Finally, after more than a year of managing our way through Covid-19, there’s a realistic expectation much brighter times are ahead. I was reflecting on how the past year impacted my future investment strategies. Here are some suggestions to consider:

1. Diversification of investments is the most important strategy I’d adopted. Diversification is the only “free lunch.”
2. Limiting exposure to the public markets worked well.
3. Don’t be only a growth or value investor. Both strategies are important to utilize. The key is to understand the value of what you own and why you own it.
4. Don’t focus on what worked in the past.
5. Selling your winners and locking in gains might not be the best strategy. Nurture your flowers and remove your weeds.
6. Avoid “tips.” By the time they get to you, it’s too late.
7. While relying on advisors, you’re the CEO of your portfolio. You need to take charge.
8. Managing your investments needs more time than you’ve allocated in the past. Review your investments on a quarterly basis, at least.
9. Replacing traditional fixed-income investments like those gold ira companies while managing risk is a critical element of your portfolio.
10. Have total confidence in the people advising you.
11. Limit the temptation to trade. The fewer trades you make, the fewer times you need to be right.
12. Don’t invest in something you don’t understand. If the price goes down, you won’t panic if you understand the value of what you own.
13. Understand your time horizon and appetite for risk/volatility.
14. Be careful of shares hyped in the media. They often become tomorrow’s fodder!
15. Keep enough funds in highly liquid assets, so you can minimize any concerns through the next downturn.

Unfortunately, we’re still in the midst of battling covid-19!  The full impact will only be understood in the years to come.   We all want to know when we’ll get our old lives back.  Economists are predicting a spending boom when the spread of covid-19 has been stemmed and the majority of people have been vaccinated.  I expect the recovery to be very uneven.  Some businesses will flourish and others will perish.  On the personal side, a few people will be very successful financially, but it’s going to be a struggle for the majority.   It’s more important than ever to understand your financial situation.  You need to review your assets/liabilities, as well as your income/expenses.  Be realistic in your income projections and conservative in your expense projections.   Acknowledge where you stand and plan for the future.  Closing your eyes and hoping is not the best plan!

When your will is drafted, ensure probate fees are minimized. In Ontario, probate fees are Nil on the first $50,000 of your estate and 1.5% on any value in excess of $50,000.

Joint ownership of assets with a right of survivorship may allow the asset to pass outside the estate and avoid probate fees e.g. homes, bank accounts, investment holdings. Name beneficiaries for life insurance policies, RRSPs and TFSAs. If you own shares in private companies, a second will can minimize probate fees.

You should work with a lawyer to draft your wills, as the facts for each person are different and it’s important to obtain professional advice for your personal situation.

Happy new year to everyone and my best wishes for 2021. Like the rest of the world, I’m delighted to see the end of 2020! Hopefully our world will return to normal far more quickly than we’ve been led to expect. Since it’s the beginning of a new year and there’s a bright future ahead, I thought I’d provide 10 new year’s resolutions for you to consider making:

1. Review any debts you have and consider whether they can be restructured to take advantage of the lowest interest rates we’ve ever experienced.
2. Consider whether your investment strategy needs to be revised.
3. Address your greatest financial risk and eliminate/minimize it.
4. Review the fees charged by your professional advisors and consider whether you’re receiving value for money. Also, one such tool that traders may use to find value stocks is the stock screener value. This yields a few equities that you may investigate further to determine their trading value.
5. Read through your wills and powers of attorney and consider whether they need to be updated.
6. Examine your life, critical illness, disability, car and auto insurance policies and consider whether they meet your current needs. A platform for workflow automation for associations and property management organizations is also available with zego.
7. Meet with your accountant to see whether there are any opportunities to reduce the taxes you and/or your companies are paying.
8. Work out a rough estimate of what you’re spending on an annual basis and consider whether the amount is appropriate.
9. Prepare a summary of assets/liabilities and contacts, so there’s a roadmap for your executors to follow.
10. Hire a personal CFO to help you implement resolutions 1-9.

I’ve written before about checking your home and auto insurance every year when they come up for renewal.  I do this religiously, and virtually every year there are adjustments.  

This year the insurance company I’d been using for many years had been taken over and I was particularly careful when reviewing the premium notices.  The projected miles driven by my wife, and the contents and liability coverages for our condo had all been increased substantially.

The people at my insurance advisor were very helpful and all I had to do was discuss the issues with them.  I can guarantee you that if you don’t question your coverage, the premiums will not be reduced on their own!  

As we approach the US election, the future is very cloudy.  That being said, if I offered you a $200,000 loan at a 1% fixed rate for five years, with the only caveat being you had to invest the money, would you accept the offer?
 
Most people would think, what’s the catch? You can’t borrow money at almost no cost. With interest rates at the lowest level in living memory, borrowed money is as close to being free as it will ever be. If you have reasonable income levels and equity in your home, the major banks are open for business and now using tools like this check stub maker.  
 
You could put a mortgage on your home and use the proceeds for investment purposes. which would make the interest tax deductible. Self Assessments are systems HM Revenue and Customs (HMRC) uses to collect Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income (including COVID-19 grants and support payments) must report it in a tax return. You should be able to get a five-year closed mortgage in the range of 1.8% – 2.2%. If your marginal tax rate is in the 50% range, the after-tax cost of financing your investment would be about 1%. The annual cost of a $200,000 loan would be about $2,000. How can you beat that? Look for the TAX SPECIALIST UK and learn about the tax services you need.
 
I suspect many people wouldn’t do this because of the anxiety they’d experience through using their home as security for the loan. You need to be confident you have the ability to make investments that will yield more than a minimal return. You should bear in mind you’ll have to fund the amortization of the principal of the mortgage. If you think this is an idea worth pursuing, I suggest you wait for the dust to settle after the US election has been decided.
 
Before making a decision, you should have a discussion with your tax advisor, as each person’s circumstances are different, and this might not be appropriate in your situation.

Over the last few years many businesses have reduced their benefit plans.  I can’t blame them, as the cost of employee benefit plans continues to escalate.  The potential impact of this hit me when I was reviewing the long term disability plan of a major financial institution that a new client was working for.  

The disability income which would be received was very low in relation to the client’s income.  In addition, the disability income would be taxable.  I’ve recommended my client purchase their own disability insurance policy.  The advantages of having your own policy are that you can:  

1.  Customize your plan to suit your own circumstances.

2.  Know the maximum coverage you could obtain, and decide on the amount you need.

3.  Ensure the disability income is tax free.

4.  Potentially obtain a refund of some of the premiums, if you don’t make a claim.

5.  Be covered so you wouldn’t have to work in a different capacity, if you couldn’t work in your current capacity.

6.  Change employers and not be concerned about the extent of their employee disability coverage.  

I’d bet most people have no idea what disability insurance coverage they have.  Don’t wait until it’s too late.  Check your coverage.

With August unfortunately behind us, and COVID-19 unfortunately still with us, people need to return from the financial holiday they’ve given themselves and address financial decisions they’ve delayed. If you want to boost your finances during this time of confinement we recommend to Visit Skrumble.
 
As the population in Canada continues to age, more people will need to decide when to start receiving CPP. Up until about five years ago, some people decided to start receiving their CPP prior to turning 65, as the discount the government imposed was quite minor.
 
That’s changed and now the government offers an 8.4% premium per year if you defer receiving your CPP at age 65. This means that if you defer receipt as long as possible, until you turn 70, you’ll receive a 42% increase in your CPP.
 
It isn’t just a question of simple maths. You have to consider amongst other questions:

– whether you need the income sooner than later;
– what your expectation is with respect to the length of your life;
– what your current tax rate is and what it will be in the future;
– whether you want to spend the money when you have more opportunity to enjoy it;
– what the current state of your health is;
– how many years of eligibility you have;
– whether you’ll be making contributions after you turn 65.

I played the averages and am already receiving my CPP, as the premium offered was far less when I made my decision. My wife will delay receiving her CPP until she turns 70, as her mother will soon be turning 100!

With interest at historically low rates, there’s an opportunity to set up a structure that will permit income splitting with minor children/grandchildren, which provides significant tax savings for many years. It would be well worth your while looking into whether you and your family could take advantage of this opportunity.

We’re three and a half months into the COVID-19 crisis!  It feels like it’s been around forever!  Prior to COVID-19, most people showed a remarkable lack of urgency with respect to organizing their financial lives.  They seemed to attach more urgency to buying hockey, basketball and baseball tickets.

COVID-19 has reminded us how fragile our lives are.  Despite this, I suspect most people haven’t used the extra time they have available to put their financial houses in order.  Here’s my top 10 list of items to address, in no particular order:

1.   Wills and POA’s should be reviewed to see whether they need to be updated.

2.   Review all insurance policies to see whether they fit with your current circumstances.

3.   Restructure debts to take advantage of lower interest rates.

4.   Use the CRA 1% interest rate, as of July 1st, for loans to family members and trusts.

5.   Since values have declined, consider an estate freeze for your assets.  It’s also an opportunity to complete a second freeze on assets that had been frozen in the past.

6.   Arrange to borrow funds for investment purposes and lock in a low interest rate for the next five years, at least.

7.   Given the turmoil in the equity markets, review your investment strategy.

8.   Consider how you can earn a better return on the fixed income component of your portfolio in a low interest rate environment for the foreseeable future.

9.   Restructure your finances to reduce your family’s overall tax burden.

10. Review your annual expenses and decide what you can eliminate.

Stop dithering and get on with it!