As a kid growing up in the ‘80s, 2025 seemed like a distant future away. Many movies and TV shows portrayed the 2020s either as an advanced time with flying cars or a dystopian world that has been destroyed by wars or natural disasters. Since my childhood, the Mayan calendar ended in 2012 without major incident, Grigori Rasputin’s prediction for a 2013 doomsday style event came and went and while 2020 certainly came with a lot of hardship, the world continues on pretty much as we knew it. Heck, even Skynet (the super-computer from the Terminator series) didn’t become self-aware in August of 1997! So here we are, a quarter century into the new millennium. We’re still here, and hopefully, you’re all doing alright!
Natalie and I are just getting back from some time out of the office. We got in a couple of weeks with the girls while they were on their Winter Break. Unfortunately, Natalie came down with Covid-19 halfway through our holiday. She got hit pretty hard from it and ended up spending a number of days in bed. What an awful virus that can be. We hope that you all had a better holiday season than Natalie did!!
We’re back to it now and going into our busiest time of the year. By the time you read this, we will be well-into RRSP Season which is a very busy couple of months for us. We’ll also be busy with TFSA and RESP Contributions as there will be more contribution room for those in 2025. We will remind you that you will start getting some Tax Documents in the weeks ahead. That being said, you will not be getting all of them. Some slips and forms won’t come until March. Please remember that if you have a Portfolio Strategies Nominee RRSP, RRIF or LIF, you will be able to download your Tax Documents from our Client Portal once they have been prepared. You will be able to download these documents at your leisure. If you would prefer a paper copy, just reach out to us; We are happy to mail these to you or send a password-protected PDF through email.
2024 was another strong year on the market. That’s two very good years in a row. Our Toronto Stock Exchange (TSX or TSE) ended the year 19% higher.1 That may come as a surprise to many as our economy has been slowing down. While we have had some GDP Growth in Canada, that’s almost entirely due to Population Growth. We’ve also had all kinds of disfunction in Ottawa so it’s hard to see that and then look at all these positive returns in your Investment Portfolios. The US Economy has been much stronger than our own, and stronger than the rest of the G7. Their Stock Market had another fantastic year. The S&P 500 went up 23% last year and that’s after doing 24% the year before.2 Once again, a lot of negative forecasts were way off. All this stuff like “… you’re going to see a crash like you’ve never seen before” never happened.3 Not even close. Once again, a large part of this year’s gains came from the “Magnificent Seven” made up of Amazon, Apple, Nvidia, Tesla, Microsoft, Meta, and Alphabet.4 Technology continues to be a main driver of growth. Tesla delivered just under 1.8 million EVs worldwide last year. Chinese automotive company BYD had 1.76 million Electric Vehicle deliveries in 2024.5 I couldn’t find final numbers for EV Sales in Canada for the year. By the end of November 2024 though, market share for Battery Electric Vehicles had climbed to 12.2% of sales according to S&P Global.6 I’m sure Facebook tells a different story, but I’ll level with you, I don’t find Social Media to be a very good source of information!! At this point, approximately 1 in 6 new vehicles registered in Canada is either a Battery Electric Vehicle, or a Plug-in Hybrid.
Canada’s final Inflation Numbers for the year were 1.9%. We were over 3.0% at the end of 2023 so quite a bit more progress here. We got multiple Interest Rate Cuts in 2024 which has helped ease the stress of Higher Rates for many across the country.7 The Canadian Bond Market has done much better with these Lower Interest Rates. I expect that if rates continue to fall, we’ll do well in Fixed Income. It’s hard to see another strong year on the Stock Market after two very good ones. A lot can happen in twelve months though so we’ll see what happens.
Now that it’s a New Year, there will be new numbers, limits and dates to make note of. Here are some important ones for 2025:
- The Tax Free Savings Account (TFSA) Contribution Room will be $7,000 for the year. This is in addition to any room that you are carrying forward from past years. The Maximum Amount that a person can add to a TFSA is now $102,000. Remember that the amount depends on how long you have been a resident of Canada and when you turned 18.
- The 2025 RRSP Contribution Room Limit will increase to a maximum of $32,490. Canadians can contribute up to 18% of their Gross Income to an RRSP. They are limited to this number of $32,490 in 2025 if they have a very high Income. Like with the TFSA, if you have past RRSP Contribution Room, you can add it to your new Contribution Room.
- The RRSP Contribution Deadline is March 3rd, 2025. Please get in touch with me well before this date to make sure we can allocate your contributions to the 2024 Tax Year.
- New Registered Education Savings Plan (RESP) Contribution Room will also open up. The maximum Federal Grant that a child can receive is $500 per year. You can go back and reclaim the Grant Money from the year before so if you haven’t added to your child’s RESP in a while, a $5,000 Contribution could give you $1,000 worth of Government Grants.
- Investment Loan Interest Statements for 2024 will start getting to people in the weeks ahead. You’ll want to hang onto these for your Income Tax Returns as this Interest can be Tax Deductible.
I know, lots to go over here. Just reach out if you’d like to get a review in or to discuss anything else. Have a great start to the year. We wish you all the best in the weeks and months ahead!!
Bryce A. Borden
1ATB Financial: The Seven, January 3, 2025
2Visual Capitalist: Charted: The Pyramid of S&P 500 Returns
3Reuters: Trump says stock markets will crash if he loses election
4Nasdaq: 2024 Review and 2025 Outlook
5MSN: Tesla Achieves Record Sales In China, Overtakes BYD In Global EV Sales For 2024
6S&P Global: Automotive Insights – Q3 2024 Canadian EV Information and Analysis
7ATB Financial: The Seven, January 3, 2025
