The article “Take Our Fall Refresher: Four Ways to Get to the Top of Your Class in Personal Finance” was originally published on The Financial Post on September 4, 2015.

As the summer draws to an end, many of us are thinking about back-to-school time. Whether you have kids, teach kids or once were a kid, September represents a new year of learning. With that in mind, Jason Heath offers up a little financial refresher course on four key personal finance topics.


Did you know that most actively managed mutual funds do not beat the market over the long run? According to S&P Dow Jones Indices’ SPIVA Canada Report Card, as of Dec. 31, 2014, only “20 per cent of actively managed funds in the Canadian Equity category outperformed the S&P/TSX Composite” for the previous five years. That means four out of five mutual funds underperformed.

There are two reasons for this, in my opinion. First, most mutual funds are not truly active: That is, many of them are reluctant to take risks, so they more or less buy the index, making them destined to underperform the index by about the amount of their fees. Just check out the long-term performance on your mutual funds on – many of them end up lagging the index by just about the management expense ratio (MER).

Secondly, the higher the fees, the higher the threshold to beat to even have a chance of outperforming the markets. The average MER for Canadian equity mutual funds is currently 2.42 per cent – compared to 0.05 per cent at the other end of the extreme for some Canadian equity exchange-traded funds (ETFs).

For extra credit: Check out Dan Bortolotti’s Canadian Couch Potato blog for a complete guide to index investing. DIY may not be for you, but the content is highly educational regardless.


According to consumer insurance advocate,, only 44 per cent of life insurance policies purchased in Canada are cheap, simple, term life insurance. So more than half of us buy fancy whole life and universal life insurance, which includes an investment component.

Given how many Canadians have debt or have failed to max out their RRSPs, TFSAs and RESPs, it is a shame that so many of us pay more that is probably necessary for life insurance instead of considering other smart financial options.

Replacing expensive coverage with a cheaper alternative policy may result in enough savings to cover the premiums for other types of insurance that may be more important – like disability insurance. A 30-year old female, non-smoker is more than eight times as likely to become disabled than die before age 65, according to Manulife — but she is also more likely to have life insurance than disability insurance.

For extra credit: Check out the Canadian Life and Health Insurance Association’s A Guide to Life Insurance to become a more informed consumer.


According to Statistics Canada, 8.2 million people report income from non-registered investments on their tax returns. But the Canada Revenue Agency says that four out of five Canadians have not maxed out their tax-free savings accounts.

Why pay tax on investments when those investments can grow tax-free? Keep in mind that if you transfer an investment into a TFSA, you are deemed to have sold it at the fair market value. If the investment has gone up in value from what you originally paid, you may have a taxable capital gain.

For extra credit: The Ontario Securities Commission uses fines to fund an unbiased and independent financial blog called Get Smarter About Money to help consumers make better financial decisions. Check out their section on TFSA basics.

Estate Planning

About 1/3 of Canadians have no will. Exactly 100% of Canadians will die.

Dying without a will could mean that your estate is distributed based on provincial formulas, that the government temporarily becomes guardian for your children or that the legal fees to settle your estate far outweigh the cost to draft a will in the first place. Better to sort all that out while you still can.

For extra credit: Check out Lynne Butler’s Estate Law Canada blog for information on wills, estate planning and elder law.

Someday when you least expect it, there will be a pop quiz on these topics. Your mark won’t count towards your final grade, but if you fail, you may fall behind. If you are a real keener, you will dedicate some time at the start of this school year to the above topics. Doing so should help you stay at the top of your class.

Jason Heath is a fee-only Certified Financial Planner (CFP) and income tax professional for Objective Financial Partners Inc. in Toronto, Ontario.