Financial health is serious, But we can still have fun

This month, we'd like to introduce you to Stanley Chiu, who is a lawyer and business owner! Stanley owns and operates Titan Law Corporation in Vancouver and is dedicated to help people live a better life with their legal services. Members on our team often turn to Stanley for many legal related questions. They provide a wide range of legal services, why don't we let him introduce himself and their services instead!

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Tell us a bit about yourself

I am Stanley Chiu. I am a lawyer at Titan Law Corporation specializing in immigration law, corporate/commercial law, and franchising law. My job entails assisting international and domestic businesses in their formation and expansions whether they are franchised or not. I also guide people from various countries through the Canadian immigration process so that they settle their families here with peace of mind and continue to build their business or career. This includes representing my clients in the Provincial Court of British Columbia, the Supreme Court of British Columbia, and various federal tribunals including the Immigration and Refugee Board of Canada and the CBSA Recourse Directorate.

I am a firm believer in working in the community and that each person has responsibilities of mutual respect, consideration, and cooperation to foster the betterment of society. Accordingly, I dedicate a portion of my practice to assisting the less privileged through Access Pro Bono and Legal Aid BC, including refugee claimants. So far, I have worked with refugees from over 30 countries.

In my spare time, I serve on the board of directors for two non-profit organizations, which are the Dunbar Community Centre Association and the Canadian Mental Health Association– Vancouver-Fraser Branch.

Tell us a few personal interests and hobbies

 Some of my hobbies include playing piano and bass guitar, playing airsoft, and generally spending time with my family and friends. I believe a significant factor of success can be measured by the quality of the relationships that we build.

When and why did you choose this industry over others?

 What started as a first step into the legal world evolved into a career that I couldn’t have imagined when I first thought about the practice of law. While any career or business venture can be daunting, stressful, and tiring, what has kept me motivated has been the people and my ability to assist them through their most difficult or life-changing moments. Basically, this career offers me the opportunity to do what I am very good at and to see the results of those efforts have real ameliorative effect for my clients.

How does a financial planner and lawyer work together to help clients?

 Having a strong and effective team to put action to plan is the difference between success or failure. Lawyers can set up the vehicle through which to conduct business, or set up the mechanisms to limit liability, effect conveyance of assets, and other things, within the various regulatory schemes we must comply with. Financial planners can lay out the framework around which the various parts of your business or financial life in general will flow. Your professional team working effectively with each other will mean not only a quick reaction time but also that you would have planned in advance.

As a business owner, how do you keep your team motivated? (talk about your leadership style, culture, philosophy)

At Titan Law Corporation, we foster a culture of open communication, transparency, and teamwork amongst staff and management. Stress most often comes from the unknown and we utilize each of our personal strengths and experience to minimize the unknown, both within our firm and for our clients. We believe that a person cannot accomplish what he or she cannot imagine, hence our ability to organize a complete picture is paramount to meeting and exceeding our clientele’s goals, just as it is important in the argument of legal matters in court.

What's the most fulfilling part of the job? 

The most fulfilling part of my job is seeing the success of my clients and of my team.

Who should be reaching out to you?

Our practice areas include immigration law, corporate / commercial law, franchise law, wills & estates, family law, and civil litigation. My ideal client would be anyone seeking to immigrate to Canada, turn their business into a franchise or purchase a franchised business, or generally build their new or existing business. We have clients who are straight out of university who are looking to build upon their great business ideas while securing permanent status in Canada, to businesspersons operating public companies that want to settle themselves and their families in Canada.  

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If you follow the news, you may have heard that recently, Canada's inflation rate for August hit 4.1%, which historically speaking, is quite high. So what does that mean, for you? As a worker, or a retiree, or an investor? Before we delve into that, first let's take a look at what inflation is, and how it's measured.

"The economy works best when inflation is stable and predictable" - Bank of Canada.

Just think, how difficult would it be for your to budget your monthly expenses if instead of spending $300 on groceries every month, it might be $500 one month, $200 the next, and then back to $600 the next month, even though you're buying roughly the same things? If you ran a business, how difficult would it be if your supplier charges you wildly different amounts every quarter, even though you're receiving the same stuff from them?

When inflation is high, that means the economy is in trouble. For example, you may have heard about the situation in Venezuela where the unstable economy resulted in almost 3000% inflation over just a few years. Imagine if a $4 carton of eggs was suddenly $80 the same time next year. This is obviously an extreme example of a very unstable economy and government, but you get the idea.

On the flip side, deflation, where the cost of items go down, isn't great either. It's usually seen in times where countries go through a depressive phase in their economy: a great example would be the US, and many other parts of the world, during the global economic crisis of 2008.

Through use of monetary and fiscal policy, the government of Canada aims to keep inflation at roughly 2% annually. Thus, it may sound alarming when you hear the headlines saying that inflation hit 4.1% just recently.

What does this all mean to you, as a Canadian?

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Should someone working in Canada be concerned about inflation?

As someone who is working and earning an income in Canada, the high inflation can be a cause of concern, especially if your wages aren't keeping up with inflation. Business owners are feeling the same squeeze too. With global production down and demand staying relatively the same, the prices of nearly everything are not only increasing by itself, the prices are further increased by inflation. Make sure that you're budgeting properly and taking into account the inflation we're seeing, so that you're prepared in the upcoming months, and perhaps years.

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Should someone who is retired worry about inflation?

If you're retired, it really depends on your sources of income. For example, if you are taking the Canada Pension Plan, or CPP, in addition to other government benefits, that is adjusted for inflation by the government, so your real spending power isn't really affected dramatically. On the other hand, if you're taking money from your own savings and investments, you do want to make sure that you take inflation into account, as a 5% growth with 2% inflation is very different when there's a 5% growth with 4% inflation. Talk to a financial expert in Vancouver to make sure that you're adequately protected.

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Should investors worry about inflation?

Luckily, if you're an active investor, you're in a great position to protect yourself against inflation! The worst thing you can do when inflation rates are climbing is to let your money sit there, stagnating. Having your money invested in something, anything, will counteract the effects of inflation. Of course, the real rate of return will be lower than before, so what you'll need to do is to find ways of adjusting your portfolio so you're still hitting those desired outcomes.

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In any case, no matter what position you're in, the most important thing is for you to stay prepared by staying knowledgeable. When you have a plan in mind to deal with inflation, you'll be able to put yourself into the best position in any scenario!

Have you ever used, or have thought about using the registered retirement savings plan that’s available to us in Canada? If yes, I assume that you want to use it because it offers a great tax benefit, and helps you grow your long-term savings for your future retirement, right? That’s usually the case for most people. As our team of financial planners in Vancouver would tell you, the RRSP is something of interest to most people because of the above reasons.

First, let’s have a quick refresher about some key points of the RRSP, and why it has been a long-time staple in the financial planning of so many Canadians.

The RRSP contribution reduces your taxable income.

‍This means that if someone earns $100,000 a year, and they contribute $10,000 into their RRSP, they only need to pay taxes on $90,000 worth of income. This could mean a reduction of around $3500-$4500 of taxes paid.

The money grows tax deferred.

Deferred means not yet, so while the money is sitting inside the RRSP (being invested, hopefully, and not just in a savings account), you won’t be taxed on it every year like you would your normal income. It only becomes taxable once you decide to make the withdrawal. Which brings us to our next point.

When making a withdrawal from an RRSP you’ll have to pay full income tax.

Ideally, you would make withdrawals from your RRSP once you’re retired. The idea is that in retirement, people would generally have lower income. So even though you’re making withdrawals from your RRSP, it will be balanced out by the fact that you’re not making as much working income. There are 2 ways that you can temporarily withdrawal some money from your RRSP: The homebuyer's plan and the lifelong learning plan, but pay attention to the fine print: you'll need to pay it back at some point.

If you and your partner have different incomes, use spousal RRSP.

There are many single income families, or families where the partner make very different incomes. If this is the case, the higher income partner can contribute to the lower income spouse's RRSP. The deduction will go to the higher income spouse, but the savings will be under the lower income spouse's name. Essentially, you could get some income splitting happening.

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As you can see, the biggest benefit here is that your RRSP contributions lowers your taxable income, which means you will pay less taxes. For some people it might even give them a tax refund! But here’s a secret that a lot of people don’t know, which we are excited to share with you today: there is another way to get that same tax refund, without the downside of the withdrawals being fully taxable!

In Canada, when you borrow money (that is, take on a loan), you will need to pay interest. If you invest in certain assets with that loan, the interest that you pay on the loan would actually qualify you for tax deduction as well. If you’re not sure about this, ask your accountant about line 22100 – carrying charges and interest expenses, and they’ll tell you all about it.

We can use this to our advantage. Let’s assume that you borrowed $200,000 and the bank charged you an interest of 5%.This means that in one year, you’ll be paying 5% interest, or $10,000. At the end of the year, you would have $10,000 of interest expenses, which will lower your taxable income by $10,000. You’ve achieved the same income deduction as if you contributed $10,000 into your RRSP. Not to mention, if you had invested the loan into something, making 10% hypothetically, you’d end up with $20,000! This is what we mean when we say you can go beyond the RRSP: not only do you get a tax deduction, you also get amazing potential for growth!

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Talk to us to learn more about the RRSP and find out how you can supercharge your own financial plan!

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The contents of this post are from informational purposes only and should not be considered financial advice.