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Navigating Personal Finance in 2025: Key Changes to Capital Gains and Tax Brackets

As we step into 2025, several significant changes are set to impact personal finance, particularly in the areas of capital gains and tax brackets. These adjustments are designed to adapt to economic conditions and provide better financial planning opportunities for individuals. Capital Gains Tax Adjustments One of the most notable changes is the adjustment to capital gains tax. Starting in 2025, a higher tax rate will be applied to capital gains exceeding $250,000. This means that individuals selling assets with substantial gains may need to reconsider their timing and strategy to minimize tax liabilities. For example, spreading the sale of assets over multiple years could be a more tax-efficient approach. Changes to Tax Brackets Inflation adjustments are also on the horizon for tax brackets. To prevent inflation from pushing taxpayers into higher brackets, the income thresholds for each tax bracket will increase by 2.7%. For instance, the federal tax rate for earnings up to $57,375 wi...
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Why You Should Diversify Your Portfolio Beyond GICs



Guaranteed Investment Certificates (GICs) are a type of fixed-income investment that offer a safe and predictable return on your money. However, they also have several drawbacks that may limit your financial growth and security. Here are some reasons why you should consider diversifying your portfolio beyond GICs:

  • Low returns: GICs typically offer lower interest rates than other investment options, such as stocks, bonds, or mutual funds. This means that your money may not grow as fast as you need it to, especially in times of high inflation or economic uncertainty. You may also miss out on the potential for higher returns from other investments that can benefit from market fluctuations and opportunities.
  • Lack of liquidity: GICs usually have fixed terms, ranging from a few months to several years, during which you cannot access your money without paying a penalty. This can be a problem if you need cash for an emergency or an unexpected expense. You may also lose the opportunity to reinvest your money at a higher rate if interest rates rise during the term of your GIC.
  • Tax inefficiency: GICs generate interest income, which is taxed at your marginal tax rate. This can reduce your net return on investment, especially if you are in a high tax bracket. Other investment options, such as equities, may offer more favourable tax treatment, such as lower capital gains tax or dividend tax credit.
  • Lack of diversification: GICs are a single type of investment that do not offer much variety or flexibility. If you invest all your money in GICs, you may not have a balanced and diversified portfolio that can withstand different market conditions and risks. You may also miss out on the benefits of asset allocation, which is the process of spreading your money across different types of investments to optimize your risk and return.

GICs are not a bad investment option, but they are not the only one. Depending on your financial goals, risk tolerance, and time horizon, you may want to explore other investment options that can offer higher returns, more liquidity, better tax efficiency, and more diversification. A financial advisor can help you create a personalized investment plan that suits your needs and preferences.

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