Tutor profile: Ryan B.
Subject: Personal Finance
What is a Registered Retirement Savings Plan (RRSP) and what is its significance in personal finance?
An RRSP is a tax-deferred savings account created by the Canadian government for the purpose of helping people save for retirement. After opening an account, deposits you put (up to the limit) into the plan are deducted from your taxable income, reducing the amount of taxes you have to pay at that time. You can then invest in numerous securities at your discretion, such as stocks, bonds, ETFs, mutual funds, and more. When you retire and begin withdrawing the proceeds from the plan, the gains are taxed at the current tax rate set by the government. If you are earning less than during your working years, you will have saved on some taxes! In the context of personal finance, this is one of the most powerful tools available to Canadians when saving for retirement and should be maxed out if possible. In the present day, this is the alternative that was developed in response to a decline in company-sponsored pension plans. Some companies also offer matching programs that allow you to stretch your dollar much further.
Who is Canada's head of state? Explain how they interact with other entities in the Canadian government and how that impacts the nation's governance.
Canada's head of state is the Monarch of the United Kingdom, currently Queen Elizabeth II. When the Queen is not in the country (which is most of the time), she is represented by a Governor General, who has the power to sign bills into law, call elections, and commands the Armed Forces. While the head of state formally possesses these powers, the role in practice is much more ceremonial, with most decisions based on the advice of the country's elected head of government, the Prime Minister. The Governor General does perform many essential functions of government, such as receiving foreign ambassadors, reading the Throne Speech that opens each Parliament, and representing the government abroad. While they don't impact the day-to-day operations of the federal government, they could have a role to play in the event of a severe 'Constitutional Crisis', such as where the Prime Minister oversteps their boundaries or a government cannot be formed after a general election.
What are Porter's Five Forces and why are they important for a business' strategy? Pick one force and explain it in further detail.
Porter's Five Forces are: competition in the industry; potential of new entrants into the industry; power of suppliers; power of customers; and threat of substitute products. The model is integral to a company's strategy as it examines relative power within the industry; determining the expected level of profitability you can sustain over the long-term. From the perspective of the business, a higher level in certain categories will give them more leverage over customers, allowing them to charge a higher price and extract more profit from the market. A proper understanding of this dynamic is important for understanding what investments need to be made, either to keep up with competitors or set yourself apart. As an example, the higher the potential of new entrants in the industry, the more competitive a business must be on price. This is usually determined by capital requirements, licencing costs, intellectual property protections, or employee experience. For example, for a new company to enter the telecom industry, they need to obtain extensive licences from many governments and invest potentially billions of dollars into new infrastructure like cell phone towers. This increases the cost of market entry and (taken alone) gives telecom providers greater power over customers, allowing them to charge more for their services.