Trusted Tips and Resources

Trusted Tips & Resources

Trusted Regina Financial Advisors at Worby Wealth Management Tip on Wealth Building & Corporate Income

Chris Worby and Jeremiah Worby are Trusted Regina based financial advisors and Wealth Management services providers. With over 20 years of experience, Worby Wealth Management has been committed to providing a high standard of financial service to individuals, families and business owners in Regina and area. Worby Wealth Management listens and provides a personalized financial plan. In their latest Worby Wealth Management Trusted Regina Financial Tip, they discuss corporate income. 

The Wealth Building Toolkit: Corporate Income 

Here you are, ready to retire, and you’re getting all your ducks in a row: assessing your RRSP to RRIF options, seeing how you can maintain OAS through the household, and you have spent your career building wealth in a corporation so that’s a major tool in your kit.

The first and most interesting thing is that, by definition, assets built in your corporate investment account are going to be retained earnings which means you’ll be paying yourself dividends. The upside of dividends is that you also get a dividend tax credit. 

The benefit of dividends is this: let’s say you were targeting this $95,000/yr of net income. From my last blog, we know you’d need to take approximately $130,000 of gross income to provide that net of taxes. A non-eligible dividend to make the same $95,000 net income needs to only be $120,000 - dividends allow for more tax-advantaged income for sure and the saving of $10,000 in this case.*

Another option is to use a life insurance policy. If a corporation were to own a policy with the shareholder as life insured, there could be a cash value built up in the policy against which a loan could be set up to be settled upon the passing of the shareholder. As the insurance policy is not required to declare gains for tax purposes year over year, this tax deferral can lead to larger amounts within the policy and more money available for a loan. 

You’ve noticed I keep referencing ‘tools’ throughout this series. That’s because you can’t screw a screw with a hammer, and you can’t drive a nail with a saw. I mean, I suppose you could do those things but let’s attempt a little efficiency here! I think of retirement planning as exactly this, pulling out the right tool for the job. And in this example of having a high level of corporate assets, insurance is a great tool to help build that wealth to do the job of providing security of income in retirement.

In the next blog, we’re going to talk about insurance in corporations again but from more of an estate planning perspective - no surprise but insurance is very helpful in dealing with taxes in an estate.

*all personal tax calculations are estimates based on taxtips.ca tax calculator.


If you have questions about wealth building, contact Worby Wealth Management to get your questions answered and start investing in an RRSP, TFSA or other investment accounts today.

Some of the services that Worby Wealth Management can help you with: 


TRUSTED REGINA FINANCIAL ADVISORs Chris & Jeremiah Worby from Worby Wealth Management help you live your dream!


 

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances.  This Blog was written, designed and produced by Jeremiah Worby and Chris Worby for the benefit of Jeremiah Worby and Chris Worby who are Financial Advisors at Worby Wealth Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc.  The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.  The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice.  Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.  Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.

Trusted Regina Financial Advisors at Worby Wealth Management Discuss Wealth Building and Corporations

Chris Worby and Jeremiah Worby are Trusted Regina based financial advisors and Wealth Management services providers. With over 20 years of experience, Worby Wealth Management has been committed to providing a high standard of financial service to individuals, families and business owners in Regina and area. Worby Wealth Management listens and provides a personalized financial plan. In their latest Worby Wealth Management Trusted Regina Financial Tip, Jeremiah shares how corporations are a fantastic tool for building wealth. 


The Wealth Building Toolkit: Corporations 


There are many tools that are useful to build wealth. Virtually everyone has access to account types such as RRSPs and TFSAs. These are accounts which have special tax treatments such that we can reduce our overall taxation while we are alive and accumulating wealth. Pensions and group RRSPs are also useful and often an employer will give additional funds to these plans which is of obvious benefit.


For those of us who are not employees though, we may be able to use another tool - the corporation. If someone is self-employed and legally able to have their corporation take their income, this can be very helpful.


The key to using a corporation efficiently is that the earnings a taxpayer has is not all required. Active income for a small business conducted in Saskatchewan is taxed at a low rate of 11%. If a person’s income level is high enough that they don’t require all of it, leaving income behind in a corporation to invest may be much more efficient than taking it all as income and then investing.


Let’s look at an example:

John needs $95,000/year after tax for lifestyle but earns $250,000/yr gross. If he took all this money, paid tax and then invested the remainder, he’d have approximately $66,760* to invest at the end of the year.

If he were able to and chose to use a corporation, however, he’d take $130,000 gross income from the corp and pays approximately $35,000 in tax leaving $120,000 behind. 11% tax for taxes leaves him with $106,800 for investing.

The difference of using a corporation in this example leaves him with an additional $39,920 or 60% more money to invest to build his wealth.

Clearly, corporations are a fantastic tool for building wealth. The next blog is going to look at strategies to get this money out of the corporation on a tax-advantaged basis.

*all personal tax calculations are estimates based on taxtips.ca tax calculator.


If you have questions about wealth building, contact Worby Wealth Management to get your questions answered and start investing in an RRSP, TFSA or other investment accounts today.


Some of the services that Worby Wealth Management can help you with: 


TRUSTED REGINA FINANCIAL ADVISORs Chris & Jeremiah Worby from Worby Wealth Management help you live your dream!


 

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances.  This Blog was written, designed and produced by Jeremiah Worby and Chris Worby for the benefit of Jeremiah Worby and Chris Worby who are Financial Advisors at Worby Wealth Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc.  The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.  The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice.  Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.  Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.

Trusted Regina Financial Advisors at Worby Wealth Management Provide Their Year End Financial Checklist

Chris Worby and Jeremiah Worby are Trusted Regina based financial advisors and Wealth Management services providers. With over 20 years of experience, Worby Wealth Management has been committed to providing a high standard of financial service to individuals, families and business owners in Regina and area. Worby Wealth Management listens and provides a personalized financial plan. In their latest Worby Wealth Management Trusted Regina Financial Tip, Jeremiah shares their year end financial checklist.


Year End Financial Checklist

by Jeremiah Worby 


It's near the end of another year. You've probably been busy planning parties, planning pranks, and soon to be attending holiday events, but there's one thing that needs your attention – your personal finances.  It's time to start reviewing how much money you have saved up for retirement and other important costs in life. 


HERE'S HOW 


Do you have any RRSP room left for 2022?

If your RRSP room is $10,000 and you have already contributed $6,000 to an RRSP this year, then that means you have only… hold on give me a minute here – carry the 9… oh yeah,  $4,000 of available room for 2022.

If you don't have any remaining RRSP room for 2022, then no other RRSP contributions can be made before year-end.  That being said, if there are other registered plans (e.g., a TFSA) that you haven't maxed out yet for this year, then it may still be worthwhile contributing what is needed to fill up your existing registered plans so long as doing so doesn't exceed their respective contribution limits.


Are your TFSA contributions up to date?

TFSAs are a great way to save for retirement. Straight from the Canadian government’s website



The TFSA program began in 2009. It is a way for individuals who are 18 years of age or older and who have a valid social insurance number (SIN) to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. "

Unused contribution room from previous years carries forward to future years.  A quick check with your MyCRA account (or office Dwight – he seems to know everything) should let you know exactly how much TFSA room you currently have.



Have you funded your children's RESPs this year?

Whether you have two children or twelve, saving up for their education is a top priority for lots of families.  The biggest benefit of RESPs is that a grant from the Canadian government of up to $7,200 can be earned over the life of the plan.

The money in an RESP can be used for various education costs, not just for tuition.  There is no tax on the investment earnings as long as it remains in the plan.  Contributions are not tax deductible, however withdrawals called educational assistance payments are included in the student’s income.


Do you have enough life insurance coverage in case something happens to you?

Life insurance is an important part of financial planning.  The question is, do you have enough?  Pro tip: $100 Million is probably more than what you need.

You should consider getting life insurance coverage to protect your family from being left with financial burdens if something happens to you.

It's important to know how much coverage you need and what kind of coverage makes sense for your situation.  You can get a free life insurance quote by contacting Worby Wealth Management.


A review of personal finances at the end of the year makes sense

It’s a good idea to review your personal finances at the end of the year. This way, you can ensure that you are on track with your goals and make adjustments as needed.

You should review:

  • Your financial situation – How much debt do you have?  How much money do you have in savings?  What are your investments doing?  If there is anything that needs to be changed or improved, now is the time for it!
  • Your financial goals – What are some things that need improving?  Are there any new goals that could be set for next year?
  • Investments – Is your portfolio set up for long-term growth or short-term gain? Are your investment goals aligned with your time horizon and risk tolerance (e.g., saving for retirement vs. building wealth).  Have any recent market events caused you to rethink this part of your financial plan?  If yes, make sure to contact Worby Wealth Management for a free second opinion. 
  • Insurance coverage –  Does your current insurance cover all important aspects of your life (e.g., health care, disability income, burial expenses) while still being affordable?  What other types of coverage might make sense moving forward as life circumstances change (e.g., term insurance for those years while you’re still carrying a mortgage).

Conclusion

The end of the year is a good time to review your finances and make sure you're on track for the new year.  It's also a great opportunity to look back at the financial decisions you've made over the past 12 months and see if there might be room for improvement.  If so, now is the perfect time to make those changes!


Questions regarding your year end financial checklist? 

If you have questions about your year end financial checklist, then contact Worby Wealth Management to get your questions answered and start investing in an RRSP, TFSA or other investment accounts today.


Some of the services that Worby Wealth Management can help you with: 


TRUSTED REGINA FINANCIAL ADVISORs Chris & Jeremiah Worby from Worby Wealth Management help you live your dream!


 

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances.  This Blog was written, designed and produced by Jeremiah Worby and Chris Worby for the benefit of Jeremiah Worby and Chris Worby who are Financial Advisors at Worby Wealth Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc.  The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.  The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice.  Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.  Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.

Trusted Regina financial professionals tip on marriage finances

 Trusted Regina’s Financial experts tip on 50/50 finance in a marriage:

Can 50/50 finances work in a marriage?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bills can be a headache at the best of times. Figuring out who pays for what in a relationship can be complicated enough to trigger a migraine.

Should you split bills evenly in your marriage or partnership? What if one person makes substantially more? Should it be based on a percentage of income instead?

A 50/50 split is one way to go, but it seems fraught with problems.

“Fifty/fifty isn’t usually sustainable as incomes differ, and over a lifetime one partner usually takes time off to raise children, care for elderly relatives, or may be on sick leave for a period,”. “Fifty/fifty is a roommate, not a marriage.”

Fee-only financial planner Marie Engen of Boomer & Echo agrees that splitting expenses down the middle has the potential for unhappily-ever-after.

“This may work if both salaries are somewhat equal, but if there’s a considerable difference the lower-income partner is eventually going to resent it,” Engen says.

Ron Graham, president of fee-only financial-planning firm Ron Graham and Associates Ltd., has seen the ways a 50/50 split can work out for the worst.

“I have some clients with vastly different incomes who keep their finances separate,” Graham says. “They discuss and agree to which expenses they will pay jointly and each put an equal amount into the pot to pay those joint expenses. The balance of their incomes is then available to be spent according to each partner’s wishes. This is where sometimes conflicts arise. One person has money to go on vacation, and the other cannot afford it. I have seen some couples take separate vacations as a result. Sometimes these relationships do not last.”

 

 

A better plan

So what are alternatives? Some couples decide on another breakdown, say 60/40. Some have an informal agreement where one covers the mortgage and the car, and the other takes care of things like food and kids’ clothing. Others have the higher-paid partner pay the bills while the lower income-earner’s wages go straight to investments.

Pooling resources appears to be the most effective means to a marriage not marred by money woes.

“I have seen most harmony from a joint account all income goes into,” Waite says. “From this, pay fixed expenses … Figure out what you afford as an allowance for each person and open individual bank accounts. That way, the lower-income earner isn’t overstretched paying a high percentage of income towards fixed costs, and you each have some personal money you can spend without feeling guilty.

“Save for joint goals out of the joint income so no one feels the mountain is insurmountable alone,” she adds.

Graham says that putting money into a joint account, with each person having an equal amount of spending money, works well, especially when there’s a large discrepancy in incomes.

“If you go into a relationship thinking that your money belongs to you, this can lead to conflict and potentially separation,” he says. “My suggestion for newlyweds is to pool their resources to pay for the family expenses, put aside savings for future goals, and pay five to 10 per cent of the total to each partner to spend as they wish.

“This way, each partner gets to spend the same amount on what they want,” he says. “The family expenses are covered, and they are putting aside funds for future goals like buying a house, new vehicle, kids’ education retirement, et cetera.”

Engen is onboard with the idea of shared money too.

“I believe that in a committed relationship, income should be pooled,” she says. “Couples should determine together what is required and budget for regular expenses and short- to medium-term savings for large purchases and Registered Education Savings Plan (RESPs). Longer term Registered Retirement Savings Plans (RRSP) investments would depend on variables such as the availability and type of company pension plans. Each partner should have an amount for their own discretionary spending, no questions asked.”

 

 

Often one person has more of an interest in financial matters than the other, Engen notes, from paying bills to investing. “The other partner should be involved in discussing goals and strategies and at least have basic knowledge of assets owned,” she says.

To avoid future disagreements, Waite suggests handling joint expenses systematically.

“It’s really important to write down what you agree [to],” Waite says. “Email it to each other, use a spreadsheet saved in a joint Dropbox or OneDrive, or write it in a notebook so there are no arguments later.

“Set up automatic transfers,” she adds. “Use phone apps and tools like Mint and FreshBooks …to track progress.”

 

 

 Trusted Regina’s Finance Experts -give them a call to see how they can work for you!

 


 

Trusted Regina Financial experts tip on Client Defections

 Trusted Regina’s Financial experts share a tip on client defections: 

Client defections to speed up!

“There are a lot of advisors who don’t keep up with their clients and wait for them to call instead of being proactive and keeping up regularly,” she said. “If my client mentions something about taking a trip at a specific time, I’ll often call them just to find out how it went. It lets them know I care, that I’m thinking about them and it’s led to more referrals while keeping my attrition rates low.”

 

 

A survey of client attrition rates for 2014 may, in fact, represent a turning point for the industry as it prepares for fallout from regulatory change.

Currently, Canada’s top financial advisors have a one per cent attrition rate while the average for Canadian advisors as a whole is closer to 10 per cent, according to Maximizer Services Inc., based in Vancouver B.C.

But CRM2 is expected to change that, with many transactional advisors anticipating client defections will double post CRM2’s full implementation.

“There will be a lot of unhappy clients out there once they realized the truth about their accounts and how much fees they’re paying to some of these advisors,”  “I think that we’ll see the attrition rate get much higher when CRM2 finally kicks in.”

Top advisors and their commitment to using advanced technology as well as those who previously anticipated CRM changes and engaged clients in difficult conversations are most likely to maintain low attrition rates.

The study also found that 69 per cent of advisors had an attrition rate of five per cent or less if they were previously using a strong customer relations management system.

Using DayLite or Symantec has helped to build her business because she is able to keep up with clients regularly. The Important thing, she says, is to be proactive for their needs, and not reactive to their demands.

 

 

 Trusted Regina’s Finance Experts -  give them a call to see how they can work for you!

 


 

 

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