Self-Education is THE Path to Prosperity

You are playing the Money Game. There is no way to take yourself out of the game. It is just a fact of life. The good news is you can learn how to play the game better. How you do that is by committing to getting an education on money and to make learning about money (and learning in general) a regular part of your life.

Fortunately there are so many ways that you can learn about this wonderful and exciting game. Take a course or two, that are offered through the internet, correspondence courses, or classes offered through your local continuing education office. Start talking to financially successful people to find out how they make their financial decisions and what has worked for them. Watch a television show that deals with the subject of money.

Go to your local library and check out all the many available books on the subjects of budgeting, investing, insurance, and emotions around money or better yet go to your local book store and start building your own collection. A few good authors on the various topics surrounding money that I recommend are:
Dr. Thomas Stanley
T. Harv Eker
Suze Orman
David Chilton
Gail Vaz-Oxlade
David Bach
Robert Kiyosaki
Gordon Pape

There are so many wonderful resources available to anyone that is willing to look. Start learning, start questioning, and start taking an active role in your financial life. It is a decision that you will never regret.

If you would like to start your kids or grandchildren off on the path to prosperity I would highly recommend (and yes I know I’m biased) my children’s financial books.

As you learn more about money you will automatically make better choices that will move you forward. Go out there and start asking questions and finding the answers.

“Nourish the mind like you would your body. The mind cannot survive on junk food.”
Jim Rohn

And a Happy New Year to all!

, T-bnAs we finally close 2012, there are many things on which we can reflect. The sad, the inexplicable, the disappointing and yes, some good things too – from an investment perspective anyway!

Canadian banks and other financial institutions, despite a credit downgrade late in the year, are among the safest in the world and investors continue to benefit from holding their preferred shares, common stocks and various debt instruments. The same appears true for the utility industry, despite the contretemps of the Northern Gateway (or maybe Arctic Gateway or Eastern Gateway) oil pipeline in Canada and the US side of the Canada/US Keystone XL pipeline project. Oil is a key utility input in all of it’s many forms as is natural gas. I will stay out of the debate on fracking!

The world needs power – from any and all sources so I believe that for long-term holdings, exposure to this part of the economy is important. Short-term, be prepared for some storms in all of the energy sector, and I suspect they will all be of a political making. So some inclusion of energy and utlities makes some sense – the amount you include depends on your investment comfort level and time-horizon.

Communications in all of it’s forms will continue to grow although I suspect it too will be choppy due to anti-trust, patent issues and regulatory meddling on one level or another. Manufacturing and transportation industries should experience reasonable grow as I believe that deficit and national debts will gradually be controlled allowing economies to begin expanding again.

Whether doing your equities on a do-it-yourself basis or using some form of managed funds or ETFs, I would be staying blue-chip common shares and preferreds particularly for the risk-adverse.

Short-term interest rates (10 years and less), I believe will stay within about 1% to 1.5% of curent levels, which is positive for everyone including companies loooking to expand their operations. If doing things on your own, I recommend GIC or GIA ladders and if you are going the managed fund or ETF route, then I would be looking at average term-to-maturity south of 10 years and only A or better ratings – BBB if you feel adventurous.

On the pure cash side of things, whether in a bank account, T-bill account or some life insurance cash values, it seems to make sense to hold somewhere in the 5% to 7% range – both for protection and any buying opportunities that present themselves.

On Precious Metals – flip a coin! From everything I can find, the “experts” are about evenly divided on direction and potential upside/downside movement. Some level of exposure would seem reasonable if you can tolerate the earthquake-style market reactions but for these I would personally stay on the managed money side and look for broad diversification across countries keeping in mind political situations and I wouldn’t be comfortable holding more than 4% to 5% and only then if I was looking in the 10 plus-year holding range.

Think positive about yourself and your family, keep personal debts going DOWN and by wise in your discretionary spending in 2013!

A ridiculous idea – but profitable!

My mind works in strange ways as my readers know – so here is another slightly off-beat idea on RRSPs – for children!

I took the time recently to confirm a long-held belief – most people selling RRSPs aren’t aware of all of the possibilities – and neither am I for that matter – however, here is an idea that no-one I asked had the slightest understanding of that which I was asking. My question was simple (or at least I thought so anyway): “What is the earliest age at which a person can purchase an RRSP?”

Without exception, I received answers that fell within this brief summary – “the year after they have earned income.”

I found this a bit disconcerting, particularly coming from many professional advisors. The correct answer, of course, is the same day the receive their SIN from the Federal Government. In other words, within 3 to 6 weeks after they are born.

But wait you say – they don’t have any earned income so how can they contribute?? My response – what about the lifetime $2,000 over-contribution limit? I usually receive a puzzled look from the person with whom I am speaking and then they say: “what about it?”

Let’s be a wee-bit creative here – I am NOT a rocket scientist I assure you – my mind just works somewhat differently than most other peoples’!

These days, parents and grandparents spend literally thousands of dollars on toys and other gadgets that have life spans counted in days and weeks and maybe months – but that’s it. What about a gift that will GROW with each passing year?

Rather than all of the toys and related odds and sods, put $2,000 into an RRSP for the baby as soon as the parents receive an SIN. The actual source of the money is irrelevant of course – but the concept is sound.

If a baby has an RRSP with $2,000 in it at age zero and leaves it until age 65, it will grow to $18,713.40 assuming a compound growth rate of 3.50% and as much as $25,597.47 with a compound growth rate of 4.00%. I will leave it to my readers to play with other assumptions – my purpose here is just to get people thinking about the possibilities of acting on this idea.

The $$ amount doesn’t sound like a lot – and it really isn’t – but it is certainly worth a lot more than the toys and gadgets that are generally purchased for a new-born child in their first year of life. What a special Christmas gift (oops – don’t want to be politically incorrect!) – holiday season gift – for the new one in your life!

All the best to everyone for a wonderful and SAFE holiday season and a prosperous 2013! Cheers Ian

Bullying at work – the total cost – financial and societal Part 2 of 2

Outside the financial costs, the personal costs are also of major concern to health-care professionals. Treatments for depression, stress, heart conditions, ulcers, other forms of gastric and intestinal stress, PTSD, internal trauma, alcohol abuse and drug abuse. The physical, emotional and mental abuse of families and friends. Other mental illnesses including paranoia and schizophrenia are common as is bi-polar disorder. In extreme cases, severe and unrestricted violence against themselves – including suicide and against others including events such as robberies, assault and in some cases and situations, even murder. These are all potential consequences to society that result from bullying. Is it really worth it? Bullying tears families and communities apart and it is preventable. Are you part of the problem or part of the cure?

“If you turn and face the other way when someone is being bullied, you might as well be the bully too.” ~Unknown

Inside family units, bullying is a well known, if very well hidden issue. Yes, we hear about parents abusing and bullying children but we don’t hear as often about siblings bullying or abusing each other – and it is not always the older child bullying younger one – I know of several cases where the reverse is true. There is no “typical” situation, which makes it tough to help the victims and educate the perpetrators or provide punishment as appropriate. Please remember, not all abuse is physical – the hidden damage of emotional and mental abuse is very often hard to identify and treat. Victims of emotional and mental abuse sometimes even appear to live outwardly “normal” lives, but on the inside are ready to explode with sometimes terrifying consequences to themselves and others – most often directly impacting those closest to them.

“By being a bully, you show everyone what an inferior coward you are.” ~Unknown

Psychologists, psychiatrists, family medical care providers and counsellors all deal with the effects on a daily basis. Unfortunately, law enforcement and other first responders see the consequences when no intervention or support has been provided. Healthcare practitioners and paramedical professionals have long known that bullies act out of feelings of inadequacy, jealousy and fear but the driving forces behind those issues are very challenging to define. They tend to use the bluster, self-aggrandisement and brash behaviours to cover their feelings – they are actually crying for help but too often that cry goes unheard until the damage has been done to one or more other people in their lives.

I have included several quotes in this article that can provide a starting point for readers to consider this issue. I suggest that to one extent or another, everyone’s lives have, are or will be affected by some form of bullying and/or related abuse. Can we do anything less than exert our best efforts to eradicate it from our lives?

“Respect – simple respect. I expect nothing more and I will accept nothing less.” From the Emmy Winning Series MASH – Margaret Houlihan talking to Hawkeye Pierce.

In closing, please think about the words of the famous song by Aretha Franklin:
“R – E – S – P – E – C – T”

These are but a very few links to sites that offer information on workplace bullying, abuse and violence. I urge you to use these and other resources to help yourself and others.

Not financial – but personal – bullies are cowards – never let them win!!

Amanda Todd’s recent suicide struck home for me. Then the utlimate in cowardly, vile bullying took place – apparently other students and classmates vilified her after her death. I say “apparently” because police have not yet tracked down who made the posts – but regardless of who made them, they deserve the harshest punishment available – and our laws badly need strengthing in this area.

Also police need expanded powers, under proper control of course, to use every means available – electronic and otherwise – to track these people down. The BCCLA and similar groups always seem to forget the victims – they worry more about protecting the guilty than ensuring they don’t EVER repeat their offences. Put your focus where it belongs for once! Then our judges have to have the guts, courage and some reasonable level of sanity and common-sense, to impose first punishment – and later some rehabilitation – but punishment comes first.

Amanda is nor the first, and unfortunately she will not be the last. Why? Because not all parents care about what their children are doing. Not all parents bother to teach their children right from wrong. Not all schools (teachers, principals, staff – everyone) watch for signs of bullying and deal HARSHLY and SEVERELY with the bullies involved. Not all parents bother to learn about bullying – or if their child is either a bully or a victim until it is too late. Not all parents supervise everything their children do on-line – on the web, twitter, social media, flash-mobs, etc. Not all parents bother to learn about cyber-bullying.

Not all law enforcement and other first-responders have been trained to identify signs of bullying – either victim or perpetrator. Not all medical people have been trained to identify bullying and the resulting physical and mental damage and eventual destruction, victims will face.

Politicians can’t agree on the time of day or the shape of the table to use for a meeting – but can’t – for ONCE – they stop petty party-politics and do something for victims of bullying? Can’t they for once deal forcefully with those who bully others?

Political will is lacking – or rather the will to deal with the problem outside petty politics is lacking. Everyone wants to be seen as the champion but no-one bothers to act. Committees don’t solve problems. Inquiries don’t solve problems. Studies don’t solve problems – and neither do working groups or any other such actions.

This needs to the part of ALL school curriculums starting in elementary school – regardless of religion, private or public schools. There are bullies of every race, colour, creed, religion, faith, political stripe and sex. There also needs to be consistency in dealing with bullies. Leaving it up to each organisation or school or school district to set their own “remedies” is not the answer. And regardless of legislation, it is time to “name names” for many reasons, not the least of which is to ensure there are consequences for actions and that potential victims can be protected. Let’s refocus our energies on victims and rehabilitate the offenders second.

The effects of bullying last the rest of your life – they affect your personal life, your relationships, your career – and they do impact on both mental and physical well-being. A victim never recovers – just as the victims of child-abuse, pedophilia, etc. – NEVER completely recover. They are changed people – forever. I know first hand – I was bullied for 5 years in junior and senior high school – and it affects me today.

Year-end Tax Planning – part 2!

Greetings once again – this next commentary will focus on some of the less well-known items on the list – starting with self-directed RESPs – Registered Education Savings Plans.

There are a few different types, but generically they typically invest in mutual funds, segregated funds (legally and correctly known as Individual Variable Insurance Contracts) or GICs/Term Deposits. Nothing fancy, but remember, the contribution period in order to potentially qualify for the CESG – Canadian Education Scholarship Grant – is on a calendar-year basis – no 60-day grace period as there is for RRSPs and Spousal RRSPs – it works the same as TFSAs – Tax Free Savings Accounts – calendar year deposits only.

If you are planning to make a contribution, a deposit to a plan of $2,500 should get you the annual maximum of $500 in CESG from Her Majesty. Miss it in 2012, you don’t get to “catch up” in 2013.

If the CESG is not an important factor for you, remember there is NO maximum age at which you can start a self-directed RESP! You can be 60 years of age and decide that on retirement you want to go back and get that lost BSc or MBA – you can use an RESP for yourself too!!

Switching now to self-employed people – regardless of industry – one of the key tax savings available to you is a Private Health Services Plan or PHSP. These are available through most financial advisors and you can contribute up to $1,500 per year (January 1st to December 31st – no 60-day grace period – and also not cumulative for missed deposits) for your-self, $1,500 for your spouse and $750 for each eligible dependent. Talk to an advisor to learn more about these interesting creatures – the potential benefits are very substantial!

Next for the self-employed are equipment purchases and software purchases. If you know you are going to need a new version of software for business purposes, but it now – you can generally claim the full amount as a deduction in the year of purchase if the cost is less than $1,000 (before taxes) – if more than $1,000, consult CRA tax bulletins to review write-off rates and duration.

The same applies to business equipment – if initial cost is less than $1,000, generally you can deduct it in the year of purchase – if more than $1,000, then it generally has to be amortised over a few years – again, refer to CRA bulletins or their website for more information.

For the rest of us, you may want to consider prepaying for Physical Education programs that qualify for the Fitness tax credit and getting your transit passes early if you can.

When in doubt – check with CRA via their website at or your tax preparer or accountant for other tips to maximise your deductions and tax credits! Cheers

Dis-Orientation: Back to School and Divorce

Traditionally, autumn is a boom season for divorce, particularly for couples, who wait out the summer at the cottage before returning home to cut their marital ties. Many couples considering splitting decide to wait until after the holidays to break the news to their children. How are these parents going to approach their separation or divorce – and how will it affect their children?  
Obviously school-year separations can be difficult for school-age children. Parents need to bend over backwards to minimize the changes and transitions in their child’s life so as to keep school-related schedules, after-school activities, playtime with friends and other routines as much the same as possible.  

Parents with university aged children face the additional burden of having kids who are moving away from home.  The added stress of dealing with ever increasing tuition costs and related school expenses makes divorce at this stage more complex.

As couples work through their separation agreement, they should be aware of the many financial issues that affect them and their children beyond the traditional items of child support.

They should be considering such things as:

  • Is there enough savings set aside for tuition and room& board expenses
  • How will any shortfall be funded by each parent?
  • Who manages any RESP plan set up for the student?
  • What additional expenses will students/parents incur as a result of parents living apart
  • Who will benefit from any tuition tax credit available to transfer to a parent

Sending kids off to university is an exciting and challenging time for both students and parents alike.  Dealing with divorce at this stage in your family’s life adds additional challenges.   If you need help sorting through the financial issues around these issues, we may be in the position to help.


So What Goes in a Full Financial Plan Part 3 of 3

So – now the wrap up of this series.

Financial Planning is intensely personal and clients need to have complete faith and trust in their advisor to make the process work properly, effectively and efficiently. The relationship is the key to success.

It is for this reason, that top planners spend the first meeting just working on laying the foundation for a relationship to grow and blossom – listening is the key of course – the good Lord gave us two ears and one mouth – and good planners and advisors use them in that ratio! This is what as known as a “non-interview”.

I first learned about this concept about three decades ago by reading a book by a fellow named J. Douglas Edwards – “Questions are your answer” – copies are still available in used book stores and on-line – I highly recommend that everyone involved in the financial/estate/retirement planning process, read it – and read it several times. In fact, it is excellent reading for anyone in a sales, marketing and/or management role.

I want to touch on the reporting now – I can hear advisors and planners already saying that if they covered everything I listed in my two previous posts, the final report is going to be 100 pages in length! Well, that depends, doesn’t it ——– on the client.

Some clients are detail-oriented, number crunchers, navel inspectors, etc. – and for those people, a planner can create dozens of reports and many dozens of pages – looks impressive I admit – but of what value to the client?

I learned from studing about and listening to people like Jim Rogers, John Savage, Jack and Gary Kinder, Norman Levine, Charlie Flowers, Don Pooley, Hal Zlotnik, Rick Forchuk, Dick Kuriger, Jim Otar and many others – that simple is best.

In my experience, I have found that the planners who use the longest reports are often trying to impress clients with quantity as opposed to quality. Certainly the attitiudes of the client drive the entire process – including the reporting and some clients do want more details than others – but this is a fine line to follow.

I have found that there needs to be enough detail to illustrate to the client that their goals can be achieved given a certain set of circumstances, what changes they need to make and actions they need to take and I allow the client to determine how that is done. As an example, before I present a plan, it is my normal practice to ask them a few questions first, including: How much time to you want to spend at our next meeting reviewing the plans? Do you want to go over the entire plan in detail, or do you want just a high-level summary and then decide on what sequence to follow before getting deeply involved in the entire report? As part of my interview process, I ask clients very early on to indicate their priorities in dealing with their goals – and regardless of my personal preference or prejudice, I follow the sequence or timing as verbalised by the client – this is critical IMHO.

My preference is to give a high-level overview at the first reporting meeting – typically no more than 3 or 4 pages – I don’t want to frighten them or have them start to think they can’t change anything – spoon feeding in other words. Then the rest is covered over the next two or even three meetings so they aren’t overwhelmed and I use LOTS of pictures and graphs and as few tables of numbers as possible. If they ask for some specific details, of course I can produce them, but I don’t try to bury them.

Last, but not least, as a professional financial planner, it is great to have a plan but unless it is implemented and there is regular follow-up (at a minimum of once every two years) to make adjustments as necessary – the whole thing collapses into a pile of snot with only some wasted money and good intentions left lying on the ground!

Anyway, that wraps up this series – hope you find some of the comments of value or at least thought-provoking – agreement is neither necessary, required or expected! Cheers Ian

So What Goes in a Full Financial Plan – Part 2 of 3

So here we go on part 2 of this 3-part series

Post-employment/work Income PlanningAll sources of potential revenue.

1) Employment pensions:
a) Type – Defined Benefit Plans, Money Purchase Pension Plan (Defined Contribution) Deferred Profit Sharing Plans, Employee Profit Sharing Plans, Employee Share Purchase Plans, Group RSP, etc. – past and present – valuations, statements, benefit formulas – early or late – contribution rates, maximums, etc.
b) Portability, commutability – formulas, etc.
c) Inflation protection – none, partial or fully indexed.
d) Pension choices available – spousal requirements, pension splitting options, etc.
e) Income buy-back availability.
f) Integration with OAS or CPP as applicable.

2) Personal retirement assets:
a) RRSPs, Spousal RSPs, Locked-In Retirement Accounts, Locked-in RSPs, Tax Free Savings Accounts, OPEN – depending on current purpose if in existence.
b) Valuations, statements, reasons for choices of investment holdings.
c) Plans for disposal of other investments/business interests/tax-shelters, etc. to supplement other retirement income assets.
d) CPP and OAS benefits statements – OAS maximization/claw-back minimization and planning.
3) Other Savings/Investments earmarked for other purposes/re-direction possibilities.
4) Review potential for partial employment or other post-retirement income supplements, potential inheritances, etc.

Education Planning – as appropriate For clients and family members as applicable.
1) RESPs, other in-trust holdings earmarked for education:
a) CESG and related possibilities including low-income education benefits for grandchildren/great-grandchildren.
b) Retiring student loans effectively.
c) Potential uses of Tax Free Savings Accounts for children.

Charitable/Philanthropic Intentions Family, living and/or posthumous recognition or benefits, donation planning.

Special needs – challenged or gifted Registered Disability Savings Plans, other government assistance plans, trusts, grants.

Wills, Codicils Inter-vivos/Discretionary Trusts, Alter-Ego/Joint Spousal Trusts, General and
Restricted POAs – including bank accounts, Limited POAs, Enduring POAs,
Representation Agreements (Living Wills), Multi-jurisdictional Wills/Multiple Wills for non-situs assets,
Planned inheritances, tax implications, contingent ownership issues etc.
choices for Executors/Co-Executors/Corporate/Contingent Executors, Guardianship
of the person and financial guardianship, conservatorships.

Marriage Marital regime, prior divorce, financial obligations from previous relationships that
survive death. Discuss domestic partnerships as appropriate.

Special tax-planning issues Restructuring cash flows, taxable inheritance planning. Review previous
personal, corporate, partnership, Limited Partnership financials, trust tax returns for missed items,
trends. Discuss Health and Welfare Trusts or Private Health Services Plans, as appropriate.

Risk tolerance assessment Separated by family member, goal specific – generic asset allocations, generic product

Gift planning Family and others – refer back to Charitable/Philanthropic.

Intergenerational Wealth Transfer Tax effective and efficient transfer of wealth – next and/or subsequent generations.

Implementation roadmap Suggested target dates, sequences.

The Financial Guides Presents Financial Foundations Children’s Books

CALGARY, ALBERTA (May 14, 2012) – Financial Foundations is a fully and beautifully illustrated series of children’s books designed to teach kids that money can be fun!

We are all playing the money game, but how many of us really know the rules?

Join The Financial Guides at Financial Foundations Summer Camp as they teach a group of kids how to play the money game to win, in a fair, balanced, and healthy way! With four series covering all the money basics (Foundation, Growth, Protection, and Business), kids and their families can learn the skills they need to succeed.

The first book set (Foundation) is now available for ordering, and will cover the importance of:
• Learning how money works,
• Goal setting,
• Simple and effective budgeting,
• Understanding the facts about credit,
• How daily choices affect our lives,
• How to keep a long term perspective and balance in life.

Help give your kids the tools they need to survive and thrive in our complicated world! To view the complete first set online please go to:

The Financial Guides were founded by Tammy Johnston, as financial advisors who take a holistic approach to working with their clients. With over 19 years of experience in the financial services industry, Tammy focuses on first educating her clients on how money works and how to ask questions. Through many years of hearing students in the Financial Journeys class ask where were you when I was a kid, and do you have anything that I can use to teach my children, Tammy came up with the concept of Financial Foundations. The first set of four is currently available for ordering with the second set scheduled for late 2012.

As part of their commitment to supporting good works and charity, $10 from the set of every book is going to charity. For direct sales the $10 donation goes to World Vision Canada, Tammy Johnston’s favourite charity. For sales made through charity websites and email mail outs, the money goes to the sending charity.

Tammy Johnston
The Financial Guides
884 Riverbend Drive SE Calgary, AB T2C 3N9
Phone: 403-257-6354
Toll Free: 888-469-3027