A tax-free compounding account… In your portfolio that may have been over looked – $52,000 for each spouse to be exact, start planning now!

The tax-free savings account (TFSA) 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 now set to reach $52,000 in 2017.

Start taking advantage of this savings today.

Remember when you thought $5,000 did not amount to much as an investment. If you had taken advantage of this program you could have another $60,000 to $70,000 for each husband and wife invested in savings today. That’s $120,00 -$140,000 of Tax free Value based on the average market return since 2009.

Used correctly the TFSA can supplement income lowering your tax base during retirement. The gain made in a TFSA is tax-free, and therefore 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 who downsize and sell their house or receive an inheritance, this money is already tax-free. Do not make it taxable in the hands of the government again.

Contact me for more information regarding this and other investments that have been overlooked. It never hurts to get a second opinion regarding your future.

 

Do you have a plan?

Do you have a plan?

Most people are concerned about having enough money to meet their obligations at or in retirement. Using traditional planning methods such as buy term and invest the difference, and live off the earnings and retain capital are the most common methods used today.

This type of planning only works if you follow a regimented plan and you don’t spend the difference.  If you fail to invest the rest… it lessens the quality of life that one should be able to enjoy in the active years of retirement! It is upside down and backwards!

With our low-interest rate environment, it’s difficult to find sustainability in your portfolio. One way to extend the life of your capital is to consider equities in the form of dividend earning stock.

This tends to be a source of hedging against tax, inflation, fees and other wealth transfers, however, using equities means taking more risk.

Who wants to take more risk leading into retirement?

If you would like advice on reducing the risk, or with what type of investment vehicle may be best for your situation please contact us at info@Henleyfinancial.ca

Visit us at at Henley Financial and Wealth Management

If indeed you are investing in equities please understand the risk involved within your investable assets. Investing in equities will depend on your risk tolerance and the reality of the situation. During retirement, you should lower the amount of Equities within your portfolio to protect you against the volatility of the markets. Leading up to retirement Equities can help build your portfolio but you must be able to accept the risk of volatility which the markets will provide.

Guaranteed Lifetime Withdrawal Benefit products offer a guaranteed income bonus and can provide a stable environment for investments moving forward with the option of a guaranteed lifetime income. This takes the guess work out the planning and provides you with a pension like asset.

Another strategy is to have adequate permanent life/asset insurance that frees up other assets such as non-registered savings, investment property equity or retained earnings in a business.

Having enough life insurance allows one to spend down taxable savings RRSP’s or RRIF’s during early/active retirement years (age 60-75) whereby you’re actually reducing the tax burden overall.

By deferring the use of RRSP’s and RRIF’s the tax on these assets is actually growing as invested capital. By using the funds sooner, rather than later, (yes you are paying more tax now) but you are paying a known tax, you have control over what the tax amounts are. If you wait long enough the government dictates the amount of tax owed yearly. Meaning if you defer too long, one conceivably can pay a much greater tax than ever saved by using the registered plan strategy!

Access equity sitting dormant in your paid off or very low debt home could also be a strategy that you could use during retirement. The reverse mortgage has been a component of retirement planning  over the last few years based on the low-interest rates on borrowed money. Again this strategy requires some professional advice.

Life insurance lowers the pressure of the capital to perform and lessens market volatility risk. It also lessens government control risk. Meaning, by using a registered plan strategy you absolutely are in a partnership with the government. RRSP and RRIF products are very much a controlled revenue source for the C.R.A. your strategy will dictate the how much income they will receive on your behalf.

If you are interested in creating more spendable income during the early retirement years without fear of running out of money we can show you how. For the most part, we can increase your spendable income into and during retirement without any additional out of pocket expense!

If we can recover 1%-5% of gross income from dollars that are unnecessarily being transferred away from you through tax, fees and other opportunity costs which can be redistributed to your retirement plan and increase lifestyle along the way. Would you be interested?

Let us provide you with an overall review of your entire investment and financial plan. We will do this with no obligation from you to move forward with any recommendations we may have, or we may find that you are well on your way and continue on that path. Either way, a second opinion never hurt anyone.

Insure your Childrens Education…

Insure your Childrens Education…

In the last budget, our government announced a plan  that will see less fortunate children gain a free post-secondary education. I believe that this is a great gesture, as we no longer are going to limit post-secondary education to the fortunate. Everyone should be able to pursue a post-secondary education to better him or herself in today’s society.

The only problem we see going forward is that a  post-secondary education is becoming very expensive even for the middle-class working families. Tuition costs have nearly tripled over the past 25 years with no end in sight, parents of today must plan for their children’s future education needs at birth.

We have RESP (registered education savings plans) accounts, which have a maximum investment limit of $50,000 per child. You are eligible for a 20% credit on your yearly investment from the government up to a maximum of $7,200. Their is a strategy involved in this investment portfolio to maximize the value of these accounts moving forward. But we will leave that for another article to come.

These accounts have become the main source of savings for most parents when we speak of education savings for their children.

In today’s dollars, it can cost up to $58,000 for your child’s post-secondary education. With that in mind, as the average cost of an education continues to rise the markets will have to perform extremely well for these accounts to provide the funds needed for the future. Not to mention that you will need to time your planned withdrawal of funds on high market returns. Volatility of todays markets can definitely be damaging to your child’s education portfolio.

Is there an alternative or another investment that could help enhance your child’s future education needs?

We believe there are products in the financial world that can be used to help enhance your present education funds.

Life insurance products  such as whole life offer a guaranteed cash accumulation value component which grows inside the policy tax-free (within limits).

Yes, I said Life Insurance!

Permanent Life Insurance or Whole Life can provide the extra cash needed for the growing cost of your child’s education. Many people don’t like the idea of insuring their children. They believe that the kids do not need coverage or find it very morbid. That being said it is the cheapest form of financial planning that you can do for your child. There is merit in this type of planning regarding  your children.

How does permanent insurance work?

The Cost of Insurance is based on age and health; this is lowest it will cost for your child and at a time when your child is at their healthiest. You are looking at paying pennies on the dollar for insurance coverage with a cash value that will compound annually inside the policy tax-free. Once a dividend is declared it cannot be taken back so you don’t have to worry about market volatility depreciating your account. This is a safe investment!

When it’s time to withdraw funds for your child’s education, you can either withdraw the accumulated cash value or take out a loan against the policy’s accumulation. If you take out a loan, your cash value can continue to grow, provided you repay the loan sometime in the future. Alternatively, you can surrender your insurance policy if coverage is no longer required and apply this money to your child’s education needs. The latter strategy could create a tax issue if you take out more money than you have invested in the insurance policy. Always consult your financial advisor on which strategy would work best for your situation.

Purchasing participating life insurance for your child or grandchild is a gift that keeps on giving. A participating life insurance policy has a cash value that can grow over time and can be accessed to pay for things like tuition, a new car, wedding, or a down payment on a house in the future. With your child’s insurance needs taken care of for life as long as the policy stays in force, they can focus on other key life priorities.

The value of this strategy is second to none in the investment world. You have insured your child’s future health at the lowest rate possible and secured an investment portfolio that will grow tax-free without the volatility of the market.

Consider the possibility of alternative planning.

Let us help @ Henley Financial & Wealth Management we are familiar with this strategy and others to help you create your family’s financial security.

You may also contact us at the following info@henleyfinancial.ca

Do you really need 10 reasons?

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We live in a world that is filled with the uncertainty of what might happen. Life Insurance protects your loved ones in the event of your death. It can provide future income to your family if you were to passaway during your prime working years, and it may also be used to pay debt, such as a mortgage, final and emergency expenses.

Life Insurance is the most selfless act a person cando for their family, as the person that is insured will never benefit from the coverage.
Before obtaining Life Insurance here are some things to consider.

1. The Best Time is now:
The cost of Critical Illness insurance policies will never decline, the costs will only ever increase. So the best time to get Critical Illness Insurance is now.

2. Receive Cash Back:
In Canada there is a Critical Illness plan that enables you to receive a portion of your premiums to be returned after a specified time frame. Which means if a client doesn’t need to make a claim and feels they won’t, they can cancel the policy and receive repayment based on the percentage of premium paid, all the while having coverage just in case

3. Purchase while you are healthy:
Critical Illness coverage can only be purchased while you are healthy. Once an illness has been diagnosed you are not eligible to purchase it.

4. Tax free lump Payment:
When a claim is made with Personal Critical Illness coverage, it pays out a lump sum, tax free to the insured. The payment is in the amount that has been agreed upon when the policy is taken.

5. One less Worry:
Personal Critical Illness allows the insured to take the time that is necessary to recover without worry as to how the day to day expenses or additional medical services not paid by the provincial health plan. There isn’t a prearranged allocation for the payment, so all of the payout goes to the insured.

6. Additional coverage:
You can purchase Critical Illness coverage on a mortgage, however, these types of plans only cover three illnesses such as cancer, heart attack and stroke. Alternatively, Personal Critical Illness policies cover these three illnesses as well as 22 others; all of which we hear about almost daily.

7. Not included in most employers plans:
In most employee benefit group plans, Critical Illness is not always offered. In the rare instance that it is indicated on a group policy, it is often not near the recommended coverage amount.

8. Best Doctors:
Personal Critical Illness coverage allows you access to Best Doctors. Best Doctors is a group of the best Doctors worldwide that are experts in specific areas of medicine. Once a claimis made, your file is put before a panel of Doctors to review and determine whether the diagnosis is correct and the course of treatment is the best for the diagnosis.

9. Coverage for children:
Critical Illness can be purchased to insure people from newborns and up to the age of 65. Some carriers allow you to insure children for up to five illnesses, where as adults can be covered forup to 25 illnesses.

10: Peace of mind:
Critical Illness policies are underwritten at the time of the application process. Meaning that we will know if the client is covered up front and not left to chance at claim time.
What’s next?

Contact us… http://www.henleyfinancial.ca
info@henleyfinancial.ca