Archive for December, 2010

h1

Thank you to the “Modern Approach” group

December 28, 2010

Attached is a nice comment from Andrew P. Murray and his team regarding my Financial Planning Services:

http://modernapproach.tumblr.com/post/2496791365/financial-planning-for-2011

Advertisements
h1

An Update to Christmas and A Modern Approach

December 13, 2010

-Well, things are winding down for the holidays.  Except for a packed schedule of social events, Christmas parties, concerts, performances, business will be slowing down until the week of Jan 5th (unless otherwise needed). The holidays should be a time to socialize with family and friends and recharge your batteries. It is also, believe it or not, a good time to consider (with a relaxed and clear mind) the adjustments you wish to make to your finances for the new year.

Your financial health should be exactly like your physical health- unencumbered with complications. Protecting, saving, and growing a powerful net worth is not complicated. Take the right steps and exercise your plan and you will have energy, choice, longevity, and freedom of lifestyle. Although I am making an obvious analogy, it is important to realize that your mental and physical health is directly linked to your financial health. Both are made stronger on principles of discipline, planning and fun. If you can come honestly to the realization that you will have at least one serious health related complication in your life , you will agree that you must prepare (both physically and financially) so as to limit the damage to your life; and don’t underestimate the damage this causes. A protection strategy partnered with growth of your net worth is a responsible and exciting combination.  This is the only message I wish to have you consider during this holiday break.

-On a separate note, my meeting with Scott Brison was quite successful. I am looking forward to working with him and his group to educate and support local (and non-local) programs and plans that can be implemented to assist families with the financial impact of critical and catastrophic illnesses. As you know, this is a big part (mandatory even) of all of my financial planning strategies and I am happy to support Scott on this and any other related programs.

-Finally, I am proud also to support the initiatives of Andrew Patrick Murray in his “Modern Approach” to Real Estate. He, I believe, is the first to capture the cutting edge of social media and mobile applications for the purposes of assisting the home buying/selling public with their real estate needs. Andrew and his team can provide the entire life-cycle of the home buying/selling experience from one easy to use application. For more, please review his Facebook page at:

http://www.facebook.com/home.php?#!/pages/Halifax-Real-Estate-A-Modern-Approach/136668999714884

Also, the official website is:

http://www.modernapproach.ca/modernapproach/index.lasso

Thank you for reading and thinking:

See you in (or before) the new year, Jeff H Barrett

h1

Loans, Mortgages, Credit Cards,Debt items, etc

December 9, 2010

Always protect outstanding balances through purchasing insurance coverage that covers the amount and the duration of the liability. For example: If your Mortgage is payable in 20 years and you owe 300k, purchase a 20 year Term policy with a face value of 300k. This is remarkable cheap to purchase and is not only responsible (if you care about your family..ha) but necessary in some cases. Do the same for Lines of Credit, Credit Cards, and so on. If you already have it in place with the bank, you will be shocked at how much you are overpaying for a different type of coverage. Always, and I mean always, buy private coverage for these items through your investment advisor because bank sponsored Creditor Insurance (another name for what I am talking about here) is over priced, depreciates in face value, cannot be transferred to a permanent policy (as can Term Policies; and no medical is needed upon conversion), and goes to your beneficiary when/if you die so that they can pay off the debts and keep the difference. I paid 56 dollars a month for insurance for a 15000 dollar line of credit. I paid this same amount (despite depreciating loan values) for over 10 years. Once the loan was paid off, I lost the coverage that I had (foolishly) paid over 6000! dollars for (think about it, paid 6000 dollars insurance on a 15000 dollar loan. Now I know better. You can get about 500000 dollars coverage (Term 20) for like 40 dollars a month (if you’re in your 30’s) and you can transfer it to a permanent policy or cancel it once your debt is paid off. Think of the math on that.

h1

Emergency fund: TFSA all the way.

December 9, 2010

Even if you can withdraw from your Mutual Fund without a fee you would be WAY better off using a TFSA for emergency money because money withdrawn (principal and/or growth) is NOT included as income for the year as it would be for Mutual Fund withdrawals:

Hence the money is taken “tax free.”

The only caveat is that (unless you use a withdrawal and carry-forward strategy, which I will talk about later) your TFSA contribution room is only 5k.

It is vital that you avoid taking any income that will be included as income for tax purposes. There are many ways to save and grow income without affecting your taxable income. There are even other ways to take money and have it reduce your taxable income (hence the RRSP).

For example: If you are receiving a taxable lump sum (like severance or salary bonus etc) and you suspect that you may need to utilize the money for living expenses, you should never ever deposit it into your bank account. You should look at one of the following strategies:

1. Retiring allowance:
Revenue Canada allows you to shelter money into what’s called a retiring allowance as part of the Income Tax Act. So long as your company qualifies — it must have a payroll of more than $2.5 million and one or more employees severed within the past six months — you can shelter $2,000 per year, for each year of service up to and including 1995 (even if you started work in November or December, for example, part years count as full years; therefore you can shelter the full amount for that year). For example, if you were hired in 1985 and severed in 1997, you would qualify for 11 years of sheltering.

2. Transfer to RRSP
Suppose you determine you’ll have $10,000 remaining after your retiring allowance options are used. And to keep the exercise simple, also suppose you have $10,000 of RRSP contribution room available for the year. You can ask your employer to take that $10,000 and put it into your RRSP (the employer must get Revenue Canada’s approval to do so through a letter). At year end, the company will send you a slip that says they paid you $10,000 with no taxes withheld. Normally you would claim this as incomfor the year and pay taxes on it. But try to arrange to have the employer pay out this money the following year. That way it becomes income for 1998. And if you arrange for the RRSP transfer described above, you will have all this money tax deferred in 1998, meaning you can claim this contribution on your 1997 tax return, lowering your taxable income. In other words, you’ve made a healthy RRSP contribution at a time when your income is high and you have money growing tax deferred, a big help as you search for a new job or make other plans. Should you have to draw on these funds, you may be taxed at a lower amount, and when funds are especially tight, it’s nice to know you’ll be giving less to the government.

3. Reduce taxes
Assume you have expenses of $2,500 a month and you have $5,000 in savings. If you think you could be out of work for some time and you don’t have the cash reserves to weather the storm, you may want to use your severance pay another way. Instead of taking this money in cash, you could put it all in an RRSP. If you don’t, be forewarned that Revenue Canada is going to tax it quite heavily; at a minimum 30 per cent. And, should you find a job sooner than expected, you’ll have just given Revenue Canada 30 per cent for nothing. Try rolling the payment into a short-term money market fund inside an RRSP. When your two months worth of savings have run out, you can begin to draw from the funds. Continue to pull out the same $2,500 as long as you need it, keeping in mind you’ll only pay tax on the amount you take out; anything under $5,000 is taxed at 10 per cent withholding tax. When you find your next job, roll the remaining money into something long-term.

h1

West Hants Historical Society

December 7, 2010

I am proud to be a part of promoting awareness of this important historical society. It’s always important to support the history, people, and culture of your local community.

On Feb 19, 2011 the Society will host its annual banquet.  I am yet to announce the guest speaker; but will do so in January.  I hope you review this page (see below) so that you are a little more aware of the history of Windsor, NS

http://www.westhantshistoricalsociety.ca/about.html

h1

Cookie cutters and Changes to Business.

December 6, 2010

You should never receive a “cookie-cutter” financial plan. If you do, then you should question the relevance of its content. There are as many plans as there are financial scenarios. In fact, it’s rather nebulous to explain. Each person, business, or family has an innumerable number of variables that have to be juggled by the Advisor before a proper plan can be accepted. I have never come across the same situation twice. For the systematic minded Advisor to keep up, they must leave system in their processes and not in their client interactions.

Lately we have seen the propensity for large, recruitment focused, investment firms to draw much of their revenue from a few apps from a lot of recruits. In other words, it may look as if they accept a bit more inexperience in the name of volume. If a hundred (cheaper) agents  have a minuscule closing percentage, that’s better than twenty (higher cost) agents with a higher closing percentage. Not that this is always intentional, but is a consequence of the the business. It is very costly and time consuming to train new advisors (one estimate I saw had it at 70-80k for the first year-a risky proposition if a large percentage fall out after the first year).

Not only that, being an advisor takes a certain skill set, social dynamism, educational eclecticism, business savvy, and intangible nuance in personality. These traits are very difficult to “train into” someone. In the next generation of Advisor’s you should look for exactly these traits before you consider the relevance of the company they work for.

Having said that, the Desjardins Group has a powerful reputation for its recruitment rigidity. The organization has been so potent for over one hundred years because they have resisted fad opportunities and searched for strong and dynamic recruits for the next generation. It has remained focused on keeping it a closed club to experts and not made it a recruitment house for volume applications. It’s quality and not quantity; and I can tell you from my extensive experience interviewing those who wished to hire me, that there is a huge difference in support (financial and otherwise), knowledge, dynamism,  and quality in some firms vs others.

Though I am superficially young for this career (the average age is 53), I am proud to have navigated the selective community that is DFSIN. My focus is on radicalizing the business (within compliance limits) to make it more relevant for this century. I believe that being one step ahead is key in an otherwise lagging industry.

h1

Desjardins Group named top Canadian Bank.

December 3, 2010

Read the report from Investment Executive Magazine here:

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=56029&IdSection=149&cat=149