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My Investing Guide

Expertise that inspires confidence —

My Investing Guide

Dear advisors,

We are pleased to present the 2019 Investing Guide. This handy reference guide contains a wealth of relevant information to help you during your client meetings throughout the year.

Expertise that inspires confidenceEvery year, National Bank introduces a multitude of initiatives to optimize its range of solutions and ensure sound management. Experts work with the financial engineering team to make sure that you have all the tools necessary to constantly strive to better meet your clients’ needs.

The National Bank Investments team offers you:

> a full range of diversified and simple investment solutions

> fast, attentive and courteous service

> an innovative product development strategy

> a wide range of sales support tools

> presentations enabling you to earn professional development units (PDUs)

> research and analysis services via: – information sheets – rate curves

My Investing Guide

Table of contents—2018 in review .......................................................................04

2019 outlook ......................................................................... 07

Investment basics..................................................................09> The importance of updating your plan ......................................................10> Determining your investor profile ...............................................................13> Why diversify? .................................................................................................14> Diversification and rising interest rates ......................................................15> Diversification across geographic regions ...............................................16> Diversify the economic sectors ...................................................................17> Start saving early ...........................................................................................18> Rule of 72 .........................................................................................................20> Benefiting from systematic savings ...........................................................21> Long-term investing .......................................................................................22> Setting your emotions aside ........................................................................23> The importance of staying invested ...........................................................25> Resisting the temptation to time the markets .........................................27> Stay the course ...............................................................................................28> Periodic rebalancing, a value-added process .........................................29> The impact of dividends on the overall performance ............................30

Retirement ............................................................................. 31> Why save for retirement? ..............................................................................32> The withdrawal strategy ...............................................................................33> The 5 retirement risks ...................................................................................34

RRSP, TFSA and RESP .............................................................39> TFSA or RRSP, which one to choose? .........................................................40> RESPs and their benefits .............................................................................. 41

Investment solutions and strategies ...................................... 42> Why choose us? ..............................................................................................43> Meritage Portfolios® ......................................................................................44> NBI Exchange-Traded Funds .......................................................................45> NBI Funds .........................................................................................................46

Useful references ...................................................................48> Attribution rules .............................................................................................49> Compounding tables .....................................................................................50> CPP and QPP benefits ................................................................................... 51> Benefits of the Old Age Security Program ................................................52> RRIF and LIF .....................................................................................................53> Contribution limits .........................................................................................54> Understanding RESPs ...................................................................................55> Marginal tax rates for 2019 .........................................................................56

For investment specialists only. Do not reproduce nor distribute to clients.

04

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My Investing Guide

Source: Bloomberg.

Indices Change (%)

Canadian equities – S&P/TSX Composite Index (total return) -8.9%International equities – MSCI EAFE (CDN$) -5.85%American equities – S&P 500 (CDN$) (total return) 3.99%Fixed-income securities – FTSE TMX Canada Universe Bond Index 1.4%Global equities – MSCI World (CDN$) -0.20%Money market – FTSE TMX Canada Canadian 91-Day T-Bill Index 1.4%Emerging markets – MSCI Emerging Markets (CDN$) -6.82%Fixed-income securities – FTSE TMX Canada Corporate 1.1%

2018 in review—Main index returns in 2018


05

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My Investing Guide

Canadian sectors – S&P/TSX Composite Index (total return) Change (%)

Consumer Staples 2.0%Information Technology 13.0%Health Care -15.9%Consumer Discretionary -16.0%Industrials -2.4%Utilities -8.9%Telecommunications -0.8%Financial Services -9.3%Materials -9.3%Energy -18.3%

Currency Sept. 2018 Sept. 2017 Change (%)

US$ / CA$ 0.77 0.80 -3.40%CA$ / Euro 1.50 1.47 1.65%

Oil 73.25 51.67 41.77%Gold 1,192.50 1,280.15 -6.85%

2018 in review—

Source: Datastream, as at December 31, 2018.


06

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My Investing Guide

> After a spectacular 2017, 2018 was a disappointing year for most investors. With the exception of cash and government bonds, nearly all assets presented losses. For a classic passive portfolio (60% equities, 40% bonds), the end result is a poor yet not catastrophic loss of 4.7%.

> Increased supply from U.S. shale producers, a decline in emerging market growth prospects and OPEC’s inability to coordinate large-scale supply cuts until very late in the year all played their part in sending oil prices to their lowest since September 2017.

> Gold made a strong comeback in Q4 of 2018, rallying 7.5% over the period and acting as a safe haven for investors seeking shelter from the equity market sell-off.

> For Canadian equities, 2018 was the least favourable year since the 2008 financial crisis. The majority of sectors (8/11) saw negative returns, with Energy and Consumer Discretionary leading the pack, losing 18.3% and 16.0% respectively.

> In the United States, for the first time in a decade, the S&P 500 finished the year in the red after falling 4.4%. Despite a strong bull run from April to October, market sentiment soured in the final months of the year, paving the way for its worst December run (-10.24%) since 1931. A silver lining for Canadian investors exposed to the U.S. market: CAD-adjusted S&P 500 returns were positive, at 4.23%.

2018 in review—


07

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My Investing Guide

2019 outlook—> In 2018, market turbulence moved the valuation needle across all asset classes, but especially for global equities and safer

government bonds, while corporate credit spreads continue to display some valuation downside risk. We believe this argues in favour of an equity overweight.

> Global growth should slow in 2019, but not to the point of ending the ongoing economic expansion. U.S. labour market conditions and leading economic indicators still show no symptoms indicative of an upcoming recession.

> Both U.S. and Canadian monetary policies should continue to tighten toward a neutral level in 2019, but at a much slower pace. This context is likely to lead to modestly higher 10-year government bond yields over the course of the year. The removal of accommodative policies undoubtedly makes life hard for equities, which should therefore continue to exhibit a fair degree of volatility.

> Prudence should be the motto this year. The 2019 investment backdrop could hardly be more challenging, with global growth (and especially China) losing steam, the Federal Reserve increasingly prone to policy mistakes and a U.S. president seemingly willing to put the stability of the world economy at stake in his quest for re-election. These are the three key risks for this year.


08

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My Investing Guide

2019 outlook—Evolution of the price-earnings ratio of the major North American indices over the past 15 years

Source: Bloomberg.

0

5

10

15

20

25

Sept

. 04

Sept

. 05

Sept

. 06

Sept

. 07

Sept

. 08

Sept

. 09

Sept

. 10

Sept

. 11

Sept

. 12

Sept

. 13

Sept

. 14

Sept

. 16

Sept

. 15

Sept

. 17

Sept

. 18

RPric

e-ea

rnin

gs ra

tio

Date

S&P TSX Composite Index S&P 500 Index

Investment basics


10

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My Investing Guide Investment basics

The importance of updating your plan —As your situation changes with each major life event (the birth of a child, a promotion, a divorce, etc.), your finances change too! It is important to work with your advisor to update your plan.

Career-focused (18-34 age group)

Starting to save

Building portfolio

Planning according to goals Preparing

for retirement

Final stage of accumulation

Living retirement

Family-focused (35-49 age group)

Retirement-focused (50-64 age group)

Protection-focused (65 and older age group)

Generating income from investments to maintain standard of living during retirement

Estate planning


11

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Career-focused (18-34 age group) Family-focused (35-49 age group)

The importance of updating your plan—

Concerns:> Having enough money to pay for your education> Paying off your debts and ensuring sound budget management

Advice and key solutions:> Budget planning> Periodic savings> Financial education and greater awareness of saving

Students:> Student line of credit, if required (and banking offers)

Workers:> RRSP, TFSA> Line of credit> Mortgage

Concerns:> Paying off your debts and ensuring sound budget management> Taking care of day-to-day obligations while planning for your future> Being able to save money for projects without necessarily

having a plan> Saving time in managing finances

Advice and key solutions:> Personal line of credit and credit card> Mortgage financing> Periodic savings (renovation, travel, security, children and retirement)> RRSP, TFSA> RESP (children’s education)> Budget (short term) and financial (medium/long term) planning> Creating an emergency fund


12

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Retirement-focused (50-64 age group) Protection-focused (65 and older age group)

The importance of updating your plan —

Concerns:> Retirement planning: amount required and age> Tax strategies> Optimizing your financial situation (overall picture of your

personal finances)> Maximizing your returns without unduly compromising your capital> Entrusting your assets to a financially solid institution that is close by> Paying off your debts before retirement> Being able to make the transition from earning a salary to managing

income from many possible sources

Advice and key solutions:> More than ever, looking for advice and returns> Support and an optimal client experience before consolidating

your assets for retirement> Financial plan with an overall picture of your personal finances,

focused on retirement planning> Debt management> RRSP, TFSA> Mobile and Internet access> Solutions that facilitate the transition from the accumulation phase

to the withdrawal phase> Protection mandate in the event of incapacity and will

Concerns:> Ensuring the security and protection of your wealth> Having an unforeseen expense that prevents you from enjoying

your retirement (health)> Prematurely depleting your capital> Transferring your assets according to your wishes> Obtaining products adapted to your income needs> Simplifying the day-to-day management of your personal finances> Entrusting your assets to a financially solid institution that is close by > Being able to make the transition from earning a salary to managing

income from many possible sources

Advice and key solutions:> Accounts with power of attorney> Financial plan with an overall picture of your personal finances,

focused on withdrawal > Debt management> Solutions offering protection of principal and providing regular income> RRSP, RRIF, TFSA> Planning the transfer of your assets, trust > Protection mandate in the event of incapacity and will


13

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Determining your investor profile —

Your investor profile provides you with an optimal potential return based on your risk tolerance.

Expe

cted

Ret

urn

Volatility

Growth ProfileEquity Profile

Pure Equity Profile

Conservative Profile

Moderate Profile

Balanced Profile

There are seven different investor profiles, each representing different investment needs.

Diversified Fixed Income Profile

Canadian Equity Global EquityFixed Income Pure Equity Profile


14

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

32.76 18.75 6.42 55.08 17.58 9.87 15.96 41.42 24.25 20.70 21.08 28.29 3.99

27.14 9.81 3.33 35.04 12.16 9.67 15.20 36.02 15.30 18.65 8,90 16.91 1.41

20.94 4.43 -13.39 15.23 9.16 4.40 13.98 31.62 11.18 18.53 8.61 14.60 1.38

17.22 3.68 -22.62 14.87 8.33 1.29 13.53 13.52 10.55 5.10 7.57 13.47 -0.20

16.08 2.07 -26.73 13.45 6.74 1.00 7.61 12.98 8.79 3.52 5.17 9.08 -1.65

12.41 -5.10 -30.10 9.72 5.76 -2.94 7.18 4.30 7.04 1.58 1.66 7.78 -5.85

4.06 -6.78 -33.02 5.41 1.83 -8.72 3.60 1.01 4.38 0.63 0.51 2.52 -6.81

3.98 -10.28 -42.54 0.63 0.54 -16.42 1.01 -1.19 0.91 -8.33 -1.33 0.56 -8.88

Why diversify? —

* The Balanced profile is represented by a combination of the following indices: 45% FTSE TMX Canada Universe Bond Index, 25% S&P/TSX, and 30% MSCI World in CAD.Source: Bloomberg and Morningstar, from January 1 to December 31.

2006-2018 Annual return in percentage by asset category

Indices will always have their ups and downs.Through proper diversification, you can mitigate some of the risk associated with volatility.

Canadian stocks S&P/TSX CompositeInternational stocks MSCI Europe, Asia, and Far East (EAFE) in CADU.S. stocks S&P 500 in CADCanadian bonds FTSE TMX Canada Universe Bond IndexGlobal stocks MSCI World in CAD91-day T-Bill FTSE TMX Canadian 91-Day T-BillEmerging markets MSCI Emerging Markets in CADBalanced profile*


15

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* Correlation over 10 years, October 1, 2008 to September 30, 2018.Source: Bloomberg.

Given that bond prices generally move inversely to interest rates, a rate increase has a negative impact on bonds. The negative impact can be tempered by diversifying the portfolio using different asset classes that have a lower correlation with the FTSE TMX Canada Universe Bond Index.

Diversification and rising interest rates—

-2%

100%

80%

60%

40%

20%

0%

-20%

87%

23%

-8%

13%Interestrates

Bondprices

FTSE TMX CanadaCorporate Bond

S&P/TSX Preferred Share

S&P/TSX REIT(Real estate)

Canadian Equity (S&P/TSX Composite

in CAD)

U.S. Equity (S&P 500 in CAD)

Correlation between returns and the FTSE TMX Canada Universe Bond Index – 10 years*


16

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Diversification across geographic regions—Stock markets evolve quickly. Sound geographic diversification provides an opportunity to benefit from the best markets.

Changing makeup of the world’s stock markets over the last century

Source: Morningstar Direct: MSCI ACWI All Cap, as at January 31, 2019.

Stock Markets in 2018Stock Markets in 1900

United Kingdom 25%

United States 15%

Germany 13%France 11%

Russia 6%

Austria 5%

Belgium 4%Australia 3%

Other 10%

South Africa 3%Netherlands 3%

Italy 2%

Marchés boursiers en 1900

United Kingdom 5%

United States 54%

Japan 8%

China 4%Canada 3%France 3%

Switzerland 3%Germany 3%

Other Countries 9%

Australia 2%South Korea 2%

Taiwan 1%Hong Kong 1%

India 1%Brazil 1%

Stock Markets in 2018


17

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A healthy industry diversification can enhance your portfolio returns, while reducing the risk resulting from being overly exposed to a particular sector when it experiences an economic slowdown.

Sectoral distribution of major indices in North America

Source: Bloomberg, as at September 30, 2018.

S&P 500 IndexS&P/TSX Composite Index

Diversify the economic sectors —

TSX

Financialservices 34%

Industrials 11%

Utilities 5%

Materials 10%

Consumerdiscretionary 4%

Energy 19%

Informationtechnology 4%

Telecommunicationservices 3%

Health care 2%Consumer staples 3%

SP500

Financial services 13%

Health care 15%

Consumerdiscretionary 10%

Industrials 10%

Energy 6%

Utilities 10%

Consumerstaples 7%

Materials 2%Telecommunication

services 3% Information technology 21%


18

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Start saving early —

If the investor decides to start saving at age 50, he will have to save more than 50% of his income.

Assumption: Annual RRSP contribution of a person with a salary of $50,000 that increases by 2% annually. Effective annual return of 3.75%.

Are you familiar with the IQPF’s projection assumption standards?The projection assumptions used in this guide are based on the projection assumption standards of the (IQPF). For more information, refer to the Tools and forms section on the IQPF site (www.iqpf.org).

Annual contribution necessary to reach a target amount by age 65

Starting at age 30,contribution 18.00% of income



Age

Gro

wth

of c

apit

al

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

25 30 35 40 45 50 55 60 65

https://www.iqpf.org/en/index.en.html


19

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Start saving early —

1. Gross annual income indexed at 2%.2. Based on an effective annual return rate of 3.75%.

Age when you start saving Total contributions Total value at age 652

25 $211,407 $446,610

30 $193,193 $372,835

35 $173,083 $305,075

40 $150,880 $242,840

45 $126,366 $185,680

50 $99,301 $133,181

If you start saving early, you may end up with more than double the capital you invested!

Accumulated savings at age 65 after annual investments of 10% of the gross income1

(starting gross annual income at age 25: $35,000)


20

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Rule of 72—

To do this, simply divide the number 72 by the interest rate earned on your investment.

Rate of returnNumber of years required

to double investment

2% 36

3% 24

4% 18

5% 14

6% 12

7% 10

8% 9

9% 8

10% 7

Do you know this rule? It is possible to know approximately how many years it will take for an investment to double.


21

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Benefiting from systematic savings —

Assumption: Calculation based on an effective return of 3.75%.

$27,426

$54,852

$109,704

$219,408

$274,260

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

0 5 10 20 30 40

$16,495$13,196

$6,598$3,299$1,649

$36,323$29,058$14,529

$7,265$3,632

$88,810$71,048$35,524$17,762

$8,881

$164,658$131,726

$65,863$32,932$16,466

Number of years

Tota

l inv

estm

ent

$250

$200

$100

$50

$25

Monthly savings

Investing on a regular basis is a simple way to save, because it is done systematically.

Evolution of the portfolio value based on the monthly savings amount


22

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Long-term investing —Variability of returns for the different profiles

Val

eur

tota

le d

e l’i

nves

tiss

emen

t

Years

Secure Conservative Balanced Growth EquityModerate-40%

-20%

-30%

-10%

0%

10%

20%

30%

40%

1 5 10 1 5 10 1 5 10 1 5 10 1 5 10 1 5 10

The six profiles are represented by the following combinations of indexes: Secure: 35% FTSE TMX Canada 91 Day T-Bill, 65% FTSE TMX Canada Universe Bond • Conservative: 15% FTSE TMX Canada 91 Day T-Bill, 65% FTSE TMX Canada Universe Bond, 10% S&P/TSX, 10% MSCI World in CAD • Moderate: 65% FTSE TMX Canada Universe Bond, 20% S&P/TSX, 15% MSCI World in CAD • Balanced: 45% FTSE TMX Canada Universe Bond, 25% S&P/TSX, 30% MSCI World in CAD • Growth: 25% FTSE TMX Canada Universe Bond, 30% S&P/TSX, 45% MSCI World in CAD • Equity: 10% FTSE TMX Canada Universe Bond, 35% S&P/TSX, 55% MSCI World in CAD. Source of index returns: Morningstar, from October 1, 2008 to September 30, 2018.

A higher risk tolerance is required for expectations of more attractive returns.


23

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In terms of investment, letting your emotions take over is rarely a winning strategy.

Setting your emotions aside—Investing can make you live a whole range of emotions.

Optimism Optimism

Excitement

Thrill

Euphoria Anxiety

Capitulation

Denial

Despondency

Fear

Depression

Desperation

Hope

Panic Relief

“Wow, I feel great about this investment!”

“Have I made the right investment choices?”

Point of maximum

financial risk

Point of maximum financial opportunity

“Temporary setback, I’m a long-term investor.”


24

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Despite the bad news in past years, the S&P/TSX index has generated an average annual compound return of 9.5%.

Setting your emotions aside—

$25,000

$10,000

$5,000

$0

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

$15,000

$20,000

1968 USSR invades Czechoslovakia 1999 Y2K paranoia1970 US invades Cambodia – new peak in Vietnam War 2000 Tech bubble bursts1971 Wage / price freezes in the U.S. 2001 9-11 terrorist attacks1973 Energy crisis / Arab oil embargo 2002 Major accounting scandals sap confidence in financial system1974 Nixon resigns to pre-empt impeachment 2003 War in Iraq1975 Clouded economic prospects 2005 London metro and bus bombings1977 Markets begins a major slump 2007 Subprime crisis1978 Interest rates rise – Stagflation 2008 Global financial system near collapse1979 USSR invades Afghanistan 2009 Major equity markets 50% below their peaks1980 Oil prices skyrocket – First Quebec referendum 2011 U.S. debt downgraded, threat of double dip recession1981 Short-term interest rates in Canada hit 21% 2012 European crisis: debt, unemployment, austerity1982 Falklands War 2013 U.S. budget crisis, weak growth in China1990 Persian Gulf crisis / Iraq invades Kuwait 2014 Crisis in Ukraine1991 Coup d’état in Russia 2015 Paris attacks1993 Bombing of World Trade Center 2016 Brexit and U.S. elections1995 Second Quebec referendum 2017 Increase in interest rate in Canada and the United States1997 “Asian Flu” financial crisis 2018 U.S. Trade Rates/NAFTA Renegotiation

Source: Bloomberg. Total return for the S&P/TSX Composite Index from September 1, 1960 to September 30, 2018. Effective May 1, 2002, the TSE 300 Composite Index was retired and replaced with the S&P/TSX Composite Index. For more information on the changes to this index, please visit tsx.com.

Bad news fails to derail a long-term trend.

Growth of $100 invested in the S&P/TSX Total Return Index

https://www.tsx.com/?lang=en


25

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The importance of staying invested—

Staying invested despite market fluctuations can be more advantageous than trying to time the market.

All values are represented in CAD. Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Market: S&P/TSX. Source: Bloomberg, from March 1, 2008 to September 30, 2018.

$60,000

2008 2009 2010 2011 2012 2013 20182014 2015 20172016

$80,000

$100,000

$120,000

$140,000

$200,000

$160,000

$180,000

$121,889

$175,374

$77,883

Stay invested in stock market

Exit market and reinvest after 1 year

Exit market and invest in cash

Recession (Oct. 2008 - June 2009)


26

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The importance of staying invested—

Source: CIO Office (data from Thomson Reuters Datastream)

Remaining invested despite significant declines has paid off in the medium and long term. The average annual performance five years after the worst of the first 10 quarters is 12.5%, or 3.5% above the historical annual average.

S&P/TSX Total Return Index (Period: Jan. 1969 to Sep. 2018)

10 Worst Quarters

Performance

Following Quarter

Following Year

Following 3 Years(Annualized)

Following 5 Years(Annualized)

Q3 1998 -23.5% 16.0% 25.9% 8.3% 7.4%

Q4 2008 -22.7% -2.0% 35.1% 13.2% 11.9%

Q3 1981 -19.4% 5.1% -10.4% 13.1% 14.0%

Q2 1970 -18.6% 13.2% 27.5% 15.9% 9.3%

Q4 1987 -18.3% 5.7% 11.1% 4.7% 4.9%

Q3 2008 -18.2% -22.7% 0.5% 2.7% 4.8%

Q1 1982 -17.7% -12.7% 42.6% 23.0% 23.2%

Q3 1974 -16.5% 2.9% 23.2% 11.7% 21.8%

Q2 1974 -16.1% -16.5% 10.0% 5.9% 15.4%

Q1 2001 -14.5% 2.1% 4.9% 6.0% 11.7%

Average -18.6% -0.9% 17.0% 10.5% 12.5%


27

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To obtain a return equal to that of the S&P/TSX, the investor would have had to make the right decisions 60% of the time. Achieving 65.60%, i.e., 2.5% more than the index would be exceptional, even unrealistic. In addition, frequently moving in and out of the markets could trigger more fees for the investor!

Source: Bloomberg, from January 1, 1958 to September 30, 2018.

Resisting the temptation to time the markets—

$100

$1,000

$10,000

$100,000

$1,000,000 19

64

1966

19

68

1960

19

58

1962

1970

19

72

1974

19

76

1978

19

80

1982

19

84

1986

19

88

1990

19

92

1994

19

96

1998

20

00

2002

20

04

2006

20

08

2010

20

12

2014

2018

20

16

Valu

e of

the

inve

stm

ent

If the investor made the right decisions…

His return would have been…

50% of the time 4.74%

60% of the time 9.05%

65.60% of the time 11.55%

If the client had stayed invested 100% of the time, his return would have been 9.05% (return of the S&P/TSX).

Results for an investor who tries to time the markets(moves in and out of the market every month, based on his expectations for returns)


28

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Every asset category, over the long term, experiences growth despite market fluctuations.

Source: Bloomberg. Total return for the S&P/TSX Composite Index from October 1, 1977 to September 30, 2018. Effective May 1, 2002, the TSE 300 Composite Index was retired and replaced with the S&P/TSX Composite Index. For more information on the changes to this index, please visit tsx.com.

Years

$100

$1,000

$10,000

1977

19

78

1979

19

80

1981

19

82

1983

19

84

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

2014

2016

20

17

2018

2015

2013

Valu

e of

the

inve

stm

ent

(Initi

al in

vest

men

t of $

100)

July - Nov. 8725%

20 months

Dec. 89 - Oct. 9020%

29 months

April - Aug. 9827%

15 months

Aug. 00 - Sept. 0243%

31 months

May 08 - Febr. 0943%

24 months

June 81 - 8239%

10 months

Period:Total decline:

Market recovery:

12 months

4 months

10 months

4 months

25 months

9 months$5,461.35

$1,282.53

5-year guaranteed investment certificates (GICs)S&P/TSX Composite Index

Stay the course—Canadian market fluctuations (from October 1, 1977 to September 30, 2018)

https://www.tsx.com/?lang=en


29

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Periodic rebalancing of a portfolio brings it back in line with its target allocation and optimizes performance.

Periodic rebalancing, a value-added process—

Starting mix Six months later

40%

60%

Initial allocation

Portfolio allocation after rebalancing

Portfolio allocation after market fluctuations

Rebalancing transactions

Sell 10% Asset class B

Buy 10% Asset class A

Ass

et c

lass

A

In the medium or long term, day-to-day variations in different asset classes cause an undesired change in the allocation of an investment portfolio.

Example of change in the allocation of an investment portfolio

40%

60%

30%

70%

Ass

et c

lass

B


30

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Source: Bloomberg.

S&P/TSX Total Return Index S&P/TSX Composite

The impact of dividends on the overall performance—Growth of $100 in the S&P/TSX Total Return Index versus S&P/TSX Composite (from September 30, 1998 to September 30, 2018)

$258.90

$420.49

$0

$100

$200

$300

$400

$350

$250

$150

$50

Sept

. 17

Sept

. 16

Sept

. 98

Sept

. 18

Sept

. 99

Sept

. 00

Sept

. 01

Sept

. 02

Sept

. 03

Sept

. 04

Sept

. 05

Sept

. 06

Sept

. 07

Sept

. 08

Sept

. 09

Sept

. 10

Sept

. 11

Sept

. 12

Sept

. 13

Sept

. 14

Sept

. 15

$450

Retirement


32

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My Investing Guide Retirement

Why save for retirement?—

Government plans Other sources Guaranteed Income Supplement (GIS)

0%

Gov.plans

Individual contribution27.4%

Governmentplans

Individual contribution30.9 %

Governmentplans


Governmentplans


10%

20%

30%

40%

50%

60%

70%

80%

$40,000 $50,000 $60,000 $100,000

Repl

acem

ent r

ate

Annual gross income before retirement

12.2% 7.3%

5.1%

3.1%

15.2% 23.6% 30.5%

46.3%

42.6% 39.1% 34.4% 20.6%

Note: These figures are based on amounts applicable in Quebec for government plans (QPP, OAS) and the Guaranteed Income Supplement from January to March 2018.

For a retiree with pre-retirement income of $60,000 and no savings, government plans will replace the equivalent of 39.5% of his gross annual income before retirement. However, if the retiree’s savings were sufficient to replace 70% of his pre-retirement income, he would lose the Guaranteed Income Supplement.The individual contribution therefore has to be 35.6%.

In some cases, government plans are insufficient to live a fulfilling retirement. Saving will help you get more out of your retirement.

Replacement rate needed to reach 70% of active period income


33

—


It is usually advantageous to withdraw the non-registered investments first.

The withdrawal strategy—

0

5

10

15

20

25

30

3530.0 years29.5 years

27.3 years27.2 years25.1 years

24.5 years

Dur

atio

n of

inve

stm

ents

RRSP-TFSA-NR TFSA-RRSP-NR TFSA-NR-RRSP RRSP-NR-TFSA NR-RRSP-TFSA NR-TFSA-RRSP

Hypothesis: Start-up capital distributed equally in an RRSP, a TFSA and non-registered investments. The portfolio is continually rebalanced to 50% in equities (return of 6.5%; 80% capital gains, 20% dividends) and 50% in fixed income (return of 4%). The calculations are made at the margin, assuming a tax rate of 40% and a special tax treatment of capital gains and dividends.

NR: Non-registered investments

The order of withdrawal of your investments has a significant influence on the duration of your capital.


34

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According to recent statistics, if you are currently 60 years of age, there is a 50% chance that you or your spouse will reach the age of 94. If your health is better than that of the general population, then your life expectancy is even longer!

Probability of survival

10% 25% 50%

Age M F M/F M F M/F M F M/F

Age

at w

hich

the

prob

abili

ty

of s

urvi

val i

s re

ache

d

20 99 101 102 95 97 99 90 93 95

30 98 101 102 95 97 99 90 92 95

40 98 100 101 94 97 98 89 92 95

50 98 100 101 94 96 98 89 91 94

60 97 100 101 94 96 98 89 91 94

70 97 99 100 94 96 97 89 91 94

80 97 100 100 94 96 98 90 92 94

90 99 101 102 96 98 99 94 95 97

100 105 105 106 103 103 104 102 102 103

The 5 retirement risks—

https://www.iqpf.org/docs/default-source/outils/iqpf-normes-projection2018-eng.pdfSource: Institut québécois de planification financière and Financial Planning Standards Council. Projection assumption standards 2018.

1. Time

Taking into account your life expectancy when planning your retirement reduces the risk of outliving your capital.

https://www.iqpf.org/docs/default-source/outils/iqpf-normes-projection2018-eng.pdf


35

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The 5 retirement risks—2. Inflation

Inflation has a big impact on how long your capital will last. Good retirement planning takes inflation into account!

Impact of inflation on basic food prices

Data source: Bank of Canada, Statistics Canada. Inflation Calculator.

The biggest increases have been for essential items. For example, between 1965 and 2014, clothing prices went up by 254%, food prices by 782% and gas prices by 1391%. Inflation is an invisible cost but its impact is very real.

Price in 1965 Price in 2014

$2

$4

$0.63 $0.64$0.26

$4.52

$3.21

$2.33 Pound of butter

Dozen eggs

Litre of milk


36

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Source: NATIONAL HEALTH EXPENDITURE DATABASE, 1975 TO 2017, Canadian Institute for Health Information.

55-59 60-64 65-69 70-74 75-79 80-84 85-89 90+$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Age groups

$3,852.43 $4,791.24$6,606.89

$8,495.32$11,570.11

$16,314.56

$24,655.03

$29,411.53

3. Health care

Canadians’ spending on health care tends to increase over time. A complete plan must take into account the risk associated with higher health care expenditures.

The government’s total health care expenditures by age group


37

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Hypothetical value of assets held in a $100,000 no-fee, non-taxable account invested in a portfolio of Canadian equities (25%), U.S. equities (30%) and fixed-income securities (45%) with withdrawal rates adjusted for inflation each year. Withdrawal projections that have starting points in January 1938 to January 1984 and ending points 35 years later, in December 1972 and December 2018 have been made. Withdrawals are adjusted annually according to 100% of the CPI growth that prevailed. Each curve represents the median of 47 projections. There are fewer scenarios than the median illustrated. Canadian and U.S. equities are represented by the S&P/TSX and S&P 500 indexes respectively. Fixed-income securities are represented by the FTSE TMX Canada Index for the period between 1982 and 2018. Since that index did not exist before 1980, the index is simulated for the years between 1938 and 1979 with the average of long-term bonds and 91- day Treasury bills. This graph is provided for illustration purposes only and does not represent any actual investments. Past performance is no guarantee of future returns.

4. The rate of your withdrawals

If you withdraw funds too quickly, you could deplete your capital prematurely. Reviewing your withdrawal rate periodically is essential!

Projection of different withdrawal rates on a 35-year period

$50,000

$100,000

$150,000

$200,000

$250,000

Age $0

65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99

Valu

e of

por

tfol

io

A retired person aged 65 will run outof money at age 97 if he/she withdraws6% of his/her assets every year (adjusted upwards for inflation).

4% 6%5% 10%Withdrawal rate


38

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B

100% Bonds

Optimal mix

100% Stocks

Risk

Yiel

d po

tent

ial

C

A

Point C shows that, for the same level of risk, a superior return can be obtained if stocks are added to the bond portfolio.

25% Stocks / 75% Bonds

5. Asset mix

A sound allocation of investments allows you to reduce overall risk and enhance your portfolio’s potential return. The right combination of risk and return can make your capital last.

Theory of efficient portfolio selection

RRSP, TFSA and RESP


40

—

My Investing Guide RRSP, TFSA and RESP

TFSA or RRSP, which one to choose?—

RRSP TFSAEligible age None 18 yearsPlan maturity (winding up) Year of 71st birthday None

Contribution limit 2019: $26,500, 2018: $26,230, 2017: $26,010 up to 18% of earned income

2019: $6,000, 2018: $5,500, 2017: $5,500 (regardless of earned income)

Indexing of contribution limit Based on Average Industrial Wage growth Based on CPI, in $500 incrementsCarrying forward unused room Annually AnnuallyWithdrawal limits None NoneReplacement of withdrawals No (except for HBP and LLP) Yes, the following yearTax deductions for contributions Yes NoTax on income No NoTax on withdrawals Yes NoQualifying investments Very wide range Similar to RRSPsExcess contributions 1% penalty/month if > $2,000 1% penalty/monthImpact on government benefits Yes NoFamily patrimony Yes NoContribution to spousal account Yes No, but funds can be givenTax impact at death Yes, if no rollover NoTransfer-breakup/death (spouse) Yes YesUse as collateral No YesLoan interest Non-deductible Non-deductible

Source: http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/lmts-eng.html

http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/lmts-eng.html


41

—

My Investing Guide RRSP, TFSA and RESP

RESPs and their benefits—It is best to start investing as soon as a child is born to benefit from the government grants and to establish a solid investment strategy. The earlier you invest, the larger your gains will be.

Annual investment of $2,500 in an RESP at a 3.75% rate of return*

Contributing on a regular basis is also a simpler way to save because it is done systematically.

* The figures in this chart are assumptions only and are provided to illustrate the potential advantages of investing in an RESP under identical conditions.

$73,302

$49,103

$27,398

$9,342$10,000

$30,000

$20,000

$50,000

$40,000

$60,000

$80,000

$70,000

Valu

e of

the

inve

stm

ent

Child’s age

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17$0

At 15 years old

At 5 years old

At 10 years old

At birth

The Canada Education Savings Grant (CESG) has been added to the annual contributions.

Investment solutions and strategies


43

—

My Investing Guide Solutions and strategies

OP4+: A rigorous governance processContinued evaluation of external portfolio managers based on the following criteria:

Why choose us? Our different approach—

Our approach> 100% of portfolio management of the funds built

for NBI’s product shelf entrusted to other firms

> NBI: Leading major-bank-affiliated asset manager in Canada to favour this approach

Benefits> Opportunity to select amongst the best portfolio

managers in the world

> Option to change them if they no longer meet our criteria

> Creation of new investment possibilities

100% open architecture

OrganizationStrong organization with top-tier investment culture

PeopleTalented and stable group of investors

ProcessEmphasis on proven management processes to select securities, build portfolios and manage risk

PortfolioOptimized portfolio construction that follows the investment process and ensures sound diversification

PerformanceStrong and predictable risk-adjusted returns

+Integration of Environment, Social and Governance factors

nbinvestments.ca

https://www.nbinvestments.ca


44

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Meritage® Portfolios Independent. Diligent. Proactive.—

Meritage Portfolios

Choice of more than 30 model portfolios: A solution for every investor profile

Designed to reduce risk while optimizing return

Distribution with potential tax benefits*

Rigorous selection and periodic evaluation process of portfolio managers

* Distributions are comprised of net income and may also include a significant return of capital component. A return of capital reduces the value of your original investment and is not the same as the return on your investment. Returns of capital that are not reinvested may reduce the net asset value of the portfolio and the portfolio’s subsequent ability to generate income.

Diversification Optimization

nbinvestments.ca/meritageportfolios

M

anagement Styles Regions / Sec

tors

As

set C

lasses Market Capitalizations

®

Meritage Portfolios made up of mutual funds Auto-rebalancing

Meritage Tactical ETF Portfolios Tactical deviations

https://www.nbinvestments.ca/products/meritage-portfolios.html

TSX: NREANBI Global Real Assets Income ETF

TSX: NPRFNBI Active

Canadian Preferred Shares ETF

TSX: NFAMNBI Canadian

Family Business ETF

TSX: NALTNBI Liquid

Alternatives ETF


45

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NBI Exchange-Traded Funds An innovative lineup—

NBI ETFs

> Innovative portfolio and risk diversification opportunities

> Non-traditional active and alternative niche exposure

Lineup of ETFs updated in March 2019.

nbinvestments.ca/etf

To stay up to date on the latest information, visit:

https://www.nbinvestments.ca/products/exchange-traded-funds.html

Money Market Funds

Short-Term and Income Funds

Diversified Funds

Canadian Equity Funds

Global Equity Funds

Specialty Funds

Index Funds


46

—


NBI Funds Simplify your processes with our endless opportunities—

NBI Funds

> A complete range of investment funds for every risk profile, designed to help Canadian investors pursue their financial goals

> Seek to provide risk-adjusted investment returns over the long term

> Available alone or as a complement to a larger investment strategy

> Cater to multiple investment profiles

nbinvestments.ca

https://www.nbinvestments.ca/products/nbi-funds.html


47

—


Meritage Portfolios® (the “Portfolios”) are managed by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with investments in the Portfolios. Please read the prospectus of the Portfolios before investing. The Portfolios’ securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Portfolios are not guaranteed, their values change frequently and past performance may not be repeated. ® MERITAGE PORTFOLIOS and the Meritage Portfolios logo are trademarks of National Bank of Canada, used under license by National Bank Investments Inc. All trademarks of the mutual fund and ETF companies are their property. National Bank Investments Inc. is an authorized user. Fidelity Investments is a registered trademark of FMR LLC.

NBI ETFs are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, management fees and expenses all may be associated with investments in exchange-traded funds (ETFs). Please read the prospectus or ETF Fund Facts document(s) before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. ETF units are bought and sold at market price on a stock exchange, and brokerage commissions will reduce returns. NBI ETFs do not seek to return any predetermined amount at maturity.

NBI Funds (the “Funds”) are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Funds before investing. The Funds’ securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Funds are not guaranteed, their values change frequently and past performance may not be repeated.

Useful references


49

—

My Investing Guide References

Attribution rules1

—

1. Different attribution rules apply for RRSP or TFSA contributions.2. Provided the main reason for making the loan was not to reduce or avoid tax of the lender.

Party/Source GiftLoan at no interest or lower

than the Prescribed RateLoan at Prescribed or Commercial Rate

Spouse or Partner

Income Attributed to giftor Attributed to lender No Attribution

Capital Gains Attributed to giftor Attributed to lender No Attribution

Second-Generation Income No Attribution No Attribution No Attribution

Child Under 18

Income Attributed to giftor Attributed to lender No Attribution

Capital Gains No Attribution No Attribution No Attribution

Second-Generation Income No Attribution No Attribution No Attribution

Child Over 18

Income No Attribution No Attribution2 No Attribution

Capital Gains No Attribution No Attribution2 No Attribution


50

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Compounded value of a single deposit of $1*Year 1% 2% 3% 4% 5% 6% 7% 8%

1 $1.01 $1.02 $1.03 $1.04 $1.05 $1.06 $1.07 $1.08 5 $1.05 $1.10 $1.16 $1.22 $1.28 $1.34 $1.40 $1.47

10 $1.10 $1.22 $1.34 $1.48 $1.63 $1.79 $1.97 $2.16 15 $1.16 $1.35 $1.56 $1.80 $2.08 $2.40 $2.76 $3.17 20 $1.22 $1.49 $1.81 $2.19 $2.65 $3.21 $3.87 $4.66

Compounded value of a deposit of $1 per year*Year 1% 2% 3% 4% 5% 6% 7% 8%

1 $1.01 $1.02 $1.03 $1.04 $1.05 $1.06 $1.07 $1.08 5 $5.15 $5.31 $5.47 $5.63 $5.80 $5.98 $6.15 $6.34

10 $10.57 $11.17 $11.81 $12.49 $13.21 $13.97 $14.78 $15.65 15 $16.26 $17.64 $19.16 $20.82 $22.66 $24.67 $26.89 $29.32 20 $22.24 $24.78 $27.68 $30.97 $34.72 $38.99 $43.87 $49.42

Compounded value of a deposit of $1 per month*Year 1% 2% 3% 4% 5% 6% 7% 8%

1 $12.06 $12.13 $12.19 $12.26 $12.32 $12.39 $12.45 $12.51 5 $61.54 $63.12 $64.74 $66.40 $68.09 $69.82 $71.60 $73.41

10 $126.23 $132.82 $139.79 $147.18 $154.99 $163.26 $172.02 $181.28 15 $194.21 $209.76 $226.80 $245.46 $265.90 $288.31 $312.86 $339.78 20 $265.66 $294.72 $327.66 $365.03 $407.46 $455.65 $510.41 $572.66

* Payment at beginning of period.

Compounding tables—


51

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Beneficiary’s age QPP and CPP

60 years $738.93

61 years $822.06

62 years $905.19

63 years $988.32

64 years $1,071.45

65 years $1,154.58

66 years $1,251.57

67 years $1,348.55

68 years $1,445.54

69 years $1,542.52

70 years and over $1,639.51

Maximum monthly amounts payable for pensions in 2019 (for a new beneficiary)

CPP and QPP benefits —

Sources: Retraite Québec. Canada Pension Plan.


52

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Benefits of the Old Age Security Program —

1. The maximum amount includes GIS and Allowances benefits. To learn more, visit Service Canada’s website at https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html.

2. Maximum annual income does not include the OAS pension and the first $3,500 in employment income. 3. The OAS pension repayment range in 2019 is between $77,980 and $125,896. Source: Service Canada.

Type of Benefit RecipientMaximum Monthly

Benefit1

MaximumAnnual Income2

Maximum annual income for extended

benefits2

Old Age Security pension3 All recipients $601.45

Guaranteed Income Supplement (GIS)

Single person $898.32 $18,240 $8,720

Spouse of pensioner $540.77 $24,096 $7,840

Spouse of non-pensioner $898.32 $43,728 $17,440

Spouse of Allowance recipient $540.77 $43,728 $7,840

Allowance All recipients $1,142.22 $33,696 $7,840

Allowance for the survivor All recipients $1,361.56 $24,552 $8,720

January to March 2019

https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html


53

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RRIF and LIF —

Age on January 1st

Minimum rate

Age on January 1st

Minimum rate

Age on January 1st

Minimum rate

65 4.00% 76 5.98% 86 8.99%66 4.17% 77 6.17% 87 9.55%67 4.35% 78 6.36% 88 10.21%68 4.54% 79 6.58% 89 10.99%69 4.76% 80 6.82% 90 11.92%70 5.00% 81 7.08% 91 13.06%71 5.28% 82 7.38% 92 14.49%72 5.40% 83 7.71% 93 16.34%73 5.53% 84 8.08% 94 18.79%74 5.67% 85 8.51% 95 + 20.00%75 5.82%

Source: Retraite Québec.

Life income fundTo learn more about the life annuity and temporary income you can draw from your LIF, go to: retraitequebec.gouv.qc.ca, under Retirement and Planning.

Minimum annual withdrawals as a percentage of the RRIF and LIF value (as at January 1, 2019)

https://www.retraitequebec.gouv.qc.ca/en/Pages/accueil.aspx


54

—


Source: Canada Revenue Agency.

Taxation year TFSA contribution limit

2009 to 2012 $5,000/year2013 and 2014 $5,500/year

2015 $10,0002016 to 2018 $5,500/year

2019 $6,000/year

* Assuming no membership in an employer-sponsored pension plan or DPSP.Source: Canada Revenue Agency.

Contribution limits—

Taxation year RRSP contribution limit* If earned income in the prior year was at least…

2018 $26,230 $145,7222019 $26,500 $147,2222020 $27,230 $151,2782021 Indexed according to growth of the Average Industrial Wage in Canada

TFSA

If you have never contributed to a TFSA, you can contribute up to $63,500 this year.—

RRSP

The notice of assessment indicates the maximum RRSP contribution.


55

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The Registered Education Savings Plan allows you to put money aside (up to $50,000) for a child’s post-secondary education and let it grow tax-free.

Very attractive grants

> Canadian Education Savings Grant (CESG):

(up to $7,200)

> Quebec Education Savings Incentive (QESI): An amount equal to 50% of the CESG amount (for Quebec residents only) based on family income in 2018. The thresholds correspond to the first two 2019 Quebec tax brackets.

> Canada Learning Bond (CLB)1: An immediate payment of $500, plus $100 each year for a maximum of 15 years. Maximum additional grant of $2,000 over the length of the plan. An amount of $25 is also received when the account is opened.

> Alberta Centennial Education Savings Plan: As of March 26, 2015, the government of Alberta announced that the Alberta Centennial Education Savings Plan (Alberta’s provincial plan) would be closing. To learn more, please get in touch with the Canada Education Savings Program or call 1-888-276-3624.

> British Columbia: A single grant of $1,200 given to eligible children born on January 1, 2006, or later. When an eligible child reaches the age of six, the subscriber may apply for the grant. To learn more, please visit https://www2.gov.bc.ca/gov/content/education-training/k-12/support/scholarships/bc-training-and-education-savings-grant.

> Saskatchewan: As of January 1, 2018, the government of Saskatchewan has suspended the SAGES grant program.

1. Available for all children residing in Canada born after 2004, provided the family qualifies for the National Child Benefit Supplements. Typically, such families have a net income under $46,605.

Parents’ income in 2018CESG rate

CESG if $2,500 contributedFirst $500 Surplus

< $47,630 40% 20% $600

Between $47,630 and $95,259 30% 20% $550

> $95,259 20% 20% $500

Understanding RESPs—

https://www2.gov.bc.ca/gov/content/education-training/k-12/support/scholarships/bc-training-and-education-savings-grant


56

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Marginal tax rates for 2019Quebec and Ontario

2019 combined marginal tax rates (Ontario) based on source of income (%)1

Taxable incomeRegular Dividends

Capital gainsIncome taxes Tax on excess (%) Ineligible Eligible

$10,582 – 5.05% 2.03% 0.00% 2.53% $12,069 $75 20.05% 8.89% 0.00% 10.03% $43,906 $6,458 24.15% 13.61% 0.00% 12.08% $47,630 $7,358 29.65% 19.93% 7.56% 14.83% $77,317 $16,160 31.48% 22.04% 8.92% 15.74% $87,813 $19,464 33.89% 24.81% 12.24% 16.95% $91,098 $20,578 37.91% 29.43% 17.79% 18.95% $95,259 $22,155 43.41% 35.76% 25.38% 21.70% $147,667 $44,905 46.41% 39.21% 29.52% 23.20% $150,000 $45,988 47.97% 41.00% 31.67% 23.98% $210,371 $74,947 51.97% 45.60% 37.19% 25.98% $220,000 $79,952 53.53% 47.40% 39.34% 26.76%

1. Does not take into account the Ontario moderate-income credit of $244. If income exceeds $15,087, 5.05% of the credit is recovered; the full amount is recovered at $19,819.

2019 combined marginal tax rates (Quebec) based on source of income (%)



$12,069 – 12.53% 5.73% 0.00% 6.26% $15,269 $401 27.53% 16.60% 4.44% 13.76% $43,790 $8,251 32.53% 22.35% 11.34% 16.26% $47,630 $9,500 37.12% 27.63% 17.66% 18.56% $87,575 $24,327 41.12% 32.23% 23.18% 20.56% $95,259 $27,486 45.71% 37.51% 29.52% 22.86% $106,055 $32,421 47.46% 39.53% 31.93% 23.73% $147,667 $52,170 49.97% 42.41% 35.39% 24.98% $210,371 $83,500 53.31% 46.25% 40.00% 26.65%


57

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Marginal tax rates for 2019Alberta and Manitoba

2019 combined marginal tax rates (Alberta) based on source of income (%)



$12,069 – 15.00% 6.87% 0.00% 7.50% $19,369 $1,095 25.00% 16.11% 0.00% 12.50% $47,630 $8,160 30.50% 22.44% 7.56% 15.25% $95,259 $22,687 36.00% 28.76% 15.15% 18.00% $131,220 $35,633 38.00% 31.06% 17.91% 19.00% $147,667 $41,883 41.00% 34.51% 22.05% 20.50% $157,464 $45,900 42.00% 35.66% 23.43% 21.00% $209,952 $67,945 43.00% 36.81% 24.81% 21.50% $210,371 $68,125 47.00% 41.41% 30.33% 23.50% $314,928 $117,267 48.00% 42.56% 31.71% 24.00%

2019 combined marginal tax rates (Manitoba) based on source of income (%)



$9,626 – 10.80% 11.52% 3.86% 5.40% $12,069 $264 25.80% 18.38% 3.86% 12.90% $32,670 $5,579 27.75% 20.63% 6.56% 13.88% $47,630 $9,730 33.25% 26.95% 14.12% 16.63% $70,610 $17,371 37.90% 32.30% 20.53% 18.95% $95,259 $26,713 43.40% 38.62% 28.12% 21.70% $147,667 $49,458 46.40% 42.07% 32.26% 23.20% $210,371 $78,553 50.40% 46.67% 37.78% 25.20%


58

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2019 combined marginal tax rates (Saskatchewan) based on source of income (%)



$12,069 – 15.00% 6.87% 0.00% 7.50% $16,065 $599 25.50% 15.07% 0.00% 12.75% $45,225 $8,035 27.50% 17.37% 2.07% 13.75% $47,630 $8,697 33.00% 23.70% 9.63% 16.50% $95,259 $24,414 38.50% 30.02% 17.22% 19.25% $129,214 $37,487 40.50% 32.32% 19.98% 20.25% $147,667 $44,960 43.50% 35.77% 24.12% 21.75% $210,371 $72,237 47.50% 40.37% 29.64% 23.75%

2019 combined marginal tax rates (British Columbia) based on source of income (%)1



$10,682 – 5.06% 3.57% 0.00% 2.53% $12,069 $70 20.06% 10.43% 0.00% 10.03% $40,707 $5,815 22.70% 13.47% 0.00% 11.35% $47,630 $7,386 28.20% 19.79% 7.56% 14.10% $81,416 $16,914 31.00% 23.01% 7.56% 15.50% $93,476 $20,653 32.79% 25.07% 7.96% 16.40% $95,259 $21,237 38.29% 31.39% 15.55% 19.15% $113,506 $28,224 40.70% 34.17% 18.88% 20.35% $147,667 $42,128 43.70% 37.62% 23.02% 21.85% $153,900 $44,852 45.80% 40.03% 25.92% 22.90% $210,371 $70,715 49.80% 44.63% 31.44% 24.90%

Marginal tax rates for 2019Saskatchewan and British Columbia

1. Does not take into account the British Columbia moderate-income credit of $464. If income exceeds $20,144, 3.56% of the credit is recovered; the full amount is recovered at $32,869.


59

—


2019 combined marginal tax rates (New Brunswick) based on source of income (%)



$10,264 – 9.68% 7.97% 0.00% 4.84% $12,069 $175 24.68% 14.83% 0.00% 12.34% $42,592 $7,708 29.82% 20.75% 1.13% 14.91% $47,630 $9,210 35.32% 27.07% 8.69% 17.66% $85,184 $22,474 37.02% 29.03% 11.04% 18.51% $95,259 $26,204 42.52% 35.35% 18.63% 21.26% $138,491 $44,586 43.84% 36.87% 20.45% 21.92% $147,667 $48,609 46.84% 40.32% 24.59% 23.42% $157,778 $53,345 49.30% 43.15% 27.99% 24.65% $210,371 $79,273 53.30% 47.75% 33.51% 26.65%

2019 combined marginal tax rates (Nova Scotia) based on source of income (%)1



$11,481 – 8.79% 6.67% 0.00% 4.40% $12,069 $52 23.79% 13.54% 0.00% 11.90% $25,000 $3,128 24.32% 14.14% 0.65% 12.16% $29,590 $4,244 30.48% 21.23% 9.15% 15.24% $47,630 $9,742 35.98% 27.55% 16.71% 17.99% $59,180 $13,898 37.70% 29.53% 19.08% 18.85% $75,000 $19,861 37.17% 28.92% 18.35% 18.59% $93,000 $26,552 38.00% 29.88% 19.50% 19.00% $95,259 $27,410 43.50% 36.20% 27.09% 21.75% $147,667 $50,208 46.50% 39.65% 31.23% 23.25% $150,000 $51,293 50.00% 43.68% 36.06% 25.00% $210,371 $81,478 54.00% 48.28% 41.58% 27.00%

Marginal tax rates for 2019New Brunswick and Nova Scotia

1. Includes a basic credit increase of $3,000. The $3,000 increase will be reduced by 6% of the individual’s taxable income exceeding $25,000. An individual whose taxable income exceeds $75,000 or more will no longer benefit from this credit.


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2019 combined marginal tax rates (Newfoundland and Labrador) based on source of income (%)



$9,414 – 8.70% 5.98% 4.55% 4.35% $12,069 $231 23.70% 12.85% 4.55% 11.85% $37,591 $6,280 29.50% 19.52% 12.56% 14.75% $47,630 $9,241 35.00% 25.84% 20.12% 17.50% $75,181 $18,884 36.30% 27.34% 21.91% 18.15% $95,259 $26,172 41.80% 33.66% 29.50% 20.90% $134,224 $42,460 43.30% 35.39% 31.57% 21.65% $147,667 $48,281 46.30% 38.84% 35.71% 23.15% $187,913 $66,914 47.30% 39.99% 37.09% 23.65% $210,371 $77,537 51.30% 44.59% 42.61% 25.65%

Marginal tax rates for 2019 Prince Edward Island, Newfoundland and Labrador

2019 combined marginal tax rates (Prince Edward Island) based on source of income (%)



$9,160 – 9.80% 8.12% 0.00% 4.90% $12,069 $285 24.80% 14.98% 0.00% 12.40% $31,984 $5,224 28.80% 19.58% 4.55% 14.40% $47,630 $9,730 34.30% 25.91% 12.12% 17.15% $63,969 $15,334 37.20% 29.24% 16.12% 18.60% $95,259 $26,974 42.70% 35.57% 23.71% 21.35% $98,995 $28,569 44.37% 37.17% 24.56% 22.19% $147,667 $50,165 47.37% 40.62% 28.70% 23.69% $210,371 $79,868 51.37% 45.22% 34.22% 25.69%


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2019 combined marginal tax rates (Northwest Territories) based on source of income (%)



$12,069 – 15.00% 6.87% 0.00% 7.50% $14,811 $411 20.90% 6.87% 0.00% 10.45% $43,137 $6,331 23.60% 9.86% 0.00% 11.80% $47,630 $7,392 29.10% 16.18% 7.56% 14.55% $86,277 $18,638 32.70% 20.32% 8.53% 16.35% $95,259 $21,575 38.20% 26.65% 16.12% 19.10% $140,267 $38,768 40.05% 28.77% 18.67% 20.03% $147,667 $41,732 43.05% 32.22% 22.81% 21.53% $210,371 $68,726 47.05% 36.82% 28.33% 23.53%

2019 combined marginal tax rates (Nunavut) based on source of income (%)



$12,069 – 15.00% 6.87% 0.00% 7.50% $13,618 $232 19.00% 8.46% 0.00% 9.50% $45,414 $6,274 22.00% 11.91% 2.06% 11.00% $47,630 $6,761 27.50% 18.24% 9.62% 13.75% $90,829 $18,641 29.50% 20.54% 12.38% 14.75% $95,259 $19,948 35.00% 26.86% 19.97% 17.50% $147,667 $38,290 40.50% 33.19% 27.56% 20.25% $210,371 $63,686 44.50% 37.79% 33.08% 22.25%

Marginal tax rates for 2019Northwest Territories and Nunavut


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2019 combined marginal tax rates (Yukon) based on source of income (%)



$12,069 – 21.40% 11.58% 0.00% 10.70% $47,630 $7,610 29.50% 20.90% 7.56% 14.75% $95,259 $21,661 36.90% 29.41% 15.15% 18.45% $147,667 $40,999 41.80% 35.04% 20.37% 20.90% $210,371 $67,209 45.80% 39.64% 25.89% 22.90% $500,000 $199,860 48.00% 42.17% 28.93% 24.00%

Marginal tax rates for 2019 Yukon

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accurate at the time of their printing and were obtained from sources which we considered reliable. We reserve the right to modify them without notice. This information and these data are supplied for information only. No representation or guarantee, explicit or implicit, is made as to the exactness, the quality and the complete character of this information and these data.

The present document aims to supply general information and must on no account be considered as offering investment, financial, fiscal, accounting or legal advice. The present document on no account recommends the purchase or sale of any given security and it is strongly recommended that the reader consult an advisor of the financial sector and/or a professional tax consultant before engaging in any purchase or sale transaction of a security.

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