does OSAP work? Why do some people have to pay OSAP loans if it’s a grant?

A: OSAP is the assistance program for Ontario students. OSAP provides both loans and grants, in two portions. They are both under the OSAP program, which is why most people refer to the grant and the loan as OSAP. It is true that OSAP gives you a loan for school fees, but you are not forced to apply for the loan. You can choose to apply for just the grant portion of OSAP, which will depend on your income, and this portion does not need to be paid back at all. OSAP can also be applied as a grant + loan, which is where you would have to pay back the OSAP loan after graduation.

How much money can I get from grants?

A: The amount of money that is given out for each grant is different, but they usually range from a few hundred to a few thousand dollars each. The amount you will get is all based on your own situation and eligibility for grants, as well as how many you apply for.

What’s the point of applying for grants? It’s not that much money.

A: Although it might not be as much money compared to what you can get from a loan (borrowing money), grants are basically free money given out. It would not hurt to apply for grants and will only cost you some time. Keep in mind that you can apply for grants and loans at the same time to meet your goals.

Am I eligible for a grant? How many can I get?

A: Again, it will depend on your personal situation, and you can get as many as you are eligible for, unless the terms and conditions for the grants that you apply for clearly state a limit. Since this is very different for each person, you should do your own research on grants that you feel like you can be eligible for.

Emphasize that grants do not have to be repaid and to get them you just have to apply. It is a hard concept to grasp at times because it seems too good to be true :)

 

Credit

Credit Script, Activity, and FAQ

Slides for the script can be accessed here.

Introduction

  1. Introduce yourself (name, background) and the topic for the session today (credit)
  2. Introduce the topics for today related to credit

 

Topic 1 - Debit vs. Credit 

  • We will first explore the difference between debit cards and credit cards
  • A debit card draws directly from your bank account (in most of the case, the chequing account) when you make a purchase
  • Note that the funds are IMMEDIATELY withdrawn from your account with a debit card
  • A credit card allows you to borrow money in small amounts when you make a purchase because you do not have to pay back the purchase amount right away
  • This allows the card to act like an I.O.U (I owe you), where you must pay back the amount on the credit card from you chequing account
  • If the purchase amount is not paid off in (usually) 30 days, you will have to pay interest on the purchase

Both cards are physical cards issues by a commercial bank:

  1. Represent an alternative way to pay (instead of cash)
  2. The cards allow you to transfer money electronically between stores or other banks
  3. Setting up accounts at the banks allows you to use other features like e-transfers and mobile banking

Credit Cards

Important because they help you build a credit history. If you have difficulties obtaining a credit card, you can obtain a secured credit card at your bank. This acts like a credit card, but with some additional requirements the holder must include to obtain the card

Some of the requirements may include:

  • You depositing a sum of money with a credit card issuer
  • There is a credit limit set to a percentage of your deposit

You may transfer to a conventional credit card once your credit history is satisfactory

 

Topic 2 - credit scoreS

Now, we will explore the importance of credit scores and the effects it has on your credit.

Definition: A credit score is basically a judgement about your financial health at a specific point in time. It is a number that summarizes how well you use your credit

To a lender, it indicates the risk you represent compared to others.

Scores range between 300 and 900 points, where 900 is a perfect score

The credit score is used in a variety of ways, including:

  • Influencing how much the interest rate you pay when you borrow
  • Sets up the limit of credit you have with the banks (ie. loans, credit cards)
  • Banks use it to consider for approving your loans (ie. for mortgages)
  • And it can influence how much you pay for your insurance in certain provinces

It’s also important  to know what factors influence your credit scores:

  1. One factor is your payment history. This is how often and in what amount you pay your amounts due. A missed payment will negatively influence your credit score
  2. The amount of debt you have outstanding will also affect your credit score. The more debt you have due, the less likely you will be able to get a new loan, and the lower your score
  3. The last factor is your account history, that is how long you’ve had credit. The longer you’ve had credit, the higher your score will most likely be

The next thing  I want to talk about is the credit report. The report is basically a combination of your information as affecting your credit history. The specific time frame varies depending on the type of information in the credit history, province, or credit bureau

Some examples are:

  • Negative information about credit cards and loans will stay on your profile for 6 years
  • Credit checks by lenders, like Equifax, will stay on your profile for 3 years
  • Bankruptcy will stay on your profile for 6 to 7 years

Maintaining Good Credit History

Now that you have a good understanding of what credit history is, let’s take a look at how to maintain a good credit history

  1. Pay your bills on time
  2. Try to pay your bills in full by the due date. If aren’t able to do this, pay at least the minimum amount shown on your monthly statement
  3. Contact your creditors (lenders)  if you’re having trouble making payments
  4. Ask if you can make special arrangements to pay iiff the debt
  5. Make sure that your monthly account statement is correct
  6. Read the statements and other material you received from your credit card company. Keep up to date of any fee changes
  7. Deal with companies you know and trust

Credit Activity

True or False: When it comes to credit scores, the lower the number the better?

  • False. The higher the credit score, the better
  • 900 is a perfect score

True or False: To build a credit history, you should apply for every type of credit card you can get your hands on.

  • False. To build a credit history, you need to use different types of credit over time. However, you should not apply for too many sources of credit within a short period of time.

True or False: A debit card does not allow you to build up your credit history.

  • True. A credit card allows you to build up your credit history. A debit card only acts as an access card to your bank account, where funds are deducted right away when you make a purchase.

Missed payments generally stay on your credit report:

  • For 1 year
  • For up to 7 years
  • Forever
  • As long as the banks indicates

What are some advantages of using a credit card?

  • Building up your credit history
  • Maintaining a good credit history allows you to:
    • Borrow at a lower rate of interest
    • Borrow at larger amounts or for longer periods
    • Lease cars
    • Positive background checks - ie. for jobs or house rentals

 

Q&A

1. What does a credit report include? It can include your credit cards and loans, mobile phone account, and your mortgage.

2. Do you have to pay to order your credit report? You do not have to pay when you order your credit report by mail or phone. You do have to pay to get your credit report instantly online, and you usually have to pay to get your credit score.

3. What should you do when you cannot make a payment? Try to make at least the minimum required payment amount by the due date. You should also contact the lender, and try to make special arrangements to pay down the debt if possible. Note that the interest is based on the principal amount outstanding. Simply paying down your interest may still result in interest due if there is a principal amount outstanding.

4. Where should I start if I want to recover my credit history? Take an account of the amounts outstanding and budget payment schedules. Paying down higher interest dues may be suggested, but do keep in mind the payment due dates. Talking with a financial advisor can also be helpful to discuss specific financial situations.

5. Does the credit score of my business affect my credit score in the event of a bankruptcy? If the business is a sole-proprietorship, bankruptcy will affect your credit score. If the business is in the form of a corporation (ie. it is a third-party or you own shares of a company and the company goes bankrupt), the bankruptcy will not affect your credit score.

Budgeting

Budgeting Script, Activity and FAQ

Slides for the script can be accessed here

Slide 1: Introduce yourself and the topic (budgeting)

Slide 2: There are a number of topics that will be discussed today. It includes:

  • Financial Management
  • Quality of Life
  • How to Create a Budget
  • Government Grants
    • OSAP
    • RESP
    • RRSP
    • Grant website

Slide 3: Financial management

  • Whether it is personal finance or business finance, proper understanding, planning and controlling of financial activities such as how to allocate and utilize funds, can help individuals make better decisions on financing resources.
  • Comprehensive evaluation of an investor's current and future financial state by using currently known variables to predict future cash flows → this means that the main purpose of financial management is to make sure you are in a stable financial state.
  • There are many benefits to good financial management:
    • Save and plan for retirement
    • Fund your children’s education
    • Buy a home and pay off mortgage quickly
    • Minimize taxes

Slide 4: Quality of life

  • By definition, it is the standard of health, comfort, and happiness experienced by an individual or group.
  • Knowing what qualifies as good “quality of life” for yourself means you have a good understand of your own needs and wants --> a very important concept in budgeting
  • Different people experience varying levels on the quality of life spectrum; some receive low income and can only afford basic life necessities, while others earn high income and can afford luxury goods. They fall into different categories on the federal income tax brackets, with the high tiers (with lower income) paying less tax and the lower tiers paying more.  

Slide 5: How to create a budget:

Now, we will talk about some key points on how you can create a good budget.

Slide 6: Wants vs. needs:

  • Needs: something you cannot live without: Things like food, clothing and shelter are needs because you need those things to survive in life.
  • Wants: something you would like to have, but can live without. Things like fancy cars or jewelry or phones are wants because these are things you simply would like to own, but not things that you need to survive.  

Slide 7: Step 1 in creating a budget: understanding your costs

  • What is your goal? --> what is it that you want to achieve?
  • Figure out the costs of your goal --> is it recurring or a one-time thing?
    • There would likely be many different costs incurred, and you must carefully think through all the details to make sure you have checked off everything that could potentially cost you something.
  • List out all your expenses/costs --> keeping everything organized is crucial.

Slide 8: Step 2 in creating a budget: sources of income

  • This is the other side of the equation: where are you getting money from? Costs/expenses take money away from you, but sources of income puts money back into your account.
  • Where is your income coming from? Will it drastically differ in the future?
  • The best way to go about this in an organized manner is to create a timeline that showcases these income amounts and variances in them depending on different future events and situations.

Slide 9: Step 3: tying your lists together

  • All together now!
  • This is an important step because it connects the two things you just calculated together. Without this step, you would just have lots of scattered numbers and values, with no concrete way to organize them.
  • All you have to do is add up the total amounts from both your list and then compare the two.
  • Remember, expenses is the amount that you have lost; savings/income is the amount that you have gained.
  • Thus, if your expenses is greater than your income, that means you are losing more money --> should consider other sources of income such as grants and loans.
  • If your income is more than your expenses --> consider savings options in order to build a healthy financial habit and plan and in case of any emergencies in the future.

Slide 10: Now let’s talk a little bit about government grants...

Slide 11: Government Grants

Government grants are essentially financial awards given by the government to individuals. They are meant to help fund projects and activities that will directly or indirectly improve the economy.
Here are some websites to give you more information about the different types of government grants there are and how you can apply for them.

Slide 12: OSAP - Ontario Student Assistance Program

  • OSAP is a financial aid program that gives individuals (who normally cannot afford school) the opportunity to go to university and get an education.  
  • It offers two kinds of funding:  
    • Grants - money you don’t have to pay back
    • Loan - money you need to repay once you are finished with school (you can repay gradually throughout the years); There are other programs that can aid you in repaying your loans once you are out of school.
  • This program is open to Ontario residents of any age who are:
    • Canadian citizens
    • Permanent residents
    • Protected persons
  • Amount received depends on your education expenses (such as tuition, books, living expenses, etc.) and personal financial situation (such as family income).
    • There are other factors that are considered which may allow you to receive more money, such as being Indigenous or having a disability.
    • New OSAP rule make average tuition free for students whose family income is less than $50 000 per year

Slide 13: RESP - Registered Education Savings Plan

  • Savings accounts that parents or grandparents open in order to start saving for their  children’s education
  • It is essentially an agreement between an individual needing the money (called the subscriber) and a person giving the money (called the promoter).
    • The beneficiary, the student pursuing post-secondary education, takes the payment from their RESP
    • There are a number of different options available for RESPs, including stocks, bonds, mutual funds, and GICs (guaranteed investment certificate).
    • Can be opened at banks or organizations (these people, called promoters, pay educational assistance payments to the beneficiaries).
    • Includes saving incentives:
      • Canada education savings grant (CESG): basic 20% of annual contributions for a qualifying beneficiary.
      • Additional CESG may be available depending on family income.
      • Canada learning bond (CLB): additional incentives for children born on or after January 1, 2004
  • Plan options vary depending on the organization and your needs

General break-down of RESP:

  1. Subscriber opens an RESP account --> enters contract with promoter
  2. Subscriber will make contributions to the RESP. Government grants such as CESG, or CLB, will be paid to the RESP.
  3. Promoter will make payments to the beneficiary so they can attend post-secondary

Slide 14: RRSP: Registered Retirement Savings Plan

  • Any income earned in the RRSP is usually exempt from tax as long as funds remain in the plan
    • Contributions to the plan are deductible from income, thus resulting in a reduction in income tax for the individual for that year.
    • Wh en it is withdrawn from the account, however, it becomes taxed as income.
  • Set up through a financial institution (ex. bank, credit union, trust, insurance company)
  • For holding savings and investment assets
    • Asset options: savings account, GICs, bonds, mortgage loans, and mutual funds, etc.  

 

FAQ - Budgeting only

Why is budgeting important?

A: Budgeting allows you to keep track of how you are using your money, thus it allows you to see in what way should you be allocating your money appropriately. This helps you make sure you have enough money to spend on the things you need. It will also prevent you from going into debt or help you slowly move out of it if you are already in debt (by paying off a bit every month and putting aside some money for savings).

How do I use my budget plan to benefit myself financially for the future?

A: It helps to plan out your budget for a few months in the future. This way, you can roughly  predict how each month will look in terms of your finances. If there is extremely contrasting fluctuations between the months, you can try to look for ways to balance it out a little bit. You can also see how much money you can save for big spending products like houses or cars. Lastly, forecasting for the future can allow you to plan for any long-term life goals you might have, such as travelling, or starting your own business.

What items should I include in my budget?

A: Proper budgeting means you should include everything that you spend money on, no matter how small or big. It helps to list your costs in order of priority to you. Here are some example categories to get you started thinking about it:

  • Housing
  • Debt
  • Furniture
  • Vehicle
  • Education
  • Entertainment
  • Food
  • Personal car e

Does it cost anything to create a budget?

A: There are tons of software programs online that can help you with creating a budget, and some of them may come with a cost while others are completely free. The most important thing to remember about budgeting is that, simply put, it is a list of all your revenues (money earned) and expenses (money lost - costs) over a period of time. For beginners, simply determine how much you have, how much you owe (if you have any debt), how much you make, and how much you usually spend every month (expenses), Then, use an easy online program such as Microsoft Excel and online tools like Mint, and input your numbers.