Earlier this year we sent out a workbook for your financial plan and also sent you information on reducing debt faster. Now that you have paid attention and done all of this, it’s time to take care of the kids’ education fund. There are a few types of plans out there but my preference is the self-directed version that offers flexibility where you can start and stop the program at any time without penalty.

Other options that many people don’t know about is that there are certain companies that offer RESP top up programs. Basically they are RESP loans that have minimum payments that allow you to take full advantage of the RESP free grant money of 20%.

For example:

• If you have $5000 currently in your RESP, an investment/insurance company will loan you an additional $5000 dollars and place this into your child’s RESP.
• The government will then grant you an additional 20% on top of the new deposit (20% x $5000 = $1000).
• Now your RESP will total $11,000 and build up at whatever projected interest rate you have averaged.

This is a great way to have money compound for you faster and take advantage of the government grant money.

For more information about RESPs, please contact us and visit our articles on the website.

“Shared Ownership” is Not a Product

Rather, it is a financing arrangement between two or more parties to share the benefits and costs associated with an exempt life insurance policy. The arrangement consists of a life insurance policy, a shared ownership agreement, and a special transfer of a portion of this policy. There are no explicit provisions in the Canadian Income Tax Act (the “ITA”) that address the various tax issues relating to shared ownership arrangements. The concept derives from the wording in various provisions in the ITA which refer to “an interest in a life insurance policy”.

Common Strategies

The most common use of the Shared Ownership strategy involves a private Canadian corporation and the shareholder(s) of that corporation. Generally underlying this strategy is the corporation’s need to purchase life insurance to protect against financial losses arising from the premature death of a key shareholder / employee. Where additional funds are available inside the corporation and not currently needed to invest in the underlying business, the Shared Ownership strategy not only satisfies the need for life insurance coverage, but creates a tax-deferred investment vehicle that can benefit the shareholder / employee during retirement years.

The Shared Ownership strategy can be integrated with a business succession strategy, key-person life insurance coverage or the buy-sell / share redemption component of a shareholders agreement. It can also be used to fund estate liabilities. However, it is important to carefully plan and document all the terms and conditions. It is highly recommended that the financial, legal, accounting, and tax advisors of the parties are involved.

• See our Shared Ownership Worksheet Example

Do you want to Save Money, Save Time, and Enjoy Financial Flexibility?

Many of my clients have asked me how they can pay down their debt, increase their cash flow, or pay off their mortgage faster. With the average consumer debt balances reaching $26,000 and car payments/lease payments of $500 per month, 50% of the average household income is going out to pay consumer debt. This means that if one spouse loses their job, leaves work to be a stay-at-home parent, or encounters an unforeseen expense, they could be in big trouble.

In addition, your financial advisor and all the big investment and insurance firms want you to place $500 per month into an RRSP and an additional $200 to $400 into your insurance plan to cover the debt. So how do you manage your monthly cash flow, pay down your debts, and get that mortgage balance down at retirement? Sounds like the old story that goes… “there was an old lady who swallowed a bird to catch the spider to catch the fly”. The debt we add to our existing plan limits our ability to plan for any future.

So if the average Canadian is in big trouble, they may want to consider retiring in an RV in Mexico—not a bad idea! But how do you manage to set aside enough money each month, reduce debt, and have some sort of lifestyle? The answer is to find a mortgage product that provides flexibility for your income, lifestyle, and current debt load.

How are you going to live up to your parents’ expectations in paying off your $500,000 mortgage? Not a fair comment since my parents bought a house in Kelowna, BC for $30,000 back in 1975. Gone are the days where people focused on solely paying off their mortgage—how can you? The people I have seen who do this have racked up credit cards and lines of credits; they decrease one and increase the other. If you have children, you will know what I am talking about. The focus since the 2008 crash is to conserve cash flow and recover from the downturn in the economy.

So once you have a handle on the cash flow by restructuring your mortgage and debt, we can use a few strategies such as RRSP loans and tax refunds to fund your retirement. It’s another creative solution in fixing clients problems here at Your Future Financial Group.

Here’s how the Manulife One Mortgage Works

You create an all in one account which allows you to combine your mortgage, personal loans, and lines of credit with your income and short term savings.

How does this benefit your family? Simple! By consolidating your debt at one low rate, and then using your income and short term savings to reduce your balance, you will take years off your mortgage and save thousands in interest.

How This Is Accomplished…

Save Money

• Consolidating your debts at a low interest rate reduces your interest costs.
• Depositing your short term savings in your account reduces your debt immediately and saves interest.

As long as your income exceeds your expenses, having your income deposited to your Manulife One account means any excess cash will reduce your overall debt.

Save Time

• It’s easy to manage your daily finances with one account.
• With savings and debts in one account, you always know where you stand financially.
• Access your account with debit purchases, ABM withdrawals, chequing , and online or phone transactions.

Financial Flexibility

• The amount you deposit or withdraw each month is up to you as long as your borrowings and accrued interest don’t exceed your account limit.
• You can track portions of your debt and lock in some or all of your borrowings at a fixed rate.
• Access to your home equity, up to your borrowing limit, allows you to meet your changing financial needs.

The best part is, you don’t need to wait for your present mortgage to come due. Your first appraisal and up to $300 of your legal costs are covered by Manulife Bank on a home purchase.

Let us help you get started today!

Contact Your Future Financial Group to set up an appointment:

Call our Office Phone at: 1-250-869-8158

Or email us on our online email form.

What’s your situation?

• You want to grow your investments and reduce your taxes.
• You want to pay off debts & lower your monthly payments.

How It Works:

Example: Husband & Wife with 2 children

A. Growth on your money

B. Reduce your taxes

C. Government benefits

Total Tax Refund and Government Benefits: $24,680!

Quick Review

Apply for $50,000 RRSP loan minus $24,680 in tax savings = Your cost $25,320
(plus interest charges depending on loan term and interest rate.)

Growth on RRSP for Retirement: $287,174
Plus Tax Refund and Government Benefits: $24,680

Use your government tax refund and benefits of $1,028.33 per month to pay for your $564.00 per month RRSP loan.

Resource Downloads:

Benefits of an RRSP Loan (PDF)
Loan Application Form (PDF)

Young kids are often given a loonie or twoonie and left scratching their heads and wondering what to do with it. (Candy! Candy!) Remember, kids can imagine some very unusual ways of spending their money. So what’s it going to take to teach them on how to use it wisely then?

With so much in our hands most of the time, we definitely need some professional help in taking care of our financial plans. Trained individuals like a Kelowna Financial Advisor could be the answer to that. This is the person to run to for advice, tips and strategies considering this new phase that we have to go through with our children.

Simply put, a parent’s influence on each developmental milestone can either “make” or “break” the child’s general perception on a lot of things. What the kids are going to perceive as the correct thing to do is the way they see mommy and daddy spend their cash.  As challenging as it may sound, that’s how things are going to be when we become parents.

Photo by Penny Mathews

Now let’s try to use some common sense into this. Every parent has this natural instinct on what to do when it comes to their kids’ needs. Here are some things your instincts will tell you when initially teaching them the value of money:

• Don’t easily pull money out of your pocket every time your kid asks for some spare change.

• Ask probing questions like:
  • What do you need this money for?
  • Do you really need to buy it?
  • Is it too important that you really have to buy it now?
• Always show them that you’re setting some money aside as “your personal savings”. Get that cute little piggy bank if you have to, just to show them that you’re saving up for something

• Give them a set amount weekly.  Having a fixed $4 or $10 will force them to budget and prioritize, just like adults.

• Let them do some extra chores and negotiate the pay rate.  Throw in “performance bonuses” if you want to introduce more advanced ideas.

• Try not to let them see you splurge! Parents are entitled to do some splurging sometimes but you can do that in your own “alone” time.

• Don’t forget the importance of charity and donations – school fundraisers are the obvious place to start, but kids often think that parents automatically give money for school activities.  Let them see that you support non-school efforts too and help them understand why you do it.

Have more questions about family finances?  Finding a good Financial Advisor in Kelowna is one good place to start.  As a Kelowna life insurance and financial planning company, Your Future Financial Group has proven to be a great resource for families from all walks of life. We have expertise in life insurance, health insurance, investment planning, RESPs, RRSP Consolidation Loans, and tax-efficient business strategies.

Resource Downloads:

Mortgage Broker Partner Brochure (PDF)
Client Version of RRSP Consolidation Loan Brochure (PDF)
Client Loan Application Form (PDF)

Do you have clients that were recently declined funding?

Your Future Financial Group can set up an RRSP Loan for them up to $100K and they can withdrawal the investments the next day!

Here’s how it works:

Your Future Financial Group submits a pre approval for an RRSP loan through one of our major Canadian banks. Rates vary from 3% to prime plus 2.75%.  The amortization is up to 10 years which makes payments affordable.

Once your client is approved we setup an RRSP Investment account and place their funds into a money market cash account.  Because the RRSP Investment is not collateralized nor is the client’s house, they are free to move the money wherever they choose.

Clients will be able to:

• Move money to alternative investments.
• Liquidate the investment and pay off debts.
• Purchase real estate or businesses with their money.

Your Future Financial Group will pay you a referral fee in the amount of 20% of the commissions realized.  Average commission is $400-$600 per approved loan.

RRSP Loan Consolidation Example

Debt Removal Strategy

Step 1: Family uses RRSP Top Up Program to get $50,000 loan
Step 2: Take $35,000 out of the RRSP to pay off higher interest debt
Step 3: Leave $15,000 in for next year’s tax return and receive $4,500 refund depending on their tax situation.
Step 4: Use the Government Tax Refund to pay for Life Insurance Program

Family saves $386 per month and 5.75% interest!

Enter our Get Clothed Contest for a $25 Gift Card to the GAP

Getting a life insurance quote will require speaking to an Kelowna insurance agent or representative of the insurance company.  To help speed up the quoting process, having an idea why you need to be insured and the amount of coverage you think you need are good places to start.  Answers to these basic questions will often steer the choice among products and providers.

Agents can help assess your financial situation, but Brokers can do even more

A good life insurance agent will know all that is required and is the best person to assess the insured person’s financial situation, and thus explain the best options available. Knowing your mind with regard to the type of insurance as well as coverage amount will no doubt aid in getting an accurate and complete life insurance quote, and if you ask more than one agent you will certainly be able to get more competitive quotes.

In Kelowna, many of the life insurance agents are exactly that – agents.  They agents for one company.  Your Future Financial Group is a brokerage insurance firm.  We can source multiple life insurance quotes from multiple companies.  This fact allows us to get the best rates for you and your family.

Before you get a life insurance quote, expect the agent to ask about your income, net worth as well as financial goals which may include sending the children to college and other similar instances. You may also be required to state your health, including your age, medical conditions as well as family medical history and whether you are a smoker or not. In addition, before getting a exact life insurance quote you may also be required to take a medical examination.

Term vs. Whole vs. Universal Life Insurance

It is important for you to understand the different types of insurance policies available which include whole life insurance and term life insurance. You should also enquire and receive the lowdown on annuities as well as other financial plans most appropriate for your particular situation.

Each type of life insurance has it’s own pros and cons.  Talk to us to see what is most appropriate for you.  Cost is not the only factor to consider, although it’s hard to see anything else at the time of purchase!  In all seriousness though, monthly premiums are vastly different between plans for a reason – make sure you know why.  Here’s another article on Cheap Life Insurance in Kelowna that explains more.

Before comparison shopping for life insurance quotes in Kelowna

Make sure that the period of coverage as well as amount of coverage has been determined as these figures can be used to make accurate comparisons of different life insurance quotes. To estimate how much life insurance coverage is ideal for you, and looking for lowest life insurance cost, you may need to consider a number of factors. These factors include the amount of coverage and the period of insurance, the number of dependents the insured has, his or her family’s current monthly expenses and debts, the projected family expenses, credit card life insurance, inheritance or succession plans, future estate tax, etc.

Call Jason at 250-869-8158 to discuss your options or use our simple life insurance quote form and we’ll get back to you quickly.

The Registered Education savings Plan (RESP) account is an investment vehicle that is designed for college planning. Parents, grandparents and other family members often desire to financially contribute to a child’s future higher education costs. As Canadians desire to plan financially for their children’s high education costs, the RESP account is a popular investment tool to utilize for the purpose.
The RESP account offers individuals several tax benefits when they utilize the account for higher education purposes. The primary tax benefits include tax free growth and tax free withdrawal when the funds are utilized for qualified higher education expenses.

There are several important regulations to become familiar with for the RESP account:

Contribution Amounts- The maximum total contribution per child into the RESP account is $50,000. There is not currently an annual maximum contribution limit, although when they account was initially created, there were annual contribution restrictions to adhere to.

Account Beneficiaries- The account must be registered with a beneficiary. This beneficiary must be a child with a registered social insurance number. Each child may have more than one account established, allowing multiple family members to create accounts to aid in the future higher education costs.

Age Restrictions- The beneficiary listed can access the funds for higher education purposes at any age. But, the funds must either be utilized or the account must be dissolved before the beneficiary reaches the age of 25.

Contributions into the RESP account are not tax deductible

But, the tax free growth allows the funds to grow more quickly than they would if they were in a taxable investment account.  For individuals who are looking to establish a RESP account, there are a variety of financial institutions that they can establish this account with. Some of options for establishing a RESP account include banks, credit unions, mutual fund companies, investment houses and trust companies. Each type of financial institution will offer a variety of investments to use within their RESP accounts. So, when selecting a financial institution, be sure to evaluate which accounts are the best match for your financial goals and needs.

Most financial institutions will offer a variety of investments to select from within their RESP accounts, including securities, bonds, mutual funds and cash. So, account holders have the option to develop an investment diversification that matches their risk tolerance and their investment time frames.

Canadians need to save for many different purposes over their lifetimes

In addition to RESP accounts reducing taxes on savings can also help. That’s why the Government has introduced a new Tax-Free Savings Account (TFSA). It’s likely the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

The TFSA will allow Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes. TFSA savings can be used to purchase a new car, renovate a house, start a small business or take a family vacation. With the TFSA Canadians from all income levels and all walks of life can benefit.

Article Source: http://EzineArticles.com/?expert=J_Welch