Why financial growth can be deceptive

This week, Jackie is back with Jin to discuss why financial growth can sometimes be deceptive. Our goal at Team Jackie is to make financial planning and finance more accessible by demystifying finances and letting our community know the importance of having your finances for long term peace of mind. Let’s get into the conversation.

Growth is great, in fact we all need to grow but it can sometimes be deceptive. Some individuals think, because they are doing well in their finances and earn a high income, they might not need the services of a financial advisor, but the truth is a financial planner can help you to protect and hold on to a larger share of your hard earned wealth.

 

What value can advisors bring to successful business owners/individuals?

The definition of success is relative and if you are successful – big congratulations to you! You’ve worked so hard and earned it. We find that many successful individuals are worried about what will happen when they retire, some others are looking to scale down so they can take a step back and enjoy the wealth they have built so far.

As financial advisors, we come in and show you what is possible for you and how you can strategically position your finances to get you where you want to be. Many people are at different stages of their lives, some are wondering what their options are when it comes to taking a pause to care for family or much needed self-care.

You could be doing so well but thinking things cannot go wrong in the future may lead to disastrous consequences. Did you know, the average instant millionaire is broke in 5 years, this can happen only because you spend all your earnings without having a plan for a secure financial future. Even if you are earning a lot today, if you are not being intentional about wealth, you risk losing it all once your means of earning a living is affected. Look at your lifestyle vs your income – is there extra room in your pocket for savings and emergencies? Is your disability insurance ample enough to cover you should health issues come up? A financial planner can walk you through these scenarios to ensure you have built a solid financial fortress around you wealth.

 

Optimizing wealth and how to make better financial decisions

Did you take advantage of the low interest rates from 2008 till now to pay up your mortgage? Our team can help you build a plan to pay down your mortgage sooner, we can also help you manage debts, figure out how much goes to your retirement savings and/or investments, or how to structure your mortgage payments so its paid off sooner. One strategy may be reducing your amortization period and striking a balance between paying off debt and putting money away for the future.

 

Let’s talk about tax planning

The more you can reduce how much of your income goes to paying your taxes the more of your earnings will go to building wealth. A good example of how we help our client with retirement income withdrawals. The key to this strategy is smoothing out the amount of tax you pay over a longer period of time and reducing your tax burden versus paying more in the later years and

facing Old age security clawbacks. If you are someone who has seen a spike in your earnings that led you to be in the highest tax bracket (over $220,000) and are dreading paying almost 54% back to the government in taxes, consider becoming incorporated. The good news, is funds you don’t need for your lifestyle can be tax sheltered at a 12.5% rate, instead of a 54 percent tax rate on your next dollar of income.

 

Let’s talk about optimizing your wealth around estate planning

For individuals looking to pass down properties to their kids, it is important to consult the services of a planner so you can minimize taxes on the assets you would like to pass on to your children. When a property owner passes away, the property is deemed sold and fully taxable – your kids may be required to pay heavy taxes or sell the asset if they cannot afford it. We can help you set up a plan to avert such situations by either putting money aside for the tax bill or getting a life insurance plan that can allow you to pass on the asset tax free to your children. Have you done the math? What assets will be left after you pass down your property to your kids? Think about this critically important, especially when you are doing well!

Confidante community, do you have a team of financial professionals supporting you to keep your finances in order? Do you have retirement income strategy? An estate plan? A tax efficient plan to keep more of your earnings in your pocket? Do you feel confident about your finances? Let us know where you stand. Team Jackie Porter is happy to help walk you through these financial circumstances and get you to where you need to be. Reach out to our team at jody.euloth@askjackie.ca for a free 30-minute financial strategy session