Tag Archives: Financial Planning

KEY011 | Individual Pension Plans – Why they are the best wealth accumulation plans for business owners.

Individual Pension Plans – Why they are the best wealth accumulation plans for business owners.

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In This Episode

In this edition of The Key To Retirement™, we’re going to talk about Individual Pension Plans (IPP’s) and why they are the best wealth accumulation solution for business owners.

Bonus Segment

In today’s bonus segment we’re going to show you how to get a FREE, customized report showing you how much of a tax-deduction you can create, virtually out of thin air, to save a boat load of taxes this year.  This one report will clearly show you, in black and white, whether or not you should be exploring this amazing wealth accumulation plan further.

And if you’d like to get a jump start on finding the answers to your key financial planning questions, using our proven system, you can book your risk free, no-obligation initial meeting. One of our specifically trained Certified Financial Planners will be pleased to walk you through The KAIZEN Financial Planning Process™.  Visit us online, at ironshield.ca, to obtain our contact information, then simply call or email to book your free initial meeting.

 

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KEY010 | The Canada Pension Plan – Should you take a reduced Canada Pension Plan now? Or a full Canada Pension Plan later?

The Canada Pension Plan – Should you take a reduced Canada Pension Plan now? Or a full Canada Pension Plan later?

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WELCOME TO THE KEY TO RETIREMENT™ PODCAST!

To subscribe to the podcast, please use the links below:

If you have a chance, please leave me an honest rating and review on iTunes by clicking here. It will help the show and its ranking in iTunes immensely! I appreciate it! Enjoy the show!

In This Episode

In this edition of The Key To Retirement™, we’re going to talk about the Canada Pension Plan and answer the question “Should you take a reduced Canada Pension Plan now or a full Canada Pension Plan later?

Bonus Segment

In today’s bonus segment we’ll share with you how to get your own copy of a FREE Special Report titled “12 Key Questions You Must Ask A Financial Planner BEFORE You Hire One!”  This free report is a must read if you’re thinking of interviewing a Certified Financial Planner in your area.

And if you’d like to get a jump start on finding the answers to your key financial planning questions, using our proven system, you can book your risk free, no-obligation initial meeting. One of our specifically trained Certified Financial Planners will be pleased to walk you through The KAIZEN Financial Planning Process™.  Visit us online, at ironshield.ca, to obtain our contact information, then simply call or email to book your free initial meeting.

 

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Our Programs

A process for
Financial Progress
The KAIZEN Financial Planning Process™ is an evolutionary approach to comprehensive financial planning. Starting with the name “KAIZEN”, which is a Japanese word for constant and never ending improvement, you get a first glimpse at our core process that is truly different. Our process is designed to encompass all key areas of your financial life, simplifying the often complex aspects of wealth accumulation and preservation, over a lifetime.

Click any section of the diagram below (or use the navigation to the left) to view more about that step, program or plan.

kaizen_chart-2015

The Building a Foundation Program™The Securing the Future Program™The Preserving Wealth Program™ Step 2: The Confidential Data Gathering Package™Step 1: The Issues & Concerns Analyzer™Step 5: The KAIZEN Mid-Year Review™Step 6: The KAIZEN Full-Year Review™Retirement PlanInvestment PlanEducation PlanStep 3: Plan Presentation (part 1)Insurance PlanThe Wealth Protection Plan™Tax PlanStep 4: Plan Presentation (part 2)

Focus on financial freedom, not financial wealth.

Focus on financial freedom, not financial worth.

At the time I write this, there are advertising agencies and marketing departments of the investment companies poised and ready to release this years marketing message to you.  The marketing message usually has something to do with investing more.  Read the messages, understand them but don’t follow the advice delivered through them.

I’m going to speak to you now from a financial planning perspective.  Quite a different viewpoint than a marketing one.

Believe it or not, some of us overspend every so often.  (Yes, it’s true!)  Here is my message to you that will trump any registered investment:

Pay off your high-interest credit card debt or clear the balances on your overextended lines of credit.

Doing so will allow you to move closer to financial freedom.

Then, once you are free and clear of the shackles of these debts, set yourself up for success and take advantage of at least one of the following plans.

Registered Retirement Savings Plans have always been a friendly way to invest.  For each dollar you put into your RRSP, you get to reduce your taxable employment income by a dollar and the tax you originally paid on that dollar of income comes back to you in the form of a refund.  So, for someone in the 46% tax bracket, putting in $1,000 to your RRSP provides you with tax savings of $460.

But, if you don’t have any taxable employment income or your income is quite low, there is a solution that you can take advantage of.  The Tax Free Savings Account is a solution that brings with it a lot of punch.  If you haven’t contributed to a TFSA before, you can put up to $20,000 into a plan in 2012 (assuming you were at least 18 years old in 2009).  Any money you put into a TFSA is completely tax sheltered as it grows and completely tax free when you withdraw the funds (original investment and all profits) in the future.  For a complete overview of the power of a TFSA, click HERE.

Now, with all government plans, there are some rules you have to follow.

For the 2011 tax year, you have until February 29th, 2012 to make a contribution to an RRSP that you can use on your 2011 tax return.  The maximum all Canadians can contribute to their RRSP is 18% of their previous years income to a limit of $22,450 for 2011.  This amount is reduced for those Canadians who are a member of an employer sponsored Registered Pension Plan.  The reduction is based on your Pension Adjustment that is found on your T4 slip that was issued for your previous year.  Plus, if you have a previous year that you had RRSP contribution room that you did not use, you can add this amount to your annual limit.  If you found this hard to follow, simply find your Notice of Assessment from last year and at the bottom of it is a summary of the amount you are allowed to contribute to an RRSP for the current tax year.

If after reviewing my previous post on TFSA’s you determine that a TFSA contribution is more appropriate for you, here are the contribution rules that you are governed by.

If you were at least 18 years of age in 2009 and have made no contributions to a TFSA then you can contribute up to $20,000 in 2012.  That’s it.  It’s pretty simple.

I do urge you to read my previous post on TFSA’s however because there are a lot of reasons to and reasons not to contribute to a TFSA.

If you’re thinking that all of this sounds great but you don’t have lump sums like this sitting idle in your bank account right now looking for a home in a RRSP or a TFSA, here is a solution for you.

Set up a monthly contribution plan (a.k.a. PAC or Pre-Authorized Chequing) arrangement.

Here are some key monthly contribution amounts that will help you maximize each years contributions:

  • $1,914.17/mth, to a RRSP starting in January 2012 will allow you to hit the annual limit available for your 2012 RRSP of $22,970
  • $416.67/mth, to a TFSA starting in January 2012 will allow you to maximize the annual $5,000 limit

So, focus on Financial Freedom.  Paying off your high-interest debts first will not only be a very smart financial decision but will provide you with the financial freedom needed to make huge strides in increasing your financial wealth.

*UPDATE: Starting January 2013 – the new TFSA annual maximum contribution limit is $5,500.

 

What Your Birth Certificate Says About Your Exit Plan

By: Scott Plaskett & John Warrillow

In our experience, your age has a big effect on your attitude towards your business and how you feel about one day getting out.

Here’s what we have found:

 

Business owners between 25 and 46 years old

Twenty- and thirty-something business owners grew up in an age where job security did not exist. They watched as their parents got downsized or packaged off into early retirement, and that caused a somewhat jaded attitude towards the role of a business in society. Business owners in their 20’s and 30’s generally see their companies as means to an end and most expect to sell in the next five to ten years. Similar to their employed classmates who have a new job every three to five years; business owners in this age group often expect to start a few companies in their lifetime.

Business owners between 47 and 65 years old

Baby Boomers came of age in a time where the social contract between company and employee was sacrosanct. An employee agreed to be loyal to the company, and in return, the company agreed to provide a decent living and a pension for a few golden years.

Many of the business owners we speak with in this generation think of their company as more than a profit center. They see their business as part of a community and, by extension, themselves as a community leader. To many boomers, the idea of selling their company feels like selling out their employees and their community, which is why so many CEO’s in their fifties and sixties are torn. They know they need to sell to fund their retirement, but they agonize over where that will leave their loyal employees.

Business owners who are 65+

Older business owners grew up in a time when hobbies were impractical or discouraged. You went to work while your wife tended to the kids (today, more than half of businesses are started by women, but those were different times), you ate dinner, you watched the news and you went to bed.

With few hobbies and nothing other than work to define them, business owners in their late sixties, seventies and eighties feel lost without their business, which is why so many refuse to sell or experience depression after they do.

Of course, there will always be exceptions to general rules of thumb but we have found that – more than your industry, nationality, marital status or educational background – your birth certificate defines your exit plan.

Wondering if you have a sellable business? The Sellability Score is a quantitative tool designed to analyze how sellable your business is. After completing the questionnaire, you will immediately receive a Sellability Score out of 100 along with instructions for interpreting your results.

Take the Quiz here: The Business Sellability Audit

KEY009 | Group Benefits – How Business Owners Can Change Their Group Benefits Plan From An Expense To An Investment

Group Benefits – How Business Owners Can Change Their Group Benefits Plan From An Expense To An Investment.

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | RSS

WELCOME TO THE KEY TO RETIREMENT™ PODCAST!

To subscribe to the podcast, please use the links below:

If you have a chance, please leave me an honest rating and review on iTunes by clicking here. It will help the show and its ranking in iTunes immensely! I appreciate it! Enjoy the show!

In This Episode

In this edition of The Key To Retirement, we’re going to talk about Group Benefits and how business owners can change their plan from an expense to their business to an investment in their business.

And if you’d like to get a jump start on finding the answers to your key financial planning questions, using our proven system, you can book your risk free, no-obligation initial meeting. One of our specifically trained Certified Financial Planners will be pleased to walk you through The KAIZEN Financial Planning Process.  Visit us online, at ironshield.ca, to obtain our contact information, then simply call or email to book your free initial meeting.

 

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KEY008 | Four Things NOT To Do and Five Things To Do With Your Financial Plan When The Markets Crash

Four Things NOT To Do and Five Things To Do With Your Financial Plan When The Markets Crash.

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | RSS

WELCOME TO THE KEY TO RETIREMENT™ PODCAST!

To subscribe to the podcast, please use the links below:

If you have a chance, please leave me an honest rating and review on iTunes by clicking here. It will help the show and its ranking in iTunes immensely! I appreciate it! Enjoy the show!

In This Episode

In this edition of The Key To Retirement, we’re going to talk about the four things NOT to do and the five things to do with your financial plan when the markets crash.

Bonus Segment

In today’s bonus segment we’ll share with you a FREE tool that you can use to simply and easily manage your finances.  This tool in my mind is going to revolutionize the personal finance industry.

And if you’d like to get a jump start on finding the answers to your key financial planning questions, using our proven system, you can book your risk free, no-obligation initial meeting. One of our specifically trained Certified Financial Planners will be pleased to walk you through The KAIZEN Financial Planning Process.  Visit us online, at ironshield.ca, to obtain our contact information, then simply call or email to book your free initial meeting.

Links to things mentioned in this episode:

 

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The Danger Of Market Timing The Sale Of Your Business

By: Scott Plaskett & John Warrillow

The other day I was speaking with a successful CEO in his fifties who runs a heating and air conditioning company generating eight million dollars in revenue and over one million dollars in profit before tax.

Even though he was tired and nearing burnout, he was planning to wait another five to seven years before selling his business because he “wanted to sell at the peak of the next economic cycle.”

On the surface, his rationale seems to make sense. If you speak with mergers and acquisitions professionals, they’ll tell you that an economic cycle can impact valuations by up to “two turns,” which means that a business selling for five times earnings at the peak of an economic cycle may go for as low as three times earnings at a low point in the economy.

The problem is, when you sell your business, you have to do something with the money you receive, which usually means buying into another asset class that is being affected by the same economy.

Let’s say, for example, you had a business generating $100,000 in pre-tax profit in an industry that trades between three times earnings and five times earnings, depending on the point in the economic cycle.

Furthermore, let’s imagine you sat stealthy on the sideline until the economy reached the absolute peak and sold your business for $500,000 (five times your pre-tax profit) in October 2007. You took your $500,000 and bought into a Dow Jones index fund when it was trading above 14,000.  Eighteen months later  – after the Dow Jones had dropped to 6,547.05– you’d be left with less than half of your money.

Even though you cleverly waited till the economic peak, by March 9, 2009, you would have effectively sold your business for less than 2.5 times earnings.

The inverse is also true. Let’s say you waited “too long” and sold the same business in March 2009. And because you were at the lowest possible point in the economic cycle, you only got three times earnings: $300,000. Notice that’s 20% more than if you’d sold at the peak and bought an index fund at the top of the market.

Just like when you sell your house in a good real estate market, unless you’re downsizing, you usually buy into an equally frothy market. Which is why timing the sale of your business on external economic cycles is usually a waste of energy.

External vs. internal economic cycles

Instead, I’d recommend timing the sale of your business when internal economic factors are all pointing in the right direction: employees are happy, revenue and profits are on an upward trend, and there is still lots of market share for an acquirer to capture.

When internal economic factors are pointing up, you’ll fetch a price at the top end of what the market is paying for businesses like yours right now, which means that – for good or bad – you get to use your newfound cash and buy into the same economic market you’re selling out of.

Wondering if you have a sellable business? The Sellability Score is a quantitative tool designed to analyze how sellable your business is.  After completing the questionnaire, you will immediately receive a Sellability Score out of 100 along with instructions for interpreting your results. Take the test here: The Business Sellability Audit