I’m sure you’re aware of the severe decline in the equity markets in the last quarter of 2018. In mid-December I was involved in numerous meetings with investment advisors. Each of them had a rationale for what had happened and why their clients should be pleased they lost less than the benchmark!

The advisors got paid and the investors lost money. Sounds like a good deal for the advisors! I’ve grown increasingly skeptical about the public markets over the last couple of years. Consequently, I’ve significantly increased the percentage of our investible assets in alternative investments for which we recommend this guide on how to generate w7 form to handle taxes.

Alternative investments are not publicly traded. Examples are mortgage funds, syndicated mortgages, real estate development projects, real estate limited partnerships that own rental properties, and limited partnerships that own operating businesses. Many of the alternative investments provide an attractive annual income.

These investments aren’t impacted on a daily basis by Brexit, Trump and the crazy world we live in. The general view is that the biggest negative of alternative investments is that they aren’t liquid. Actually, as long as I don’t need the liquidity, I see this as a positive. I accept my funds are tied up for a number of years and don’t waste time and energy checking the latest prices.

I’m not suggesting you sell your entire equity portfolio. Consider reducing your exposure to the public markets through purchasing some alternative investments. Before making a purchase, as with any investment, you need to do your due diligence on the product and the people behind it.

Over the last few years we’ve experienced increasing personal tax rates in Canada and significant tightening of tax planning opportunities. The personal tax rates are the highest I’ve experienced over the last forty years.

The government continue to allow private companies to establish health spending accounts. These vehicles allow a company to deduct medical expenses it reimburses it’s employees for. Different levels of reimbursement can be set, depending on the seniority of the employee.

These plans are particularly attractive to entrepreneurs and their families. Frankly, the medical tax credit isn’t worth much and the expenses which qualify are restricted. A health spending account permits the reimbursement for a broader list of medical expenses, which the company can deduct for tax purposes.

A health spending account isn’t for everyone. Each person’s situation is different. If you own a company, I recommend you discuss the benefits of the company having a health spending account with your professional advisors.

I’ve written before about checking insurance premiums when they’re due for renewal. I recently received a renewal notice and challenged my insurance advisor to review it. I thought the premiums were too high.

Insurance advisors are very busy with many clients. They don’t have the time to review each policy when it’s up for renewal. They don’t know if your circumstances have changed. The result of challenging my insurance advisor was that I switched insurance companies and obtained a significant reduction in my annual premium.

You need to take responsibility to review your policies every year. Too many people don’t even look at the renewal notice when they receive it and pay it automatically.

Happy New Year and best wishes for 2019.

Why don’t you make a new year’s resolution to take an in depth look at the fees being charged by your investment advisors? At this time last year we heard these fees were going to be more transparent. My experience has been that you still need to obtain a complete understanding of the fees you’re charged.

I recently met with a new client and one of her investment advisors. We were told the fees were based on 1% of the value of the portfolio. Her portfolio included individual shares and investment funds. When I asked whether there were fees within the investment funds, I wasn’t surprised to hear there were.

By adding the fees charged within the investment funds and the fees charged by the investment advisor, the fees totaled 1.5% of the value of the portfolio. My client was under quoted by 50% on the fees she was being charged! I wasn’t impressed.

You should find out, and quantify, exactly what fees you’re being charged by your investment advisors. Then reflect on whether you’ve received value for money.

This Tip will be of interest to those of you who own companies that have earned passive income in prior years. Passive income consists primarily of interest, dividends and rental income.

Some technical tax changes will be introduced in the near future, and it might be beneficial to withdraw funds from your company through a dividend.

The bottom line is that if you haven’t been contacted by your accountant, you should speak with her/him before the end of the year and ask if these changes impact your company.

Over the last six years, I’ve spent many days in the US. Initially, I had some “interesting” discussions with Rogers about roaming charges. In recent years, Rogers simplified matters by charging $5, $6 and then $7 per day.

A couple of months ago, I learned that Rogers had introduced a program where they charge a flat $10 per month if you’re making calls while you’re in the US. The representative at Rogers didn’t volunteer this information. I had to ask about the program.

Perhaps this is old news, but I suspect it might benefit some people reading this Tip. If anyone knows a downside to this $10 a month program, I’d appreciate you letting me know.

I’ve spent the last month rehabbing my knee replacement and have had plenty of time for reflection!

As I thought about my own investment strategy over the last six years, the most important aspect that comes to mind is diversification. Of course, it’s the standard stuff of not having too big a holding in any specific stock or industry, as well as having the appropriate blend of fixed and equity investments.

It’s about getting the right mix between Canadian, US and international equities, and not being too Canadian-centric, however comfortable that feels. It’s important to decide which industries you feel comfortable investing in. From a personal perspective, there are industries I avoid, as I don’t understand them.

I believe there’s a need to look outside the traditional markets. Mortgage funds, specific mortgages, rental property ventures and real estate development projects should be part of your strategy. In addition, adding one or two alternative investments should be considered. Of course, for these types of opportunities, you have to do your due diligence, not just on the investment but more importantly on the people behind it.

We’ve all been nervous about a correction in the equity markets and real estate for a very long time. For sure this will happen at some point. Make sure you have some liquidity in your portfolio for this eventuality. In the meantime, you need to generate returns and seek opportunities. Make sure that when the downturn comes, you’re so diversified that any investment that doesn’t work out as planned can be no more than a flesh wound to you!!

I had knee surgery at the end of July.  Prior to the surgery, I was reflecting on whether I had my financial affairs in order.  Here are the items I considered:

1. Are my will and powers of attorney up to date?
2. Are the beneficiaries of my RRSP, TFSA and life insurance correct?
3. Have I documented a list of my assets?
4. Have I provided a list of people to contact with respect to my investments?
5. Have I created a roadmap of my investments?
6. Is there a list of codes which provide access to all my on line accounts?
7. Did I discuss with my spouse and sons health alternatives in the event of a problem?

The property market in the GTA seems to be taking some strange twists and turns in 2018. We recently moved thanks to a great Home Removal company and a great real estate agent, and our experience on closing the sale of our old home wasn’t “normal.”

Five days before the scheduled closing, our agent notified us the buyer wanted a one-month deferral on the closing date. It wasn’t a great call to receive! We had a four-month gap between the offer and closing dates, which concerned us. As part of the offer, the buyer agreed to provide a standard 5% deposit. At our request, the buyer agreed to pay a second deposit of 3% of the purchase price sixty days prior to the closing.

The bottom line is the buyer closed on the designated date. We don’t know the reason why the buyer wanted to delay closing. There’s no doubt in my mind a deposit of 8% of the selling price was very influential on the buyer closing on the specified date.

The moral of the story is the real estate market has changed in the GTA, and you need to do everything possible to ensure the buyer closes on the agreed date.