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Estate Planning vs Will

Estate Planning vs Will

Blog
7 minutes
Jan 4, 2022
Blog
7 minutes
Jan 4, 2022

Estate Planning vs Will

Estate Planning vs Will

These two processes have been known to confuse many because they are quite similar and they take care of your affairs when you are alive and when you are no longer around to tend to your finances and assets. The basic difference is that one is more comprehensive than the other which makes some people go for the less comprehensive one. The complexity of estate planning sometimes discourages people from having one and choosing to have a Will instead. However, it all depends on your finances, assets and ultimately your preference. There are a lot of things to consider before choosing one over the other and going for the easy one is certainly not one of them. This article will discuss the difference between the two and the appropriate one to have depending on your financial and asset situation and your preference. You will also learn what to include in anyone you choose and the appropriate age for having either of the two.

 

Does Estate Planning Include Wills?

Estate planning in itself is described as the process of taking care of your finances while you are alive and also provides for how your finances will be handled according to your wishes when you are no longer alive. So, to answer the question of whether an estate plan includes a Will, the answer is yes, Wills are included in an estate plan.

 

A Will is a legal document that provides instructions on how a person wishes to share his assets with his/her loved ones and who takes custody of their minor children if any. So many people interchange an Estate Plan and a Will thinking that one can be substituted for the other. This is not the case. A Will is included in an Estate plan while an Estate plan cannot be included in a Will. Other things that can be included in an Estate plan include Trust, A living Will that gives healthcare and mental power of attorney to a person of your choice.  It is always advisable to seek the help of a professional to help develop your estate plan to effectively take care of your estate while alive or dead.

 

At What Age Should You Do Estate Planning

Estate planning is not age-specific. Experts will tell you, the earlier the better. Given the comprehensive nature of estate plans, you will be able to take care of your finances while alive and prepare for your loved ones when you are no longer around. As long as you are earning, it is advisable to have an estate plan. However, your estate plan must be adaptable to your current financial situation.

 

The 20s

Once you clock 18, your parents will no longer have authority over health and financial decisions. You can create an estate plan with a living Will to give healthcare and mental power of attorney to a person of your choosing who will take care of your financial and healthcare decisions in case you become incapacitated. Do not feel too young to have an estate plan, it is a smart way of putting your life in order and taking care of your welfare.

 

The 30s

At this stage, you should be preparing to have a family or you may already have one. You naturally will have more responsibilities at this stage as well as a reasonable income. You may have assets you wish to bequeath or you may want to set up a Trust for your family. At this stage, your estate plan should include a Will and a Trust, together with a living Will that will give healthcare and mental power of attorney to anyone you wish for when you become incapacitated.

 

At What Age Should You Have A Will

Like an estate plan, there is no appropriate age for having a Will. As long as you attain the majority age of 18, you are eligible to have a Will to take care of your affairs. You can create a Living Will or a Last Will and Testament. A living Will take care of your affairs while you are alive but incapacitated to make key medical and financial decisions. It will ensure your wishes are carried out to the latter. A Last Will and Testament, on the other hand, takes care of your affairs when you are no longer around. It takes care of how you want whatever assets you may have to be distributed among your loved ones. Whatever Will you decide to have must be appropriate for your current financial situation.

 

What Is Estate Planning?

Estate planning is the process of creating a set of wishes and instructions that will detail how your assets are used and distributed in the event of incapacitation or demise. An estate plan seeks to distribute your assets according to your wishes and minimize tax liabilities. It will comprise of different legal documents that will assign different sets of authority on how your affairs should be managed and prevent your loved ones from guessing what your wishes will be.

 

After a well-spent lifetime with a lot of money earned and financial goals met, an estate plan will ensure that your wealth is not distributed at the discretion of the government which may be against your wishes and principles. Therefore, an estate plan ensures that you structure your finance when you are alive and also ensures your affairs are handled by the people of your choosing after your demise. It is a comprehensive way of taking care of your money and assets. From the moment it is created, an estate plan takes care of your current and future assets and money. In other words, it helps you structure your financial affairs while you are still alive and allow you to make good decisions about your finances.

 

Advantages Of Having An Estate Plan

There are a lot of benefits of having an estate plan to take care of your affairs. Some of the advantages of an estate plan include:

To Provide For Your Loved Ones

An estate plan allows you to leave enough money for your spouse and other loved ones of your choice to include in your estate plan. You can set up a trust for your loved ones and bequeath some other assets to them to take care of them for when you are no longer around. The double advantage of an estate plan is that it also allows you to make provisions for yourself and your loved ones while you are still alive. Having various investment portfolios and Trusts can take care of you and your family while you are alive.

To Minimize Expenses and Taxes

Having an estate plan takes care of the expenses that may be incurred during the transfer of properties to your named beneficiaries. You can use it to set up a Trust for your children and loved ones which has its tax advantages and ensure your beneficiaries keep more money.

Plan For Decision Making During Incapacitation

An estate plan will create room for healthcare and mental power of attorney that will appoint someone that will make medical and financial decisions on your behalf when you become incapable of making them yourself.

Plan For Your Needs

An estate plan gives you the opportunity to give healthcare and mental power of attorney to a person of your choosing to make medical and financial decisions on your behalf when you are incapacitated.

To Make Donations

If you have philanthropic wishes, an estate plan ensures that you fulfil this goal by putting the money in a trust and donating it when you are no longer around.

 

What Is A Will?

A Will is a legal document that describes how you want your assets and money to be used and distributed when you are no longer around. A Will takes care of both your assets and liabilities. An up-to-date Will allow your executor to carry out your wishes according to the laws of your Province. The absence of a Will means that the government will determine how your assets and money are used and distributed. You will name an estate representative who will handle your affairs as you have listed in your Will.

 

There are several options for writing your Will. You can engage the services of a Will and Estate lawyer, Will kits, Will preparation sites and DIY legal forms. You no longer have an excuse for not having a Will. Some of the things you should include in your Will are:

●      Name of executor(s);

●      How you want your assets and money to be distributed;

●      Guardians for your children; and

●      Provisions for your debts and taxes.

It is important to ensure that anyone you name as your executor is someone you trust and have confidence in to execute your estate according to your wishes. For a Will to be legal in Canada, it must be:

●      In physical form;

●      Made by someone who has attained the age of 18;

●      Made by a testator of sound mind at the time of writing;

●      Signed by the testator at the end of the Will and by 2 witnesses who are not beneficiaries in the Will;

●      Notarized.

 

Advantages Of Making A Will

Having a Will is not a death sentence or does not mean you will die soon. There are a lot of benefits you can get from creating your Will. Some of the advantages of having a Will include:

Allows Your Wishes To Be Carried Out

A Will allows you to list out your wishes as to how your affairs are handled when you are no longer around. It ensures you are in control of your assets in terms of usage and distribution.

It Protects Your Loved Ones

A Will protects your loved ones from the exploitation of unscrupulous elements in the family. Your Will provides how your children are taken care of and how your assets and monies are taken care of.

Funeral Directives

You can use your Will to give additional instructions on how you want your burial arrangements to be handled.

It Helps To Keep Peace Within The Family

If there is an outlined instruction on how your affairs should be handled it prevents rancour among family members who may want to take your properties for themselves.

It Prevents Statutory Devolution

Where a person does intestate, the law says that it is the province that takes charge of the assets of the deceased and they will be used and distributed at the discretion of the province. Most times, the state will use and distribute your assets differently from how you would have loved them to be distributed. Having a Will ensures you decide who gets what in your estate.

 

Differences Between Estate Planning and Wills

●   Estate planning is the comprehensive process of distributing your estate which usually comprises your real estate, monies in banks, investments, cars and any other asset.
A Will is a legal document that provides instructions on how your assets and monies are  used and distributed.

●   Estate planning can be active while you are alive and at your demise.
A Will becomes active after your demise.

●   An estate plan includes a Will.
A Will cannot include an estate plan.

●   Documents that make up an estate plan include Will, Inter-Vivos Trusts, Testamentary Trusts, and Power of Attorney.
Documents that make up a Will include all documents showing legal ownership of your assets.

Featured Fire Client of the month: Kelvin Yeung!

Featured Fire Client of the month: Kelvin Yeung!

Blog
Dec 16, 2021
Blog
Dec 16, 2021

Featured Fire Client of the month: Kelvin Yeung!

This month, we'd like to introduce you to Kelvin Yeung, who is the owner of 2 physiotherapy clinics - Launch Rehab in New Westminster & Kensington Square Physiotherapy in North Burnaby. Kelvin is a huge advocate of healthy body and movement, and he is on a mission to help you move freely without pain!

Tell us a bit about yourself

Hi, I am Kelvin Yeung, a Registered Physiotherapist and owner of Launch Rehab & Kensington Square Physio.

Tell us a few personal interests and hobbies

I love working out, cooking, all sports, and before having kids, video games.

When and why did you choose this industry over others?

I chose this industry back when I was 15 years old. I have always been fascinated by how the human body worked and I was considering a career as a physician. At the same time, I was a competitive and injury-prone athlete, which exposed to me to the field of physiotherapy. I loved the idea of being part of someone’s recovery journey from start to finish. I felt by being a physiotherapist, I was able to create much more personal and meaningful relationships with my patients as you usually spend 4 to 6 weeks with a patient during their recovery process.

How does a financial planner play a role in your personal and business life?

A financial planner helps me in a similar way to how I help my patients. They’re able to help set a path towards a particular goal in my life and with check-ins, are able to adapt, react, and adjust accordingly to the changes that are happening both in my personal and business life.

As a clinic owner, how do you keep your team motivated?

Our team believes in a few simple values. Accountability, integrity, and growth.

As a clinic owner, I take full responsibility for the success and failure of my team. By keeping myself accountable and acting with integrity, I hope to set an example for my team. We create weekly and monthly “lunch and learns” to keep everyone up to date with the latest research and clinical gems. But most importantly, our clinic culture abides by the philosophy of being a family unit. Maybe cause I’m a dad, but I look at all my practitioners as my kids and I try my best to take care of them.

What's the most fulfilling part of the job? 

The smile of a patient when they walk out of the clinic feeling 100%.

 

Who should be reaching out to you?

Anyone who wants to improve their quality of life through movement and exercise. We are a clinic that welcomes everyone, as long as they want to improve. No matter your age or exercise experience, we will be there alongside to help you! I encourage you to check out my website (www.launchrehab.ca)

We encourage you to connect with Kelvin to find out more about Launch Rehab, and book a consultation with him at his beautiful brand new clinic in New Westminster!

Tax Planning For Individuals: 7 Tips To Make Life Easier

Tax Planning For Individuals: 7 Tips To Make Life Easier

Blog
7 minutes
Dec 1, 2021
Blog
7 minutes
Dec 1, 2021

Tax Planning For Individuals: 7 Tips To Make Life Easier

Tax planning is a complex task that requires you to be conversant with every tax you are liable to pay as an individual. It also means you have to be conversant with the relevant tax laws and calculations to enable you to meet the requirements of the law. You must have heard that there are ways to ensure you pay the lowest taxes possible without raising the CRA's attention. Most people end up paying more than they are either because they do not want to employ the services of a tax expert or they lack knowledge on tips for effective tax planning. Tax planning for those without the requisite information is quite frustrating. This article will explain why tax planning is important and some tax planning strategies that you can adopt.

 

Tax Planning In Simple Terms

Tax planning in simple terms refers to the analysis of your financial plan or current situation in order to ensure that all components work together to allow you to pay the lowest taxes possible.

 

Tax Planning Explained

Tax is an inevitable mandatory financial charge that is imposed by the government on anyone qualified to pay them under relevant laws. Failure or resistance to paying taxes is regarded as a crime and punishable under the law. One way to ensure that you maximize all available legal methods to reduce the amount of tax you pay is through tax planning.

 

Tax planning is the process of arranging your financial and business affairs in such a manner that will attract the lowest tax rates under the relevant tax laws. In other words, it is the process of limiting the amount of taxes you pay without breaking any law. An efficient tax plan will minimize how much taxes you pay and is an essential part of your financial plan. Tax planning involves the optimization of marginal tax rates using different calculations and means such as Trust arrangements, charitable entities, corporations, tax exemptions, deductible expenses, profit-shifting arrangements, and some other means. One thing to note about tax planning is that while you pay reduced tax rates, it must be done within the purview of the law. Tax planning is entirely different from tax evasion which is a crime.

 

When developing a tax plan, some of the things to consider include the timing of your income, the size of your income, the timing of your purchases, and the plans you have for your other expenditures. Also, the types of investment portfolios and retirement plans you choose must complement your tax filing status and deductions to create an efficient tax plan.

 

Types of tax planning

Some of the types of individual tax planning include:

 

Tax Planning using Government Programs

This tax plan is using tax benefits offered by the government of Canada. Some of which may include registered plans such as Tax Free Savings Account (TFSA), Registered Education Savings Plan (RESP) and Registered Disability Savings Plan (RDSP). You will also get tax benefits on your charitable donations and withdrawing from your RRSPs through Home Buyers Plan.

Retirement Tax Planning

This is a tax plan that allows you to enjoy your post-retirement days by reducing your tax liability and maximizing your income at that stage of your life. You can enjoy deferred taxes on your Registered Retirement Savings Plan (RRSP), Canada Pension Plan (CPP), and for some, Individual Pension Plan (IPP).

Estate Tax Plan

Believe it or not, when you pass away, your estate is still subject to taxes. Yes, even the dead pay tax. You should put a tax plan in place that will preserve the value of your estate. You can enjoy the benefits of plans like Tax Free Savings Account (TFSA) or taking out life insurance to pay for those taxes.

 

Importance Of Tax Planning

Paying your taxes is important for so many reasons. For one, it ensures that you stay on the right side of the CRA. However, there are ways to ensure you pay less in taxes without contravening the law. With a well-prepared tax plan, you can enjoy paying taxes while you also build your financial plan and enjoy maximum benefits from your financial plan. Here are some of the importance of tax planning:

 

Solves Tax issues

Having a tax plan will help you pay up any back taxes you owe and also solve any other tax issues you may have.

Extra Cash

With a tax plan, you can save some extra cash and divert it into your savings or investments. It is an opportunity to grow your wealth with a smart tax plan.

Building An Education Fund For Your Child

The extra cash you get from smart tax planning can be diverted to fund your child’s education. You do not need to start sweating for cash to build an education fund when you can easily get it from paying less in taxes through your tax plan. You can take advantage of the Registered Education Savings Plan (RESP) which allows you to save for your child’s post-secondary school education and also earn tax-deferred income. On top of that, you also attract government grants that can help grow this savings faster.

Flexible Tax Payment Schedule

A tax plan will inform you on when to pay up your taxes. This eliminates unnecessary stress and uncertainties when it comes to paying your taxes. It allows you to take advantage of the tax installment opportunity where you can spread the payment of the tax owed over the course of the year.

Tax Information

Building a tax plan will mean you have to be up to date on the relevant tax laws and tax liabilities. In other words, tax planning is a learning opportunity about relevant information on taxes and relevant laws. You also get to learn about some tax tips and legal tricks you can use to pay less in taxes.

 

What Are The 3 Basic Tax Planning Strategies?

Tax planning strategies will ensure the efficiency of your tax plan to reduce your tax liability. Tax planning strategies revolve around 3 components which include reduction in income, increasing deductions, and utilizing available lower tax rates. Three basic tax planning strategies you can adopt include:

 

Income splitting and Shifting

Tax splitting is when you shift income across your family members or legal entities. When you split your income across your family unit, you enjoy reduced tax rates. You can also shift different types of income such as bonuses, dividends, and your year-end payments to a period when you will enjoy lower tax rates. You may also use a Spousal RRSP to split your retirement income in the future.

Deferring Taxes

Deferring your tax payment will allow you to pay your tax at another time. You can do this by using specific investment portfolios that allow deferred tax payments. A good example is a pension plan contribution and RRSPs that allows you to defer your tax payment till a later date in the future.

Tax-Exempt Investments

You can choose selective investments that will afford you exemptions from federal or provincial tax. One registered investment program is a Tax Free Savings Account (TFSA) with tax free earnings that may benefit your tax plan. Another investment with tax benefits are flow through shares.

Tax Planning Tips

Some basic tips on tax planning will give you the benefit of enjoying tax advantages without the help of a tax expert. Here are some of the tips you can consider for your tax plan:

 

Investments

Choosing the right investment will enable you to enjoy some tax benefits. Some investments such as stock are accorded tax breaks on dividends and capital gains. You should be careful of putting your money in fixed-income investments such as GICs and Bonds because they do not have tax benefits. They are fully taxable and will cost you money.

More Philanthropic Activities

Donating to charity does not only mean you get to help those in need, but you can also enjoy some tax benefits that come along with it.  Charitable donations have their fair share of tax credits or deductions which will be a good addition to your tax plans. The essence of the tax benefits on donations is to encourage people to give to the needy.

Assess Your Deduction Strategy

If you have several expenses to meet up with, it is best you itemize the deductions available to you. There are deductions you can enjoy as the head of a household and there are the ones you can enjoy if you file jointly with your spouse. Itemizing them gives you clarity on the benefits that are available to you and it helps you divert the deductions for other useful purposes. For example, your Registered Retirement Savings Plan (RRSP) allows you to enjoy tax deduction and tax-free growth on your earnings until retirement.

Start A Side Business

Asides from being your boss and building something for yourself, starting a business also has its tax benefits. One advantage is that you can deduct many of your expenses from the income from your business which will reduce your tax obligations. Some of the tax deductions you can enjoy as a business owner include health insurance premiums, home office tax deductions.

Aim For Capital Gains

Investment is an important aspect of a financial plan because it is what determines how well and fast your wealth will grow for a financially secured future. Investment portfolios such as mutual funds, stocks, bonds, and real estate have their tax advantages if you shoot for capital gains. Capital gains have much more favourable tax treatments compared do dividends, rental and interest income.

Borrow To Invest and Save To Buy

Almost everyone has one debt or the other hanging over their heads. If you are going to have one, you might as well make most of it. Taking out a loan for investment purposes has its tax advantage. The interest on loans taken out for the purpose of investing can be tax-deductible as against taking a loan to make a purchase. This is a wake-up call to change your orientation, borrow to invest and save to buy.

Open A Tax-Free Savings Account (TFSA)

The investment income earned on the funds you invest in a TFSA is not subject to tax when earned or withdrawn. It is a sure way of maximizing the tax benefits available to you. Another benefit of a TFSA is that your contribution room is replenished the year following your withdrawal.  

Tax Planning For Individuals Conclusion

Tax planning is very important and has its advantages. However, you should be careful and ensure your tax plans will not put you on the wrong side of the law. Know the limits the law provides to clearly distinguish your tax reduction from tax evasion or tax avoidance. Keep abreast of changing tax laws to maximize any benefit available to you, depending on your investment plans and your finances generally. If developing a tax plan is becoming complex for you, it is advisable to seek the help of a professional tax accountant or certified financial planner to help you out your tax plan within the ambit of the law.

Financial Safety Net: Five Areas To Create Yours Today

Financial Safety Net: Five Areas To Create Yours Today

Blog
6 minutes
Dec 1, 2021
Blog
6 minutes
Dec 1, 2021

Financial Safety Net: Five Areas To Create Yours Today

A financial safety net is usually embedded in a financial plan to provide you with a cushion when there is an emergency that requires instant cash. It is best to start planning for your financial safety net once you have put your day-to-day expenses in order and your long-term financial goals are in motion. An emergency fund should be included in your financial safety net, it is an important component that you can fall back on when you need an emergency fund. Such needs could be in the form of health needs or suddenly losing your job. It is advisable to have enough savings for six months to cover your safety net funds. Other components of the financial safety net include life and disability insurance. Building a financial safety net requires careful and systematic planning that requires few tips. Some of these tips are discussed in this article.

 

What Is a Financial Safety Net?

A financial safety plan is a combination of various insurance policies and a savings account. Its function is to help you reduce financial risks that may be caused by unexpected expenses. It protects you and your family's long-term financial goals by giving you a fallback plan that will not derail your overall financial plan.

 

Emergency funds are held in a liquid savings account which makes it easily accessible, unlike your investment funds which may be locked in for a specified period. Financial advisors always recommend setting aside a specific amount to build your financial safety net for expenses that carry significant financial impact.

 

Why Should Creating An Emergency Fund Take Priority?

You never can tell when you will need a financial safety net. That's the whole essence of having one. To prepare for any eventuality. If you speak to people who have an emergency fund when they need one, they will testify to how happy they were that they had an emergency fund and how difficult it was to find the amount of money if they didn't have one. An emergency fund helps you plan ahead. No one prays for any financial emergency but these things happen and you have to be prepared for them.

 

The Covid 19 pandemic is an example of such an emergency. A person with an emergency fund would have coped better for a few months than someone who had to dip into their investment funds.  Here are some reasons why you should make creating an emergency fund a priority:

You Just Started Budgeting

When you just start out budgeting your income and expenses as part of your financial plan, it is not unusual to leave out some expenses that you may need to plan for. An emergency fund will come in handy when you finally realize you have left out some important expenses. It will help you cover the expenses for the main time till you recover and put them in your budget.

 

You Have Only One Source Of Income

If you fall under this category, it is important to have an emergency fund in case of any eventuality. An emergency fund will protect you from a sudden job loss or illness that can keep you from earning your regular income.

 

You Have A Medical Condition

If you have a medical condition that requires constant testing and purchase of drugs that may max out your income, an emergency fund will help you cater for these costs. It will also protect you from any medical emergency that may force you to take days off without pay.

 

You’re Saving For A Goal

If you have a financial target you want to meet, having an emergency fund will guarantee you achieve this goal in case of any emergency. An emergency fund prevents you from touching your savings and investments to meet any emergency financial need.

 

You Own A Car or A Home

These two assets do not give a warning when they want to break down. They are very essential for your everyday living and should they need fixing, it has to be done as soon as possible. An emergency fund comes in handy in these kinds of situations. If your car needs repairs or your home needs some repair and upkeep.

 

5 Reasons Why You Need A SafetyNet

A financial safety net protects you from a financial hit and cushions your fall in cases of emergency. A safety net also allows you to take some investment risk to grow your investment funds without the fear of being impacted should it fail. Here are some of the reasons why you need a financial safety net:

 

To Protect Your Long Term Investments

A financial safety net gives you the discipline you need to avoid touching your long-term financial goals. When an emergency situation arises, there is always the temptation to dip your hand into your investment to meet the financial emergency. Essentially, a financial safety net prepares you for a rainy day.

 

To Provide For Your Family

A financial safety net is not only for you. You also do it with your family in mind. Your kids could fall I'll, needing major medical attention that could hit you financially. Having a financial safety net will help you feel the impact less. Losing your job or taking sick leave without pay could affect your family being the breadwinner of the family. A financial safety net helps your family deal with these kinds of situations till you get back on your feet.

 

Financial Stability

A financial safety net gives you financial stability by providing a cushion for any financial emergency. With a financial plan, all your income and expenditures are structured to meet your financial goal. Any slight change in the routine could put your finances off balance. This is the essence of a financial safety net. When an emergency arises, instead of distorting your financial plan, your safety net takes the hit while your financial plan is still intact.

 

It Improves Your Saving Culture

A safety net fund is another set of saving you have asides from the savings plan in your financial plan. Knowing that you are building a safety net keeps you in check and prevents you from spending extravagantly. One saving plan still gives you the room to spend impulsively but with a safety net plan in place, you are restricted on your spending to be able to meet up with all your financial goals.

 

It Helps You Organize Your Financial Plan

A safety net plan is part of your financial plan. Having it included in your financial plan gives it structure and organization. A safety net can be classified as one of the strategies for meeting your mid-term and long-term financial goals. It will guarantee your investments are not distorted by any financial emergency.

 

Ultimately, a financial safety net is a strategy used to meet your long-term financial goals.

 

5 Ways To Start Saving Today

For young people, saving can be a problem because it might seem like there's enough time to save in the future. This is a wrong orientation that you should correct. Saving helps you build your financial plan to meet your financial goals. It also ensures that you have a financial safety net for rainy days. No one is too young to save and you should start developing the habit today. Here are some tips methods of having a saving culture:

 

Have A Budget

One effective way of saving is having a budget and sticking to it. Young people mistake having a budget to restrict the amount of fun they have. By creating a budget, you will be able to track your expenses and allocate funds for your savings and investment. You can track the amount you spend on fun and what you spend on securing your future.

 

Have A Safety Net Plan

This is another way to develop a saving habit. A financial safety net plan requires you to set aside a portion of your income for an emergency fund. It will ensure you keep to your saving plan to meet up with your financial safety net plan. You can use a high-interest liquid savings account as your safety net plan so you can access it in a time of emergency.

 

Set Savings Goals

Goal setting is known to be an effective way of achieving a desire. Visualizing what you're saving for keeps you in check and ensures you follow through with your saving culture. Setting goals like buying your home in 3 years will improve your saving habit because you have a goal to meet.

 

Find Ways To Cut Your Spending

If you have high expenses, you won't be able to save. If you are interested in developing a saving habit, you need to cutdown on your expenses. You will need to do away with some of the unnecessary things you buy just for the sake of buying. The habit of buying clothes thinking you will need them in the future will have to stop. Cut back on expenses on entertainment and eating out. Having a budget will help you cutdown on unnecessary spending.

 

Try Out Automated Saving

Automated savings ensures that a predetermined amount is deducted from your main account into your savings account before you access it. With automated savings, you can split your income between your main account and your savings account to gradually meet your saving goals.

 

Track Your Progress

Tracking your savings progress is essential because it will ensure that you stick to your savings plan. It also helps you to know when you are not meeting up with your savings plan. It will also encourage you by showing you how far you have come with your savings plan.

 

Financial Safety Net Conclusion

Having a savings habit is essential, especially at a young age because it will ensure you prepare for a secured future. Do not think you are too young to save, as a matter of fact, this is the best time for you to start saving for your future. Have a financial plan that consists of investment plans, financial goals and a financial safety net plan.

Smart Financial Goals: 10 Examples For A Successful Life

Smart Financial Goals: 10 Examples For A Successful Life

Blog
7 minutes
Dec 1, 2021
Blog
7 minutes
Dec 1, 2021

Smart Financial Goals: 10 Examples For A Successful Life

Financial planning is very important when it comes to structuring your finances. To keep track of your income and expenses, you will need a solid financial plan to guarantee a financially secure future. One of the important steps in developing a financial plan is setting your financial goals. Goals on a general note can be classified into short-term, mid-term, and long-term goals. This is also applicable to your finances. Setting financial goals guides you on how to set aside a percentage of your income as savings and how much will also go into investment. You may think you have time on your side before retirement, don’t be deceived because time flies and you will only have yourself to blame if you have not adequately prepared for post-retirement. We will be discussing the importance of setting financial goals and how to set smart financial goals to secure your future.

 

Why Is Setting A Smart Financial Goal Is Important

It is one thing to set financial goals, it is another thing to set smart financial goals. Smart financial goals will allow you to put in place effective savings and investment frame works that will ensure you meet your financial goals both in the short term and long term. Smart financial goals are important for the following reasons:

Sense of Direction

Setting goals gives you a sense of purpose and direction and having one for your finances is very important. Without financial goals, you do not have a reason to save or invest part of your income for a secured future. You will fall for every financial temptation, buying things you do not need and borrowing money you have no means of paying back on time. Smart financial goals give you direction on your finances by telling you how much you earn and give you a clear idea of how much is convenient to save and invest. Smart financial goals will identify what lifestyle you desire for yourself and also guide you on how to invest smartly so as to grow your wealth to meet this lifestyle.

Financial Strategy

Smart financial goals will help you identify the best investment strategy that will help you meet these goals. If you have modest financial goals, you can come up with flexible strategies that will ensure you enjoy a bit now and still plan for your future. For those with ambitious financial goals, you may need to combine a few investment strategies to meet these goals.

Discipline

Setting smart financial goals will instill discipline when it comes to your finances. It will tell you how much to set aside as savings and investment to meet your goals. It will prevent you from spending money on what will stretch your budget and what you do not need.

Shape Your Career Choices

When you set smart financial goals, you do everything in your power to meet up with these goals and part of what you can do is make the right career choices that will earn you more and increase your savings and investment. If you have a 9 to 5 job, and you have an ambitious financial goal, you may want to look at starting your own business or taking on more gigs so as to increase your income. When you know what you want financially, it guides your decisions on how to achieve them.

Difference Between Short Term Goals and Long Term Financial Goals

Short-term and long-term goals may seem self-explanatory but when it comes to finances, some intricacies must be understood in order to avoid placing what should be short-term in the long term goals. This may affect your savings and investments and you may end up not achieving your set financial goals.

 

Short-term financial goals have to do more with your immediate expenses. They vary according to personal needs and timelines. Generally, short-term financial goals are usually between 1 month and one year. Most people use short-term financial goals to settle their credit card debt, set up emergency funds, and save for minor home improvement, holiday expenses, and payment of other utility bills.

 

Long-term goals, on the other hand, are usually set from 5 years and above. Long-term goals require more strategic savings and investment planning and you may need the help of a professional. Some things that fall under long-term financial planning include retirement planning, mortgage payment, and starting your business.

 

In between these two sets of goals, it the mid-term goals, these set of goals usually take a few years to accomplish and some of the short-term goals and long-term goals can overlap as mid term goals. Some mid-term goals include paying off debts and buying a car.

 

How Do You Set Smart Financial Goals?

The ‘smart’ in smart financial goals could be termed as an acronym that means Specific, Measurable, Attainable, Realistic, and Timely. These five components when applied to your financial plans will give you some degree of assurance of a secured future. To create a smart financial plan, there are tips you should follow so as to get the desired result. Some of the tips include:

Specific Goals

When highlighting your financial goals, ensure that you are specific as to what you want. Avoid basing your goals on some conditions that may or may not happen. Being specific with your goals will give you clarity and every step from then on will be intentional and towards achieving the goals. Know what you want and how much you want it.

Measurable Goals

When you have outlined specific goals, it becomes easy to track. You can create points of measurement in-between your plan to see if you are on your way to achieving your set goals. For example, if you set out to save $12,000 in 12 months, you could assess your progress after 6 months to see how far you have come. You can also set weekly targets to ensure you are progressing steadily towards your goal.

Attainable Goals

In setting your goals, whether moderate or ambitious, ensure that they are goals that your current financial situation can attain or close. When setting your goals, also ensure your strategies are achievable. Do not base your strategy on possibilities or guesswork. For example, you set a goal of $50,000 in savings in 12 months with a $1,000 income. How do you want to achieve that? Simple. By keeping your goals within your means.

Realistic Goals

When your goals are realistic, then they are attainable. This ties directly to the above. Sometimes, long-term goals may seem unrealistic but when you break it down and have a measurability frame work in place, it will make it easier and realistic. You can always review and change.

Timely

After identifying your specific goals, with a measurability framework and you have determined that they are realistic and attainable, the last part is to put a timeframe on the attainment of your goals. Give yourself reasonable time, do not choke yourself. Putting a timeframe also instills discipline and focus towards achieving your financial goals.

While these steps will get you closer to setting smart financial goals if you ever feel overwhelmed by the process. Do not fail to involve a financial expert. You can choose to develop your financial goals and run them by your financial advisor for his input.

10 Examples Of Smart Financial Goals

 

Eliminate Credit Card Debts

Collate all your credit card debts and the interest rate, then assess how much from your income you can conveniently set aside to service all your credit card debt. Set a time frame and ensure that it is a realistic time frame.

Create An Emergency Fund

An emergency fund comes in handy when there is an unexpected urgent expense that needs tending to. It prevents you from dipping into your savings and investment. This is a reasonable financial goal that you must have. You can set a time frame of 6 months to 1year to build an emergency fund. Set the amount you want and make sure it is attainable with your current income.

Set Investment Goals

This is the fulcrum of your financial plan because that is what will ensure the growth of your wealth to secure your future. In deciding on your investment goals, set out specific asset growth you want to achieve in the long term and identify the best investment strategies and portfolios that can help you achieve these goals. Investment goals could be from 10 years so it is advisable to have a variety of portfolios that will ensure your investments are balanced and attainable within your set timeframe.

Retirement Savings

Whether you are retiring early or at a regular age, it is always important to have retirement savings plan to cater for your post-retirement. If applicable, you can set up a RRSP through your employer with a convenient percentage as a contribution, your employer might match a certain percentage of what your contribute as well. Your retirement lifestyle goals and the duration before retirement will determine your contribution. Ensure your retirement lifestyle is a realistic one.

Earn More Money

If you can, having multiple streams of income will go a long way in helping you achieve your financial goals. It allows you to set more money aside for savings and investment. Take per-time jobs and set aside a percentage of the earnings. Set a time frame you want for your side hustle. This is a relevant financial goal for those looking to save more money.

Financial Education

This is spending part of your income on how to better manage your finances. You can take online classes or buy books on financial management. This will go a long way in making sure you are financially mature. It will also help you with financial goals and investment strategies.

Own Your Home

If you have the extra income, you can take advantage and set a goal of owning your home in the next 10 years. You can make two mortgage payments till the end of the year and see how far you have covered the principal sum. Take stock at intervals to measure your progress.

Insurance

This is a very important goal. Protecting your life and your assets can not be overstated. You can subscribe to life insurance, disability insurance, or car insurance.

Estate Planning

It is never too early to start an estate plan. Setting family goals will go a long way in structuring your estate plan. You can provide for your loved ones and create a legacy for when you are no longer around. An estate plan is not a death sentence, it is a smart financial goal.

Start Your Business

Although it is often said that not everyone is built for a self-made life but it is worth considering. Running your business means taking your fate into your hands. You can always run a business side by side with your 9 to 5 job. Set aside your capital and set specific goals for your business and soon enough, you can set aside part of your profit to meet your financial goals.

Smart Financial Goals Conclusion

Setting specific financial goals and applying the SMART concept will go a long way in securing your financial future. The essence of smart financial goals is to have flexible financial plans that will give room for financial market fluctuations for your investment and other uncertainties. Do not forget to be as realistic as possible. Set aside periods when you will do some sort of check-up on your financial plan to monitor the progress you have made towards attaining your financial goals.

Investment Planning Definition & How To Prepare For Your Future

Investment Planning Definition & How To Prepare For Your Future

Blog
4 minutes
Nov 30, 2021
Blog
4 minutes
Nov 30, 2021

Investment Planning Definition & How To Prepare For Your Future

Investment Panning Definition

Investment planning is the process of aligning your financial goals with your investment resources. It is the main component of financial planning which puts to use your savings and ensures you earn more money through investment. The first step to a successful investment plan is identifying your financial goals and objectives so as to direct you on the type of investment vehicles you can use to multiply your financial assets to meet these goals and objectives. Having a plan for your investments gives you a sense of direction and purpose so you can get maximum return on your investments. Investment planning also helps you decide on the best investment strategy to meet your financial goals.

 

Why Is Investment Planning Important?

Having something to fallback on in times of crises or post-retirement is a major reason to have an investment. It is never advisable to spend every cash you have whenever it comes in. it is prudent to save and invest a percentage of your income, no matter how little. Financial advisors will always recommend that you have your money invested in different portfolios to provide for you and your loved ones. To have a lucrative investment, you need to have a solid investment plan that will ensure your financial and investment goals are achieved. Investment planning is important for the following reasons:

Definite Goals and Objective

When you include an investment plan in your financial plan, it helps you to think and identify your future financial goals and objectives. The kind of lifestyle you want to live in the future will determine the best type of investment portfolio that will meet your financial goals. It gives you an idea of the bigger picture you want for yourself.

Direction

Having an investment plan will give you a sense of direction in your finances. You will be able to choose the best investment and every financial decision you make will be intentional and purposeful.

Investment Strategy Formulation

Having an investment plan will help you determine the investment strategy that best suits your financial goals. You will be able to align your income with your savings and determine how you move money around to grow your investments. It helps you create an investment plan that will be comfortable for you by accommodating your present needs.

Review and Monitoring

An investment plan will help you review your investment strategies and monitor how well your investment portfolios are doing. With a proper investment plan, you can always review and change your strategies if there are indications that they won't help you meet your financial goals.

Financial Security

An investment plan protects your future both in the short term and long term. It guides you on how to save and invest to secure your future and that of your loved ones.

Financial Knowledge

One benefit you get from investment planning is the level of financial awareness it gives you. In order to choose the right investment plan for your financial plan, you will have to be familiar with quite a number of investment vehicles that will improve your financial knowledge. You will know investments that are appropriate for the short term and in the long term. It will give you a whole new perspective on budgeting and how you can improve your financial situation and lifestyle.

Controlled Spending

In developing an investment plan, you will have to assess your current financial situation to enable you to save and invest a portion of your income. It also puts a cap on your expenses so as to meet up with your saving and investment plans.

 

What Is The Difference Between Investment Planning and Financial Planning

Investment planning is known to be a subset of financial planning. The major difference between these two is the area of focus. Financial planning focuses on a comprehensive aspect of your finances like estate planning, and retirement planning. While investment planning focuses only on how you will grow your savings through different investment vehicles. Your investment planning is a key determinant of how successful your financial plan will be.

 

A financial plan helps you evaluate your current financial status and helps your structure your savings, budget, taxes, insurance, retirement, and estate plan. An investment plan, on the other hand, helps you create and evaluate your investment strategies that will multiply your assets and secure your future and that of your loved ones.

 

What Is Systematic Investment Planning

Systematic investment planning refers to a investment strategy that allows investors to contribute periodically instead of investing lump sums. The amount to be contributed is usually fixed and debited at pre-determined intervals. This type of investment relieves the investor from speculating in different volatile investment markets.

 

A systematic investment plan (SIP) is appropriate for retail investors who do not have the financial might to pursue exclusive investment vehicles. It also frees an investor from active investment monitoring which will be handled by the investment house handling the mutual fund portfolio. It is a flexible investment plan which you can discontinue anytime, increase or decrease your contribution at your convenience. SIPs are suitable for long-term investments as you can invest small amounts over a long period. These contributions can be biweekly, weekly, monthly or quarterly.

 

What are The Five Steps Of Investment Planning

It's one thing to know you need an investment plan, it's another thing to develop a viable investment plan. It is advisable to seek the help of financial advisors and tax lawyers to help structure your investment plan. After a bit of research into what investment planning is, there are further steps to take to ensure your investment plan is solid. Here are the first 5 steps to take when developing your investment plan:

 

Evaluate Your Current Financial Situation

Investment planning is all about securing your future and to do that, you need to know where you stand financially today. Evaluating your current financial situation gives you an idea of what you have to kick-start your investment plan. It will also help you structure your income and expenses to make room for investment capital. This step gives you a clear picture of where you are financially and it can also help you identify your desired financial lifestyle. You are also able to determine your investment capital after evaluating your financial situation.

Identify Your Financial Goals and Objectives

This step is quite important because it will determine how you will structure your investments in different portfolios. After assessing your current financial status, set a financial target for yourself in the short term and the long term. You could pen down the desired worth of your asset in the short term and long term. This step will enable you to identify the best financial strategy to adopt that will grow your assets to meet your financial target. Some of the things to consider when outlining your financial goals include your post-retirement lifestyles, your real estate goals, your streams of income, and whether you want to create generational wealth for your loved ones.

Decide On Your Risk Appetite

As the saying goes, the higher the risk, the higher the reward. Investing is all about risk, nothing is ever guaranteed. Low-risk investments usually have low returns and you have to decide what your risk appetite is for the investment journey. Most financial advisors will recommend that you spread your investment portfolios to combine low-risk and high-risk investments to strike a balance in your portfolio. Your financial goals also directly relate to this step because that determines how aggressive your investment portfolios will be. The key is to set realistic goals for yourself, using your current financial status. You can always review your investment plan when your financial situation improves. The more your income, the more you can afford to invest. Your retirement age also determines your risk appetite. For those aiming to retire young at the age of 40 or below, depending on how old you are and how much you make, you may have to invest aggressively to be able to sustain the post-retirement lifestyle you desire. When it comes to investment and risk, it's not about how quickly you reach your financial goals but reaching them that is important.

Decide on The Type of Investments

This step is crucial to the survival of your financial plan and it is what determines how soon you achieve your financial goals. There are different types of investments that you can put your money to help achieve your goals. It is advisable to consult a financial advisor at this stage because every investment portfolio has its pros and cons depending on your financial goals. There is also the issue of tax which may hinder your investment from growing at the desired rate. Some of the common types of investment include:

Stocks

This gives you a stake in the ownership of any public company offering it. The returns on shares are known as dividends or you can sell your stakes when it has appreciated over a period. The stock market is known to appreciate by 7% annually or more. That is a potential value appreciation of whatever shares you own.

Investment Funds

These are known as a basket of stocks managed by a designated fund manager. This option is for those that do not have time in taking the investment decisions themselves. A known disadvantage is that the fund manager will be paid commission from your returns which may affect your total profit.

Bonds

Bonds are like loans to the government or individual companies in exchange for returns over a long period. This is a long-term investment with a modest return of 2% to 3% annually. For those planning to retire at a young age, this may not be the best option.

Annuities

They are usually referred to as a supplement to the normal retirement income. It is a contract between an investor and an insurance company whereby the investor pays a lump sum in exchange for periodic payments to the investor after retirement. The payment interval will be pre-determined.

 

The scope of investment portfolios you can choose from is wide, depending on what your financial goals are and your level of income. You can seek professional help to choose the best portfolio for you.

 

Develop a Timeline

his step is also important because it gives you a sense of purpose in every financial decision you make. Your timeline should start counting from the moment you take the first step. This step ties directly to your goals and investment portfolios. If you've set a specific financial target for yourself, having a timeline will help you know when to change strategies or investment plans if it appears you won't be able to meet your goal on time.

 

Investment Planning Conclusion

Investment planning is a very important aspect of financial planning and it has the power to make or mar your financial plan. Choosing the right investment strategy goes hand in hand with having realistic financial goals and a reasonable timeline. For those planning to retire early, you may have to be aggressive with your investment portfolios. The higher the risk, the higher the reward. Lastly, it is advisable to consult a financial expert to help you review your investment plan.

‍Debt Management Strategy: 10 Steps To Succeed 

‍Debt Management Strategy: 10 Steps To Succeed 

Blog
6 minutes
Nov 27, 2021
Blog
6 minutes
Nov 27, 2021

‍Debt Management Strategy: 10 Steps To Succeed 

Debt is an undesirable obligation to owe for so many reasons. The accruing interest rates on the debt does not help matters. Most times, owing debts is not a result of irresponsibility or extravagance, you can also borrow money for genuine pressing matters. The need for the funds most times do not allow you to think of the implication of the interest rates and the means of servicing the debt. Debts could come in the form of credit card debts, mortgages, business loans, car loans, and so many others. Most times, people that borrow do not have comfortable means of servicing the debt, which is where a debt management strategy comes to play. To service your debts with relative ease, you need a debt management strategy that will structure your finances in such a way that it pays attention to your debts and also ensures that your everyday needs are catered for and prevents you from taking more loans. This article will discuss a few steps to take in developing an effective debt management strategy.

 

What Is Debt Management Strategy?

A debt management strategy is a way of getting your debt situation under control through financial planning and budgeting. A debt management strategy helps you minimize your current debt obligations with the aim of eliminating your debt profile after a set period and it also ensures you have a proper financial plan to manage any future credit facility you may want to take.

 

When it comes to your financial plan, it is important to create a section to manage your debt. Too many debt obligations may hinder your financial progress and prevent you from achieving your financial goals. A debt management strategy takes care of your debt obligations without hampering your financial plan by giving it a much-needed structure. A debt management strategy is a way to keep up with your debts and current bills. There are different strategies you can use to manage your debt. You can develop a strategy on your own or work with a financial expert to ensure that your debt management plan aligns with your financial plan.  

 

A DIY Debt Management Strategy

You may decide to develop your debt management strategy by yourself which is not a bad idea in itself. One way to go about it is by creating a budget for yourself that will make provisions for settling your debts and still allow you to settle your daily bills and needs. This will ensure you are financially stable while you are settling your debts. You can use budget calculators, repayment calculators, and financial management apps to track the progress of your strategy. Some DIY strategies include debt snowball and debt avalanche. You can also negotiate with your creditors on a repayment plan that will be convenient for both parties.

 

Debt Management Prepared By A Credit Counselor

There are for-profit and non-profit credit counsellors you can engage to help you sort out your debt situation by preparing an effective debt management strategy. A credit counsellor will come up with a plan to repay your debts and also negotiate with your creditors on your behalf.

 

How Can I Reduce My Personal Debt Quickly?

Debt obligations can put you in an undesirable position which could distort your daily living. Asides from hampering your daily expenses, it can also hinder your savings and investment plans which may prevent your wealth from growing. The best way to overcome this is to come up with a debt management strategy that will eliminate your debts while still allowing you to meet your short-term financial needs and also have a long-term financial plan. A debt management strategy is part of a comprehensive plan that helps you take care of your debt while you secure your future. Consistency is also an important ingredient that will ensure the success of your debt management strategy. You can adopt some of the debt management strategies below to help you take care of your debt situation.  

 

Stop Accumulating Debts

The first step to getting out of a bad situation is to stop putting yourself into that situation in the first place. When it comes to debt, it is not about the principal sum but the accruing interest rate. Although this strategy won’t get you out of debt, it will, however, prevent you from entering into more debt. It may be a difficult habit to break, especially with credit cards, but you can stop accumulating debts by creating a budget for yourself to prevent you from spending beyond your limit. You can also freeze your credit to prevent you from applying for new credit on impulse. This is an important first step in the journey of getting out of debt.

Increase Your Income

In order to meet up with your debt obligations, you need to free up money, create a budget and also earn more. This is very important because it ensures that you are able to meet your short-term financial needs and still have enough money to service your debts. Waiting for a promotion may not be the answer because you don’t know when that will be. Get some digital skills or start your side business to increase your income. Another way to also ensure an increase in your income is to take advantage of different tax benefits at your disposal so you can divert the tax refund into servicing your debts.

Make The Extra Effort

Settling your debt will require a lot of discipline, both from your spending and commitment. When you come up with your debt strategy and earmark the periodic payment, make that extra effort, when possible, to pay more than the set minimum payment. Paying more than the set minimum will save you money on interest and help you get out of your debt faster. For example, you have a $10,000 balance on your credit card with a 15% interest rate and a $500 minimum payment. If you pay the minimum, it will take you almost 3 years to pay up with $4,500 in interest. However, if you pay $600 a month, the $100 extra means it will take you less than 2 years to pay up with just $3,500 interest or less. There is a great advantage in making that extra payment.

Build An Emergency Fund

Having an emergency fund in the middle of settling your debt might seem like a bad idea. You may be asking yourself, why set aside an emergency fund when I can easily channel the fund into paying my debt? What an emergency fund does is to keep you from entering more debt which ties back to the first strategy of avoiding more debt. It serves as a safety net for when there is an emergency and you do not want to touch your investment or borrow more money. An ideal emergency fund hold between 6 to 12 months of living expenses. You can set aside whatever is convenient for you monthly to build up your emergency fund. Anywhere from $1,000 monthly should do.

Consider Debt Consolidation

This is a smart debt management strategy that depends on some variables. If you have high-interest rate debts, you can consider this strategy to accelerate your payment. When you consolidate your debts, you can then take out a from a bank or reliable lender to service these debts all at once, leaving you with only one debt to pay. It will be an advantage if you have good credit or someone with good credit that can guarantee you so you can qualify for a debt consolidation loan which usually has lower interest rates than all your other debts. This strategy will help you pay your debt faster and save you more money.  

Negotiate With Your Creditor For Lower Interest Rate

The effect of interest rate on debts can be so frustrating, it is the reason most people do not settle their debt on time. Sometimes, it almost seems as though your payments go towards the interest rate rather than the principal sum. If you have a good payment history, you can negotiate with your creditor to lower the interest rate. Though it is at the discretion of the creditor, a good payment history puts you at an advantage.  

Negotiate For A Lump Sum Payment Less Than You Owe

This always seems like a long shot but it works, especially if you use 3rd party negotiator companies that specialize in this area of debt management. They'll call your creditors to negotiate the settlement of your debt for less than you owe. Take note that some debt settlement companies may ask you to stop payment during negotiations for better terms. This can impact negatively your credit score. Be sure to continue payment until a new term of payment is agreed upon.

 

Take From Your Retirement Fund or Life Insurance Policy

These are risky strategies that may turn out badly because they will mean touching your future investment for yourself and your beneficiaries. When you withdraw from your retirement account to pay off your debt, it puts you at risk because if you end up leaving your employer, you may have to also refund your employer in an expedited time frame that may further put you in a precarious debt situation. Also, when you retire, you may not have enough funds to fulfil your post-retirement lifestyle because you would have missed out on interests, dividends and capital gains. When you cash out from your life insurance portfolio, it exposes you to some tax obligations and may also affect the benefits accruable to your beneficiaries. These strategies are risky but may be worth the risk if you weigh your options carefully.

Debt Snowball Strategy

With this strategy, you will make the minimum payment on all your debt except for the smallest one, which you will pay as much as you can. This strategy allows you to eliminate your smallest debt quickly and move on to the next smallest debt while maintaining minimum payment on other debts. It stabilizes your debt structure while eliminating it little by little, from the smallest. This strategy may not work for a payday loan or a title loan.

Debt Avalanche Strategy

This debt management strategy is effective when you have extra cash. It helps you maximize the extra cash towards settling your debt. For this strategy to work, make a list of your debts in descending order, from the one with the highest interest rate to the lowest. You will make the required minimum payment on all your debts, you will make an extra payment towards the debt with the highest interest rate. This is the opposite of the snowball strategy. When you pay up the debt with the highest interest rate, you will move on to the next highest and state making more than the minimum payment. You will continue this process until all your debt is paid. This strategy allows you to save money by tackling the debt with the highest interest rate first.

Track Your Progress

This is more of a tip than a strategy. It is easy to lose momentum with paying your debt, especially when it is frustrating and denying you of your financial goals. To keep yourself motivated, track your progress through weekly or monthly check-ins. You can also keep a chart or spreadsheet of your payments to remind yourself of how far you've come. This will keep the momentum and ensure you pay up your debts on time.

Debt Management Strategy Conclusion

These debt management strategies can be effective if you follow through on them. While some of the strategies might seem insignificant, they are all essential in the bigger picture of being debt-free. You have a choice of engaging the services of a debt management professional to execute some of these strategies for a better advantage. It is best to clear your debt at this young age so you can enjoy your retirement in peace.

How Much Should I Have Saved By 30: 10 Steps

How Much Should I Have Saved By 30: 10 Steps

Blog
5 minutes
Nov 22, 2021
Blog
5 minutes
Nov 22, 2021

How Much Should I Have Saved By 30: 10 Steps

Young people under 30 generally tend to have problems with saving. The excuse made by most is that they don't earn enough to set aside part of it for saving purposes. This is a wrong mindset. No one is too young to save. In fact, saving at that early stage helps you attain your financial goal on time. There are other numerous advantages in having enough savings before you clock 30. It's all about cultivating a habit of saving and there are numerous ways to develop this habit. Nothing is stopping you from having a financial safety net savings account before you clock 30. This article will give you reasons why you should have savings as early as possible. We will also discuss what is appropriate for you to have saved before you clock the age of 30.

 

How Much Should I Have Saved By The Age Of 30

There is no exact figure as to how much you should have in savings by the time you're 30 years old. It all depends on a number of variables like your income, your financial obligations, financial goals, debts and so many other things. The most important thing is to have a saving culture before the age of 30. While we are all different and have different financial obligations and goals, it is important to have a general idea of what is considered reasonable savings at the age of 30.

 

While not putting yourself under any pressure, it is said that you should have an average savings of $47,000 if you're earning a relatively average salary. This estimation is based on the rule of thumb which says you should have a 1-year salary in savings by the time you start your fourth decade. The average weekly salary of persons between 25 and 34 in Canada is $979, and the average monthly salary within the same age bracket is $3,917, which makes an annual salary of $47,000.

 

If you have saved this amount or you're approaching this amount and you are not even 30,congratulations, you have met a financial goal. If not, do not put yourself under pressure, take this as a wake-up call and start your savings plan to save as much as you can before you clock 30. There is still time.

 

How Much Do I Need To Retire

This is a very common question among young people who want to start saving to secure their future and even those approaching retirement age. The truth is no amount is too small or big to have as your retirement fund, it all depends on the retirement lifestyle you have envisaged for yourself. Your retirement lifestyle will determine how much you need and how much will be enough to meet your lifestyle post-retirement. Knowing more about your income potential will secure your post-retirement lifestyle, although, emergencies occur which may affect your financial goals it is good to have some measure of control over your finances could give you the post-retirement lifestyle of your dream.

 

There is no benchmark of the amount you must have for retirement, it depends on your financial plan and your retirement lifestyle. However, to give you an idea, look at your lifestyle now and assess your expenses, then consider how these expenses will change when you retire, then you add some of the retirement benefits you will get from the Canadian Retirees Incomes: The Canada Pension Plan (CPP) or Quebec Pension Plan(QPP); The Old Age Security (OAS); Employer-sponsored pension plans and personal savings and investments. All these analyses combined should give you a fair idea of how much will be enough for your post-retirement lifestyle.

 

A survey showed that an average Canadian who retires at 65 will spend $60,359 including taxes until the age of 82. If you have a spouse and you both retire at 65, you will need $1,026,103 till you are both 82. These are average numbers which does not mean it has to be your numbers. Depending on the peculiarity of your situation, the money needed during your retirement may be lower or higher. This figure is only to give you an idea of the amount you should have in savings and investments before you retire.

 

Average Retirement Age

Globally, the age of 65 is regarded as the ripe age for retirement. Some retire before that while some retire way after that. Other than health reasons or years of service, it is the age most of the government retirement benefits are accessible to you. In Canada, you are eligible for the Old Age Security Pension, and Canada Pension Plan. The mandatory retirement age in Canada was 65 years until 2009 when mandatory retirement was abolished except for Judges, Justices of Peace and Magistrates.

 

Unless you are expecting an inheritance that will cater for you for the rest of your life, you are expected to work until the age of 50. That is usually referred to as the earliest retirement age. According to Statistics Canada, the average retirement age in Canada is 63 and a half years. The average retirement age for self-employed people is 68 years and 61 and a half years for federal workers. Private sector workers retire mostly at 65 years.

 

10 Ways To Save For 30

Developing a saving culture before the age of 30 is something that is now being encouraged. Covid 19 showed that anything can happen at any time and no one is too young to save. Even if you do not have a financial plan, endeavour to save as much money as you can, it is the key to securing your future. Here are some ways to save for the age of 30:  

Treat Paying Off Debt With High-Interest Rates As Investment

Debt is an undesirable situation that most people find themselves in. You may have some debt situations in your 30s such as student loans, and credit card debts. One hindrance to paying off loans on time is the high-interest rate. However, if you focus on paying off the debt with the highest interest rate, you save more by taking it off the list. To have a better understanding of this strategy, you can read more about the avalanche strategy of debt management.

Have An Emergency Fund

Building an emergency fund is an effective way of developing a saving culture. Emergency funds are used to settle unexpected financial obligations without having to touch your other savings or investment funds. To build an emergency fund, you will have to set aside a portion of your income which means you are indirectly saving some amount somewhere for when you may need it. This emergency fund also protects your other savings should the need arise for you to fulfil a financial obligation.

Automate Your Savings

Automated savings allows you to set up a direct deposit into your savings account at specific periods. The amount to be saved will be determined by you, it only means you do not have the power to decide when you remit once you activate it. It is a very effective way of developing a saving culture early on in your life. You will not have to keep racking your brain for when you have to save or are tempted to miss this current month’s savings commitment.

Have a Budget

This is a tested and trusted method of instilling a saving culture. Having a budget will give you the necessary discipline to meet your financial goals. With a budget, you can track your income and expenses and stop impulse spending. To have a realistic budget, you can have weekly and monthly expenses to watch what you spend. It is important to stick to your budget. You must be intentional about your saving culture and having a budget is one way to go about it.

Cut Down On Your Expenses

To have an effective savings plan, you must separate your needs from your want and stick to them. Reduce unnecessary travelling, impulse buying, eating out and other things that take your extra cash. Channel this cash into building an emergency fund and other investment goals. Things you can cut down on include utilities, energy, taxes, food and groceries, auto expenses and credit card charges. The extra cash you make off the cutting down can be channeled into your savings plan.

Insurance Policies

This is another way you can save enough before you clock 30. You can subscribe to policies such as disability insurance and auto insurance. This ensures that you are catered for if events under this policy occur. It is a way of saving for the eventuality and protecting your investment fund.

Save More As You Earn More

At your current age, you are full of energy and take on multiple jobs for multiple incomes. Do not see this as an opportunity to spend lavishly, rather it is an opportunity to have more money saved before you are even 30 years old. Take advantage of your youth to secure your future. It is not a time to live extravagantly and forget there is a future you need to secure starting from now. At this stage of your life, your expenses should increase at a slower rate than your income.

Open High-Interest Savings Account

This complements your automated savings plan. You can have an automated savings plan with a high-interest rate. This will ensure your money grows at a higher rate as against the regular savings accounts. At this rate, you're not only saving, but you are also earning. It is a smart move that every young person should think of.

Understand The Concept Of Cash Flow

At this stage, your financial knowledge may not be that deep which is common with everyone in their 20s. However, you can be smart and start improving your financial knowledge. One thing you can start with is the concept of cash flow. This will help you in your budgeting plan. It teaches you how money comes in and how it goes out. It allows you to streamline your expenses and make wise financial decisions. Knowledge is power.

Start Now

Do not think you are still young and you have decades to prepare. Time flies and you may end up regretting it. Things happen and you may not make as much later or you may make a lot more but because you have not cultivated the habit of saving, you lavish your income without thinking of the future. Be intentional about your finances and start saving now.   

Review Your Progress

This is important for your motivation. Once your savings plan is in place, you can set up a monthly review of how far you have gone into meeting your savings goal. It also helps you change your strategy if it doesn't align with your financial goals.

 

Conclusion

These tips will help you develop a saving culture and still allow you to have enough fun in your youth. Do not mistake these tips as a gag on your youth, it is an opportunity to be smart and have fun at the same time. With an effective savings plan before you are 30, you are sure to continue living the lifestyle of your dreams till you're 80 and more.

Featured Fire Client of the month: Vivian Man!

Featured Fire Client of the month: Vivian Man!

Blog
Nov 1, 2021
Blog
Nov 1, 2021

Featured Fire Client of the month: Vivian Man!

This month, we'd like to introduce you to Vivian Man, who is the founder of the Chinese herbal wellness company, Kyth + Kyn. Kyth + Kyn has brought a modern take on teas and soups that have been used for millennia. From her own deep rooted traditions in Chinese culture, Vivian brings a refreshing (literally) and delicious way for us to enjoy the same health benefits!

Tell us a bit about yourself

Vivian Man, Founder of kyth + kyn, a Chinese herbal wellness company. We strive to preserve Chinese culture and provide careful crafted and curated products that are culturally rooted in Traditional Chinese Medicine. We focus on educating and normalizing this practice so that we can introduce these great health benefits to both old and new customers.

Tell us a few personal interests and hobbies

I love staying active both in and outdoors! I also am busy with 2 dogs whom I love (Huckleberry and Willow) and I enjoy watching the NBA. I play basketball myself and am an lover of sunny places like California!

When and why did you choose this industry over others?

The concept of kyth + kyn started in Nov 2017 over a phone conversation with my mom. She had recently moved back to Hong Kong with my dad and we stay in touch by FaceTiming or speaking on the phone. On this particular day I was craving the homemade Chinese soups that she would make my sister and I weekly. I thought about how much I had took for granted these delicious healing broths. She would always tell us about what she puts in these soups and what they're good for but I had very little interest in what she would say because, well, she was going to make the soup for us regardless. But since she's left for Hong Kong, for the first time, I wish I had listened to everything she had tried to teach us.

I told her I was craving the soups and asked her what I should put into them.

"Just add these herbs, put it in water and add some veg and meat"

...uhhh...ok mom that's really not too clear. That's when I decided I really wanted to learn about Chinese herbs, Chinese herbal soups and all the amazing properties she had always told me about. I discovered that a lot of Chinese millennials also felt the same way I do. Sooo...lightbulb moment happened and I realized I could take my learnings and share it with the world. That's when kyth + kyn was born.

As a business owner, how do you keep your team motivated?

It's important to find the right people who believe in and are interested in my brand and the vision behind it. I am a hands off leader who encourages my team to take ownership and see the company as their own.

What's the most fulfilling part of the job? 

When a customer connects with us about how helpful or great our products are, or when they resonate with the brand, that's when I know all the struggles of having a small business are worth it.

 

Who should be reaching out to you?

If you're interested in how to include Chinese herbs in your life, or you're a business owner looking for new products to include on your shelves, I encourage you to check out my website (kythandkyn.com)

We encourage you to connect with Viv to find out more about Kyth+kyn, and take a look at some of the tea and soup blends she has created. Simple, healthy, and nutritious, so take a look!

Financial Planning Checklist - Boxes To Check Off For Success

Financial Planning Checklist - Boxes To Check Off For Success

Blog
7 minutes
Oct 30, 2021
Blog
7 minutes
Oct 30, 2021

Financial Planning Checklist - Boxes To Check Off For Success

Financial planning, as important as it is, must not be rushed into because of its sensitive nature. It is a way of protecting your future by structuring your finance. It is advisable not to rush into a financial plan because things could go south faster than you imagine and you might end up wasting your time and money. The importance of financial planning cannot be overstated. The major importance of financial planning is that it puts you in control of your income, expenses, savings, and investments. It is advisable to break everything about financial planning into stages in order to have a solid financial plan. This will enable you to track each step of your financial plan to ensure you dot every ‘i’ and cross every ‘t’. If you want to do your homework before involving a professional financial advisor, you can research the different steps (you can read our blog on the steps to take on financial planning) you can take and the things to include while preparing a financial plan. Once you are done, you can then give your financial advisor to review. From analyzing your current financial situation to developing an effective strategy to implement your financial plan, financial planning involves a systematic way of making provisions for your future.

 

The importance of a financial plan requires you to be thorough. Therefore, asides from outlining the steps you need to take to have a good financial plan, you can also go the route of outlining a checklist of things you want to take care of and included in your financial plan. Having a checklist is a more comprehensive way of ensuring you tick all the necessary boxes of having a workable financial plan. A good financial plan must include some important elements in order to make it work, these elements can be recreated as your checklist which will guide you when you finally start developing your financial plan. You may be wondering how you will determine what should be on the checklist and what you should leave out. This article will discuss some of the major elements that must be on your checklist so you won’t miss out on anything while preparing your financial plan. Some of what will be discussed include your assets and strategies. At the end of it all, it is important to run everything by your financial advisor for a professional view.

 

 

What Should Be Included In A Financial Plan?

A financial plan is composed of different components that work together to guarantee you a financially secured future. While some of these components are a must, you may do away with others. It all depends on your financial status, needs, and financial goals. Some of the things that must be included in your financial plan include.

 

Estate Plan

Estate planning is a way of taking care of your finances when you are no longer around. It is usually in form of a Will or Trust. It will state your wishes on how to handle your assets, dependents, and the administration of your estate. Your estate plan should also include a section that will appoint the person that will make medical and financial decisions when you are incapacitated. Your estate plan should also include an up-to-date list of beneficiaries of your insurance policies and registered accounts such as RRSP and TFSAs.

 

Financial Goals

Financial goals are an important aspect of a financial plan that you must include. These goals can be divided into short-term, mid-term, and long-term goals. This will be a road map to how you will spend, save and invest your income to meet your various financial goals. Short-term goals which could be in a time frame of 1 or 2 years include paying off high interests debts, tax preparations, and short-term investments. Mid-term goals take a few years and it includes life insurance policies, real estate purchases, and starting a family. Long term goals, like the name implies, is usually for a long period and it includes your estate planning and retirement planning. Financial goals should also include your family goals which will take care of them in your lifetime and when you are no longer around.

 

Emergency Funds

An emergency fund is a fund you set aside to use for any unforeseen circumstances. Things you don’t plan for may happen anytime and this is one of the major reasons for having a financial plan. Having an emergency fund in your financial plan ensures your savings and investments continue to increase in value without touching it, even in the event of emergencies. Unforeseen circumstances could be in the form of unexpected job loss or unexpected medical bills. Financial advisors recommend that you have at least 3 to 6 months of savings that can cover your living expenses for the same period as your emergency fund. It is also advisable to put your emergency fund into a liquid checking or savings account in order to be able to access the funds in a time of emergency.

 

Retirement Plan

The essence of a retirement plan is to make you financially independent post-retirement. It is never too late to include a retirement plan in your financial plan to give you a much-desired independence post-retirement. For a sufficient retirement plan, it is advisable to save between 20% to 30% of your pre-retirement income. You should also create financial goals and a budget for life after retirement. This will ensure you judiciously spend your retirement funds to achieve your set out financial goals.

 

Financial Checklist To Include In Your Financial Plan

For you to have a comprehensive financial plan, having the following checklist will go a long way in helping build a solid financial plan.

Current Financial Analyses

Number one on the checklist is the analysis of your current financial situation. You cannot possibly plan for your future if you do not understand your current situation. In analyzing your financial situation, you must consider the following.

 

Financial assets

Your assets will tell you where you stand financially. You need to make a comprehensive list of all your assets which may include your saving and checking accounts, retirement accounts, brokerage accounts, investment accounts, emergency funds, cars, real estate, jewelry, artworks, and artifacts. Your assets include all your valuables and they must all be assessed to determine your worth before you start your financial plan.

Financial liabilities

You will also need to analyze your liabilities which may include loans, mortgage, credit card debts, business debts, and other expenses.

Credit Utilization Ratio

To calculate your credit utilization ratio, you divide your total debt by your total credit limit. This is also something you should include when preparing your financial plan.

Financial Insurance Portfolio

It is important to assess all your insurance coverage as well. Life, auto, health, and other insurance policies should be considered.

Paying Your Debts

Debt is not a pleasant thing to have on your neck, especially with the interest rates. While it is advisable to avoid any form of debt, there are some debts that you may not be able to avoid at a particular stage of your life. Some of these debts include mortgage, student loans, and credit card debts. While preparing your final plan, you should come up with a strategy to pay of your debts. You can start with the ones with high interest rates. This is important for the health of your financial plan. It will ensure that you are not buried in debt while trying to build your financial plan.

Financial Goals

This is another element of a financial plan you should have on your checklist. Your financial goals are what will drive your savings and investments and they will also give you a sense of direction on your finances. You can divide your financial goals into the following:

•  Short term goals

•  Mid-term goals

•  Long term goals

•  Family goals

•  Retirement goals

•  Career goals

 

Tax Issues

There will always be questions of tax when it comes to your assets. Your short and long-term profits on your investments are subject to capital gains tax. You can engage a tax professional to help you maximize every tax benefit available to you. Have a tax strategy before making any financial move that concerns your financial plan. You need to optimize your approach for tax benefits when you want to sell your assets, set up a charitable trust or donation, or shift your investments. It goes a long way in your financial plan.

 

Budget

This is also another important element to include in your checklist. You can break down your budget into weekly and monthly budgets. This will enable track your expenses and ensure that you are within your expected spending limit. It also separates your needs from your wants. It will also help you reach your financial goals on time.

 

Emergency Funds

Having an emergency fund in your financial plan enables you to grow your savings and investments even in times of emergency. You can put your emergency fund in a liquid investment to also grow it for your time of need.

Insurance

Another important component of financial planning that you must include in your checklist is insurance policies. It goes side by side with your emergency fund as it ensures that certain aspects of your life are covered without you needing to dip into your savings and investments. Health insurance will cover your health needs, auto insurance takes care of your automobiles, life insurance provides for your dependents for when you are gone. Others include umbrella insurance policies and disability insurance policies.

 

Investment

This is arguably the backbone of your financial plan. It is a must on your checklist because it is what will ensure the growth of your savings. It is advisable to diversify your investments so as to vary your income and ensure a healthy financial plan. You should also align your fund allocation on each investment to suit your risk tolerance.

Retirement Plan

This is an important aspect of your financial plan because of its importance when you are no longer active to work. You should decide on the percentage of your income you want to save for your retirement plan.

 

Estate Planning

Estate planning will allow you to include your loved ones in your financial plan. It will be your legacy when you are no longer around to take care of them. Some of your wishes that you can include in your Will are the beneficiaries of your retirement accounts and life insurance policies. You can also include a durable power of attorney on who will handle your finances when you are incapacitated. You can also take care of your post mortem financial goals in your estate plan.

 

Consulting A Professional

The role of a professional financial expert in reviewing and putting together your financial plan should not be overlooked. You may choose to prepare your financial plan using this checklist, but it is advisable to engage the services of a financial expert to put everything in order and ensure you do not miss any component. A professional will also help you consult other requisite professionals such as a tax lawyer and an insurance agent to help you review sections of your financial plan that requires their input. Engaging a professional to guide you when preparing your financial plan should therefore be on your checklist.

 

Financial Planning Checklist Conclusion

The above checklist is not all-inclusive. Different strokes for different folks. Depending on your financial situation and financial goals, you may need to include some other components to have a comprehensive financial plan. That is why it is advisable to engage the services of a professional.

First Step In Financial Planning? What Steps To Follow After

First Step In Financial Planning? What Steps To Follow After

Blog
5 minutes
Oct 28, 2021
Blog
5 minutes
Oct 28, 2021

First Step In Financial Planning? What Steps To Follow After

Financial planning is a method of putting your finances in order so as to better protect your future

and that of your dependents. A financial plan gives you a sense of financial security that allows you

to spend rightly and save adequately. It also helps you take care of your debts in a structured way

that will prevent them from choking you. The very first step to take in financial planning which is

usually overlooked is to decide that you need one. After deciding that you want to set up a financial

plan to help monitor your present and future finances, you can then engage the services of a reliable

financial advisor to help you with a preferred structure. Find the 10 key components to financial planning to help you build out your process fully.

This article will talk about the various steps involved in having a practicable financial plan that will

secure your future and that of your dependents. Having a financial plan will enable you to have

control over your income, expenses, and investments to achieve your financial and life goals. From

the moment you decide to have a financial plan, the first step is to assess your financial position so

as to know where to start from. You determine your current income, and future possible income,

with your daily and monthly expenses. You will also need to assess your debt situation to know your

obligations. After the assessment, there are subsequent steps that you may need to take to ensure

your financial plan takes root. Some of the other steps that will be discussed include developing

financial goals, a budget, and a plan to service your debts.

What Is The First Step In Financial Planning?

We all make hundreds of decisions every day, some with reasons and some without reasons but all

decisions we make have both short and long-term consequences on our future. This is why having a

financial plan is considered one of the most prudent decisions you will ever make. It will help you

monitor your finances and secure your future. As it is with other things, a future position, there must

be an analysis of a current situation. When it comes to wealth management and financial planning,

the very first step financial advisors encourage is the analysis of your current financial situation.

Analyzing Your Financial Situation

This step of the financial planning process is the first and comprehensive view of where you are

financial, considering your income, expenses, savings, investments, debts, and taxes. In analyzing

your current financial position, you will have to prepare a list of your current assets, debt balances,

interest rates, your daily, weekly, and monthly expenses. This will give you a foundation for workable

financial planning.

It is advisable to engage the services of a professional financial planner that will collate all your

financial documents to determine your current financial position and help you design a structure

that will require that you make some changes in your financial lifestyle. During this stage, some

questions will be asked which will bother on your lifestyle goals, financial goals, risk tolerance, and

credit card transaction. After getting the much needed information and determining your current

financial position, changes may be made to your financial structure mostly in your expenses, savings,

and investments. These changes will be in line with your desired financial goals which will probably

be your next step in the financial planning process. Once a review of your financial position is

complete, it will be easier to proceed to the next steps of your financial plan.

What Is The First Step In Financial Planning For A Baby?

For most, having a baby is desirable, and having a good financial plan alongside will go a long way in

securing the future of your child. It is advisable to start your baby’s financial planning as soon as you

realize your baby is on the way.

Whether you decide on time before birth or immediately after birth that you want to have a financial

plan for your baby the first thing to do is to update your financial plan to accommodate your baby's

arrival. Most importantly your monthly budget. Once a baby is in the picture, you may need to

review your monthly budget to accommodate the baby’s needs. Most people underestimate the

expenses that follow the arrival of a new baby, therefore the adjustment you make may be a

significant one, especially for first-timers who have to buy new baby needs such as cribs, swings,

toys, and car seats. You have to create room for expenses such as diapers, infant medicines and food,

and visits to the pediatrician. Having a financial plan for your baby is the first step of good

parenting.

What Are The Next Steps Once You Analyze Your Financial Position?

After you must have analyzed your current financial situation, there are other steps you will need to

take to put your financial plan in good shape. Some of these steps include:

Identify Your Financial Goals

Once you have reviewed your financial position and you know what your financial strengths and

weaknesses are, the next step is to develop your financial goals. Your financial goals will serve as a

roadmap to your financial future. You can divide your goals into short-term, medium-term, and

long-term goals. It helps you differentiate your needs from your wants. Your financial goals must be

reviewed regularly to capture any change in your financial situation.

Developing a Strategy For Your Financial Plan

This step enables you to come up with savings and investment plans that will help you improve your

financial situation and attain your financial goals. You can design how your money will be spent on

things like savings, investments, and bills. The financial strategy will also create a road map on how

to increase your income, either through job-hopping, side hustles, and a salary raise. Having a

strategy also brings other areas of your financials to the fore. It will help you consider areas like

estate planning and insurance. This will also help you strategize on the type of investments that will

grow your savings into what will protect your financial future. Your investment strategy will depend

on things like your personal needs, risk tolerance, and financial goals

Engage The Services Of A Financial Advisor

A professional advisor is quite necessary when it comes to financial planning, especially if you have

complex financial needs. A financial advisor will guide you in putting your financial plan in place. He

may also introduce you to a network of other professionals such as a tax lawyer, an insurance specialist, and

investment advisors, that you may need to implement your financial plan. A financial advisor will

review your financial plan and his expertise will help straighten any grey areas in your plan.

Evaluate Your Strategy

Having come up with a financial plan strategy, it is easy to lose track of some of your needs and

strategies. There might also be a couple of strategies that may not fit into your financial goals

together. Evaluating your strategies will help you identify any loopholes in your financial strategies

and plans. This is the time to discuss with your spouse, attorney, and your investment house to

ensure everyone is on the same page. This is also where your financial advisor evaluates your

proposed strategy and ensures it aligns with your risk appetite and goal. He may also make his

recommendations which you should consider.

Risk Evaluation

This is also another important step in financial planning which may make or mar the success of your

plan. There are inherent risks in every financial plan and it is important to evaluate each risk and

decide whether it is worth taking on. For example, you may have a plan to sacrifice further studies

for work in order to earn more income. While this may be a good plan in the short term, it may

become a problem in the long term because you may not be able to advance in your career due to

your limited education. These are the types of risks that must be evaluated before implementing your

financial plan. Another important risk that should be evaluated alongside your planning includes

your investment risks. This is what will determine how your savings will grow.

Implementing Your Financial Plan

After so much work has been put into the planning stages, the implementation stage is one of the

most challenging stages of financial planning. This is the stage where you chart different courses of

action for the success of your financial plan. At this stage, you have to make hay while the sun shines

by implementing every decision as and when due. For easy implementation, you can create a budget

calendar for your expense to ensure that you are not ahead of your budget at every specific period,

set dates and reminders to complete some financial tasks, and implement decisions. You need to

have your financial advisor on speed dial at this stage because his recommendations, guidance, and

network will come in very handy. He may also handle interaction with financial product providers on

your behalf.

Monitor and Update Your Progress

This is a very important stage because it is what will ensure the sustainability of your financial plan.

You must continue to monitor and update your financial plan until you meet every goal in your plan.

As you progress through the different phases of your life, your priorities and situations may change

which may require some tweak in your financial plan. Periodic monitoring and update of your

financial plan will help you adjust your financial plan to reflect your current situation. It will also

help you to prioritize your financial decisions and make necessary adjustments that will align your

financial needs and goals with your current life and financial situation.

Financial Planning Steps Conclusion

Financial planning is a very important process that required a properly defined and documented

process (you can read our blog on Financial Planning Checklist) as listed in this article. When you

follow a systematic process in setting up your financial plan, you are guaranteed a reasonably

financially secured future. It not only protects your finance, but it also makes provisions for your

loved ones and ensures that they are properly taken care of as your dependents. While a financial

plan may not give you a foolproof financially secure future or wealth creation, it will, however,

provide you with the opportunity to look towards attaining wealth and a financially secure future

with proper analyses, discipline, and the expertise of a financial advisor.

Key Components of Financial Planning: 10 Areas to Succeed

Key Components of Financial Planning: 10 Areas to Succeed

Blog
4 minutes
Oct 19, 2021
Blog
4 minutes
Oct 19, 2021

Key Components of Financial Planning: 10 Areas to Succeed

If you've been wondering how to handle your finances, especially to cover you for the future, financial planning is the best way to go about it. There are components of financial planning that will help you understand how to effectively execute whatever financial plan you decide to go with. This is especially for the young folks who want to protect their future and that of their kids. If you have a well-paying job but your bank account is not reflecting this position or you have a minor expense in the coming years and you want to know how to go about it most prudently, then you need a financial plan.

What Is Financial Planning?

Financial planning is a method of taking control of your finances. It usually serves as a guide to your spending as you achieve your goals at every stage of your life. Financial planning is basically a way of handling your income, expenses, and investment so you can achieve your life and financial goals. 

If your still a little unsure of where to start your financial planning, we made this financial planning checklist article just for you.

Why Is Financial Planning Important?

Financial planning is a way of budgeting your finances so you can cater to both current and future needs. It is an important aspect of your finances that you should not ignore. Here are the reasons why financial planning is important: 

Contingency Purpose

No one knows the future and there are a lot of things that can happen that you neither plan for or budget for. It could be anything ranging from health, sudden job loss, child support, or travelling needs. Having a financial plan will help you set aside a contingency fund for such eventuality. Financial advisors advise that you have a contingency plan worth at least 6 months of your salary. This fund will be invested in a liquid investment so as to give you access during an emergency. It is simply a case of doing your best to prepare for the worst. 

Comfortable Retirement

Retirement is an inevitable phase that everyone will live to experience. However, when it's time for retirement, you will not be able to work and earn money to sustain yourself. That is why it is important to start a financial plan that will ensure you live out your retirement days with enough funds. It could be the time you travel the world and explore different cultures since you will be having time on your hands. Also, having a retirement fund will help you cater for possible medical needs when you are old and vulnerable. 

Effective Money Management

Once you start a family, it may be difficult to keep track of your obligations and resulting expenses. The wife wants a dinner gown, the kids want a car, or the whole family wants to move into a bigger apartment. The best way to get ahead is to have a financial plan that will monitor your spending and guide you on the best ways to satisfy the needs of your family.

Handle Inflation

Times change so does the economy. The prices of goods today might not be the price in the nearest future. Having savings is good, but when your savings does not grow in value, it does not effectively tackle inflation. A good financial plan will include growing your savings to last you long enough in retirement and to also handle inflation in the future. 

Peace Of Mind

A good financial plan will relieve you of the burden of worrying about your current and your future finances. You can adequately cover your expenses, save some funds and invest your saving to earn more. With all these settled, there is certainly a reassurance and peace of mind this gives you, having settled your finances. 

Types Of Financial Planning

•   Cash Flow Planning - This helps you monitor and plan your inflow and outflow of cash. It allows you to manage your expenses and how you fulfil your current and future financial obligations. This will enable you to set aside savings and invest them for future needs. 

•   Investment Planning - This helps you identify the types of investment that will ensure your savings don't just lay dormant. There are different investment vehicles that give varying returns. Investment planning will help you identify the best short-term and long-term investments for effective financial planning. 

•   Retirement Planning - It is nota healthy thing to be worrying about your finances during retirement. Your financial planning should include a retirement plan that will cater for when you are no longer able to actively earn an income. There are long-term investments that will ensure your retirement savings grow in value. It gives you financial independence when you're expected to be a dependent. 

Components Of Financial Planning

Here are 10 key components of financial planning to help you succeed in your short term and long term goals. Don't forget to read our article helping you make the right first step in this journey, after your done this one.

 

Financial Goals

This is an important component of financial planning because it sets out your current and future financial goals. It identifies what you want to achieve, how much money you need and when you will need them. You can classify your financial goals into short-term, medium-term, and long-term goals. Read more about how to set smart financial goals.

Cash Flow Analyses

This will help you identify your inflow, outflow, assets, and debts. This will prevent you from spending more than you earn. 

Tax Planning

This is also an important component that ensures you enjoy tax reduction on your savings and tax-free returns on your earnings. So you can adequately grow and enjoy your savings. Read more about how to make your life easier with these 7 on tax planning.

Investment Planning

Growing your savings is a very important component of financial planning. This is what differentiates it from an ordinary savings account. There are different investment vehicles that will help you grow your savings and excess funds and manage the tax implications.  Read more about how to prepare for you future with our investment planning article.

Retirement Planning

This component will help you prepare for your inactive days. You can set aside a retirement fund that will be invested to grow over time so you can have enough for when you retire. Your retirement lifestyle, financial objectives, and government benefits are some of the things you will consider when including retirement in your financial plan. A good goal to have is to have a set amount saved up by 30.

Debt Management

This component allows you to manage your debt effectively by ensuring you stay away from high-interest debts and find a way to serve the ones you already have. It will help you design a plan on how to service current and future inevitable debts you may incur. Read more about how to succeed with your debt management strategy with these 10 tips.

Emergency Fund

This is another component that helps you manage your funds properly. The emergency fund will prevent you from taking out of your other savings and investments in times of emergency. This way, your long-term savings, and investments are intact during emergencies. Read more about how to create your financial safety net today.

Estate Planning

This aspect caters for your wishes regarding your assets and investment for when you are no longer around. This gives you the opportunity to appoint who will administer your estate, which must be someone you can trust. It also allows you to determine who gets what amongst your dependents. You may also want to include Powers of Attorney to appoint people that will take health care and financial decisions for when you are incapacitated. 

Insurance

This is also important because it reduces the burden on your long-term savings and investments. Having insurance for some necessary needs is important. A health insurance cover ensures you are adequately covered when you have health issues. You will not be required to dipinto your savings or even your emergency funds. Other types of important insurance include Disability insurance and Life insurance. 

Education Planning

This is mainly for your children and possibly your grandchildren. It is usually advisable to start this even before your kids are born. Children grow so fast which is why adequate financial planning is needed for your children's education. Some of the things you may want to consider include the average tuition for every stage in their education, available student loans and mode of repayment, and educational tax credit. Having a separate financial plan for your children's education will ensure you don't have to spend out of your long-term savings and investment. 

 

Key Components of financial planning Conclusion

Financial planning is a prudent way of ensuring a financially secure future. It puts your spending into perspective and allows you to see where you are spending unnecessary cash and how you could potentially earn more, even when you retire.

The financial planning components help you identify all the important areas you have to consider so that your long-term financial planning can adequately cater for your future needs. Even when you're no longer around, you can be reassured that your finances are in safe hands as per your wishes. If you fail to plan, then you plan to fail. 

Out of these 10 financial planning areas above, what one do you need help with most?

Featured Fire Client of the month: Stanley Chiu

Featured Fire Client of the month: Stanley Chiu

Blog
Sep 29, 2021
Blog
Sep 29, 2021

Featured Fire Client of the month: Stanley Chiu

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!

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.  

Should I be worried about high inflation in Canada?

Should I be worried about high inflation in Canada?

Blog
3 minutes
Sep 28, 2021
Blog
3 minutes
Sep 28, 2021

Should I be worried about high inflation in Canada?

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?

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.

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.

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.

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!

Go beyond the RRSP: Maximizing tax deductions

Go beyond the RRSP: Maximizing tax deductions

Blog
2 minutes
Sep 7, 2021
Blog
2 minutes
Sep 7, 2021

Go beyond the RRSP: Maximizing tax deductions

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.

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!

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

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

Featured Fire Client of the month: Christine Monaghan!

Featured Fire Client of the month: Christine Monaghan!

Blog
Aug 25, 2021
Blog
Aug 25, 2021

Featured Fire Client of the month: Christine Monaghan!

This month, we'd like to introduce you to Christine Monaghan, who is your human potential champion! Having worked with her ourselves, we know that she's able to motivate and influence you to the next level. Get rid of your old fears, hesitations, and doubts, with Christine's practical coaching style where she provides very realistic and straight-forward solutions to your desire to achieve more. Take a look at what she has to say!

Tell us a few personal interests and hobbies

I have wide range of interest and hobbies, to name a few, I love growing heirloom garlics, practicing yoga, baking homemade spelt bread, learning the crypto market, having dinner parties with friends and family, and writing.

When and why did you choose this industry over others?

My business evolved. I started out in sales, then raising money for world-class sporting and cultural events, then co-producing world-class events (think 80,0000 attendees over 3-days). I was always naturally good at connecting the right people to create collaborations. Eventually, I started my consulting business with my signature 1-Page Revenue-Generation Plan to influence others to focus on delivering what they are really good at plus enjoy. I was fascinated with personal growth and mindset from my teen years and this has been the constant.

How do you view your relationship with your clients?

I see it as collaborative - built on what I refer to as the 3C’s – Commitments, Conversations, Choices. When we are mindful of and align with others who endorse this approach, the possibilities are unlimited. I am a big proponent of ‘lead as you would like to follow’.

What's the most fulfilling part of the job?

Witnessing individuals and companies adopt a RESET approach and create a solutions vs problem based culture. When this is established, they individually and collectively flourish.

What would you suggest people do to develop a clear roadmap?

The first task is to figure out the ‘how do you know what you don’t know’ , then get clear on the goals, then reverse engineer the process with accountability measures. Leaving judgement at the door is essential to motivate, inspire and encourage others forward. We all have our own path to navigate.

Who should be reaching out to you?

My ideal client is an individual or organization who has already succeeded and now wants to quantum leap their life/business. This client is growth oriented, understands the value of accountability and rewards and want to work on vs in their life by slowing down to move ahead. They understand working harder/longer doesn’t not mean success.  

Connect with Christine at her website here!

Fire client of the month: Hayson!

Fire client of the month: Hayson!

Blog
Jul 2, 2021
Blog
Jul 2, 2021

Fire client of the month: Hayson!

Hello again friends. This month, we'd like to introduce you to Hayson, who is an accountant at Truspect accounting. He's a very experienced accountant with expert knowledge on small and medium sized businesses. According to Hayson, "accounting is the language of business", and we think there is no better translator then our friend Hayson. See for yourself what he has to say in the interview, and you can even watch him speak to you in the video!

Tell us a bit about yourself.

My name is Hayson Chan, CPA

What are some personal interests and hobbies"

I love traveling and taking photos. I could be watching documentaries and reading books all day and I enjoy outdoor activities such as hiking and camping as well

When and why did you choose this industry over others?

A lot of people think accounting is boring, but I see that as a language and toolkit for businesses. Once we see the story behind the business, we could be the key team player of your business.

How do you view your relationship with your clients?

I don’t see clients just as client, instead, we are part of the same team and to achieve the same goals, we have to work together. Some of our clients become friends and will invite us over for dinner. We are building a community which we can all do business and have some fun together.

What's the most fulfilling part of the job? 

Results! Taxes saving is a big one and also if the client has listen to our advises and their business prosper

How does an accountant and a financial planner working together help the client?

Working together! Many accountants are very conservative and they always say no to other services providers. It doesn’t matter which industry you are working, it is important to be open minded and learn as much before you jump to the conclusion. A good financial advisor can add a lot of value in terms of financial planning and that is part of your job. It’s just like when people need to see a dentist, you don’t go to the physio. So, I always tell people that I have save you some taxes, now, make sure your money is working as hard as you, go talk to a financial advisor

Who should be reaching out to you?

We focus on small & medium size business owners. We can serve people who wants to start a business and don’t know how, all the way up to pre-IPO planning and we got amazing team members who are happy to help.

My phone (604)618-8280; email: info@truspect.ca

See Hayson talking right to you in the video!

We were chosen as one of the top financial advisors in Vancouver!

We were chosen as one of the top financial advisors in Vancouver!

Blog
Jun 8, 2021
Blog
Jun 8, 2021

We were chosen as one of the top financial advisors in Vancouver!

A local website has recently reached out to us, to let us know that in their search for the top financial advisors in Vancouver, we were one of the 5 selected! Being noticed like this was such a pleasant surprise, and incredibly rewarding. We've been hard at work building our company and to have something like this happen is the kind of affirmation we love to see!

Read more about it here

Monthly feature - Our giveback fund

Monthly feature - Our giveback fund

Blog
4 minutes
Jun 2, 2021
Blog
4 minutes
Jun 2, 2021

Monthly feature - Our giveback fund

This month, we would like to feature and share with you the more fun and personal side of Prometheus and team members. As some of you may know, community and philanthropy is a big part of what we do, and we want to share our experience in giving back and hopefully can inspire you to join us as well!

What did PPAG do this year in terms of giving back?

Earlier this year, we decided to embark on a charitable initiative that allows us to continue to give back to the community perpetually.  We put together our very own Donor Advised Fund: The Prometheus Corporate Giveback Fund with Vancouver Foundation

 

What is a Donor Advised Fund?

A Donor Advised Fund (DAF) is a fund set up with a public foundation, such as Vancouver Foundation, and allows individual donors, like our clients; or a company, like PPAG, to establish a charitable endowment fund. By donating money to the fund, you receive a charitable donation tax receipt, and then distribute the growth of the fund in the form of grant over time. Grants can be made to any registered Canadian charity chosen by PPAG.

 

Who are your target beneficiaries?

We put a huge value on education, as it opens doors and creates opportunities. We also like to help younger generations. Our fund intends to provide youth and young adults with limited financial resources the opportunity to seek higher education in the form of bursaries and scholarships.

 

How much can you distribute?

PPAG Giveback Fund can distribute around 4% annually. The distribution rate is determined by Vancouver Foundation to ensure the fund can continue to issue increased grants perpetually. The more support we get to build our fund means more grants for those who need it and we can distribute more on an annual basis!

 

How long will the giveback fund last?

The purpose of setting up the fund is to allow us to continue to grow our charitable impact without stopping. Since we are preserving capital and mainly distributing the growth of the fund, the gift will grow and be given every year for ever! We’ve created something which will continue to make an impact long after even our team has passed on. 

 

How can I help?

I am glad you asked! You can support by clicking on this link: Prometheus Corporate Giveback Fund with Vancouver Foundation and make your donation to help us grow the fund and give the gift of education and create a brighter future for the youth in our community!

 

Some final thoughts:

‍We're a local company, with a desire to improve our community. Everyone on our team lives in this beautiful city, so we believe it's so important for us to give back and make it a better place. Making a difference is an incredibly fulfilling experience for everyone involved, and we want you to find that same fulfillment for yourself too.


Featured client of the month: Cynthia Liang!

Featured client of the month: Cynthia Liang!

Blog
Apr 30, 2021
Blog
Apr 30, 2021

Featured client of the month: Cynthia Liang!

Friends, starting this month, we are going to feature a "Fire Client" every month. These fire clients are people who are close to us, and who do really great work professionally, and for the community. We'd love for you to get to know our first fire client, Cynthia! Together with Cynthia, who is a mortgage specialist with TD, we have worked to help many clients secure their new home. We have built up a great relationship of trust, which is due to her excellent work ethic, depth of knowledge, and her genuine desire to help those around her. These are the qualities that make a fire client, and she's a great person to help you finance that new home you're looking for.

See for yourself what Cynthia says below in our virtual interview!

  • Tell us a bit about yourself and what you do.

      Hi everyone, my name is Cynthia Liang and I am a Mobile Mortgage Specialist at TD Canada Trust. I help
    new and existing homeowners obtain their residential financing or refinancing needs.  


  • What are some personal interests and hobbies?

      When I'm not working hard to get my clients approved for loans, I'm investing in real estate, securities,
    and spending time with my two cats (Kumo & Masi). I also enjoy trying new sports (fencing, anyone?),
    and indulging in a good book.  
     
      
  • When and why did you choose the mortgage industry over others?

      I dipped my toes into the banking industry while studying Economics and Commerce at the University of
    British Columbia. What started as a curiosity in banking and finance in 2015 turned unexpectedly to a
    long-term career, and most of that is because of the meaningful relationships I had built with both my
    clients and business partners.

      
  • How do you view your relationship with your clients? What's the most fulfilling part of the job?

      For me, the feeling of helping clients with the largest purchase of their life is incredibly rewarding.
    During the process, clients become family which is evident when they return months or years later to
    upgrade, buy an investment property, or refer family or friends. I speak three languages fluently;
    Cantonese, Mandarin, and English, which makes my clients feel comfortable and well informed.   


  • How does a mortgage broker and a financial planner working together help the client?

      When your Financial Planner and your Mortgage Specialist work in tandem, it provides you with a
    holistic well-rounded team-based approach to your financial strategy. That's why I love working with the
    team at Prometheus!
      

  • Who should be reaching out to you?

      If you are looking to buy a home, I'd love the opportunity to help. If you're a Real Estate Agent,
    Developer, Commercial lender, or have general questions about home lending, I
    encourage you to reach out so we can discuss how we can work together to add value to people's
    lives. 


You can reach Cynthia by email at cynthiaxiaoyun.liang@td.com, or call/text at 778 891 0306. Don't be shy, she's very friendly!

Fire thoughts - Stock market: Gambling or investing?

Fire thoughts - Stock market: Gambling or investing?

Blog
Feb 8, 2021
Blog
Feb 8, 2021

Fire thoughts - Stock market: Gambling or investing?

Gambling versus Investing

The morning of January 8 th , 2021 marked a historical day in the stock market. For many of us, it

will be ingrained in our memories as “David versus Goliath” on Wall Street. A group of retail

investors formed a popular alliance on the Reddit forum Wallstreetbets (WSB) with the aim of

taking down the mighty Wall Street hedge fund managers. The showdown took place on the

stock exchange, with most of the initial action centered around a company named Game Stop

(GME).

Game Stop is a video game retailer with an aging business model and hedge funds were

massively shorting the stock — wagering that the retail chain was headed for bankruptcy. If the

hedge fund bets paid off, they stood to earn a fortune. However, Reddit users suddenly entered

the fray and went to war against the hedge funds.

The retail investors formed a group to throw their hard-earned money into GME in a bid to

inflate the stock price as high as possible — to the moon! — hoping the hedge fund companies

would lose a ton of money by having to unwind their short. Some traders even bet on GME by

digging into their emergency funds, taking out loans and risking their family’s hard-earned

retirement funds.

This created a frenzy in the stock market and as the news poured out, more and more retail

investors joined the alliance and inflated the price to as high as $481.99 per share. It was a

“short squeeze” of truly epic proportions. Those early speculators who got into GME and then

jumped out again made a killing — unfortunately, many of the late players to the game wound

up losing a big chunk of change in what ended up being an extremely risky proposition.

After the dust finally settled after two weeks of stock market frenzy, no one could have

predicted that ordinary posters on a public message board would have helped create such an

upheaval. However, there is one thing that all investment experts can agree on: This was not

“investing” in any way, shape, or form. It was gambling, pure and simple. For those that made a

profit on GME and other highly shorted stocks, congratulations, your bets paid off!

Sadly, for many others, their ill-advised speculation ended only in misery, and a hard lesson has

been learned. Investing – whether it’s in stocks, investment funds, ETFs, or anything else –

should only be done in a strategic matter. All investors need to understand their personal risk

tolerance, time horizon, and objective. And people should only ever invest within their financial

means and capabilities.

At Prometheus Private Advisory Group, we stand ready to offer our help with our knowledge

and experience. Would you like to learn more about how to invest wisely and profitably? We

warmly welcome you to book a complimentary consultation with one of our advisors to discover

what type of investment strategy is suitable for you!

Why Giving to Charities Should be Part of Your Financial Plan

Why Giving to Charities Should be Part of Your Financial Plan

Blog
Dec 7, 2020
Blog
Dec 7, 2020

Why Giving to Charities Should be Part of Your Financial Plan

We're coming up to the end of the year, and this is a time where we start thinking about other people in our community, and how we can give back to them. It might be corny but it’s true: nothing feels as good as helping others. Of course, if you can also benefit from giving back to those in need, that’s a win for everyone. At Prometheus Private Advisory Group, we believe that’s exactly what makes charitable donations so powerful: both the donor and the recipient reap significant rewards.


Most importantly, giving money to charities is a valuable, generous and high-impact way to allocate extra funds. You can choose an organization you believe in and see the direct impact of your support. But when you donate, you also save big on taxes and can even leave behind a legacy to make sure your gift keeps on giving after you’re gone. Here, we’re sharing everything you need to know about charitable giving, including:



Giving to Charity: A Valuable Part of Any Financial Plan

The benefits of giving to charity are many and obvious: your money goes towards supporting people and causes who need it most, it teaches your children the value of giving, and it straight up makes you feel good. For those reasons alone, everyone can benefit from making charitable giving a part of their lives.


But from a financial planning perspective (which, of course, is what we’re all about), charitable giving makes smart financial sense. When you donate to a registered charity in Canada, you receive a tax receipt for your donation. You can then submit your receipt(s) with your annual tax return and receive up to 53% of your donation as a tax credit. The rate is 29% at the federal level and up to 24% at the provincial level, depending on where you live. 


Since the more you donate, the more you get back, it can be valuable to hold onto your receipts and claim them all in the same year. In any given year, you can claim donations made by December 31st of the current tax year, as well as any unclaimed donations made by you or your spouse for the last five years.


How to Claim Charitable Tax Credits

To make a charitable tax claim, you’ll first need to determine that all your donations are eligible for credits. Remember, you can only claim donations made to registered charities and other qualified donees. If you’re unsure, the government website has a handy list of eligible charities in Canada. Once you’re sure that your donations qualify, you can calculate the amount you’re entitled to claim.


At the federal rate, donations up to $200 get you 15% credit. For additional amounts over $200, you’ll receive 29%. Each province also has its own charitable tax rate, ranging from 4% to 24%. Be sure to check the provincial charitable donation tax credit rates and use the tax credit calculator to get a better idea of how much you’ll receive.


How to Set Up Legacy Giving

So now that you’re up to speed on how charitable giving can help you save on taxes, let’s talk about how to make sure your money goes to good use — for now and for the future. Your donations can make a big difference, both during your lifetime and after you’re gone. Legacy giving can ensure this happens.


Also called planned giving, you can plan ahead to leave a portion of your wealth to a charity or organization of your choosing. This means you’ll be able to support causes that matter to you, even after you’re no longer able to make regular donations. Planned giving can also give you the opportunity to make donations that you wouldn’t be able to afford while you’re alive. You can even discuss your legacy donation with your chosen charity to decide how the funds will be used. It’s a powerful way to guarantee the causes you want to support have the funding they need for many years to come.


You might be wondering if there’s any benefits of legacy giving to the family you’re leaving behind. In a word, yes! The money that you give to a charity in your will does not take away from the money you leave to your children. Instead, Canada’s tax regulations allow donations to come from the amount you’d typically pay in taxes to the CRA. If you haven’t already included legacy giving in your will, talk to one of our financial advisors in Vancouver to learn more.


Charities to Support in Vancouver

I think we can all agree that giving to charity is a good thing for everyone involved. Whether you’re donating to cancer research or supporting organizations that seek to end homelessness, charitable donations make our world a better place for all of us. But deciding to donate is only one part of the equation. There are so many worthy causes out there, so choosing where to donate can be a challenge.


Choosing a charity to support is a very personal decision. It comes down to deciding what causes matter to you most — whether it’s animal rights, children’s health or equality for BIPOC people — and then researching charities in that sector. We can’t tell you where to give your hard-earned money, but we can guarantee that you’ll feel great about supporting a cause that’s close to your heart.


The best part about charitable giving is that you really can’t go wrong. Just be sure to stick to registered charities and organizations so you can claim your tax credits. If you’re not sure where to start, check out this helpful list of Vancouver charities to support. And if you still have questions about donating to charity in Canada, contact Prometheus Private Advisory Group to talk to an expert today.

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s

Blog
Nov 16, 2020
Blog
Nov 16, 2020

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s



A few months ago, we shared the biggest things we wish we knew about finances when we were in our 30s. But if you’re approaching 40, you might be wondering what financial tips you’ve been missing out on. It’s crazy to think about it but in your 40s, you’re about half way (or more) to retirement! If you haven’t already, now is the time to start making smart financial decisions for your future.


At Prometheus Private Advisory Group, we believe it’s never too late to think about financial planning. While it’s always better to start as soon as possible, you can still set yourself up for financial longevity at any age. If you’re not sure where to start, keep reading. Here, Vancouver’s financial advisors are sharing all their financial secrets for your 40s and beyond.


1. Don’t Be Afraid to Use Your Credit Cards


… as long as you pay them off! When used wisely, your credit cards can be a valuable part of your financial plan. From cashback and travel rewards to dining and retail credits, there are so many ways to make your credit cards work for you. It can make some people nervous to throw everything on their credit card, especially if you’ve struggled with debt in the past. But there’s nothing wrong with using your credit card for all of your purchases, as long as you pay it off each month before you’re charged interest. In your 40s, you know by now how much you can afford. When it comes to using your credit cards, it’s all about only spending within your means.


2. Increase Your Retirement Contributions


In a perfect world, you already have a retirement plan by the time you reach your 40s. After all, retirement isn’t all that far away so it’s a good idea to be prepared for life after work. Assuming you have a retirement savings plan, consider upping your contributions or reevaluating your account. Are you getting the most out of your retirement savings? Are you earning more than you were in your 30s? Now is the time to maximize your savings potential so you can enjoy your retirement to the fullest.


3. Buy Life Insurance


If you haven’t already thought about life insurance, your 40s are the perfect time to finally lock down a policy. The earlier you get life insurance, the better. Why? Monthly premiums are lower the younger you are because you’re less likely to have pre-existing health conditions. So while it’s never too late to get life insurance, it’s best to do it now. Life insurance is a valuable way to secure your family’s financial stability after you’re gone and will give you peace of mind knowing your loved ones will be taken care of.


4. Do a Monthly (Financial) Cleanse


No, we don’t mean you should stock up on green juice or bone broth. We’re talking about taking stock of your monthly expenses and cleansing yourself of the non-essentials. Are you really using that annual subscription for online yoga? Do you really need Netflix and Crave and Amazon Prime? If you use all of those things, great! You don’t need to get rid of things that are actually important to you. But all of those seemingly little expenses can add up to big costs, often without your realizing because they tend to be automatic charges. It’s worth taking the time to do a self-audit so you know what you’re really spending each month.


5. Get Paid What You’re Worth


By the time you’re in your 40s, you’re probably well into your career (but if you’re still figuring things out or switching gears, that’s totally cool too!). You’ve been working hard for the better part of two decades and you’ve earned your place in the working world. If you’ve been at the same company for a while or don’t feel like you’re making as much as you should be, stand up for yourself and ask for a raise. Not only will getting paid what you’re worth make you a better employee, it will also allow you to level up your retirement savings. Win win.


Not sure how to ask for a raise? Start by doing market research to find out what others in your position (and with your experience level) are making and consider hiring a career coach to develop negotiating strategies. Then talk to your boss and make your case. If they value your contributions to the company, the raise conversation should never be off the table.



Managing your finances is a big task, but it doesn’t have to be complicated. If you’re having a hard time with financial planning in your 40s, or just need a little extra advice, the financial experts at Prometheus Private Advisory Group are always here to help. Contact us for a consultation today.


What Kind of Life Insurance Should I Buy?

What Kind of Life Insurance Should I Buy?

Blog
Oct 19, 2020
Blog
Oct 19, 2020

What Kind of Life Insurance Should I Buy?

What Kind of Life Insurance Should I Buy?



Thinking about buying life insurance? Good on you — you’re a big step ahead of a lot of people! Unfortunately, people love to pretend that they’re invincible and don’t need to worry about what will happen once they pass on. In reality, no one is too good for life insurance and every single one of us can benefit from planning ahead. After all, you never know what can happen and when. So while there’s nothing wrong with hoping for the best, it’s always best to be prepared for the worst. 


As insurance advisors in Vancouver, we’re experts in all things life insurance: why it matters, how it can help you and your family, and how to pick the best policy for your needs. Not sure where (or when) to start? Here, Prometheus Private Advisory Group is sharing everything you need to know about life insurance in Canada.


What is Life Insurance Anyway?


Okay, we’re going to go ahead and state the obvious: life insurance can be pretty dull. It’s one of those not-so-fun parts of adulting that most of us would rather ignore for the rest of our lives. We get it: when you sign up for a life insurance policy, you have to fill out a lot of paperwork, estimate and calculate your living and dying expenses, and dive deep into your medical history. Not exactly anyone’s idea of a good time. But even though life insurance can be tedious, time-consuming and expensive, it is 100%, totally and completely worth it.


Why? Because a life insurance policy is the official contract that guarantees your dependents (or anyone who relies on you for financial support) is taken care of once you’re gone. In exchange for a monthly premium, you get peace of mind that your loved ones don’t have to stress about money in the event of your death, and can enjoy their current lifestyle for many years to come.


Here’s how it works: you open a policy with an insurance company for a specific amount of money that will be paid out when you die. You pay said company a monthly fee for as long as the policy is in place. Upon your death, the lump sum is given to your surviving family or chosen beneficiaries. Your loved ones are free to use the money for whatever purpose they choose, whether that’s for living expenses, tuition, debt repayments, your funeral costs or anything else.


Do I Really Need Life Insurance?


Again, we’re going to be straight up with you: life insurance policies can cost a pretty penny and you personally will never see that money again. It can be a little annoying to send that cash out into the ether when you could use it for way more fun things, like vacations or a new car. If you’re feeling that way, it’s natural! You’re certainly not the first to ask yourself, “Why should I buy life insurance?”


In a word, yes. At least, if you have a spouse, children or any other dependents, you probably want to get yourself some life insurance. Because even though no one likes to think about their own death, isn’t it worse to imagine your family struggling financially because you’re no longer around to take care of them? For that reason alone, we believe life insurance is worth the investment.


But now we’re getting to the fun part. No, really, insurance can be exciting! (Hey, we see that eye roll…) Being the insurance connoisseurs we are, we can help you use life insurance as an investment vehicle to achieve your financial goals. Our team has your back with personalized solutions and strategies that will set your family up for long-term financial stability.


What Kind of Life Insurance Should I Buy?


There are two main types of life insurance in Canada: term life insurance and permanent life insurance. With term insurance, you pay an annual premium for a set number of years (usually 10, 20 or 30 years) or up until you reach a certain age. If you die during that term, the insurance company pays out the lump sum to your beneficiaries. If you don’t die, nothing happens. The insurance company keeps the money and you’ll need to renew your policy to re-up on coverage.


Permanent life insurance works a little differently. Instead of only covering you for a fixed term, you’re covered for life. As long as you keep paying your monthly premiums, you can rest assured that a payout is coming to your family at some point in the future, whenever you pass away. In addition to lifelong coverage, permanent life insurance has the added benefit of allowing you to accumulate cash value, which you can use as collateral on a loan or receive as a payout of your own if you cancel the policy. Permanent life insurance is also valuable for estate planning purposes, allowing you to leave tax-free money to beneficiaries or charities.


The type of life insurance you choose will depend on your personal goals and financial situation. Keep in mind that term insurance premiums are much less expensive than permanent insurance premiums, but term insurance has fewer perks. When in doubt, talk to an insurance advisor in Vancouver to discuss your options.


When Should I Buy Life Insurance?


As for when to buy life insurance, the answer is now. It’s never too early (or too late) to get started, but the longer you wait to buy life insurance, the more expensive your premiums will be. That’s because insurance companies consider your entire health history. Since you’re more likely to develop chronic health conditions as you age, premiums are lower for younger, healthier folks.


We know talking about life insurance can be a little overwhelming, but don’t worry. The insurance advisors at Prometheus Private Advisory Group are experts in making insurance accessible, affordable and yes, even fun. Contact us today to get started.


What is Estate Planning?

What is Estate Planning?

Blog
Sep 14, 2020
Blog
Sep 14, 2020

What is Estate Planning?

No one likes to think about their own mortality, but when it comes to planning for the future, it’s naive to ignore the inevitable. We’re all going to pass on eventually — and unfortunately, there’s really no way to know when. Wouldn’t you rather take steps now to plan for your family’s financial future once you’re gone? That’s what estate planning is all about and Prometheus Private Advisory Group is here to show you how to do it.

As financial planners in Vancouver, we’re experts in helping people plan for their future — including their eventual passing. We know it’s hard to imagine your untimely (or even elderly) death, but the sooner you start planning for the worst, the better off your family will be.

Here, you’ll learn:

  1. The definition of estate planning
  2. Why estate planning matters
  3. The estate planning checklist

Estate Planning 101

When you think about what happens to your estate once you pass away, the first thing that comes to mind is probably your will. While a will is absolutely a key part of the estate planning process, it’s not the only thing that matters. That said, if you don’t have a will already, that’s a great place to start!

Estate planning refers to the process of preparing and arranging for the management and distribution of your property and assets in the event of your death or incapacitation. In simpler terms, it’s your plan for how your stuff will be doled out to your family, friends or other recipients after you die. Your detailed instructions will officially be written out in your will but estate planning involves many other aspects, such as setting up trusts, naming an executor and beneficiaries, making charitable donations, making funeral arrangements, and more.

A Guide to Estate Planning

We know that estate planning can get overwhelming. Aside from the absurdity of pondering your own demise, you’ll need to do a deep dive into your own finances and make big decisions about what will happen to your assets. Here’s a simple guide to estate planning in Canada to help you get started.


Prepare to Write a Will

First thing first, you’ll want to write a will that details out your wishes: who you want in charge of your estate and where you want your money and other assets to go. Be sure to include instructions for the following:

  1. Distribute your assets: Create an up-to-date, detailed list of your assets and who will get what. If there are any specific items that you want a certain person to receive, this is where you’ll state it.
  2. Name beneficiaries: Make a list of the people who will inherit your assets. Have secondary options in case your beneficiaries predecease you.
  3. Designate guardians for any minors: If you have children or other dependents who are minors, make arrangements for who will take care of them. Always be sure that your preferred guardians are up for the task and review your choice as your child gets older.
  4. Name an executor: Your executor will be the one who carries out your wishes when you die. Choose someone who is capable of handling the responsibility and also has the time for it. Settling an estate is no simple task, so it’s important that your executor knows what they’re getting into.
  5. Talk to a lawyer or notary public: For peace of mind, you may wish to get a lawyer or notary public to look over your will. While getting your will notarized or signed by a lawyer is not required, it can help to speed up the probate process so it’s something to consider.


Name your Power of Attorney:

The person you choose to act under your power of attorney document is responsible for making decisions on your behalf. In Canada, a general power of attorney manages your property and finances while you are still mentally able to do so yourself and a continuing (or enduring) power of attorney manages your financial assets if you become mentally incapacitated.


Buy Life Insurance:

Life insurance is a critical part of any estate plan. It protects your family financially and ensures they can continue their current lifestyle once you pass. Life insurance can also help pay for taxes and other liabilities that may come up after death. Make sure to keep up-to-date beneficiaries for your life insurance. As insurance experts in Vancouver, we can help you out.


Plan (and Prepay) for your Funeral:

Funerals can be very expensive. Planning ahead, and potentially even prepaying, for your funeral can take this stressful expense off your family’s shoulders.


Give Gifts or Charitable Donations:

Also called planned giving or legacy giving, charitable donations are a fantastic way to distribute your wealth after you’re gone. You can plan ahead to leave a portion of your money to causes that matter to you, which can give you an opportunity to donate funds that you wouldn’t be able to afford while you’re alive. Giving to charity also helps you save on taxes. Learn all about legacy giving here.


Set Up Trust Funds:

Trusts can be a valuable way to provide income for your family members. There are two main types of trust funds in Canada: testamentary trusts and inter vivos trusts. The first is created and begins after you die whereas the latter is set up while you’re still alive. The type you choose depends on your wishes for your wealth.


Why Estate Planning is Important

You might be wondering why you should worry about estate planning in the first place. Once you’re gone, you won’t be around to see what happens to your wealth anyway. But if you don’t have a plan for your estate, it can be extremely stressful for the people you leave behind to wade through your assets, debts, taxes and so on.

Creating an estate plan is about a lot more than just dictating who gets what. It gives you peace of mind that your wealth will be divided according to your wishes, and allows your friends and family to focus on what’s really important: grieving the loss of a beloved family member.

At Prometheus Private Advisory Group, we believe the key to estate planning is to start as soon as possible. That way, if the worst happens, you can rest in peace that your family is financially secure. Ready to start planning your estate? Contact us to talk to one of Vancouver’s estate planning experts today.

Why Giving to Charities Should be Part of Your Financial Plan

Why Giving to Charities Should be Part of Your Financial Plan

Blog
4 minutes
Aug 17, 2020
Blog
4 minutes
Aug 17, 2020

Why Giving to Charities Should be Part of Your Financial Plan

We're coming up to the end of the year, and this is a time where we start thinking about other people in our community, and how we can give back to them. It might be corny but it’s true: nothing feels as good as helping others. Of course, if you can also benefit from giving back to those in need, that’s a win for everyone. At Prometheus Private Advisory Group, we believe that’s exactly what makes charitable donations so powerful: both the donor and the recipient reap significant rewards.


Most importantly, giving money to charities is a valuable, generous and high-impact way to allocate extra funds. You can choose an organization you believe in and see the direct impact of your support. But when you donate, you also save big on taxes and can even leave behind a legacy to make sure your gift keeps on giving after you’re gone. Here, we’re sharing everything you need to know about charitable giving, including:



Giving to Charity: A Valuable Part of Any Financial Plan

The benefits of giving to charity are many and obvious: your money goes towards supporting people and causes who need it most, it teaches your children the value of giving, and it straight up makes you feel good. For those reasons alone, everyone can benefit from making charitable giving a part of their lives.


But from a financial planning perspective (which, of course, is what we’re all about), charitable giving makes smart financial sense. When you donate to a registered charity in Canada, you receive a tax receipt for your donation. You can then submit your receipt(s) with your annual tax return and receive up to 53% of your donation as a tax credit. The rate is 29% at the federal level and up to 24% at the provincial level, depending on where you live. 


Since the more you donate, the more you get back, it can be valuable to hold onto your receipts and claim them all in the same year. In any given year, you can claim donations made by December 31st of the current tax year, as well as any unclaimed donations made by you or your spouse for the last five years.


How to Claim Charitable Tax Credits

To make a charitable tax claim, you’ll first need to determine that all your donations are eligible for credits. Remember, you can only claim donations made to registered charities and other qualified donees. If you’re unsure, the government website has a handy list of eligible charities in Canada. Once you’re sure that your donations qualify, you can calculate the amount you’re entitled to claim.


At the federal rate, donations up to $200 get you 15% credit. For additional amounts over $200, you’ll receive 29%. Each province also has its own charitable tax rate, ranging from 4% to 24%. Be sure to check the provincial charitable donation tax credit rates and use the tax credit calculator to get a better idea of how much you’ll receive.


How to Set Up Legacy Giving

So now that you’re up to speed on how charitable giving can help you save on taxes, let’s talk about how to make sure your money goes to good use — for now and for the future. Your donations can make a big difference, both during your lifetime and after you’re gone. Legacy giving can ensure this happens.


Also called planned giving, you can plan ahead to leave a portion of your wealth to a charity or organization of your choosing. This means you’ll be able to support causes that matter to you, even after you’re no longer able to make regular donations. Planned giving can also give you the opportunity to make donations that you wouldn’t be able to afford while you’re alive. You can even discuss your legacy donation with your chosen charity to decide how the funds will be used. It’s a powerful way to guarantee the causes you want to support have the funding they need for many years to come.


You might be wondering if there’s any benefits of legacy giving to the family you’re leaving behind. In a word, yes! The money that you give to a charity in your will does not take away from the money you leave to your children. Instead, Canada’s tax regulations allow donations to come from the amount you’d typically pay in taxes to the CRA. If you haven’t already included legacy giving in your will, talk to one of our financial advisors in Vancouver to learn more.


Charities to Support in Vancouver

I think we can all agree that giving to charity is a good thing for everyone involved. Whether you’re donating to cancer research or supporting organizations that seek to end homelessness, charitable donations make our world a better place for all of us. But deciding to donate is only one part of the equation. There are so many worthy causes out there, so choosing where to donate can be a challenge.


Choosing a charity to support is a very personal decision. It comes down to deciding what causes matter to you most — whether it’s animal rights, children’s health or equality for BIPOC people — and then researching charities in that sector. We can’t tell you where to give your hard-earned money, but we can guarantee that you’ll feel great about supporting a cause that’s close to your heart.


The best part about charitable giving is that you really can’t go wrong. Just be sure to stick to registered charities and organizations so you can claim your tax credits. If you’re not sure where to start, check out this helpful list of Vancouver charities to support. And if you still have questions about donating to charity in Canada, contact Prometheus Private Advisory Group to talk to an expert today.

8 Questions to Ask for Financial Stability During the Coronavirus Crisis

8 Questions to Ask for Financial Stability During the Coronavirus Crisis

Blog
Jul 30, 2020
Blog
Jul 30, 2020

8 Questions to Ask for Financial Stability During the Coronavirus Crisis

It’s been over a month since the country — and the entire world — went into lockdown in response to the COVID-19 crisis. Canadians’ lives have changed dramatically over the last few weeks, with new regulations emerging daily, and it understandably has people concerned about their future. One of the biggest questions on everyone’s minds comes down to finances: am I financially stable enough to weather the storm? What supports are available to me during the coronavirus crisis? Don’t worry. Prometheus Private Advisory Group is here to answer all your financial questions and to support you through these difficult times.


While the situation we’re in is serious, it doesn’t have to be all doom and gloom. Armed with the right information, guidance and financial strategies, you’ll come through this just fine. Remember, this is about more than insurance — it’s about overall financial planning and setting yourself up for the long run. If you’ve taken a financial hit due to COVID-19, these are the big questions to ask to make sure your finances will carry you through to brighter days.


1. Do I Have a Financial and Budget Plan?

Over three million Canadians have applied for COVID-19 job benefits since mid-March when the crisis took a serious turn. If you’ve lost your job or had a change in income due to the current situation, it’s time to act fast to create a plan for your financial longevity. This starts with understanding what government sources of income are available to help you get through the next few months, from wage subsidies to tax breaks to so much more.

Fortunately, the government has ramped up its efforts to support Canadians across the board. It doesn’t matter if you qualify for regular employment insurance benefits or not, whether you’re self-employed or work for someone else, or what your current financial situation is. If your job and income has been affected by coronavirus, you will have help.


2. What Can I Do with My Current Investment Portfolio?

If you’ve been watching your portfolio since all this madness started, you might be on the verge of panicking. Don’t. In situations like this, things are bound to take a dip, but rest assured that there will be a rebound. There are also a few ways to make up for losses. For non-registered portfolios, you can trigger a “sell and buy” transaction to realize capital loss and help you reduce your upcoming tax payables. We also recommend buying into assets that have been hit particularly hard so you can capture the rebound. Also, for those who are in the position to invest, you can do dollar cost averaging (which is basically a fixed monthly purchase plan) to buy the current dip over time, reducing your risk and also capturing upside potential.


3. Do I Have Emergency Funds Set Up?

If so, great! You’re already a step ahead. Relax, review your funds and see what’s available. If you have investments, you could consider getting a line of credit against the asset. This way, you don’t have to sell at the current low point but you can still have access to cash.

Don't forget there are also many payment deferral programs available to increase immediate cash flow. This includes mortgage deferrals, car lease payment deferrals, insurance premium deferrals, as well as bill credits for BC hydro, to name a few. So if you’re feeling strapped, there are options available to you to help you get through this.


4. Do You Have a Line of Credit?

Speaking of lines of credit, this may be the time to look into tapping into it to pay for immediate expenses. As Vancouver’s insurance advisors, we can help review your budget and determine how long the line of credit will last. We’ll also help you come up with a game plan for how to pay it back later. For those who own a home, you can also look into tapping into your home equity line of credit as an available source of income.


5. Is Your Insurance Annual Premium Payment Coming Due?

Under normal circumstances, many of our clients prefer to pay for their insurance annually. Given the current situation and how you’ve been affected, that might not be the best option. If you currently pay annually and your premium is coming due, we can help you change to monthly payments to reduce your immediate cash outflow.


6. Does Your Insurance Policy Come with Built-in Cash Value?

All insurance plans are a little bit different and the details for how cash value accumulates varies depending on your policy. But if there’s built-in cash value, this could be the right time to utilize that money. Ask us how to tap into it.


7. Does Your Insurance Plan Pay You If/When You are Hospitalized Due to Accidents or Illness?

Fortunately, this includes hospitalization due to COVID-19, so if you’ve had the virus and required medical attention, you could be covered. If not, this may be the time to consider adding on this option. It’s a cost effective solution and can provide peace of mind until life returns to normal.


8. Do You Have a Proper Disability Plan?

If you become seriously injured or ill, it can take a long time to recover and return to work. Your disability plan will provide you with monthly income so you can focus on what matters: your recovery. Let your disability plan take care of the rest.


We’re all adjusting to a new normal and there are enough stressful things happening in the world right now. Your finances don’t have to be one of them. Want to talk to Vancouver’s insurance advisors about your options? Connect with Prometheus Private Advisory Group today.

5 Pieces of Financial Wisdom We Wish We Knew in Our 30s

5 Pieces of Financial Wisdom We Wish We Knew in Our 30s

Blog
Jul 30, 2020
Blog
Jul 30, 2020

5 Pieces of Financial Wisdom We Wish We Knew in Our 30s

Your 30s are some of the biggest years of your life. For many, this is the decade when you’ll land that big promotion, get married, buy your first home or maybe have your first (or second) child. But along with these exciting milestones comes a steep uptick in financial responsibility. If you haven’t planned ahead for significant life changes, you might reach your 30s and wonder, “What do I do now?”

At Prometheus Private Advisory Group, we believe that when it comes to finances, it’s always best to plan ahead and prepare for the worst. That way, even if the economy takes a turn for the worse or your circumstances change, you’ll be set up for long-term financial stability. Fortunately, as Vancouver’s financial advisors, we have the expertise to help you take control of your finances. (Unfortunately for us, we’ve also got real world experience in what not to do, too.)

Don’t wait until it’s too late to get smart about your finances. Here are 5 things we wish we knew about financial planning before our 30s.

1. Don’t Live Beyond Your Means

So you finally landed your dream job or got that raise you’ve been waiting for. Time to pop the bubbly and buy yourself something fancy, right? We get it. It’s easy to get a little loose with your cash when you suddenly have more money coming in, but living above your means (or even just slightly below) won’t help you achieve the kind of financial stability you want — in fact, it could put you in serious trouble.

By all means, toast your raise and celebrate your promotion, but hold off on buying that new car or moving to a more expensive neighbourhood. Those things can wait. For now, live below your means as much as makes sense for you and bank (or invest) the rest.


2. The Earlier You Invest, The More You’ll Earn Over Time

Sounds like a no brainer, right? That’s because it is. The sooner you start investing your money, the more time it has to grow. Think of it this way: a seed doesn’t become a tree overnight — it needs time, care and resources to grow and flourish. (We’re talking about the money tree here, in case you missed it.)

Really, it comes down to compounding interest, which reinvests your asset’s earnings to exponentially increase your overall gains over time. We know investing can be intimidating when you’re first starting out, but we’re here to help you make smart decisions with your money.


3. It’s Never too Early to Plan for Retirement

In your 20s and 30s, retirement can feel like it’s a hundred years away. Out of sight, out of mind, no problem. Well, if you think retirement is a problem for Future You, that’s exactly what it’s going to become. It’s going to sneak up on you, one of these days, so wouldn’t you rather be prepared for it? We would too.

Even if you have a pension to support you in your retirement, it’s important to make smart choices now to set yourself up for your later years. There are tons of options for retirement planning, from reducing your expenses to investing to maxing out your Canada Pension Plan contributions. If you’re self-employed or a healthcare professional, you could also consider incorporating your business to save on taxes, which will give you extra money to invest and use towards your retirement.


4. Life Insurance is for Everyone — at Every Age

Life insurance is another one of those important things that everyone loves to forget about. But the longer you wait to get life insurance, the more expensive it will be. Premiums are largely based on your age and health (among other things), and it’s more likely for health conditions to develop as you get older. Life insurance also protects your family financially if anything happens to you, so it’s best to plan ahead.

At Prometheus, we believe insurance is the key to securing your long-term financial health. We use insurance as a tool for financial planning and investing to make sure you and your family are taken care of, no matter what. So if you’re wondering when you should get life insurance, the answer is yesterday. Call us. We’re here to help you out.


5. Get Professional Help with Financial Planning

Let’s face it, managing your finances can be overwhelming. That’s why many people prefer to just go about their daily lives and not pay much attention to what’s happening in their bank accounts. This laissez faire attitude can be extremely dangerous to your financial future. If thinking about finances makes you want to stick your head in the sand, it might be time to talk to a financial planner.

A financial planner can answer any questions you have about your finances, help you develop a long-term plan, guide you through your financial decisions and give you peace of mind that you’re making smart choices. Not only that: people who work with a financial planner accumulate about three times more assets than those without an advisor. There are some things you can fake in life but financial planning isn’t one of them.


The best financial advice we can give you is to start planning for your future now. Ready to learn more about your option? Talk to one of Vancouver’s insurance and financial experts today.


Do you have the disability tax credit? No? You’re not alone.

Do you have the disability tax credit? No? You’re not alone.

Blog
Jul 30, 2020
Blog
Jul 30, 2020

Do you have the disability tax credit? No? You’re not alone.

Have you heard about the disability tax credit or DTC? If you’re like most Canadians, you probably haven’t. However, it’s a fantastic tax benefit for those living with disabilities, and it can help you with potentially thousands of dollars a year each year if you or a family member qualify.

However, there is a glaring issue. By the CRA’s own estimates, only about half the people who could qualify for the DTC actually have it. There are some reasons for this, which we’ll get to but here’s the process for applying for the disability tax credit:

  • Find the disability tax credit application form
  • Go to a medical practitioner and have them fill out, and sign off on the form
  • Fill out personal information and submit
  • Wait for approval
  • Claim the amount on your tax forms

Okay, that might seem pretty simple, but there are a few challenges you could encounter. Based on our experience, let’s take a look at some of the problems that can crop up:

  • Difficulties are apparent in the very first step. We’ve talked to a lot of people with disabilities and we’d estimate maybe 20% have actually heard about the disability tax credit. Less have applied for it and even less have been approved for it. Even though the DTC is a great benefit, people just aren’t getting the information. Now that you have it, start by downloading the form on the Canadian government’s DTC page.
  • You have to work with a medical professional to fill out their portion of the form. Doctors and other medical professionals are great at taking care of our physical and mental health. However, their realm of expertise is not in financial planning or tax advice. Usually, that’s a good thing. You definitely want your doctor focusing on their speciality, but when it comes to the form, it poses a challenge. We’ve heard from our clients that they want to apply for the DTC but when they bring the form to their medical practitioner, the doctor doesn’t know exactly what to write, or how to fill out the form. Simply put, the medical practitioner’s role in this case is to certify that their patient is indeed experiencing a disability, which results in a decreased quality of life. Unfortunately, there are some “fuzzy” guidelines in terms of what “really” qualifies for a disability, according to the federal government; as a result, there’s a certain art to filling out the form to best describe your symptoms accurately in a way that presents you or your family member correctly. That’s something we can help with.
  • Challenges from the CRA Simply applying for the DTC is only the beginning. After several months, you’ll get a reply back telling you whether the application has been declined or approved. If approved, it may only be for a certain number of years, and if declined, you can choose to appeal, which is an entire process all over again. On top of that, they expect you to adhere strictly to the guidelines of what sort of impairments can qualify for the DTC.
  • Receiving the appropriate amount of tax credits, or money back, can be difficult. This can sometimes be a challenge because even though you or your family member may qualify for the DTC, you still have to actually claim the amount on your taxes. Additionally, there are other benefits you can claim if you qualify for the DTC. In addition to that (yeah, a lot of additions), you’ll have to go through more paperwork if you want to claim amounts from previous years where you’ve qualified for the DTC. You’ll need to do some careful calculations to make sure you’re getting what you deserve. Here’s where a financial professional like Prometheus Private Advisory Group or your accountant can help you calculate how much you should receive back.
  • What should you do with the money? There are different options for what to do with the money that you claim back from your taxes thanks to the disability tax credit. The most important thing is to have a plan. For example, if this is for your child, you may want to start a disability savings plan for them. Or, you may want to use it to pay for additional therapies now. Regardless of what you choose, have a plan in place so you can make the best use of the money. Talk to your financial planner and work with them to find the best solution for you and your family’s situation in a holistic way by taking into account all factors of your finances.


As you can see, although seemingly easy at first glance, there are things along the way that can potentially make the process complicated. There are resources, however, to guide you. Start by visiting the CRA’s webpage on the disability tax credit to learn some basic info. Next, talk to professionals who can help you with your overall finances. At Prometheus, we can help you with your financial process. You deserve to have these tax benefits. Remember, they were created just for people in your situation, so take advantage of it!  

5 Key Advantages of Incorporating Your Business

5 Key Advantages of Incorporating Your Business

Blog
Jul 20, 2020
Blog
Jul 20, 2020

5 Key Advantages of Incorporating Your Business

*Updated for 2020

If you’re self-employed, incorporating your business can seem like a daunting task full of hoops to jump through and endless paperwork to file. And all for what? Your business is running totally fine without being incorporated, so you might be wondering, “Why should I incorporate?” Well, as Vancouver financial advisors, it’s our job to make sure you get the most out of your money and your business. In reality, there are many benefits of incorporating your business — from tax savings to reduced liability to small business deductions — and we’re here to show you how.

Prometheus Private Advisory Group is breaking down the benefits of incorporating a business in Canada. Here, you’ll learn:

  • What it means to incorporate
  • Why you should consider incorporating your business
  • How incorporation can save you money in the long run

Ready? Read on!


What is Incorporation?

Incorporation is a form of business ownership that creates a distinct legal entity that is separate from its owners (known as shareholders). Unlike sole proprietorships or partnerships where the owners are 100% liable for any debts, incorporated businesses offer shareholders limited liability, insulating them from being held responsible for debts.


At Prometheus Private Advisory Group, we work with many medical professionals in the Vancouver area. If that’s you, it’s important to note that limited liability does not apply to medical liability, so incorporated medical professionals can still be held personally responsible for any malpractice.


Should You Incorporate Your Business?

Choosing to incorporate your business is a big decision that should be based on a number of factors. First of all, if you’re just starting out and still building up your revenue, it may not be worth it to incorporate. While corporate tax rates are lower than personal tax rates, your business needs to be earning enough money to reap the benefits.


In other words, it only really makes sense to incorporate if your business makes more money than you need to live comfortably. For example, if your business earns $75,000 a year and you only need $50,000 of that, you’ll receive a significant tax break on the $25,000 that remains in the business.


Taxes aren’t the only thing to consider when deciding whether to incorporate. You’ll also need to be prepared for the increase in responsibility that incorporation brings, including more paperwork, double the tax returns, and registration costs. We’re not trying to dissuade you from incorporating your business at all — we just want you to have all the facts so you can make the best decision! On that note, let’s dive into the reasons to incorporate your business in Canada.


Benefits of Incorporating a Business in Canada

1. You Get a Better Tax Rate

Tax savings is one of the main reasons businesses incorporate, especially for medical professionals. We’ve covered this a little bit already, but tax rates for corporations in Canada are significantly lower than personal tax rates, so it can save you big money if you incorporate. That is, as long as your business is making enough of a profit (revenue minus costs). Like we described earlier, any surplus money that’s left in the business is charged at a lower tax rate than your personal income tax, that money then becomes your “retained earnings” and sits comfortably in your corporate account. Take for example, in BC, the small business tax rate (net income below $500,000) is just 11%


Be aware, though, that if you decide to eventually pull those funds out of the business account and into your personal pocket, you will be charged at the personal rate, since you are effectively paying yourself. But if you simply use it towards business-related purchases, you’re in the clear.


2. You May Qualify for Small Business Deductions

Incorporating your business means you may be eligible for the federal small business deduction (SBD). This tax benefit for small businesses reduces the income tax your corporation would otherwise have to pay, dropping your small business tax rate down from 27% to just 11% if you’re in British Columbia! (Note: Each province has their own business tax rate which is added on to the federal business tax rate). To qualify, your business must be a Canadian-Controlled Private Corporation (CCPC) and earn a maximum of $500,000 annually.


3. You Benefit from Limited Liability

This is one of the biggest benefits of incorporating your business (but remember, this doesn’t extend to medical liability). As a sole proprietor or partnership, you as the business owner assume total liability. This means your house, car and all other personal assets can be seized to cover any debts your business incurs. When you incorporate, however, you become a shareholder in your business and a shareholder’s liability is limited to the percentage of the company you own. Shareholders cannot be held responsible for losses and debts, so incorporating provides you with a safeguard.


4. Corporations Have Staying Power

As a sole proprietorship, if you decide to leave your business, it basically ends with you. A corporation, on the other hand, lives on … well, forever (or until someone decides to dissolve it). This makes it much easier to sell your business because you’re selling an independent entity together with its assets and liabilities, and most importantly, you will be rewarded for your life’s hard work in building up this business. If you sell an unincorporated business, you are personally selling the property and assets associated with that business, which can be a much more complicated process.


5. Increased Credibility, Increased Access to Capital

Just like having MD or PhD after your name gives you credibility and an air of sophistication, so do Inc., Ltd. and Corp. Studies show that incorporated businesses with fancy letters after their names are perceived as more stable than unincorporated businesses. This means that incorporating could earn you more business — from customers and investors alike. Likewise, incorporated businesses have more access to capital because banks and investors are more likely to get involved with incorporated businesses.


So there you have it. Are you thinking about incorporating your business? Still have questions about the process of incorporating in Canada or if incorporation is right for you? Call Prometheus Private Advisory Group to talk to a financial advisor in Vancouver today.

Tips for Financial Planning During a Pandemic

Tips for Financial Planning During a Pandemic

Blog
Jul 17, 2020
Blog
Jul 17, 2020

Tips for Financial Planning During a Pandemic

Well, we’re officially approaching month three of the COVID-19 pandemic. That’s three months of job losses, reduced income and countless changes to life as we know it. Maybe you’ve been laid off and are getting by with government support. Maybe your business revenue has dropped significantly and you’re struggling to stay afloat. You’re probably wondering how to manage your finances so you can weather the storm and bounce back when we reach a “new normal.”


No matter how you’ve been affected by the current health crisis, the importance of financial planning is clearer than ever. As Vancouver’s financial planners, the team at Prometheus Private Advisory Group is here to help you navigate these uncertain times. The key to financial planning during a crisis is to act as soon as possible to plan ahead for your future. If you’re not sure where to start, here’s a guide to managing your finances during a pandemic.


1. Create a Budget


First, you need to know what you’re working with. Start by assessing your current financial situation — including income, assets and available savings — and then work backwards to see what you can reasonably afford each month. Since we’re in a state of crisis, this may mean tapping into lines of credit or savings accounts, but be careful not to overextend yourself. You don’t want to rob Future You to pay Present You, if you can avoid it.


We don’t know how long the pandemic will last, or how long it will take for businesses to bounce back. Be cautious and create a sustainable budget that will carry you through at least six months. If it looks like things are going to take longer to rebound, reassess your budget as needed.


2. Start Small and Make Cutbacks


Once you have your budget in place, it’s time to figure out where your money is going. Calculate your fixed expenses — such as rent or mortgage payments, and cable or phone bills — to see what’s essential and what you can give up. Obviously, you’ll have bills that need to be paid, so those have to stay (bummer, right?). There are also certain comforts that you should absolutely hang on to. You’re human, after all, and you deserve your little pleasures … within reason. But chances are there are ways you can trim down your expenses to make sure you’re staying within budget.


3. Defer Your Mortgage or Credit Card Payments


Speaking of fixed expenses, there’s good news. Canada’s big banks (and many private lenders) are allowing credit card and mortgage payment deferrals to help people manage cash flow during COVID-19. This can really help to free up space in your monthly budget. A word of caution, though: this doesn’t mean those payments are cancelled. It simply pushes them off to a later date so you can focus your current finances on more urgent things.


4. Set a Long-Term Plan for the Future


Once you’ve established a short-term plan to get you through our present reality, it’s important to think ahead to the future. What if something like this happens again — will you be prepared? Because let’s face it, there will be a next time so you might as well start planning now. Making smart decisions with your money today can give you peace of mind should any unexpected situations come up down the line.


If you’ve got extra cash, this is the time to consider investing so you can build up your assets. If you have life insurance (which you should), find out if there’s built-in cash value. If you don’t have life insurance, get some! Life insurance can be a valuable financial planning tool to set yourself and your family up for long-term financial health. Ask us how.


5. Tap into Your Line of Credit


Lines of credit can be extremely helpful during uncertain times when your bank account isn’t feeling as flush as usual. You can use the funds to pay for immediate expenses or unexpected costs. Your Vancouver financial advisor can help you assess your financial situation and create a solid plan for how to pay the money back when life returns to (some kind of) normal. Homeowners, you could also consider tapping into your home equity line of credit. It’s a flexible way to access cash if and when you need it.


Unfortunately, there’s no playbook for financial planning during a pandemic. But we hope these tips will help you make smart decisions with your money so you can come out strong on the other side. As we always say at Prometheus Private Advisory Group, the key to financial stability is to start now. The sooner you start managing your finances wisely, the better off you’ll be — no matter what life throws at you.