My financial plan during COVID-19

August 19, 2020 drifinancialLeave a comment

Up until five months ago, my financial plan was clear and had a long-term horizon: contribute as much of our household income into RRSPs and TFSA as possible, invest our savings to create additional streams of income in later life, and eliminate student and consumer debt as quickly as possible.

One day in mid-March, my world changed in a matter of hours. And in some important ways, so did my financial plan.

Here’s what happened.

My wife Lina and my adult step-children, Ally and Evan, were all employed by a local breakfast restaurant. In the early morning of March 16th, Lina and Evan left to work their scheduled shifts at the restaurant, as they normally do. Not scheduled to work that day, Ally woke to her morning ritual. And I was at the office before market opening.

At 11 am, my wife called to let me know that the restaurant was closing until further notice. This was due to swift and immediate government regulations put in place to control the spread of COVID-19.

My wife, son and daughter were all instantly unemployed, and I was now the sole income earner in the family.

I was and remain grateful to be a part of an industry deemed to be essential, which meant that I could continue doing what I loved: helping our clients manage their finances and investments. But at the same time, most of my family lost their income, ability to contribute to our collective livelihood, and general sense of purposefulness.

They were all grieving, and by extension, so was I.

At the time, we didn’t know what government support, if any, would come to those who lost their jobs.

Lina and I worried about the impact of her loss of income. We were also concerned about how Ally and Evan were impacted.

In that first week, my family and I talked every night after dinner to lay out a financial plan that mirrored our current situation. It was simple, decisive, and included three steps.

Create a budget that eliminated ALL discretionary expenses.
Review our “rainy day” fund.
Envision how each of us was going to contribute to our family’s wellbeing.

Let’s dive into that more…

1. Our family budget

Overnight, our combined income (mine and Lina’s) was reduced by 31%, which meant that our expenditures had to be reduced by at least that much, if not more.

It never occurred to us that we would not pay for, or defer, our essential bills: rent, utilities, phone, internet, car lease, and groceries. Those expenses became our only priorities.

It was also very important that we maintained our current savings strategy (monthly automated contributions to RRSPs and TFSA) and that we paid off all existing credit card debt balances immediately.

All other expenses were decidedly slashed: ordering take-out, buying alcohol, shopping online, paying for subscriptions, and so on. My gym membership was placed on hold indefinitely, and I cancelled all my weightlifting sessions with my trainer. We even managed to use my family’s newfound time to clear out a storage unit, so we could eliminate the monthly lease.

Before COVID, Ally and Evan were contributing to household expenses, like paying rent and buying groceries. Thankfully, they were already living at home, so their ability to pay rent was not an issue. But they had mobile phone expenses and other subscription commitments.

Both kids were taught one of the main tenets of financial planning, which is to save at least 10% of their monthly income. They would now have to dip into their savings to pay their phone bills and help out with groceries. To ensure that they were not depleting their savings too quickly, they both suspended all their online subscriptions.

2. Our “rainy day” fund

In addition to RRSP and TFSA contributions, Lina and I had always put aside cash for a rainy day. Part of our financial plan was to have at least six months’ worth of rent available.

When we reviewed our rainy day fund, we were so grateful to find that by slashing all of our discretionary expenses, we would not have to dip into it to pay for our prioritized bills. We did use a small portion of the fund to pay off an existing credit card balance. Otherwise, the fund would remain intact. This was a great relief, as it meant our family could live on a single source of income.

Once the Canadian Emergency Response Benefit (CERB) kicked in for Lina and both kids, we saved as much of the funds as possible, since we did not know how long their furlough would last.

3. A new daily life plan

Before COVID, each member of our family had a vision about how to build a life that was financially independent, purposeful, and made up of activities we are passionate about. That included travel, eating out, cooking, film, art and physical training.

The pandemic dimmed those visions significantly and quickly. But it didn’t change our commitment to living a positive and purposeful life.

Every Thursday night, we make a plan for all our meals the following week. Ally and Evan spend hours in preparation for the evening discussion, finding nutritious, simple recipes on Pinterest and in our own cookbooks. Lina then shops for all our groceries while Evan cooks almost all of our meals and Ally stays busy with online writing courses. I have continued my workouts at home using free weights.

Life during COVID has been stressful, but we have been kept afloat by the strength of our financial planning skills and our own resilience in the face of crisis.

Our ability to make ends meet on a single source of income has led me to reflect on my spending habits and how my financial plan will change in our post-COVID life. Stay tuned for my next blog.

Never Retire Profile of the Week

David Suzuki

Canada’s most famous environmentalist once said, “We’re in a giant car heading towards a brick wall and everyone’s arguing over where they’re going to sit.” David Suzuki was objecting to the social and political wrangling that distracts from a fundamental and chilling fact: if we don’t find viable climate solutions, preserve biodiversity, protect our oceans and make our cities healthier, we are heading toward disaster. Born in 1936, Suzuki is best known as host of the CBC science program, The Nature of Things and for his vocal criticism of governments for their lack of action in protecting the environment. A scientist, broadcaster, author and activist—and survivor of internment by the Canadian Government during the Second World War—he established the David Suzuki Foundation in 1990 and became a Companion of the Order of Canada in 2006. Known for his passion and eloquence, Suzuki also believes in the power of positive change: “The human brain now holds the key to our future. We have to recall the image of the planet from outer space: a single entity in which air, water, and continents are interconnected. That is our home.”

David Suzuki

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary Wealth Navigator Process is designed with you in mind. Its structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.

Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast
Follow us on social!

source https://richarddri.ca/my-financial-plan-during-covid-19/

U.S. Markets Hoping for Coronavirus Relief Package; Gold Tumbles Tuesday

August 14, 2020 drifinancialLeave a comment

The Dow opened strong this Monday, extending its winning streak to seven sessions, as investors weighed the likelihood of fresh federal stimulus spending and slowing rates of new coronavirus infections in the U.S.

Energy and material stocks led the way on Monday, while the Nasdaq dropped as key tech giants declined. By Monday’s close, the Dow was up 358 points, while the TSX rose 61, buoyed by rising oil prices and positive data out of China.

The Dow’s winning streak ended on Tuesday, however, as the prospects for a broad coronavirus relief package dimmed considerably in Washington. While all four major N.A. markets ended the day in the red, the biggest story of the day might have been gold prices, which fell by as much as 6%, its worst single-day decline since March.

N.A. equity markets were back on track Wednesday as the S&P 500 pushed toward its first record close since February, just missing the mark in late trading. The strong showing thus far in August has been accompanied by rising U.S. bond yields, an indicator that investors are becoming more optimistic about the pace of the economic recovery. Crude prices were up more than 2% Wednesday as data showed U.S. oil inventories had fallen.

While initial U.S. jobless claims fell to 963,00 for the prior week, the standoff between Republicans and Democrats over a coronavirus relief package was still unresolved on Thursday. Consequently, U.S. markets were mixed, with Dow and S&P 500 slightly off, while the Nasdaq registered a small gain. In Canada, weakening crude prices and the stalled U.S. relief package weighed on the TSX, which was off 45 points for the day.

Common money mistakes to avoid while raising a family

August 14, 2020 drifinancialLeave a comment

By Ashley Land

Like many of you, raising my family has been my greatest joy as well as my hardest job. We all want the very best for our children and our family. We want them to be happy and successful. We want to give them everything they need. But at the same time, we want to be thoughtful parents who raise considerate, independent children who care about more than themselves and have an authentic desire to contribute to society.

This is why good parenting requires deliberation and planning.

I want to share with you five common money mistakes parents make while raising their children. I call them mistakes because they have the potential to undermine those primary goals of independence and consideration for others that parents have for their children or to cause financial hardship within the family.

1. Spending too much on kids

Today’s children have so much choice in terms of extracurricular activities, toys, unique travel and exciting experiences. Yet all of these options potentially come at a cost. Often, parents get caught up in the peer pressure they feel to buy things, enroll their children in activities, or participate in extravagant holidays. They see what neighbours, friends and other parents are doing, and they fear their child will be left out.

It’s important to take the time to evaluate how much you are spending and what drives you to do so. Also, talk to your child about what they do and don’t care about. Be deliberate in your choices. Don’t overspend or overschedule your family, which just creates burn out for you, your spouse, your children and your pocketbook.

2. Giving kids everything they want

A part of raising good kids is to teach them about work, value and gratitude. To achieve this, you just can’t buy your child everything they ask for. Instead, provide money lessons. Teach your children how to earn money by creating a lemonade stand, organizing a garage sale, or starting their own snow removal company by shovelling the neighbours’ driveways. There are endless possibilities. This will teach them responsibility, and then you can also show them what good savings habits look like.

Encourage them to save up until they have enough money to purchase something, they want themselves. Or encourage them to save a portion of their earnings and spend the rest. Your children will appreciate both their purchases and their growing savings when they understand how long it takes to earn a dollar, save up for a particular item, or create long-term savings.

3. Prioritizing your children’s education savings over your retirement

Often, parents prioritize their children’s education over their own retirement plan. While you want the best for your children’s education and future career, a true gift to your child would be to adequately prepare for your retirement first. Save it, automate it and prioritize it. This helps you and your kids out in the long run, as you will be secure in your retirement and likely also able to help them out on occasion.

You can always borrow money for your children’s education. But you cannot borrow money for your retirement.

Once you are able to do so, contribute to your Children’s education savings plan. The government offers grants and incentives to do so. No matter what your income, the Canadian Education Savings Grant (CESG) is money that the government adds to an RESP, representing 20% of annual contributions up to an annual maximum of $500. The lifetime CESG is $7200 per child.

4. Not having an estate plan in place

I have seen the unexpected happen. While grieving the loss of a loved one, family members struggle to locate a will and settle an estate. This is both stressful and emotional for the family left behind. Make sure you have in place a will and powers of attorney for both property and for the care and guardianship of your children. Having an estate plan in place will protect you and your family and provide peace of mind.

5. Not having enough life insurance

While it’s tough to have to think about your own mortality, having adequate life insurance will relieve the financial stress on the surviving spouse and children. In the early years, when the children are young, adequate life insurance should cover things such as lost wages of the deceased spouse, money for the children’s education, and debt repayment. As a rule of thumb, your coverage should be 12 to 15 times your dependents’ annual expenses.

You can speak to an insurance advisor to discuss your unique circumstances and determine what adequate life insurance is for you and your family.

It’s not easy to know how to raise children well and protect them from harm—whether emotional or financial. I offer these five money mistakes for your consideration. Whatever you decide is best in helping your family get ahead, start planning now. The best start you can give your children is a solid financial plan that teaches them values and also makes it more enjoyable for you to raise your family.

Never Retire Profile of the Week

Barbra Streisand

Two Academy Awards. Ten Grammy Awards. Five Emmys. Four Peabodys. Nine Golden Globes. The Presidential Medal of Freedom. Living on her own from age 16 on—when she graduated from high school—Barbra Streisand always wanted to be a star. At age 18, she began singing in nightclubs. At 20, she was in her first Broadway show. In 1963, at 21, her first album won three Grammy Awards and in 1964, she played Fanny Brice on stage in Funny Girl—a performance that landed her the cover of Time. Wider audiences first saw Streisand in a film adaptation of Funny Girl in 1968, and by the mid-70s she had made The Way We Were with Robert Redford and A Star is Born with Kris Kristofferson. In addition to her acclaimed career in music, plays and film, Streisand has long been involved in politics (making Richard Nixon’s 1971 list of political enemies) and in philanthropy. She established The Streisand Foundation in 1986, which supports the preservation of the environment, voter education, civil rights and women’s issues, including women’s cardiovascular health. Now 78 years old, Streisand continues to act and record albums, is said to be working on her memoir, and has no plans to retire.

Barbra Streisand

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast
Follow us on social!

source https://richarddri.ca/common-money-mistakes-to-avoid-while-raising-a-family/

U.S. Markets Rise on Hopes for Coronavirus Relief Package; Gold Hits New Highs

August 10, 2020 drifinancialLeave a comment

It was a solid start to the week for N.A. equities Monday, as U.S. stocks climbed, boosted by key tech names and signs that the rate of new coronavirus infections in the U.S. could be slowing.

While optimism over a new coronavirus relief package has driven U.S. equities higher this week, the U.S. dollar hit the skids in July, reaching a two-year low and recording its worst month in more than a decade. Analysts have expressed concern that massive federal spending is eroding the greenback’s status as the world’s dominant reserve currency.

A weak U.S. dollar was in focus again on Tuesday as gold surged past the $2,000 mark, hitting $2,009 an ounce at one point in the day’s session. This year’s sharp drop in U.S. Treasury yields has made gold much more attractive as a safe- haven asset.

By Tuesday’s close, the Dow was up 164 points, while the TSX jumped 199, buoyed by data showing domestic manufacturing activity had expanded in July for the first time in five months.

It was another strong day for U.S. stocks Wednesday as hopes for a relief package continued to fuel investor optimism. By Wednesday’s close the Dow surged nearly 375 points, while the TSX was up 134.

Meanwhile U.S. gold futures on Wednesday hit a new intra-day record at $2,070 an ounce. So far in 2020, gold is up nearly 35%. It was also a good day for oil prices, which rose to their highest levels since early March on a significant drop in U.S. crude inventories and the sliding dollar.

The economic data from the U.S. this week has been somewhat mixed. While the service industry gained momentum in July, hiring actually declined, a worrying sign of an unsteady labour market. Thursday’s U.S. job numbers revealed 1.2 million new jobless claims—fewer than the 1.4 million expected but still at high levels historically.

Finally, N.A. equities struggled for direction on Thursday as investors parsed U.S. jobs data and ongoing deliberations in Washington over coronavirus relief. By Thursday’s close, all four major indexes were up modestly.

Five financial lessons of the pandemic

August 6, 2020 drifinancialLeave a comment

Never Retire Profile of the Week

Regis Philbin (1931-2020)

Do you remember the first time you saw Regis Philbin on TV? Was it on The Joey Bishop Show in the 1960s? AM Los Angeles in the 70s? Live! With Regis and Cathie Lee in the 80s? Or, if you like game shows, perhaps it was as the host of Who Wants to Be a Millionaire. Once called the “hardest working man in show business” and holder of the Guinness World Record for most hours on US television, there’s more than a good chance that you’ve seen a few Philbin productions. Best known for his “Everyman” persona—loudly sharing all the grumbles and complaints of modern life—Philbin was also the author of five books, a crooner in the style of Dean Martin, and an avid New York Yankees fan who, of course, loudly shared his opinion of their play. Inducted into the Television Hall of Fame in 2006, Philbin kept working as an actor, guest host and co-host in the last decade of his life in shows like How I Met Your Mother and James Corden’s Late Late Show. This past July, the hardest working man in show business died at the age of 88—having never retired.

Regis Philbin

By Ashley Land

When the coronavirus pandemic hit in mid-March, everyone’s world shifted. I began working from home, the schools closed, and I had to navigate a whole different routine.

With “stay at home measures” in full effect, I—like many of you—found that my habits and routines shifted. I found new ways to obtain the things my family and I needed while keeping ourselves safe.

Flash-forward five months later, I thought I would share with you five lessons I learned during the pandemic.

1. Re-evaluate the budget

The lockdown and shift in my daily routine had me re-evaluating my budget. While my transportation costs dropped to nearly zero, my grocery bill skyrocketed with two growing boys at home who were always hungry. I used this opportunity to re-evaluate my previous spending and looked at ways I could continue to cut expenses and use the savings toward some of my other goals.

I saved money by cooking from home and shopping around during my home insurance renewal. I saved costs by contacting my car insurance company to lower my premiums. And then, instead of spending more with my newfound savings, I paid a lump sum down on my mortgage and increased my emergency fund.

2. Save for an emergency

With the uncertainty and business closures of the pandemic, some people have temporarily lost their jobs while others are working reduced hours for reduced pay. This is a real test for those who have to rely on emergency savings in addition to government support.

An emergency fund should consist of savings that are easily accessible to be used in a time of need without having to rely on high-interest credit cards or loans. The rule of thumb is to have six months of expenses set aside in the event of a lost job, surprise repair, or other unexpected emergencies.

3. Stay focused and stay positive

During the pandemic, some days I need to just turn off the news and focus on gratitude and positivity. With so many unknowns lingering—such as “When will we be able to go back into the office?” or “Can schools safely re-open in the fall?” or “ When will things go back to normal?”—stress can really grow.

I start each day focusing on what I am grateful for. For example, I know that people and relationships matter the most. I have enjoyed slowing down and sitting on my front porch with my husband sharing stories about our day. I have enjoyed conversations with neighbours, playing baseball with my kids, and that special feeling when I finally got to hug my mom and dad.

I ask myself every week, what is the one thing I did this week to make my life happier, healthier and wealthier?

4. Set goals

Now is a good time to reflect on this unique moment in history and re-evaluate what you want to accomplish. Ask yourself some questions, like “What is important to me?” and “Do I have a solid plan in place?” and “If something happens to me, will my family be okay?”

Your savings, investment, insurance and estate plan should be directed to your goals. If you do not have a plan in place, there is no better time than now to start.

Envision where you want to be in the next three years, 10 years and 25 years. Establish achievable goals with a clear purpose.

5. Give back

In times of uncertainty, it is important to reach out and help others. During the pandemic, seek out local businesses to support. During the last five months, I have shifted my spending by ordering my groceries from independent retailers and ordering take-out from local restaurants. My friends and I organized charity challenges for local not-for-profits who provide free programming for children as well as food drives for others in our community in need. By coming together and working together, we are stronger.

No one knows what the future holds. But we can better prepare by being deliberate with our planning and finances. Take the time to pause and focus on where you are and what you want to accomplish. In the famous words of Jimmy Dean, “I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.”

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast

source https://richarddri.ca/five-financial-lessons-of-the-pandemic/

Investment advice that works

August 4, 2020 drifinancialLeave a comment

Too often, I hear from investors that they don’t trust stocks because they cannot “touch or feel it”, or that “it’s just a name on a piece of paper”. These same investors prefer to buy into real estate, which they can see, touch and brag about to friends, who can also see and touch the asset.

This is a perspective on investing that has never made sense to me…

I don’t see stocks as emotionless pieces of paper. They are an ownership stake in a company doing real business in the real world with real people and making a real impact on the economy.

To show you want I mean, allow me to describe a day in my life:

Every day, my alarm goes off at 7 am, and as I slowly wake up, I notice my bedroom is a comfortable 21 degrees Celsius, despite living in Toronto where the temperature is below zero outside for half the year. That reminds me that the natural gas I use to warm my house is owned by Gibson Energy and transported through pipelines owned by Enbridge.

My next step is to turn on the washroom lights and take a hot shower, which reminds me that the electricity used to turn on my lights and heat my water is generated by Canadian Utilities.

After my shower, I brush my teeth and notice the writing on the toothpaste tube promises that my teeth will be brighter in seven days, reminding me that the labeling was handled by a labelling company called CCL Industries.

Now ready for work, I move down to the kitchen where I make myself a smoothie. I blend a banana, a cup of strawberries and blueberries, and add a couple of scoops of yogurt for protein. As I enjoy my delicious beverage, I reflect on the fact that the fruit came from farms in California in rail containers carried by CNR before it arrived at a GTA terminal where it was transported by TFI trucks to my local Metro store. And if I spend a bit more time reflecting on those foods, I recall that the farmers growing the produce used fertilizer produced by Nutrien to help grow the perfect fruits.

I leave the house at 8 am and run to catch the #7 Bathurst Street bus, which was coincidently (or maybe not), built by a company called New Flyer Industries, a leading North American bus manufacturer.

Arriving at work, I notice the building is managed by a team from Brookfield Asset Management. I then arrive in my office, where I turn on my computer. I quickly check data from many different internal sources. If I call our IT department and ask how we access so many different sources of data at the click of a button, they will tell me that we use a product from Open Text.

Later, during lunch, I take out my cell phone and call a cycling friend to arrange our Saturday morning ride. That’s when I remember that my cell service is provided by Telus. While I have my phone out, I click on TD Bank’s client site and check the due date of my next Visa bill. It’s due today, so I make a payment using the mobile app. Heading back to my desk, I remember that my son went to the dentist last month and I wanted to check if I was reimbursed for the invoice, so I open the Great West Life (a Power Corporation company) site on my computer and notice that the payment was received on the same day as the treatment.

After work, I decide to visit a new bike store to look at carbon wheels, so I make my way home on the bus to get my car. Before I turn on the ignition, I check the glove compartment for my pink car insurance certificate and, to my surprise, I am covered by Intact Insurance.

On the way home from the cycle shop, my wife sends me a note instructing me to drop by a Dollarama store to pick up wrapping paper, paper plates, tablecloths and dish soap, all for a party she is hosting next weekend.

My last stop on the way home is to pick up a long table I am borrowing from a university friend who lives in a rented apartment in west Toronto. He never bought a house because he is a pilot and travels almost 80% of the time. We load the table into my vehicle and discuss the fact that he has been grounded for several months due to the government’s ban on the planes he specializes in flying, the Boeing 737. He explains that he is keeping his skills sharp by practicing in a flying simulator owned by CAE. As I drive away from his townhouse complex, I notice that the project is owned by InterRent REIT.

At 7 pm, I finally arrive home and start preparing a home-cooked Italian dinner, but not before I check my account balances at Royal Bank and Equitable Bank Then, after a lovely evening with my wife, I make my way upstairs around 11 pm to retire for an eight-hour rest before I do it all over again tomorrow.

Over the course of a single day, I was able to “touch” and “feel” the products of over 20 companies, all of which are currently held in the Richard Dri Dividend Growth Model. Stocks are not just emotionless pieces of paper, they are integrated into our lives. More importantly, they are companies that hire thousands of people and produce products we use every day, generating profits that produce dividends for investors like us.

What is the number 1 piece of financial advice I give any one? The piece of financial advice guaranteed to work long-term?

Invest in companies you know.

It’s a tried and true investment practice that has helped many people achieve their financial goals and live the life of their dreams.

Do you invest in the companies that produce the products you use? If not, what’s holding you back? It’s never too late to start.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast

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READ MORE BY DRI FINANCIAL GROUP:

source https://richarddri.ca/investment-advice-that-works/

Live Well, Stay Rich, Never Retire – Financial Independence for Business Owners – Part Three

August 4, 2020 drifinancialLeave a comment

As a wealth advisor, it is my mission to inspire and empower entrepreneurs and business owners. I help them fulfill their professional ambitions, achieve financial independence and become the best versions of themselves.

How?

By introducing them to the approach of living, planning and investing properly. That fuels my personal and professional success. I call it teaching business owners how to Live Well, Stay Rich, Never Retire.

This article is the third in a three-part series. Read part one – Live Well – and part two – Stay Rich – to see the complete picture of how this philosophy and framework can fuel your success.

Part Three – Never Retire

The third element of my philosophy for living, planning and investing isn’t broken down into three steps. It’s an invitation to embrace a new way of thinking about one of the most engrained and established notions we have about work: retirement.

If you step back and think about it, you can reflect on how normal it has become to accept the idea that a career is something you do until a certain age before they put you (or you put yourself) out to pasture on a golf course, beach or curling rink.

The fact is that the concept of retirement – and a particular age when you should do it – is entirely arbitrary. It’s also contrary to everything business owners know about the meaning, purpose and satisfaction their work brings to their lives.

Allow me to offer you an alternative view of your future.

By the way, this is not about promoting a life of toil where we all work to the bone until death comes calling.

This is about how to Live Well and Stay Rich! It’s about creating financial independence.

Over the course of more than 25 years working with business owners, I have learned that they love running their businesses. The idea of stepping back often fills them with dread, and those who have done so often wander listlessly through their “retirement,” not sure what to do with themselves.

What if it never had to be that way?

Dan Sullivan of Strategic Coach came up with an inspiring idea he calls “A Self Managing Company.”

Imagine this.

What if you could build your business to the point where you had the right people in the right positions so that you could focus exclusively on the parts of the business that you enjoy and are good at? Better yet, what if you could set your business up to give you the personal flexibility to pursue everything on your bucket list, all while continuing to earn well into your later life?

Would you still want to retire? I doubt it.

In his book Unique Ability: find your purpose in life and define your best self, Sullivan explains that we all have a set of natural talents that motivate us and create purpose in our lives. He refers to these talents as “Unique Abilities.” He argues that when we operate within our unique abilities, we produce services/products/ideas that add value for our customers without making us tired, overwhelmed or burnt out. By identifying and following our unique abilities, we can simultaneously achieve personal and professional success.

Imagine what it would be like if you only ever worked in areas that fit your unique abilities and delegated everything else to other people with their unique ability for tasks you don’t enjoy and aren’t good at.

Over the last few years, I have been following this model. It has had an enormous positive impact on my business and my life.

I began by identifying that my unique abilities lie in three areas:

Studying and creating investment strategies that have the potential of outperforming benchmarks
Using my 25+ years of financial planning experience to create valuable content in the form of blogs and podcasts
Marketing “value add“ services to new clients

From there, I started accessing the resources I needed to shape my practice so I do what comes naturally to me while letting other people do what comes naturally to them. Finding people to join my team whose unique abilities complement my own has had a major impact.

For example, I have a passion for sharing my knowledge and expressing my ideas. I can sit down and work on a blog like this for hours without feeling tired, bored or overwhelmed. I love it and it comes easily to me. But I have a commerce degree and have spent most of my life working with numbers, so my writing style isn’t exactly going to win me a Booker Prize. Knowing this, I connected with an editor whose unique ability is to take my sometimes jumbled thoughts and smooth them out into a readable and accessible article.

Speaking of Booker Prizes, Margaret Atwood is a great example of someone living her unique ability. At age 79, she shows no signs of slowing down and just made headlines across the literary world by releasing The Testaments, the highly-anticipated follow up to her seminal work, The Handmaid’s Tale. (Yes, my editor added the word seminal to amplify my idea – our complementary abilities on display!) I have never met Margaret Atwood, but it doesn’t take much to see that she isn’t suffering from burn out or thinking about retirement. That’s the power of unique abilities.

What’s your unique ability and how can you set your business up to make sure you can Never Retire?

That’s it. A transformative idea to change the way you think about your life and career. Find your unique ability, stick to it, delegate everything else, and retire in your business.

Read part one — Live Well — and part two — Stay Rich — to finish out the series.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast

Follow us on social:

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source https://richarddri.ca/live-well-stay-rich-never-retire-financial-independence-for-business-owners-part-three/

Live Well, Stay Rich, Never Retire – Financial Independence for Business Owners – Part Two

August 4, 2020 drifinancialLeave a comment

How?

This article is the second in a three-part series. Read part one — Live Well — and part three — Never Retire (coming soon) — to see the complete picture of how this philosophy and framework can fuel your success.

Part Two – Stay Rich

You know what’s funny about the idea of being rich? Just about everyone you meet wants to be rich, but if you ask them exactly what that means, they often fumble with an answer because the question never occurred to them before.

Does $1M make you rich? How about $100M? Does owning real estate and stocks make you rich?

In Ontario, the highest tax bracket applies to individuals earning more than $220k, so does that mean that the Provincial Government believes anyone earning more than $200k is rich?

The famous Oxford English Dictionary defines the word rich as “having much money or abundant assets; wealthy, moneyed, affluent.” Heady stuff.

What’s interesting is that the definition doesn’t stipulate how much money you need to be considered rich. Nor does the definition (or anyone you might ask for a definition) distinguish between material and nonmaterial assets. What about having a healthy and thriving family? Or many friendships? Or exciting experiences? Or positive relationships? Do they count?

What does this tell us? Your definition of rich is yours and yours alone.

Personally, I think money is an essential ingredient in defining “rich,” but I also believe that achieving financial independence is simply a means to an end.

It is a tool that enables you to obtain the security, comfort, freedom, time, friendships and experiences that will make you genuinely “rich.” I don’t want to earn, save and invest just to build my bank account. I want to do it so I can Live Well.

Here are the steps you can take to achieve your version of Stay Rich.

Step One: Define What Rich Means to You

When I work with business owners, I ask them what it would mean for them and their family to be rich. This is partly covered by mapping out the objectives that help them Live Well, but it’s also about pinning down just how much money it would take for them to achieve financial independence.

It’s a critical starting point, because you can’t achieve a goal unless you know what it is.

Let’s look at an example.

Say I sit down with a client who defines rich as having an investment portfolio that will generate enough income to cover their family’s annual expenses, which total $100k. Using the rule of thumb that you need 25 times your annual expenses in investments, that means they need to build up a portfolio of approximately $2.5M. Let’s further assume that because I’m a financial planner, my job is to help them make conservative plans, so we add 50% to that projection. That means that this client’s target number for achieving financial independence and being “rich” is $3.75M.

Now we have a target, which does two things. One, it helps us plan earning, saving and investing. Two, it lets the client start to dream about what life could be like when they get there, which is where the fun of financial planning comes in.

There is nothing quite like envisioning a life where you call the shots and make all the decisions. Where you don’t have to worry about money. Where you decide how to spend your time, your money and your attention. (And you thought financial planning was all about boring spreadsheets!)

Step Two: Organize Your Earnings and Savings to Reach Your Number

With your target number in mind, you can turn your attention to earning, saving and investing — all with the motivation that comes from knowing what you want to achieve and why you want it.

The key to building up the investment portfolio you will need is to make saving and investing a priority. Strategies like paying yourself first and making wise decisions about major purchases like a new car or larger home are a critical first step.

The basic fact of saving is that you need to not spend. It’s also the hardest part. It can be so tempting, especially for business owners who have lived frugally for many years while their business is getting off the ground, to not spend when the money begins to roll in.

Living deliberately isn’t just about becoming your best self. It’s also how you ensure you are saving enough.

It’s fine—and quite enjoyable—to reap the rewards of your success. But make sure you do so within your means. And don’t get drawn into lifestyle creep that makes your expenses climb as you keep up with the Joneses. Also, always set aside a sufficient amount every month to keep yourself moving toward financial independence.

From there, you can map out a plan for how to invest your money so you will achieve your goals. You might choose to do so with an investment advisor, or you might go it alone. Either way, pursue an evidence-based investment strategy that ensures you avoid the risks of letting emotions guide your decisions.

To help with this, I advise all of my clients to write an Investment Policy Statement. It will guide your long-term decision making about your investments.

Step Three: Make a Plan to Stay Rich

Once you have your own clear definition of “rich” and a consistent approach for saving and investing that will get you there, you can develop a strategy to Stay Rich. This is where solid financial planning becomes essential.

Here are some of the topics a financial plan should cover.

5 topics a financial plan should cover:

Cash flow projections
Tax strategy
Risk assessment
Will and powers of attorney
Plan for business succession

Cash flow projections: Project yearly balances for your future investment portfolio so that you can monitor and flag years when your portfolio falls below estimated balances. Early detection of your actual portfolio falling below your projected portfolio will allow you to make course corrections and reduce the chances of running out of money in the future.

Defer and minimize taxes: Devise a strategy to defer and minimize personal and corporate taxes as much as possible. This may involve Registered Retirement Savings Plans (RRSPs), a Tax Free Savings Account (TFSA), an Individual Pension Plan (IPP), or corporate-owned life insurance.

Risk assessment: Prepare for the unexpected by conducting a comprehensive analysis of your personal and corporate exposure to risk. Then look into the appropriate corporate insurance for accidents, life insurance, disability insurance and critical illness insurance.

Will and powers of attorney: Prepare your will to reflect your wishes for how your estate will be distributed. Also, take time to establish the appropriate financial and medical powers of attorney.

Plan for business succession: As a business owner, your personal financial future is entwined with the future of your business. Do everything you can to plan ahead so when the time comes, you already have everything in place to make the transition as smooth as possible. For example, are you passing the business on to some of your children? Or are you planning to sell? If it’s the former, you should consolidate the company leadership so that it can be transitioned smoothly to your children. If it’s the latter, you should distribute the leadership because no one wants to buy a business that relies on the continued leadership of the current owner.

That’s it. Three steps to achieving your version of Stay Rich: define rich, save and invest, and make a financial plan.

Read part one— Live Well—and part three—Never Retire—(coming soon) to finish out the series.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast

Follow us on social:

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source https://richarddri.ca/live-well-stay-rich-never-retire-financial-independence-for-business-owners-part-two/

How do I help business owners achieve financial independence

August 4, 2020 drifinancialLeave a comment

Hello, I’m Richard – son of immigrants, husband, father of two adult sons and a teenage daughter, financial planner, wealth advisor, business owner, writer, teacher, and avid cyclist. I’m the founder of Dri Financial Group, where we offer investment advice with a special focus on the needs of entrepreneurs and business owners.

For business owners, building a successful enterprise is only part of the journey. To live well and become the best version of yourself, it is essential to achieve financial independence. And this is how I do it.

During 30 years of building a thriving practice and advising hundreds of business owners, I have seen firsthand what it takes to achieve financial independence. I have developed the “Live Well, Stay Rich, Never Retire“ philosophy that inspires business owners to ignore conventional thinking about the end of their career so they can pursue their passion for working as much as they want for as long as possible.

This is my story.

In the mid-1950s, my parents were among the thousands of Italian immigrants who sailed to Canada and eventually arrived in Toronto. They were both young, uneducated, spoke no English and had almost no money. My brother and I were raised primarily by my non-English speaking Nonna while both my parents worked at multiple jobs to get by.

Because we had so little money, my parents also did everything around the house themselves. They made their own wine and cured cold cuts. And like many Italian families in our neighbourhood, they had a vegetable garden in the yard. (To this day, I feel like I’m committing a sin if I buy tomato sauce from the grocery store!) They also handled all of the repairs and chores themselves or with the help of friends and family.

My parents take great pride in the life they made here in Canada. But once I was old enough to understand, I began to see their struggle. They were always exhausted and there was often tension in the home. Could they cover the bills each month? What if one of them were laid off? What if the car broke down or the furnace exploded? What if something happened to my brother or me?

As soon as I was old enough to work, I promised myself that I would not live paycheque to paycheque as my parents did.

I didn’t know it at the time, but I was making a commitment to achieve financial independence.

I also didn’t know the struggles I would face – or the enormity of the pride I would feel – on the path to getting there.

When I was in high school in the 70s, I started my own landscaping company and worked part time at a Dominion grocery store. With this income, I was able to fund my university education and even afford an occasional night out, complete with the platform shoes I needed to fit in at the discos!

During my undergraduate education, I studied accounting because it seemed like a profession that would offer a stable source of income and career advancement. Looking back, I know I was never passionate about it, and that lack of drive meant I didn’t excel, eventually failing the accountants’ qualifying exam twice.

What I did have a passion for was achieving financial independence and starting my own business, so I kept searching.

After leaving the accounting profession, I spent several years as a real estate investor, where I once again found that I didn’t really fit with the job. When a deep recession hit in 1990, I gave up on my real estate endeavour and starting looking elsewhere.

Around that time, I was having breakfast in a local diner and saw an ad for a Chartered Financial Planner (CFP) certification program. I was immediately fascinated by the possibilities of this new career track, which fit nicely with many things that interested me. That was the inflection point of my life and career.

I read dozens of books about total wealth planning and investing en route to acquiring my CFP designation. At first, I worked for another firm, but as my passion and experience grew, I made plans to break away on my own. At age 31, I opened my own wealth planning practice and became a mutual fund dealer.

As I built my business, I was shocked by the number of people I met who failed to engage in deliberate wealth planning – either because they didn’t know how or didn’t think it mattered. They weren’t saving, had no will, had inadequate insurance and were, most shocking of all to me, not maximizing readily available opportunities to defer or reduce taxes.

It was at this early stage of building my own practice that I settled on what would become the driving passion of my career: helping people achieve their Live Well, Stay Rich, Never Retire strategy. True financial independence.

Guided by a deep belief in the power of financial education and coaching, I began to give seminars at schools and corporations, eventually teaching wealth planning courses for about 10 years. As I did, with my client base growing, my passion evolved.

I loved working with business owners just like me. I could relate to so much of what they were going through.

They worked harder than anyone else. They lived with no income guarantee, no pension, and no playbook. They took chances and had no safety net. And they were motivated by their drive to build a successful enterprise and deep desire to achieve the goal that got me started in the first place: financial independence.

Through these experiences, my practice shifted to providing total wealth planning and investment advice tailored to the unique needs of entrepreneurs and business owners.
As my business grew, it came to revolve around two philosophies for living, planning and investing.

The first is my belief that financial independence is the key to living well and being the best version of yourself. Anyone living like my parents did all those years – constantly scraping by and worrying about how to pay the bills or dreading the possibility of impending financial doom – won’t be at their best.

When we have the financial resources we need to achieve financial freedom, we are able to be the best possible spouse, child, sibling, friend, colleague, philanthropist, and community member. Why? Because financial independence allows us to focus our attention on what matters.

To provide business owners with a step-by-step plan for achieving financial freedom, I wrote a book called The Ladder to Financial Independence. It guides business owners through the stages of turning their passion for building a business into establishing the financial resources they need to have the flexibility to take their career and their life in whatever direction they choose.

My second philosophy of living, planning and investing was inspired by my work with business owners.

Over and over again, I saw that business owners don’t retire well. They are driven individuals who thrive when they can jump out of bed every morning ready to face the challenges of building a business. Most I have met like what they built and would have – or have had – a hard time walking away.

Informed by this experience, I developed the Never Retire philosophy.

A business owner already has a passion and is good at it, so why retire? Slow down? Sure. Delegate a range of duties to other members of your team? Absolutely. Focus your attention on the elements of your business you love and are good at? Definitely. But why retire completely and be idle the rest of your life?

All the things you might want to do in retirement – travel, culture, time with family, education, hobbies, and so on – can be pursued while continuing to run your business. You don’t need to retire to live your life fully. And if you have achieved financial independence, you won’t need to.

There are so many examples of people who have worked long past the age when conventional wisdom said they should retire. Look at Warren Buffett. He is 89 and still working. Or actor Betty White, who is still working at 98. Or Queen Elizabeth, who continues her duties at age 93. Or Robert Redford, who is 83 and continues to manage a range of business interests.

The Live Well, Stay Rich, Never Retire philosophy grew out of what I was seeing my clients go through, but in the last few years, it has become an increasingly personal mission.
As I have approached the age people typically associate with retirement, friends, colleagues and family members have increasingly asked me about my plans for life after work. It’s a question that never really made sense to me. I love what I do – why would I stop doing it?

I set out to achieve financial independence so that I would never have to live with the stress and strain that was so detrimental to my parents. Along the way, I discovered a passion for helping other business owners achieve their own financial independence and make plans so they Stay Rich and Never Retire.

Today, I have the ability to pursue what matters to me.

I worry about how to teach my children about money, and support them without making them too soft. I worry about my aging parents, and whether they have enough money to cover their daily needs and mounting health care costs. And I worry that the drive to make money leaves many entrepreneurs missing the point: money is a tool we can use to become the best version of ourselves.

These are my passions. And that’s my story.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

Subscribe to our Never Retire Newsletter
Contact us to order a complimentary e-book
Check-out our latest Wealth Navigator podcast

Follow us on social:

Facebook
Twitter
LinkedIn

source https://richarddri.ca/how-do-i-help-business-owners-achieve-financial-independence/

U.S. markets struggled following U.S. GDP report

August 4, 2020 drifinancialLeave a comment

U.S. equities started off the week in positive territory, helped by technology stocks. Gold continued its climb as investors were concerned about the global economy and the Fed’s committee meeting. The Dow ended the day slightly up, the Nasdaq finished the session up 173 points. The TSX also rallied on Monday which was helped by the run in gold prices.

Tuesday took a turn as investors were sifting through earnings reports and concerns about the virus as global cases rose. In addition, gold dipped after hitting a high of $2,000 an ounce, breaking its rally. The S&P 500 slumped on the back missed earnings results from McDonald’s Corp. and 3M Co. By Tuesday’s close, the Nasdaq and Dow was down 134 and 206 points, respectively, while the TSX was slightly down on the day.

Markets reversed yesterday’s losses as the Federal Reserve left interest rates near zero and confirmed that it would continue to provide support as it is “the most severse economic downturn in our lifetime.” In addition, investors were still waiting on the details on a possible government stimulus program as the latest round is set to expire. By Wednesday’s close, all four major N.A. indexes ended in the green, with the Dow up 160 points.

U.S. Q2 GDP took center stage as it decreased at an annual rate of 32.9%, slightly better than estimates but still the largest fall since records begain in 1947. Almost all categories posted sharp declines, led by personal consumption expenditures which represent more than two thirds of U.S. economic activity. U.S. equities sank on the news.