If you’ve ever dreamt of a future with financial security and the ability to do the things you want, Financial Planning can be a significant piece of the puzzle to get you there. Financial planning encompasses many areas, including retirement projections, estate planning, risk mitigation, education planning, and business planning, to name a few. Often, Canadian’s will look after one or two areas of financial planning but don’t always have a financial plan. So, you may be thinking, how effective are financial plans, and what does it entail? We’re glad you asked.

The Financial Planning (FP) Canada study reports that Canadians using financial planning report significantly greater levels of financial security and emotional well-being compared to those using only limited planning or no planning at all. Additionally, the study found that 81% of Canadians who have a financial plan feel that they are on track with their financial affairs, compared to 44% who don’t have financial plans. Also proven to help you save at higher rates, financial planning has demonstrated to be significantly effective for securing your financial affairs.(1)

Having a financial plan is essential, but what does it consist of? This critical document will outline your goals; short, medium, and long term, financial and non-financial.  The plan will reference your dreams, intentions, and plans.  Most importantly, it will help keep you on track.  Written goals are achieved almost twice as often as goals that aren’t.(2)  A Financial Plan will help you achieve your financial goals.

In addition to goals, a financial plan will also encompass the strategies to reach those goals.  Over time, along with plan updates, your goals and strategy can be modified and adjusted as material changes in your life occur.  Received an inheritance?   Let’s adjust your plan.  New job with a higher salary?  Let’s increase your savings rate.  Once in place, it’s easy to tweak your financial plan to align better with your new needs.  

A financial plan will also allow you to keep track of the growth in your net worth. An updated net worth statement can help show that you are on your way to reaching your retirement goals.   Seeing growth in your net worth will help you stay motivated to stay on track with your goals, especially when life takes over and pulls you in other directions.  

A financial plan doesn’t need to be 30 pages long, filled with ledgers, graphs, or charts.  Your plan can start small and grow over time as your wealth increases.  The important part is taking the time to begin your plan.  What are you waiting for? 

Reach out to one of our Wealth Strategists if you’re interested in creating or enhancing your financial plan for a more secure future. 

The season of giving is upon us, and like many individuals, you may be beginning to think of causes that are important to you or how you’d like to give back this holiday season. Charitable organizations have most likely started running their campaigns in which organizations and individuals can support through donations of time, money, or wisdom. Whether you have a cause that is important to you or you’re not sure how much you can afford, it’s essential to take steps to determine how much you can contribute. 

At Sagium, we believe that the first step in determining what to give back is understanding what you and your family require for financial security and what amount can be allocated to the community or the greater good. Depending on your age and stage in life, this may be as simple as working through a budget exercise. Excess dollars can be contributed on a monthly or annual basis and can be adjusted just as easily. 

Depending on your situation, you may want to take a bigger picture approach. If you’ve accumulated wealth in your lifetime, financial planning may reveal that much of what you have built is not required for your financial independence. Rather than donating from cash flow, you may consider donating wealth that you have built within an investment portfolio, life insurance policy, or other assets. Donations can be made in your lifetimes or by Will at death.

The most common beneficiaries of excess wealth are surviving family members and the taxman. Of course, no one (that we know of) has ever named the CRA in their Will or as a beneficiary on their life insurance policy or RRSPs. Unfortunately, in the absence of proper financial planning, a disproportionate amount of your wealth may end up going straight to taxes. A trusted advisor who understands your objectives and the tax, legal and financial implications of different strategies will help to make sure that you don’t miss out on any opportunities. Check out some common charitable gifting strategies from our recent Insight update.

Once you understand the requirements for your financial independence, you can consider how and how much to allocate to charitable causes. If you are looking to be more active in your contribution, donating your time and wisdom to a charitable organization or foundation might be the right approach.  Or, if you have accumulated wealth in your lifetime, you may look to identify a cause and use donor-advised funds or other financial tools to direct your financial contribution to where you believe it will have the most impact.

Living in Canada, most of us have access to necessities and luxuries; however, there is also a great need both locally and globally. If you wish to understand your financial independence so you can plan ways to contribute to a better world, please reach out to one of our Wealth Strategists, who will be happy to start you on your philanthropic journey.

Every one of us relishes the opportunity to retire comfortably with the freedom to travel, take up new hobbies, and live freely in our golden years. As Canadians, we have access to the Government of Canada’s National Pension Program (CPP) and Old Age Security. However, most of us choose to enhance our retirement plans by saving and investing our hard-earned money to allow us to live more comfortably. Similarly, we have access to some of the highest quality public transportation options available, yet we continue to purchase cars, bicycles or use ride sharing services or taxis when convenient. So, the question lies: if supplementing these government services is commonplace, why is it that we don’t put the same effort into supplementing our health care?

The Canadian health care system is often viewed as one of the top health care systems in the world. Ranked among the lowest of Western Industrial countries for health care by The Commonwealth Fund and #30 out of 191 countries by The World Health Organization, we begin to question if we really do have the best health care available[1][2].  This news may be staggering to many, but with over 30 years of underfunding, rapidly growing lineups, and doubling of wait times for many procedures, it is clear why Canada’s health care system has underperformed compared to our peer Nations. Yet even as the evidence mounts that our public health system is not perfect, but rather provides a floor of protection, most Canadians rarely expect or seek enhanced health care. If we live in a society where owning two or three vehicles is acceptable, why don’t we aspire to provide ourselves with high-quality medical care?

Maybe it is time to realize that, like retirement and transportation, great health care is just as much our responsibility as it is the governments. It is time to step out of wait lines and into the care we deserve. We have the power to provide ourselves number one care, we just must be willing to enhance our health care options with our own means.

If you want to learn about how you can supplement your healthcare plan, reach out to clientservice@sagium.com

[1] McAlister, Finlay A., Peter Cram, and Chaim M. Bell. 2018. “Comparing Canadian Health Care to That in Other Countries: Looking beyond the Headlines.” Canadian Medical Association Journal 190 (8): E207–8. https://doi.org/10.1503/cmaj.171527.

[2] Tandon, Ajay, Christopher Murray, Jeremy Lauer, and David Evans. 2000. “MEASURING OVERALL HEALTH SYSTEM PERFORMANCE for 191 COUNTRIES.” https://www.who.int/healthinfo/paper30.pdf.

When discussing Estate Planning most people think of a carefully drafted will as the tool to get it done. A carefully drafted or updated will is crucial to make sure you accomplish your Estate goals, but it is only one tool in the kit! With increased government spending and the elimination of some traditional tax tools it will be more beneficial than ever to examine what tools are available to help plan your Estate effectively. 

Government spending is hitting record highs as a result of fulfilling political promises and the economic stimulation needed because of COVID. In the Financial Advisory community, we are anticipating increased taxes to help gain control of this mounting debt. Whether it be increases to Capital Gains inclusion rates, income tax rates, sales taxes, or new taxes such as Estate or Wealth taxes we know we will have to pay for the past and current level of spending. Now is the best time to prepare for this by doing some Financial and Estate Planning as there are some tried and tested strategies to help out.

Spending time with a trusted advisor to adequately discover your goals and build out your family vision is a necessity. The resulting analysis will help uncover your assets needed for you to live out your definition of financial security, hopefully until a ripe old age. Once you are convinced that your financial security is looked after, a proper analysis will define what is left for your beneficiaries and community. This is where some decisions can be made around your assets and intentions. 

Aside from your Principal Residence and your TFSA’s, everything else will be taxed throughout your lifetime and/or in your Estate. By planning ahead, you can make the decision as to where you want your money to go rather than leaving it up to Ottawa with the proceeds from your terminal tax return. Our biggest three suggestions for our clients are to:

Avoid paying tax for your entire lifetime on assets that you are going to leave behind

If you can use an asset today at a lower tax rate than you will leave it behind at then do so

There are many strategies now to deal with these planning opportunities: proper life insurance planning with the right products for your needs; RRIF burn; donation of public shares to charity (if philanthropy is a goal); Individual Pension Plans for Business Owners; corporate and trust structures; family foundations; Donation of Private Company shares in a Family Enterprise in multi-generational investment or other types of family business.

The list goes on, and it seems complicated and tedious but with proper planning with a skilled team it can be an enjoyable and rewarding process. We often see families get into arguments when there is uncertainty or misperception around their families wealth, or they become estranged upon the settling of an estate due to grief and tension.

The best time to start planning and create the efficiencies and peace of mind is now. If you want to know more or want to review your estate plan, reach out to a Wealth Strategist.

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The Value of Financial Planning

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Enhancing Your Health Care

Estate Planning in the Post COVID Tax World

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