Spring is here….(or so the calendar says)

According to the calendar, Spring has arrived.  while snow is still falling occasionally and we are still wearing our winter coats, it is Spring!!  We are used to short springs…it seems so often, to go from winter cold to summer heat with very few reminders of this season we generally love.  so beyond the date marker, how do we know we are reaching that pinnacle of seasons, the one that symbolizes rebirth, renewal and redemption from shoveling?

We start with thinking about spring cleaning…opening the windows, airing out the house or apartment and turning down the furnace.   We think about painting, renovating, redecorating or moving.  We often choose to move during the summer so that children can be settled in a new neighborhood before school starts again, it is the time when moving is easier, apartment leases are up and the cycle of homes on the market, for the same reason as you are thinking of moving, opens up.

What steps do you take to buy a house, whether it is your first or not?  You need to know what your needs are and what neighborhood you want to be in.  Then, in order to ensure you are planning within the realms of reality, you should be pre-approved for your mortgage.  If you already have a mortgage and have been happy with the terms, you may be tempted to stay with whatever bank your mortgage is with.  Rates are low and housing options are plenty.  But does your bank have the same vested interest in your long term commitment?  They will sell you on mortgage insurance without disclosing all of the facts about it.  They will sell you what they want you to have, in both mortgages and insurance, without taking into consideration what you want and NEED for the long term.

Meet with a mortgage specialist who can explain all of it to you, giving you the options that fit your life.  Pre approval is smart, getting it from the right lender is smarter.  Get in touch with me today for your mortgage pre approval and say hello to Spring  🙂  Make an appointment today…..

Andrea

andrea.blaustein@f55f.com

Tomorrow Will Arrive……Eventually. Be Ready.

Don’t do today what you can put off until tomorrow….That is the procrastinator’s creed.   Don’t put off to tomorrow what you can do today …….the creed of Strong Type A personalities. What about you and I…the average man or woman who is a Sometimes Type A, sometimes child, sometimes teenager?

No matter what, you KNOW that tomorrow is going to arrive, eventually.   Some things can be put off, but not avoided altogether.  Some things cannot be avoided or put off, no matter how much we try to not acknowlege them.  The harder we try, the harder they will hit us.  Taxes, health problems and our children becoming teenagers are the top three things we like to avoid but just cannot.  Those of us who are self employed, need to put aside money for our taxes.  it is hard…so very hard.  It is there, it would pay bills and maybe cover a much needed holiday away too.  So how do you not spend it?  It is calling your name.  But save it we must.  Or pay a much higher  price later on.

Health problems can often be eliminated when you go to the doctor early, when symptoms appear and for your annual check up.  As for teenagers, well the harder we fight our children’s independence, the harder the struggle will be.  We raise our children so that they will become adults, but so many parents want to skip that middle step….the years between 12 and 25.  Why 25 and not 18? I raised three children and at no time did a magical leprechaun come to my house on their birthdays and transform them literally overnight.  Age 18 has been deemed by bureaucracies as adulthood, but if I am the only one who never was visited by that leprechaun, I feel pretty hurt.   So I will assume I am not alone.  The teenage brain does not really develop good reason until it reaches age 25, and it truly only begins there.  That is not to say that some teens and young adults are not mature.  Some are far more responsible and mature than some twice their age.  These are the exception.  Some people NEVER grow up, never take responsibilities and accountability as a part of life. Some women will laugh now and start listing men who have not grown up, in their opinion.   To be fair, why do we expect anyone….man or woman…..to grow up if they are not taught how or if it is expected too young.  Yet that is what we want them to do….skip  that step of the process and wake up magically touched  on their eighteenth birthday……….and eliminating the 12 to 18, skipping right to the maturity of 25 years of age.

Back to the topic….if you will excuse my having gone off on a tangent.  Being ready for the tomorrow that will inevitably arrive.

I have already mentioned that you need to stay on top of your health issues.  A minor cyst today, when dealt with immediately, will always have been just a minor cyst.    Ignored, it may be a pre cancer or malignant growth.

Taxes are also something you need to stay on top of.  More than any single topic, it is likely that this will give you more heart palpitations than anything else.  Get to know a good accountant.  And find yourself a trustworthy and reliable financial planner.  Someone who can show you legitimate and accessible  tax shelters. Someone who understands tax implications for you and your family should something happen to you and who is equipped with the knowledge to ensure your secure future.  At this time of year, many programs are advertised which tout themselves as being your tax solution, as if one glove will fit all.  Leveraging, RRSPs, TFSAs, etc etc are on signs everywhere.  Are they all right for you?  Is life insurance an alternative to RRSPs (Canada) /  401K (USA) or the other way around?  Only when you talk to a qualified financial planner will you really know. Take  advantage of this time of year to start building a relationship with your financial planner. If you already have one, but are not sure he or she is doing all they can for you, talk to another one.  A meeting should not cost you anything except some time and it is time well spent, a solid investment in your tomorrow.  Be ready for tomorrow….and  be grateful that it arrives.  The alternative is deadly….

Contact me at myfuture@unleashtheknow.com for your financial future

TERM INSURANCE VERSUS PERMANENT INSURANCE: WHAT IS THE RIGHT CHOICE FOR YOU?

Most people, once they finally decide to purchase life insurance (hopefully in part to replace their mortgage insurance), they are presented with options. Depending on who their insurance agent is and where he or she works, they may have many options or very few. It can be overwhelming and confusing and often leads to the wrong insurance being purchased. It may also lead to the wrong amount being purchased. What is the right type, how much is too much and how much is too little? How do I know what to do?
Term Insurance is available in either 10 year, 20 year or 30 year terms. It may be renewed or converted to permanent insurance but that will often come at a great expense. Term insurance is like renting an apartment with 10, 20 or 30 year leases. You might renew when the lease is up but the cost of rent will go up based on the period of time lapsed since the start of initial your last lease (imagine a 20 year lease at 1000 / month for your apartment, no increase for 20 years and then to stay there you will pay 20 years’ worth of increases). The benefits of term insurance are that, like an apartment, it is less expensive than permanent insurance (like rent is usually less than a mortgage). It is beneficial for those who cannot afford permanent insurance due to age of initial application, who are on a tight budget or for those who want to have extra coverage for urgent expenses after death (mortgage, funeral expenses, taxes, etc) An example of this is a 53 year old woman, wanting to replace her mortgage insurance after reading the facts about that https://twitter.com/UnLeashTheKNOW/status/504669970597306368) She is on a tight budget and due to her age, permanent insurance is not an option due to the expense. She wants $275,000.00 in coverage for 20 years (the balance of time on her mortgage). She owes $257,000 on her mortgage at time of application so there would be $18,000.00 left to cover her funeral (commonly $10,000 – 15,000) and the bills for her children for a couple of months. The drawback being that at age 73, she will no longer have this coverage however her house would be paid off and her children would be financially independent. Term insurance is underwritten ahead of time so once accepted, it is guaranteed unless you lie on your application.
Permanent insurance can come in two forms: Universal Life (UL) and Whole Life. Universal is such a superior product that I will not discuss whole life in this article. Universal Life Insurance will remain in place for life and will not expire no matter the length of your life. (great news for those of you with lots of longevity in your family like I have). It is underwritten at time of application so is guaranteed once in place. It is more expensive than Term Insurance, sometimes significantly. Like a mortgage, UL is more expensive than Term (renting) but once yours, and assuming payments are maintained, it builds equity which is yours to use at your discretion years down the road. More on the equity in a minute. So when is it appropriate? When you are under age 40, have commitments which will surpass that 20 year time frame (a disabled child, 25 years plus on your mortgage, strong likelihood of living beyond age 75 years.) and / or when you have sufficient funds available to purchase this wonderful product.
I often recommend a combination of insurance products for my clients. For instance, a man, age 32, with a young family (3 children age 4, 7 and 10), mortgage ($350,000.00) and various other responsibilities. It is determined that he should have $750,000.00 in insurance overage but the cost of 100% of that being UL is prohibitive. I recommend a balance of $100,000.00 in UL and $650,000.00 in Term insurance for 20 years. The UL will cover the mortgage, the children’s education and more. Within 20 years, even the youngest child will have completed all of his education and will most likely be living independently. Once these responsibilities have fallen off the picture, the coverage left will be $100,000.00 in UL insurance. That, with a well balanced investment portfolio, will give the best quality of life for his widow.
Is it that simple and straightforward? Yes, but with one significant bonus in UL insurance. Back to that equity I mentioned above. With paying your mortgage, you build value in your house. With UL Insurance, let us say you are putting $100.00 month into your UL payments. Approximately $40.00 of that is actually covering your insurance payment while $60.00 is invested. It is in fact an insurance savings plan. It is equity. Managed properly, with compound interest, these investment payments in Canada, can become a TAX FREE source of hundreds of thousands of dollars, sometimes up to over a million dollars in investment savings. TAX FREE??? REALLY???? Yes…tax free. There is also no probate on this money in Canada. The built up equity (investment portion) can also take over the payments for your insurance portion once you reach retirement age. So with properly assessed needs and properly managed products, the future for yourself and your family, can be secured.
If you want to know more, write to me at myfuture@unleashtheknow.com. We will set up an appointment and get you on your way to a better future.
Next in this series will be on knowing your FIN#. This is part of the I WISH I KNEW THAT THIRTY YEARS AGO series.
Brought to you by UnLeash the KNOW. Visit us at unleashtheknow.com

ARE YOUR INVESTMENTS KEEPING UP WITH INFLATION?

ARE YOUR INVESTMENTS KEEPING UP WITH INFLATION?

 

I have been watching with fascination, the recent run of ads on Canadian radio and television for various banks.  They run the gamut from Canada’s chartered banks to banking co-ops.  What are the new ads talking about?  Something that is limited in time, special and amazing and something we should all be running to these institutions for…..HIGHER INTEREST RATES THAN WE HAVE SEEN IN A LONG TIME!  Yes indeed….holy lucky us!!!  From 1.75 to an entire 2% interest rate!!!!   SERIOUSLY?????

Let’s begin with a few facts.  The average rate of inflation in Canada, is 3%.  It has been this for many years and is likely the minimum rate of inflation for the foreseeable future.  Any bank account or investment account where the interest rate is less than 3% is, in fact, negative interest.  Given common bank fees $5.00 – $30.00 MONTHLY), you are in fact, technically at least, better off keeping your money in your mattress.  When you deposit money into the bank or purchase common investments (also paying between .5 and 2.5 % interest), the bank borrows that money and re invests it to help THEIR bottom line…..at rates of 7 – 12% interest.  You get your 2% but they make an extra 10% on YOUR money and, on top of that, charge you service fees unless you keep a minimum of $5000.00 (on average) in your account.  Is it any wonder bank profits are in the multi billions quarterly?

I am not advocating using your mattress as your savings account.  It is an exaggeration (if only a small one). I am however, advocating ensuring that you ask questions and get informed.  A free financial checkup, where you can see all of the facts of your personal financial situation, is an investment of time which you will never regret.  Know and understand what your FIN# is (financial independence number), understand how what you are doing now is getting you towards that number and what you can do in the immediate future to get you there faster.   Many people I talk to these days, respond to the question “at what age do you plan to retire?” with a quick chuckle then say maybe age 70…or 80….or never will be able to.  Their investments, whether they be RRSPs or GICs or savings accounts, are simply being depleted by inflation, faster than they can grow.

So you only have $100.00 per month to invest.  You are paying $150.00 per month into mortgage insurance (by the way, do you know the facts about that “investment”?) and you do not have any way of coming up with more money than that to invest.  With so little money, 5% or more is just a dream as a rate of return on any investment or account.  It is just a dream…right?  If only you could save taxes, you could invest more…but Canada Revenue Agency doesn’t make that possible so $100 / month it is. UNLESS……….naw…..or maybe…….is it possible?

Contact me for your financial check up.  I will teach you about everything from mortgage insurance to life insurance how to grow your investments beyond the rate of inflation.  There is no cost for this service and you may be surprised at what you can learn.  I am available to do this whether you live in Ontario or Quebec or elsewhere including the USA.  Book your appointment soon.

myfuture@unleashtheknow.com

 

This is the second article in the series, WISH I KNEW THAT 30 YEARS AGO.  Part one was published on July 6^th.