Financial Plan
Make the most of what you have
This is like getting more mileage out of the same tank of gas. I will evaluate ways to help you boost your ability to save and hang on to more of the money you earn. Depending on your individual needs and priorities, I may recommend any one of the following tax and/or debt management strategies:
Tax strategies
• Get the most out of RRSPs and other registered savings plans
• Income splitting with spousal RRSPs, family trusts, etc.
• Use of life insurance products to shelter savings from tax and protect your estate
Debt management strategies
• Loan consolidation and loan conversion to reduce interest costs
• Mortgage planning
• Prudent use of leverage
Help you understand and manage risk
An essential part of your financial plan is understanding that there are different types of risk and what it all means to you. This is the only way to assess how much risk you are comfortable with and how you can manage it with appropriate safe-guards. These are the main points to consider:
Market Risk:
Inflation, interest rates, political instability are all factors among many others that influence our economy and the ability of business to grow and flourish. Financial markets generally try to anticipate these factors causing regular volatility in market valuations. Safeguards: Recognize that investing in financial markets is a long term commitment; the longer you remain invested, the lower your downside risk. History has shown that no matter how far the market may fall, it eventually climbs back up to reach new heights.
Diversify your investments over different asset classes (stocks, bonds and cash) as well as different world markets. How much you choose of one or the other is the asset allocation that best reflects your personal comfort level.
Investment Risk:
This is caused by factors specific to individual businesses and/or sectors of the economy. Unlike market risk, it does not systematically involve the business community as a whole. Safeguards: Diversification is key. Invest in a well-managed mutual fund or a diversified portfolio of individual stocks. Research shows a portfolio of 20 stocks or more will virtually eliminate investment risk.
When purchasing individual stocks, do your research. Be sure you understand how the company works and what its potential weaknesses are.
The Unexpected:
In life, “stuff” happens. Failing to plan for contingencies can be far more ruinous to your financial success than any market or investment risk. Ironically, this is the area of financial planning we most often tend to neglect. Safeguards: depending on your individual situation, these may include:
• Maintaining a cash reserve
• Thorough succession and estate planning
• Securing insurance to protect your most valuable asset – your ability to earn an income
Take advantage of opportunities
Changing circumstances in the markets, in your personal life, as well as the introduction of new legislation can all serve to create opportunities to achieve your goals more efficiently. I will ensure your plan is up-dated at least once a year to accommodate these changes and take advantage of opportunities as they arise.
