Why the Legacy Conversation is Important

Why the Legacy Conversation is Important

  Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® The Legacy conversation is an important talk to have with your children and beneficiaries in order to reduce stress and potential conflict in the future.  It will put your children at ease and provide for peace of mind as they know there is a plan in place.  The Legacy Conversation The legacy conversation is a conversation you may want to have with your children and/or beneficiaries to discuss how your estate will be passed on. This will help you to: share your most important values with your children; let them know what you wish to happen as you age; potentially reduce confusion, discord, and family conflict; talk about any concerns you or they may have; and feel in control and let your children know that you have a plan. Some of the potential topics to review could be: what’s important to you in the legacy and wealth transfer process; the values you wish to pass on; the people...
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The Real Affect of Taxes and Inflation on Investment Returns

The Real Affect of Taxes and Inflation on Investment Returns

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Over the long term, taxation and inflation reduces your real purchasing power. The result can be quite dramatic and must be taken into consideration when investing. How do Taxes and Inflation affect investment returns? “You haven’t considered the other risk factors related to investment planning, namely inflation, taxes, and the very real worry that you might outlive your supply of money.” Again, Uncle Wayne shuffled through his papers to fish out another chart for us. “Let’s say that in 2019, you invested $100,000 for a twenty-year period in a GIC with an average return of 3.5% before taxes: 2019 $100,000 (investment) 2038 $198,979 (3.5% return, no taxes) “But you do have to pay taxes, so let’s assume your tax rate is 40%. That would mean your after­ tax growth is 2.1%, so let’s add that factor to the list. 2019 $100,000 (investment) 2038 $198,797 (3.5% return, no taxes) 2038 $151,536 (2.1% return, after tax) “Your investment doesn’t look...
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Should we take Advantage of our unused RRSP contribution limits?

Should we take Advantage of our unused RRSP contribution limits?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® A common question that we receive every year prior to the RRSP deadline is should we take advantage of our unused RRSP contribution limits? Your RRSP deduction limit is how much you can contribute to your RRSP based on your prior years income, and includes any unused contribution limits from prior years. The following excerpt describes this. Uncle Wayne started off by saying this wouldn’t take any more than forty-five minutes, because he really had to get back to Aunt Jen. Then he told us to pull out our binders or go online to our secure cloud service and look at a tax-related form called a Notice of Assessment. Everyone who files a tax return gets one of these from the Canada Revenue Agency (CRA) every year, but sur­prise, surprise … Sally couldn’t find hers! Anyway, the point of checking out this form was to determine our limits for RRSP contributions...
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Rebalancing Your Portfolio

Rebalancing Your Portfolio

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Today we are going to be reviewing portfolio rebalancing, and how it can be used to your advantage. Sometimes it is hard to know when to make adjustments and when to leave your portfolio alone. By creating a systematic plan, you are able take advantage of global market fluctuations. The following excerpt reviews this. “Exactly,” Uncle Wayne agreed. “But people will bail out of their investments when they see a decline in value, and then they’ll buy when prices start going back up. They’re doing exactly the opposite of what they should. It’s obvious that these people don’t have a long-term plan, or a wise old uncle!” “How do we buy low and sell high?” I asked. “Isn’t that what the experts call market-timing?” “I’ve got an answer for you that will be easier in the long run. We’ve already reviewed the various asset allocations based on risk level and goals....
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The Four Essential Family Conversations

The Four Essential Family Conversations

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Based on my experience of helping many families over the years, I have found that there are four essential conversations that families should be having concerning their financial and estate plans.  They are: The Estate Documents Conversation.The Eldercare Conversation.The Legacy Conversation, andThe Next Gen Financial Education Conversation. The Estate Documents Conversation The estate documents conversation is a conversation you should have with your parents, children, executors, and powers of attorney to review and discuss the following key issues: With your parents: Find out who their powers of attorney and executors are.Obtain copies of their wills and powers of attorney (or the location of the documents).Meet your parents’ financial advisor(s).Obtain the listing of the location of their financial assets and contacts for their bank, accountant, and lawyer (see Appendix C). Have a frank discussion on what they would want to happen if they were unable to make financial decisions for themselves. Have a frank discussion...
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You better have a Plan for a Retirement Home

You better have a Plan for a Retirement Home

“You better have a Plan for a Retirement Home, as I am not funding that bill.” Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® While having dinner with our daughter Paige the other night, the topic of money came up.  Paige told us, “you better have a plan for a retirement home, as I am not funding that bill.” I responded, “well Paige, if you had read my book, we’ve got this covered.” When all of us get older, we will have to review the Eldercare conversion in more detail with her and her brother Connor. Eldercare Conversation – Excerpt from the Book – Preserving Wealth  “The next conversation this led to was an ‘eldercare’ conversation based on the advice Uncle Wayne had given me. In this conversation, we discussed and made plans with our parents about what they wanted us to do if a potential medical or physical set-back occurred as they aged. For example, what would the plan...
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What are the top 26 Estate Planning tips to consider?

What are the top 26 Estate Planning tips to consider?

Estate planning helps ensure a stress-free transition of your assets to the next generation or intended beneficiaries. Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® The following are the top 26 estate planning tips from Preserving Wealth: The Next Generation. Have up-to-date wills.Have up-to-date powers of attorney for both property and personal care.Review your powers of attorney and will every few years.Review your executor(s) every few years.Determine if trusts may be of benefit to your family.Consider a staged inheritance if you have young children.Review your life insurance beneficiary designations on all your policies.Review your beneficiary designations on all registered plans, such as group savings plans, RRSPs, TFSA and RRIFs, etc.For RESPs, make them joint with your spouse, and name a successor subscriber in your will.Consolidate your investments with one financial advisor.Make sure you have enough life insurance to: protect your family, and if desired, create a family legacy, fund your favourite charity, and/or pay for estate costs. Use term insurance...
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What are the key items to consider when reviewing your insurance needs?

What are the key items to consider when reviewing your insurance needs?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® As we clattered around in the kitchen, we sum­marized the major points from our discussion about insurance: 1. Many people underestimate the amount of insurance they need and/or buy the wrong kind.  For short-term needs (less than twenty years), buy term insurance. For needs that last a lifetime, consider permanent life insurance. 2.   Families with young children should insure both spouses. 3. You are not really insuring a life but rather the income that the life could produce. In the case of spouses who stay at home to care for children, you are insuring the cost of replacing that care. 4. The insurance policy should provide enough money to:  pay all debts;cover the cost of university for the children; pay final taxes, including those on capital gains; replace a person’s income and/or provide for daycare or a nanny in the case of spouses who provide childcare in the home; andprovide for a legacy if desired. 5....
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What are the Two Main Types of Risks when Investing?

What are the Two Main Types of Risks when Investing?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® “There are basically two main types of risk: capital preservation risk and inflation risk. “Capital preservation risk is the risk that your capital is not there when you need it. Let’s say you were going to buy a new boat in a year, and the cost was $25,000. To make sure you had the $25,000 in a year, you would have to invest in conservative investments, such as a high interest savings account, so you’d have the $25,000. If you invested in equities/stocks, in a year you could have more than $25,000 or a lot less. “Inflation risk is basically making sure that your money grows over time as items get more expensive each year. Even inflation of 2% over twenty years, as in the prior example, can lead to costs increasing dramatically. “Even if you’re close to retirement, you still need some growth in your portfolio, because peo­ple today...
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