Welcome to Mortgage Insurance – Protect yourself not the lender!

Welcome to Mortgage Insurance – Protect yourself not the lender!

Your home is one of the most important purchases you’ll make and protecting it is crucial. Mortgage protection plans offered by your lender are policies that insure your mortgage against the death of the title holder and pays the outstanding balance to the lender to cover the lenders potential loss. When you need protection and security after a death, the lender seem more concerned about their bottom line than your families well-being.

The problem with the lenders (bank, credit union) plans is that you, the homeowner, do not own the actual Insurance Policy. Mortgage insurance from your lender is held by the lender and only paid out to lender, and not to your family, which leaves loved ones with little to no income replacement and no financial security.

An Individual Life Insurance Policy can be up to 40% less than the lenders offerings (depending on age and health) because the lender are the go between to the insurance company. The increased cost is added to the price of the insurance to cover the non licensed brokers fees. So not only is it costly to insure through the lender the actual coverage is not benefiting those who matter most. Individual mortgage insurance keeps your home in your family’s hands and protects the families interests, because your family deserves Financial Security upon death – not your lender. For a comparison of Individual plans versus lender plans and understanding the value of individual mortgage insurance policies versus your lender’s policies, means looking at what each policy can offer you. Please see the table below to see why a lender’s mortgage insurance plan doesn’t offer the freedom and security of insuring yourself individually.

Contact Henley Financial & Wealth Management if you have any questions or need help insuring your home for your families financial security. We are happy to help save you money while creating a positive financial future.

If you are in need of a mortgage please contact  Bayfield Mortgage Professionals a trusted professional and mortgage broker.

Individual Plans Versus Your Lender

 Questions? Individual Insurance Policies Mortgage Loan Insurance from your Lender
Do I own my insurance policy? Yes No, The owner is your lender.
Who can be the beneficiary of the policy? Anyone you choose. Only the lender can receive the benefits from the policy.
When does coverage end? It depends on the term that YOU choose. Coverage ends when the mortgage is paid.
Do I have the same coverage for the life of the policy? Your coverage stays the same throughout the term of the policy. The coverage decreases relative to the value of the remaining loan.
What can your coverage be used for? Any purpose. The benefits are paid as a sum to your beneficiary to be used how they wish. The coverage may only be used to cover the balance on the loan.
Can I get lower rates if I’m a non-smoker/in excellent health? Yes. You usually pay as much as 50% less on your insurance premiums. No, premiums are determined under one rate system.
If I sell my home am I still protected? Yes. Since you are the owner of the policy. No, you will need to obtain a new policy.
Can I convert or renew my policy to change the terms or coverage? Some policies may be renewed or converted to another policy. No, you may not convert nor renew coverage. You may not transfer this coverage into a new policy.

 

 

Sorry to burst your bubble, but owning a home won’t fund your retirement

Sorry to burst your bubble, but owning a home won’t fund your retirement

As I was looking through past articles I saw this and was intrigued. There are many who will do well when they “downsize” their family home as the article states. But with the cost of housing even for a smaller home or condo on the rise the nest egg is becoming much smaller for the younger (45 -55) home owner. My thoughts are simple, if you have a Million dollar home that you want to sell and downsize to a $500,000 home. You probably don’t need to worry about your retirement fund, you will have the money you require to live a wonderful life.  Unfortunately everyone does not own a million dollar home, and everyone will not be able to “down size” to a smaller home at half the cost of their present home. Baby Boomers will be able to take advantage of today’s real estate market. But generations X, Y and Z will need a better plan for the future.

Everyone requires a solid financial plan your financial plan can, and should include downsizing the family home. Which economically, physically and mentally, will make sense as you grow older. But again as the article states this is only a piece of the puzzle.

As you read the article, if you have any questions, or require any help with your financial plan please contact us at Henley Financial and Wealth Management .

All the best.

Winston L. Cook

A disturbing number of people are building their retirement plans on a weak foundation – their homes.

Years of strong price gains in some cities have convinced some people that real estate is the best vehicle for building wealth, ahead of stocks, bonds and funds. Perhaps inevitably, there’s now a view that owning a home can also pay for your retirement.


home buying puzzle

Don’t buy into the group-think about home ownership being the key to wealth. Except in a few circumstances, the equity in your home won’t pay for retirement. You will sell your home at some point in retirement and use the proceeds to buy your next residence, be it a condo, townhouse, bungalow or accommodation at a retirement home of some type. There may be money left over after you sell, but not enough to cover your long-term income needs in retirement.
In a recent study commissioned by the Investor Office of the Ontario Securities Commission, retirement-related issues topped the list of financial concerns of Ontario residents who were 45 and older. Three-quarters of the 1,516 people in the survey own their own home. Within this group, 37 per cent said they are counting on increases in the value of their home to provide for their retirement.

The survey results for pre-retirees – people aged 45 to 54 – suggest a strong link between financial vulnerability and a belief in home equity as a way to pay for retirement. Those most likely to rely on their homes had larger mortgages, smaller investment portfolios, lower income and were most often living in the Greater Toronto Area. They were also the least likely to have started saving for retirement or have any sort of plan or strategy for retirement.

The OSC’s Investor Office says the risk in using a home for retirement is that you get caught in a residential real estate market correction that reduces property values. While housing has resisted a sharp, sustained drop in prices, there’s no getting around the fact that financial assets of all types have their up and down cycles.

But even if prices keep chugging higher, you’re limited to these four options if you want your house to largely fund your retirement:

  • Move to a more modest home in your city;
  • Move to a smaller community with a cheaper real estate market, probably located well away from your current location;
  • Sell your home and rent;
  • Take out a reverse mortgage or use a home equity line of credit, which means borrowing against your home equity.

A lot of people want to live large in retirement, which can mean moving to a more urban location and buying something smaller but also nicer. With the boomer generation starting to retire, this type of housing is in strong demand and thus expensive to buy. Prediction: We will see more people who take out mortgages to help them downsize to the kind of home they want for retirement.

Selling your home and renting will put a lot of money in your hands, but you’ll need a good part of it to cover future rental costs. As for borrowing against home equity, it’s not yet something the masses are comfortable doing. Sales of reverse mortgages are on the rise, but they’re still a niche product.

Rising house prices have made a lot of money for long-time owners in some cities, but not enough to cover retirement’s full cost. So strive for a diversified retirement plan – some money left over after you sell your house, your own savings in a tax-free savings account and registered retirement savings plan, and other sources such as a company pension, an annuity, the Canada Pension Plan and Old Age Security.

Pre-retirees planning to rely on their home at least have the comfort of knowing they’ve benefited from years of price gains. Far more vulnerable are the young adults buying into today’s already elevated real estate markets. They’re much less likely to benefit from big price increases than their parents were, and their ability to save may be compromised by the hefty mortgages they’re forced to carry.

Whatever age you are, your house will likely play some role in your retirement planning. But it’s no foundation. You have to build that yourself.

Planning for the future…

Planning for the future…

I’ve been asked many times about the taking your Canada Pension Plan (or CPP) early. It’s one of the issues facing seniors and income management of their retirement funds, my conclusion is that it makes sense to take CPP as early as you can in most cases.  Again there are a number of factors that can determine this process and they should be considered. We can help you understand which makes the most sense for you. Contact us at Henley Financial & Wealth Management.

In seeking the answer of when to take your CPP – ask yourself these five questions…

1) When will you retire?

Under the old rules, you had to stop working in order to collect your CPP benefit. The work cessation rules were confusing, misinterpreted and difficult to enforce so it’s probably a good thing they are a thing of the past.

Now you can start collecting CPP as soon as you turn 60 and you no longer have to stop working. The catch is that as long as you’re working, you must keep paying into CPP even if you are collecting it. The good news is that paying into it will also increase your future benefit.

2) How long will you live?

This is a question that no one can really answer so assume Life Expectancy to be the age factor when considering the question. At present a Male has a life expectancy of 82 and a female has a life expectancy of 85. These vales change based on lifestyle and health factors but it gives us a staring point.

Under the old rules, the decision to collect CPP early was really based on a mathematical calculation of the break-even point. Before 2012, this break-even point was age 77. With the new rules, every Canadian needs to understand the math.

If you qualify for CPP of $502 per month at age 65, let’s say you decide to take CPP at age 60 at a reduced amount while instead of waiting till 65 knowing you will get more income by deferring the income for 5 years.

Under Canada Pension Plan benefits, you can take income at age 60 based on a reduction factor of 0.6% for each month prior to your 65th birthday. Therefore your benefit will be reduced by 36% (0.6% x 60 months) for a monthly income of $321.28 starting on your 60th birthday.

Now fast-forward 5 years. You are now 65. Over the last 5 years, you have collected $321.28 per month totalling $19,276.80. In other words, your income made until age 60 was $19,276.80 before you even started collecting a single CPP cheque if you waited until age 65. That being said, at age 65 you are now going to get $502 per month for CPP. The question is how many months do you need to collect more pension at the age of 65 to make up the $19,276.80 you are ahead by starting at age 60? With simple math it will take you a 109 months (or 9 years) to make up the $19,276.80. So at age 74, you are ahead if you start taking the money at age 60, you start to fall behind at age 75.

The math alone is still a very powerful argument for taking CPP early.

So, “How long do you expect to live?”

3) When will need the money?

When are you most likely to enjoy the money?  Before the age 74 or after age 74, for most people, they live there best years of their retirement in the early years. Therefore a little extra income in the beginning helps offset the cost of an active early retirement. Some believe it’s better to have a higher income later because of the rising costs of health care and this is when you are most likely to need care.  Whatever you believe, you need to plan your future financial security.  It is hard to know whether you will become unhealthy in the future but what we do know is most of the travelling, golfing, fishing, hiking and the things you want to do and see are usually done in the early years of retirement.

4) What happens if you delay taking your CPP?

Let’s go back to age 60 you could collect $321.28 per month. Let’s you decide to delay taking CPP by one year to age 61. So what’s happens next? $3,855.36 from her CPP ($321.28 x 12 months), but chose not to, so you are able to get more money in the future. That’s fine as long as you live long enough to get back the money that you left behind. Again, it comes back to the math. For every year you delay taking CPP when you could have taken it, you must live one year longer at the other end to get it back. By delaying CPP for one year, you must live to age 75 to get back the $3,855.36 that you left behind. If you delay taking CPP until 62, then you have to live until 76 to get back the two years of money you left behind.

Why wouldn’t you take it early given the math? The only reason I can think of is that you think you will live longer and you will need more money, as you get older.

Any way the math adds up… you can always take the money early and if you don’t need it  put it in a TFSA and let it make interest. You can use it later in life if you choose.

 

Things you may or may not know about Registered Education Savings Plans

Things you may or may not know about  Registered Education Savings Plans

 

When learning about the lingo of RESP’s you will find some useful information within this article that will catch your attention, as most people who invest in their children do so, because they understand the need to help in the future. Although, they most likely will not understand the ins and outs of the program that they have been investing into for the future. We at Henley Financial & Wealth Management are always here to help you understand the process.  Please contact us with any questions you may have.

Let’s begin…

The CESG contribution limit is different than the RESP limit. The maximum annual amount of Basic CESG (Canada Education Savings Grant) that can be paid in any year was increased to $500 from $400 (and to $1,000 from $800 if there is unused grant room from previous years). The lifetime CESG for each child is still $7,200.

You can create a family plan or an individual plan. If you have one child, and intend to have more children, a family plan can be an attractive option. You can name one or more children as beneficiaries (the child using the funds in the future), and add or change beneficiaries at any time. If one of your children decides not to attend a post-secondary institution, your other children can make use of the funds.

With a family plan, all beneficiaries must be related to you. They can include children, adopted children, grandchildren, and brothers and sisters. You cannot include an unrelated person in a family plan.

A portion of contributions to the plan must be allocated to each beneficiary, although not necessarily equally. For example you can allocate a greater percentage to an older child who becomes a beneficiary a few years before university to quickly build education savings for that child. Meanwhile, younger children could be allocated less because there is plenty of time until they attend college or university. Contributions for each beneficiary can be made until the beneficiary turns 31.

The CESG is paid into the family RESP in the name of each beneficiary until that beneficiary turns 18. Most RESP’s, family or individual must be collapsed on or before the last day of their 35th year of existence. This should provide enough time to meet education savings needs of most families, including those with children of substantially different ages.

An important thing to know regarding RESP and CESG…

In the RESP world, $7,200 is an important number.  It’s the total amount of RESP grant money that can be paid to any one child.  This means that once a child has received $7,200 of grants – any future contributions will not receive any grant money. Meaning if there is a $50,000 maximum contribution to a RESP, only $36,000 of that RESP contribution will be credited with the 20% ($7,200) CESG.

This rule also applies to the RESP withdrawal phase. When you are making payments to a student – that child cannot receive more than $7,200 worth of grants.  Any excess amount of grants paid to a child will have to be returned to the government.

All withdrawals of contributions from an RESP account can be sent to either you (subscriber) or the student (beneficiary).  If you request a withdrawal of accumulated income in the form of an EAP (educational assistance payment), the money has to be sent to the student.

Specify if the withdrawal is to be from contributions, non-contributions or both

There are two parts to an RESP account:

  1. Contribution amount.  This is the total amount of all your contributions to the account.
  2. Accumulated Income.  This is all the money in the RESP, which are not contributions.  RESP grants, capital gains, interest payments, dividends are all included in the Accumulated Income portion.

Example of contribution amount and accumulated income amount 

Let’s say you contributed $2,400 per year for 15 years to an RESP account. 20% grants were paid on all the contributions and the investments have gone up in value.

  • Account is now worth $50,000.
  • Total contributions are $36,000 (15 x $2,400).
  • Accumulated income amount is $14,000 ($50,000 – $36,000)

You can make two types of withdrawals from an RESP account if your child is attending post secondary school:

  1. PSE (Post-Secondary Education Payment) is a withdrawal from the contribution amount.
  2. EAP (Educational Assistance Payment) is a withdrawal from the Accumulated income.

Some interesting facts about PSE and EAP:

  • PSE payments are not taxable income and there are no limits on withdrawals.
  • EAPs are taxable in the student’s hands.
  • There is no withholding tax on EAPs.
  • The financial institution at the end of the year will issue a T4A slip for any EAP made during the year.
  • There is a $5,000 limit for EAPs in the first 13 weeks of schooling.
  • When doing a withdrawal, you will have to specify how much of the money will be coming from contributions and how much from accumulated income.

So you now have some of the ins and outs of making contributions and withdrawals to and from an RESP. The rules can be confusing and complicated so when in doubt, seek the help of a financial advisor to guide you through your options.

How should I invest my tax refund?

How should I invest my tax refund?

You may soon find yourself with a tax refund.

  • How should you spend it?
  • What is the right answer for you?
  • Would you be interested in a value added idea?

Presented by Henley Financial & Wealth Management – please continue to read you may find this of some value.

The average individual tax refund is between $1,500 and $3,000. Not everyone will get a tax return essentially a return means that you paid the government too much in tax during the year and now they want you to have it back… For the chosen few people that do lend the government their own money to invest during the year on a tax free basis, that’s the biggest chunk of discretionary income they’ll see in a year. There’s a lot of temptation to spend this cash as is not readily accounted for so it’s essentially free money.

What would you do with that cash if was suddenly given to you?

Hmm, A Trip, Newest Phone, Clothes, Shoes, Dinner and Drinks (well more drinks than dinner), Raptors Tickets, Concert Tickets and a host of many other ideas come to mind.

Once you see the cheque or the deposit in you bank account a spending rush will come over you. Earning 1% in a high yield savings account does not seem very appealing. Investing in your portfolio for future returns that cannot be seen for years to come does not give you that warm and fuzzy feeling.

You could take a trip of a lifetime. How could that be a bad investment? The experience alone is worth a lifetime of memories. This will subside next month when you realize that you spent the return and then some and have to pay for those memories. Hopefully you took some beautiful pictures to share with your face book and instragram friends. Those will more than make up for the sticker shock price of the trip.

The other items or ideas mentioned are all short term memories but definitely worth the time spent if that’s what you want. Just remember there is a difference between needs and wants.

So what should you do with your tax return? Here is an idea that will work but isn’t sexy at all. Double up on a mortgage payment. Or Pay down a credit card bill as it is the highest interest debt that you are carrying. Either is a good choice…

If you think about it paying down your mortgage with your return you are one month closer to paying off the principle on your house. This is one of the biggest assets you own in your portfolio especially with today’s housing market. Since mortgage rates are historically quite low, you could potentially make more money by investing that return in the market but as we know the market can be very volatile.

In any case it’s just a thought and the value to you in the long run is a great basic investment in yourself and your family.

 

The greatest compliment we receive is being introduced to family, friends and co-workers. Let us know if you would like to introduce someone to Henley Financial and Wealth Management. Contact us Henley Financial & Wealth Management.

 

Are you Missing out?

Are you Missing out?

A tax-free compounding account… In your portfolio that has been overlooked.

Check us out… Henley Financial and Wealth Management

The tax-free savings account is starting to grow up.

Introduced in the 2008 federal budget and coming into effect on Jan. 1, 2009, the TFSA has become an integral part of financial planning in Canada, with the lifetime contribution limit set to reach $52,000 in 2017, provided you were 18 at the time it came into existence.

Remember when you thought $5,000 did not amount to much as an investment. You would have another $60,000 to $70,000 for each husband and wife if you have been maximizing their contribution and based on the market’s return since 2009.

Used correctly the TFSA can supplement income lower your tax base during retirement. As the gains made in the TFSA are tax-free, and so are withdrawals —Did you know that the money coming out of the account does not count as income in terms of the clawback for Old Age Security, which starts at $74,780 in 2017.

The TFSA has also become a great vehicle for dealing with a sudden influx of wealth. For people sell their house or receive an inheritance. That money is already tax-free you don’t want to make it taxable in the hands of the government again.

With that in mind, and the new year limit increase upon us, here are eight things Canadians need to know about TFSAs.

How did we get to $52,000?

The first four years of the program, the annual contribution limit was $5,000 but that increased to $5,500 in 2013 and 2014 under a formula that indexes contributions to inflation. The Tories increased the annual contribution limit to $10,000 in 2015 but the Liberals quickly repealed that when they came into power and reduced annual contributions to $5,500 for 2016, still indexed to inflation. The annual number increases in increments of $500 but inflation was not riding high enough to boost the annual figure to $6,000 for 2017 so we are stuck at $5,500. That brings us to the current $52,000. The good news is even if you’ve never contributed before, that contribution room kept growing based on the year in which you turned 18.

Eligible investments

For the most part, whatever is permitted in an RRSP, can go into a TFSA. That includes cash, mutual funds, securities listed on a designated stock exchange, guaranteed investment certificates, bonds and certain shares of small business corporations. You can contribute foreign funds but they will be converted to Canadian dollars, which cannot exceed your TFSA contribution room.

Unused room

As the TFSA limit has grown, so has the unused room in Canadians’ accounts. A poll from Tangerine Bank in 2014 found that even after the Tories increased the annual limit, a move that ended up as a one-time annual bump, 56 per cent of people were still unaware of the larger contribution limit. In 2015, only about one in five Canadians with a TFSA had maximized the contribution room in their account, according to documents from the Canada Revenue Agency.

Withdrawal and redeposit rules

For the most part, you can withdraw any amount from the TFSA at any time and it will not reduce the total amount of contributions you have already made for the year. The tricky part is the repayment rules. If you decide to replace or re-contribute all or a portion of your withdrawals into your TFSA in the same year, you can only do so if you have available TFSA contribution room. Otherwise, you must wait until Jan. 1 of the next year. The penalty for over-contributing is 1 per cent of the highest excess TFSA amount in the month, for each month that the excess amount remains in your account.

Is the Canada Revenue Agency still auditing TFSAs?

The Canada Revenue Agency continues to investigate some Canadians — less than one per cent — who have very high balances in their accounts. Active traders in speculative products seem to be the main trigger. Expects an appeal of the current rules regarding TFSA investments to be heard in February.

Be careful on foreign investments

If a stock pays foreign dividends, you could find yourself subject to a withholding tax. While in a non-registered account you get a foreign tax credit for the amount of foreign taxes withheld, if the dividends are paid to your TFSA, no foreign tax credit is available. For U.S. stocks, while, there is an exemption from withholding tax under the Canada-U.S. tax treaty for U.S. dividends paid to an RRSP or RRIF, this exemption does not apply to U.S. dividends paid to a TFSA.

What are people investing their TFSA in?

People are still heavily into cash and close to cash holdings. A study from two years ago, found 44 per cent of holdings in TFSAs were in a high-interest savings accounts. Another 21 per cent were in guaranteed investment certificates. If you want to see your money grow you also have to respect your risk tolerance. You may want to look at your investment horizon.

TFSA vs RRSP

It’s hard to generalize which is better for a typical Canadian. RRSPs are generally geared towards reducing your taxable income when your marginal rate is high and then withdrawing the money in retirement when your income will theoretically be much lower. The answer is easy if you make $10,000 a year and you’re a young person — the TFSA is better — but the deduction you get from RRSP contributions are only part of the equation. It also depends on the flexibility that you are looking for. Once you get to the higher marginal rate that deduction is attractive but nothing stops you from taking that deduction and putting it in a TFSA and getting the benefit of both.

 

Getting out of your way to find success!

Getting out of your way to find success!

I learned that courage was not the absence of fear, but the triumph over it. The brave person is not the person who does not feel afraid, but the person who conquers that fear.  Nelson Mandela

During the Christmas break we find ourselves looking towards next year. Planning our business model or just looking forward to a change. I always try to pick up a book during the holidays usually a biography as I find them to be most interesting. I like reading about other people’s stories.

Generally what you find in every success is the same pattern, if you have a goal in life and want to succeed you will need to know the following…

  1. Be clear about your goal.
  2. Face your fears.
  3. Trust yourself.
  4. Embrace the unknown.
  5. Think big.
  6. Be brave.

To be successful at anything we do we must conquer some if not all of the above. Life is funny as we are held back by our cautious nature we are afraid of the unknown, our own failure. Because of this most of us never reach our true potential. We read about the successful people who fail more than once and keep pushing forward until finally they reach that unattainable goal for most. Success!

Being clear about your goal – we focus more on what we will lose than what we will gain. Therefore if you are going to lose something you must be clear about what it is you want to gain. There will be no guarantee that success will be accomplished but the answer is ‘NO’ if you don’t ask the question and will always be ‘No’! We must know the answer before we start. So ask the question!

Fear – often gets in the way but we are wired from a young age to be cautious to any potential threat to our own safety. That is not only a physical threat but also a mental threat we will undermine our own ability to asses smart risk from safe risks. Sometimes you have to say “what the heck?” and push forward. If don’t challenge your fear it will become you.

Trust – you must believe in the path that you have set out for yourself. If you don’t have trust in yourself to create the future you aspire to have you will only find regret. There will be days you will be overwhelmed. As long as you believe in the path you have set out for yourself and trust the process. Success will come.

The unknown – We always choose the path of least resistance because it’s the one we know. What if we walk through a door that’s open and we don’t know anyone on the other side. You have two choices turn around and walk back through the open door, or meet new people on the other side. Within a short period of time you will have made a new contact, a new friend, or had a new conversation. At any rate you will have embraced the unknown. Choose a path unknown every now and then you may be surprised at the result.

Think big – we all have dreams, which get us excited. These dreams are awe-inspiring; they are the end result of an idea. We know for a fact that we can’t go from nothing to something without staring with an idea. If it’s a big idea then that’s the end result, and we you need to take small step along that path to achieve the dream. Don’t stop dreaming big dive in with both feet grounded find the solution to create the idea that fulfils the results.

Be brave – Let’s be clear: Living courageously is not the absence of knots in your stomach, a lump in your throat, sleepless nights or sweaty palms. It’s not about being fearless. It’s about fearing less. Everyone processes greatness within himself or herself.

Do not judge me by my successes, judge me by how many times I fell down and got back up again. Nelson Mandela

Get out of your own way and you will find success!

 

 

 

 

 

Expect the Unexpected…

Expect the Unexpected…

If I told you to do what you love and love what you do and spend 99.9% of your time doing so you would understand that statement as it applies to your life. Some would call it the simple life. But I recommend that you commit 0.1% of your time to plan for the unexpected, especially as you move towards some big milestones like marriage, home ownership and kids. That is when term life insurance, a type of policy that covers you for a specific length of time, can really make sense.

Don’t hesitate to call or email us for your best options when thinking about your family’s financial security.

Henley Financial & Wealth Manangement  

 

Newlyweds with debt

You are marring the person of your dreams the person that you want to share your future with. But does your future include a term life insurance policy. Here is one reason why you might want to consider buying it now:

Debt.

Insurance is designed to protect you from unknown at death. Many young people start their marriages with a significant amount of debt. It could be a disastrous if only one spouse remained to cover the payments. Say you want to cover $100,000 in debt. You can get a term life insurance policy to cover it for pennies on dollar a year, which is most likely less than you spend on coffee for the year.

Another scenario where term life insurance makes sense is when there is a big disparity in income. Insuring the difference means that if the higher income person dies, the lower income person can support their current cost of living while they rebuild his or her life.

For a newly wed couple Life insurance is something you should have. Hopefully you never need to use the benefit. You can feel good knowing that if something catastrophic was to happen your spouse is covered.

Buying your first home together

There’s “married” living the dream travelling doing what you want when you want, with no obligations. And then there’s “married with a mortgage,more debt and kids.” It’s an exciting step, a new home a place you call your own. But it also presents new risk. If one of you were to die, how would the surviving spouse manage the mortgage payments? This is when and why you buy a mortgage insurance at the bank (or they tell you that you have to purchase insurance through them). The better option is to buy a term life policy from your advisor or an insurance company, for a few reasons.

First, Term life is less expensive than mortgage insurance. Second, The payout on death benefit with term life doesn’t change, but on mortgage insurance it declines as you pay down the principal. Third, Mortgage life insurance has no flexibility meaning there is a face value policy limit and it isn’t transferable, so the policy will be cancelled if you move or become terminally ill before your mortgage is renewed.

Getting married and starting a family

There are a few things you are going to need if you’re expecting a baby. A completed baby room with the right crib, dresser, and a car seat plus all the other must haves. Oh yes you will have all the latest things needed to insure that your child is well looked after. I know this might sound morbid but at the same time you’re anticipating a new life beginning, and this is important. If you die, you want to make sure that your dependents are covered. Term life is a good short-term solution for a new family. The question is, how much do you need? The payout should cover your mortgage and replace a loss of income. How much you will need depends on the conversation you and your financial advisor have when you discuss this section of your family’s financial security.

 

The lost art of communication!

The lost art of communication!

I have spent countless years coaching the youth of today for tomorrow I have always told them that “If you don’t ask the answer is no!” It is an attempt to have them ask questions. You want to open the doors that are closed or at least appear to be closed. In today’s society as parents, we struggle with technology and the effect it is having on our children’s communication skills. Below is an article that talks about just that how to open doors by communicating with one another and not through technology. Please take a moment to read through the article. In my opinion, she is right on the money

Presented by: Henley Financial and Wealth Management

 

Written by Whitney Johnson

 

Returning home recently from a consulting engagement in Tampa, I found myself stranded, late at night, in the Washington Dulles airport. The small regional airline I was counting on for a puddle jump never came through. Eventually, the airline loaded all nine passengers into a van and shuttled us the two  hours to Shenandoah Regional airport.

 

One of my fellow travelers was a student at an expensive, private university. Upon discovering that we lived fewer than three miles apart, he asked me if I would give him a ride for the final leg home. I happily agreed.

 

As I was giving him a lift home, I learned a lot about him: his name, where he grew up, where he goes to school, his major, what his parents do for a living, his own career aspirations when he graduates in a few months. We even discovered that we have an acquaintance in common. Meanwhile, I made a few mentions of my children, such as my 19-year-old son is living in Brazil, my husband teaches at a local university. Conversation starters.

 

In the same 45 minute ride, he didn’t ask me a single question, not even name. 

I’ll confess I felt a little invisible. I find it easy to ask people about themselves. I genuinely enjoy doing it. It’s one of my strengths, and we’re often exasperated with people who aren’t likewise adept at the things that we do well.

 

But here’s the real takeaway from this chance encounter: this young man is looking for a job when he graduates in a month. His parents are concerned that he doesn’t have employment lined up for the rapidly approaching day when he commences from his education, a several hundred thousand dollar investment.  I could have potentially helped him if he’d just shown a little of the moxie that would have motivated me to recommend him.

 

The client I’d been with in Tampa is the CEO of a real estate construction and development company, the exact industry this young man wants to enter.  I could have called, and said, “I just met this terrific guy; why don’t you speak to him?” Would the CEO have given him a job? Not necessarily. But on my recommendation, I think he would have given him a listen. If this seemingly capable, but ultimately undistinguished young man had opened up his network, he might today be interviewing for a really great job.

 

Contrast this experience with the son of one of my childhood friends, Alexander. He struck up a conversation with a gentleman on an Amtrak train, stayed in touch, and is now going to work for him this summer.

 

My brief encounter with this college student left me wondering about the opportunities I miss. For example, there was another passenger in the van, traveling from Germany to visit her daughter. I really liked her. I wish I’d asked her name. Would it have led to a business opportunity? I have no idea. It doesn’t matter, really, because there would be one more interesting person in the world who I know.

 

We all need to feel that we belong. A sense of belonging gives us the confidence to climb a new curve. But if we’re too comfortable with our place in the world, it’s easy to believe that the way things are is the only way they should be. We battle this mindset as we open up our network, especially to people who are unlike us, and ask questions, solicit opinions, and entertain new possibilities, rather than focusing inward.

 

In business as in life, are based on reciprocity. Our real advantages, both concrete and less tangible, are gained through humility, through putting ourselves in one-down relationships with those who know more than we do.

 

We really do know less than we think we do; open up, and we will learn more.

If we’ll extend ourselves in this way, the research suggests we are 2x more likely to enjoy breakthrough ideas. We do have to be open to something (or someone) new, instead of focused on the same old thing, especially if that same old thing is ourselves.

 

Growing Old is Inevitable, Growing up is Optional! But we do have to deal with it…

Growing Old is Inevitable, Growing up is Optional! But we do have to deal with it…

It’s that time again Labour day has come and gone the kids are back in school meaning that summer has unofficially ended. We are back and will have some helpful insights for you to read over the next few months.  All the best from Henley Financial and Wealth Management. www.henleyfinancial.ca

Over the last year, I have been dealing with my mother who has decided that she would like to see my father again. The problem is he died 30 years ago. Yes he left us at the age of 52, the loss was hard but at that time my mother had lots of friends to entertain and years later I started a family. So she always busy and felt needed. Up until a few years ago, my mother was needed as she helped with my children. That has all changed, the girls are now teenagers and don’t even want my help and her friends have passed or moved on so she has been left feeling as though she is no longer needed.  A few years ago, I was telling everyone that she would outlive me. But things changed, life changed, she took her final trip, a trip she had asked me to go on when I was a teenager and of course I refused. It was at a time when I was involved in sports and could not leave my teammates behind. She has traveled extensively but this was her dream destination a month-long trip to China.

 

She has always been a good saver and lives minimally, as she gets older, you can see she is overwhelmed by the costs of things. Her generation is very concerned about finances it is the way they have come through life. Most people over 75 have filled out forms that are 20 pages in length, or do their own income taxes, they live on small incomes, there are Guaranteed Income Supplement forms to fill out, and in her case, a small pension my father left her.

 

As it turns out I have found to maintain their independence, older seniors like my mom need a lot of help with their finances—even if they have healthy savings. Home-care services need to be paid for, bill payments need to be set up, and investments need to be managed. It’s a balancing act and the process is time-consuming, but it needs to be done if you want your parents to age comfortably. Unfortunately, my mother is not aging comfortably as she is suffering from kidney failure and a poor heart. She would not go to the doctor when she was sick she did not think it was necessary… she felt she is no longer needed.

 

Handling elderly parents’ finances is made even tougher by the awkward role reversal. Aging parents are often reluctant to even share financial information with their children, let alone relinquish control. My mother is that in a nutshell. She continues to refuse help on any level. In many cases, you may have no choice but to pick a neutral person to oversee a parent’s finances.

 

That’s why it’s important to do some advance planning before your parents become incapable of managing their money themselves. Every family should have a plan to safeguard their elderly parents’ finances when the time comes.

 

If your parents are having trouble handling their finances, don’t expect them to come to you for help. If they’re like most parents, they don’t want to be a burden. So be on the lookout for subtle signs they may be having problems. Can’t remember if they paid a bill or think they did pay the bill. If they repeat things often, or forget conversations you recently had. I do that to on occasion I guess that comes with age but you will start to notice the signs.

 

Ideally, communication between parents and siblings should start well before a parent needs help. The best time is when parents are starting to talk seriously about retirement. It’s just an intellectual activity then. The longer you leave it, the harder it will become.

 

Understand that total trust doesn’t happen overnight, I have not always had a good relationship with my mother but as an only child there is not much choice. In many cases, it’s hard for siblings to work well together. One often feels another is taking advantage. The key to making it work is transparency on all fronts.

 

Have frequent family gatherings or communicate by email or phone constantly speak candidly about retirement and old age. It will happen it’s not a secret. You should also talk about what happened in the meeting that transpired with lawyers, accountants, and advisors. Then you will be able to understand the process in the future.

 

Gather information

Find out where your parents keep their safety deposit box and important documents. Make a list of their bank accounts and investment accounts, insurance documents, wills and the names of their accountant, lawyer, and financial advisor.

Open a joint bank account with your parents, deposit their CPP and OAS checks into it, and take over all bill payments. You should also find out where your parents’ income comes from, including government and employer pensions as well as RRIF withdrawals and any income from their investment portfolio. Find out who their beneficiaries are, what their financial wishes are, and how they want funeral arrangements handled.

 

Get legal power

While both parents are alive, make sure all non-registered accounts are held jointly: otherwise the surviving parent will need a will and death certificate to access those accounts. Also, ensure your parents have an up-to-date will and estate plan. A loss of capacity either suddenly, such as through a stroke, or gradually as with Alzheimer’s, may mean they never have the opportunity to clarify their intentions.

That’s why it’s also key to know if your parents have in place a power of attorney (POA) for health care as well as for finances and property. A POA will often name a child as a substitute decision maker. That person can sign documents, start or defend a lawsuit, sell a property, make investments, and purchase things for the parent, the POA usually comes into effect as soon as it’s signed and witnessed, but a parent can put a clause in saying it doesn’t come into effect until they’re incapacitated.

 

More than one person can be named as a POA: that way no one can act opportunistically and without accountability. If you’re concerned about mismanagement of funds, make sure your parents include a clause in their POA document that requires the decision maker to submit periodic financial statements to your parents’ accountant, adviser or lawyer.

 

10 key questions to ask your aging parents

You can start by asking your parents these key questions to ensure your family is prepared for the road ahead.

  1. Where do you keep your important papers—wills, investment account statements, life insurance policies, and others?
  2. Do you have a current will? Where do you keep it and when was the last time you updated it?
  3. Have you prepared a power of attorney (POA) documents? A POA designates who will take care of your affairs if you are unable to do so because of illness or cognitive decline. Your parents can designate one person to handle health decisions and another for financial decisions, or they can designate one person for both roles.
  4. Do you have a safety deposit box? If so, at which bank, and where do you keep the key?
  5. Where are your bank accounts? If you are incapacitated, where would I find the PIN and account information?
  6. Do you have credit cards and if so, who are they with? Have you been paying the balance off every month?
  7. Do you have a financial adviser, lawyer or accountant, and what is their contact information?
  8. Do you have life insurance policies? Who is the contact agent?
  9. Do you have any debt and if so, with whom? How much do you owe?
  10. Does anyone owe you money and if so, who?

Hopefully, this will help you start that conversation. I know from experience that once they get sick they have no interest in sharing information.

 

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