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Information regarding the Canadian Pension Plan is displayed of the service Canada website in 2012. (Sean Kilpatrick/The Canadian Press)
Information regarding the Canadian Pension Plan is displayed of the service Canada website in 2012. (Sean Kilpatrick/The Canadian Press)

Carrick on money

Just how good a deal is the Canada Pension Plan? Add to ...

By Rob Carrick

The federal government is studying the idea of expanding the Canada Pension Plan, which would likely mean higher contributions for both workers and their employers. One way of deciding how sensible this would be is to look at the bang we’re getting for the bucks we contribute to the CPP. In this analysis, a financial blogger lays out some numbers and concludes the CPP is a “wonderful program” for workers.

Wondering how much you’ll get from the CPP? Here’s a post from the same blogger that will help you find out. And here’s an update on the federal government’s plans to expand the CPP.

CPP expansion is particularly important for young adults, who often find temporary or contract work that doesn’t include a company pension. In this recent column, I looked at how tax free savings accounts are an essential retirement savings tool for millennials.

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Rob’s top web links

Young people are fleeing Vancouver
> High house prices are sending even successful young adults to other cities, where houses are more affordable.

Use the criticism sandwich technique
> That’s how you talk to a spouse who is terrible with money. Start with praise, slip in a criticism and then end with another bit of praise.

File this under bizarre trends
> Why are so many adults suddenly interested in colouring books?

20 things you can enjoy just as much as a billionaire
> A blogger lists some of life’s simple and affordable pleasures, including iPhones and the taste of a can of Coke.

If you or a family member have cancer
> Survey results from people diagnosed with cancer about how well their benefit plans at work covered their treatment costs. The cost of prescriptions seems to be an issue.

An investor’s anti-reading list
> More information isn’t necessarily better. Tips on how to be a smart reader of financial commentary.

Today’s featured investment tool

Canadian equity funds are featured in this first volume of my latest update of the Globe and Mail ETF Buyer’s Guide. ETFs, or exchange-traded funds, are a low-cost tool for building sound but simple investment portfolios that you can easily manage on your own. A growing number of advisers also use them.

Ask Rob

The question: “My portfolio consists heavily of five of the major bank stocks in Canada. I appreciate their dividends and have been holding these stocks for many years. When the market turns back around, should I sell some of these shares? In the interim, I have sufficient fixed income/GIC's that I do not have to sell any shares in my portfolio anytime soon.”

My reply: Sounds like you’re investing in those bank shares for the dividend income, which makes sense because the banks are sold dividend growth stocks (they pay dividends reliably, and increase them periodically). If that’s the case, and you don’t need the money tied up in your bank stocks any time soon, then it’s hard to see a case for selling them. There will be many ups and downs for these shares over the years, but they have a good long-term track record.

Do you have a question for me? Send it my way. Questions and answers are edited for length.

Featured Video

I take a look in this video at the financial moves you should make if you are terminally ill. Good info for the family members of seriously ill people, too.

The Globe and Mail Small business Summit

The upcoming Globe and Mail Small Business Summit (hashtag #GlobeSBS16 on Twitter) is a one-day conference in Vancouver, Calgary and Toronto for small-business owners and managers. Speakers include Harley Finkelstein from Shopify, Bruce Poon Tip from G Adventures, Ryan Holmes from Hootsuite and Vikram Vij. They’ll offer insights into the rapidly changing marketplace and the key challenges of securing financing, competing for talent and expanding sales. Further details and ticket information at http://globesummits.ca/

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Should I delay starting my CPP and OAS benefits? (The Globe and Mail)

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