Today’s podcast guest is Sam Moorcroft, President and Co-founder of Christiancafe.com. After a few hits — but many more misses — on various dating sites, Sam and his brother Philip — who is also an MBA recipient — decided to build their own. Launched in 1999, Christiancafe.com is now the largest privately-owned Christian singles site online. After more than 22-years as a business, this site has helped hundreds of thousands of Christian singles connect, and is responsible for over 25,000 marriages.

In today’s podcast, Sam takes us through the complex world of online dating, and how Christicafe.com’s original strategy has and stood the test of time, technology and the pandemic.

Sam finishes up by offering his advice for young entrepreneurs, detailing his and his wife’s savings and investments, and, revealing his definition of financial independence for him and his family.

Listen to the podcast – Download the transcript

Highlights:

• Sam and his brother started ChristianCafe.com after Sam used many dating sites and realized that he could create a better experience for Christian singles.
• He explains how they saw a 30% jump in membership buy-in during the pandemic.
• Sam highlights that, while Christiancafe.com is a global site, 80% of their membership is from North American singles.
• Sam’s investing strategy has changed somewhat over the years, however, he continues to embrace a tax limiting strategy of using RSPs, RRSPs, TFSAs and RESPs.
• His definition of financial independence is quite straightforward, “it is just from a simple mathematical point of view of more cash in than cash out.”

Quotes:

“So people are shifting heavily, heavily towards mobile. So in our case, right now it’s about 65%.”

“While [activity] historically was, and it still is, evenings and weekends. In our case, Sunday afternoons are one of our most popular times.”

“I remember a great salesman, a mentor of mine saying, “The difference between a good salesman and a great salesman, a great salesman believes in what he’s selling.” So you have to know why you’re there.”

“If I was giving advice to my younger self, I would have started saving 20 years earlier. Like when I was legally eligible.”

Follow us on social:

Listen to more podcasts by Richard Dri:

Standing out from the crowd with Elias Anderson

Building a business from a napkin brief and a personal belief with Kevin Mako

Clear the Air on Success as a Lifelong Entrepreneur with Stephen Worrall

source https://richarddri.ca/how-a-lack-of-likes-drove-an-entrepreneur-to-create-christiancafe-com-with-sam-moorcroft/

If you have a child or other loved one with a disability, it’s essential to plan ahead to secure their future well-being.

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Estate planning considerations

When creating an estate plan that provides for a beneficiary with a disability, there are several things to consider. Start by asking the following questions.

Will your loved one be able to manage their day-to-day expenses? What about any unforeseen expenses?

Your estate plan should help provide your loved one with financial security after you pass away. Assess your beneficiary’s needs and expenses to determine if they will have sufficient resources.

Also, consider your loved one’s capacity to manage their own assets. If they cannot legally own property, they may not be able to hold anything that is gifted or inherited. If your loved one does not have a Power of Attorney for Property, a court application may be needed to appoint a Guardian of Property to control and manage their assets.

Will a gift or inheritance impact your loved one’s eligibility for disability benefits?

An outright gift to your beneficiary can contribute to their financial security after your death, but it may have unintended consequences on their government entitlements. If your beneficiary is currently receiving disability benefits, determine the eligibility requirements and ensure that their new inheritance would not disqualify them. Holding the assets in trust is a common way to bypass this issue.

Do you want your loved one to live in your home?

If your loved one currently resides with you, consider where they will live when you pass away. If you want your beneficiary to continue living in your home, how will expenses be managed? Will they need assistance to maintain the home? If so, you may want to find a caregiver or guardian to support them.

Does your loved one require a legal guardian?

If your loved one is a minor or mentally incapable, you must decide who will be their guardian. A personal guardian can make decisions about a person’s healthcare, housing, food, and other personal matters, while a guardian of property can make decisions about a person’s money, income, property, benefits, and other financial matters.

Registered Disability Savings Plans (RDSP)

An RDSP is a registered savings vehicle for Canadians with disabilities designed to help them and their families save for the future. Generally, any resident of Canada under the age of 60 who is eligible for the Disability Tax Credit (DTC) can be the beneficiary of an RDSP.

Since RDSPs have a lifetime contribution limit of $200,000, parents looking to leave large gifts to a disabled beneficiary may need to consider other options, such as a fully discretionary trust.

Trust planning

If your loved one is unable to manage their own affairs, consider leaving assets in a trust. The terms of the trust can specify how the assets are managed and distributed to your loved one throughout their lifetime. Trusts may be either inter vivos (set up during your lifetime) or testamentary (set up after your death).

A specific type of trust, known as a Henson Trust, is designed to protect your disabled beneficiary’s government benefits and entitlements.

Henson Trusts

A Henson Trust is designed specifically to benefit individuals with disabilities or special needs. It manages the trust assets and is fully discretionary, which means the trustee will determine how funds are managed and distributed. The trustee may use the funds from the trust to pay for your loved one’s regular expenses, while keeping the bulk of the trust intact for future needs.

A Henson Trust allows the beneficiary to remain eligible for certain government disability benefit programs.

For example, the Ontario Disability Support Program provides a basic income/shelter support for an eligible individual between the ages of 18 and 65, with no dependents. They may also qualify for drug and dental benefits as well as certain medical supplies, above what is provided under the Ontario Health Insurance Program. Please note that Henson Trusts are not available in Alberta, Nunavut, or the Northwest Territories.

Choosing a trustee

If you choose to create a trust for your beneficiary, you will need to designate a trustee. This is not a decision to be taken lightly, as the role of trustee is an important responsibility. The trustee will manage the assets in the trust, maintain adequate records, file tax returns, and perform other related tasks. A trustee can be a single person, multiple people, or a trust company like Scotiatrust.

Choose a trustee who understands your beneficiary’s unique needs. The trustee will have discretion over the trust, so they should know how to utilize the trust to best support your beneficiary. Additionally, avoid any conflicts of interest where the trustee might not act in the best interests of your beneficiary. For example, the trustee may be set to inherit the balance of the trust upon your beneficiary’s death.

Ensure that your prospective trustee is willing and able to take on the role, as their obligation may continue for many years. You may instead choose to appoint a trust company as trustee, such as Scotiatrust. By appointing Scotiatrust as trustee, the needs of your beneficiary will be handled with sensitivity, professionalism, expertise, and objectivity.

Planning for the future of disabled loved ones can be difficult, but you will have peace of mind knowing they will continue to receive appropriate care after your death. Contact us to find out how we can help you plan for your disabled loved ones.

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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 P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/estate-planning-for-inheritors-with-disabilities/

There was plenty for Market Watchers to digest this week with market-moving news out of China and the U.S. as well as noteworthy economic data from the IMF and Canada.

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Starting in the U.S., Q2 GDP grew at a 6.5% annual clip lifting the economy’s size above its pre-pandemic level. The milestone underlines how quickly the U.S. economy has recovered as U.S. consumers resumed spending in concert with business re-openings, vaccinations and large infusions of government aid. The Federal Reserve has also played a key role implementing easy-money policies at the start of the pandemic which will continue the bank confirmed at this week’s two-day policy meeting. When the Fed does start to tighten it will begin with a reduction, or tapering, in monthly Treasury and mortgage bonds purchases. Also in the U.S., President Biden’s US$1 trillion infrastructure deal cleared its first procedural hurdle mid-week advancing to the Senate where it still faces a long road to being approved. On the Q2 U.S. earnings front, a large majority of S&P 500 companies continue to top earnings estimates and exceed revenue projections buoying markets south of the border. Turning to China, the Beijing government continued its crackdown on the technology sector announcing new rules on private tutoring and online education firms as well as ordering Internet giants to fix certain practices that previously went unquestioned. In economic news, the International Monetary Fund released its latest outlook Tuesday leaving its 6% global growth forecast intact from its April estimate. The big change to the IMF’s outlook was an increase in growth projections for developed countries and reductions for developing countries as lower vaccination rates have left them more vulnerable to economic fall-out. Finally in Canada, inflation decelerated for the first time this year with CPI up 3.1% yoy in June compared to 3.6% in May. The read exceeds the Bank of Canada’s 1% to 3% inflation range but the decrease supports the bank’s view that the price run-up is transitory.

N.A. markets were mixed this week

For the four days covered in this report, the Dow added 23 pts. to close at 35,084, the S&P 500 gained 8 pts. to finish at 4,419 and the Nasdaq fell 58 pts. to settle at 14,778. In Canada, the TSX rose 123 pts. to end at 20,311 pts., a new record high.

Read more

source https://richarddri.ca/markets-digest-latest-batch-of-earnings/

Today’s podcast guest is Elias Anderson, Founder of Hear Me Cheer and one of the youngest guests we’ve ever had on the Richard Dri Wealth Navigator Podcast. In 2018, Elias made a life-changing decision to put his schooling on-hold to follow his entrepreneurial dreams. Little did he know how his future would unfold.

After incorporating his first business on his 18th birthday, a few months later, Hear Me Cheer was launched. The web app, which can be integrated directly into other applications and platforms, allows users to fully engage with the stadium experience of a sporting event, concert or show. Right from the comfort of their own living room. The potential of the web app is so great, that by the end of his first-ever two-hour job for ESPN, 200 prospective clients were pinging his inbox.

His expertise and entrepreneurship belies his years. As demand grew, Elias saw opportunities in other vertical sectors and expanded the technology accordingly. Today, Elias has partners knocking on his door to take his product in directions that he never imagined when Hear Me Cheer was just a napkin concept in the college cafeteria.

LISTEN TO THE PODCAST – DOWNLOAD THE TRANSCRIPT

HIGHLIGHTS:

• Elias started his first company: ChampTrax, the day he turned 18. In his own words, “It’s not something that people usually do the day that they turn 18, but I filed the papers for incorporation in May 2018.”
• While Hear Me Cheer is the brainchild of Elias, he’s kept the business in the family, working with his father and brothers to grow the startup into a fully functioning business with 12 full-time employees.
• Elias explains that the platform, which has been borne by pandemic-driven demand, has endless post-pandemic opportunities to put physical events in front of global sofa-surfing viewers.
• As a young entrepreneur, Elias hasn’t begun his investing journey — not a traditional one at least — as he is focused on reinvesting profits back into his business.

QUOTE:

“One of the greatest challenges of my life is being an entrepreneur and going to work everyday and working for yourself.”

“You have to be 100% committed to building the business out and you have to believe in the idea.”

“We’ve grown our team to 12 full-time people now, and we’re still cash flow positive.”

“We’re not saving money yet because we’re dumping it back into the business to invest [it] back in ourselves.”

“I think that the social audio space is just getting going with something like Clubhouse and Facebook, Twitter, all creating social audio products.”

Follow us on social:

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Listen to more podcasts by Richard Dri:

Building a business from a napkin brief and a personal belief with Kevin Mako

Clear the Air on Success as a Lifelong Entrepreneur with Stephen Worrall

Making your Passion Your Business with Marc Wilson

source https://richarddri.ca/standing-out-from-the-crowd-with-elias-anderson/

On this week’s podcast, I have the pleasure of talking with Kevin Mako, President of Mako Design and Invent. When Kevin had an idea for a product, he needed an agency to help him take his concept to production, but no company existed that could fully fulfill his needs—so he created his own. Built completely from the ground up with no financing and no debt, Mako Design and Invent is now the largest physical product design company in Canada, turning great product ideas into booming businesses. Listen to Kevin’s journey from napkin investor to the President of Mako Group, Inc., which specializes in investing in startups and scaling businesses. But it wasn’t all business talk, Kevin gratefully shared his tips and thoughts on personal financial planning.

Listen to the Podcast – Download the Transcript

Highlights:

• In this interview, Kevin describes how he came up with the idea for his rather unique business, his journey from inventor to multinational business owner, and what his business looks like today.
• Years ago, Kevin was looking for a company to help him develop his invention from ‘sketch to product’ and realized such a company did not exist. So he created the business himself.
• He has invested in rental properties and businesses he believes in, maxes out his RRSP annually, and has been financial planning since he was 20 years old.
• Kevin’s definition of financial independence is to have the finances in place so that his “family is in good shape to perpetuity.”

Quotes:

“What I realized at the time, was there’s absolutely no reasonable way for an individual or a small startup that has a physical invention idea, to go from the rough sketch on a napkin, all the way through to production.”

“I would say that one of the biggest things in terms of succeeding in something like that, is to make sure that you have the tools and the infrastructure built in advance in order to scale your business, before you actually take that journey.”

“Quite regularly, we’re also helping startups with many of the other elements of getting a product to production and beyond―actually creating a business out of it.”

“If you’re not willing to invest your own money, even just to start, then you’re going to have a very hard time convincing others.”

“We always got to focus on the opportunity, relentlessly focused on the opportunity, and not worry about logistics in the backend. I can’t emphasize enough how important it is to get those processes in place now as opposed to later.”

“If I want to achieve certain things, such as: if I want to have a house by a certain date then h are the financial milestones I need to hit.”

“When it comes to financial independence, it’s about ensuring that at least a baseline is there for my family forever.”

Follow us on social:

FacebookTwitterLinkedIn

Listen to more podcasts by Richard Dri:

Clear the Air on Success as a Lifelong Entrepreneur with Stephen Worrall

Making your Passion Your Business with Marc Wilson

The Formidable Combination of CPA and Tax Law Expertise with Josh Kumar

source https://richarddri.ca/building-a-business-from-a-napkin-brief-and-a-personal-belief-with-kevin-mako/

Whenever I’m explaining the challenges of inflation, with a client, I always stress these three points:

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1. Even a low annual inflation rate of 2% reduces purchasing power by roughly 50% over a 20-year period.
2. Investors need a compounding strategy that increases annual retirement income by at least the rate of inflation. We suggest dividend growth stocks.
3. A rules-based strategy (if successfully back-tested) helps remove emotions and gut reactions from the investment strategy and may lead to better long-term results.

At the very least, an investment portfolio must grow at the rate of inflation otherwise it may be better to hide your savings under your mattress.

Inflation is a persistent threat to investors

While there are many things that can derail your life planning, inflation is one of those Jekyll and Hyde characters that can be great for your investments or can wipe out your savings like a swarm of hungry locusts.

What I mean is, the Canadian inflation rate averaged 3% from 1915 to May 2021, and as of May, is currently 3.6%. So, according to the Bank Of Canada’s Inflation calculator, if you spent $1,000 on a basket of goods and services on January 1, 2000, the same basket would cost approximately $1,485.77 in May, 2021.

That is a cumulative increase of 48.58% over 21 years, which sounds like a huge increase but broken down annually, it is “only” 1.90% per annum.

Why is inflation so important to understand?

Understanding inflation is important because it’s the difference between an extra-large Double Double and a small Double Double. Or possibly even, no Double Double at all.

Using the example above, if I retired on January 1, 2000, and estimated my retirement expenses and income at $75,000 per year, my retirement income must rise to approximately $111,433 in May 2021, simply to buy the same basket of goods and services.

The magic of compounding interest

Inflation is a great example of compounding in the wrong direction, i.e.; the value of your cash gets incrementally worse. But compounding can go both ways. Let’s say you invested $500,000 on June 30, 2011, and followed the buy/sell recommendations of the Richard Dri Canadian Dividend Growth model. 10 years later on June 30, 2021, your account would have grown to approximately $1.6 million.

Typically, Investors search for investments that compound in a positive direction. So if your objective is to achieve financial freedom, you must use compounding investments, such as:

Guaranteed Investments Certificates (GICs): GIC’s pay simple compounding interest but the rates are currently low and may not cover the rate of inflation. The current rate for a 5-year nonredeemable GIC, compounded annually is 1%, as of July 17th, 2021.

Real Estate: Rent generally compounds at (or above) the rate of inflation, however, rental properties have maintenance and management needs that require time and effort. Perhaps a Real Estate Investment Trust ( REIT) may be the better option as it removes the day-to-day management of the rental property.

Dividend growth stocks: Invest in companies with a long history of paying a quarterly dividend and increasing their dividends at least annually. The increasing dividends can be used to purchase additional shares in the payer company (usually at a discount to market). Since dividends are usually paid quarterly and increase annually, It’s a viable option for a compounding model and requires very little personal effort.

Enbridge, a long-term compounding success

A great example of a quality dividend grower is Enbridge. Enbridge has paid a dividend for over 66 years and over the last 26 years, the dividend has grown at an average compound annual growth rate of 10%, which easily beats the inflation rate over the same period, and would have kept your retirement income growing comfortably.

In short, you don’t need to find the next Google or Amazon; build a personal compounding model by finding and investing in proven dividend growth stocks, which you can reinvest or even live off: How to Live Off Your Dividends.

It is not a game of chance

Gambling can be a lot of fun, and yes, occasionally it can pay off. There are even those rare people who gamble professionally, but over my 25+ year career, I have always said that investing in stocks/publicly listed companies is not a game of chance.

Despite knowing that a stock’s performance is not entirely predictable, I don’t consider investing in dividend growth stocks as gambling, as I believe there are many ways to remove some chance from the equation and make decisions that deliver more consistent returns.

A rules-based approach

I believe the key is to eliminate hunches, hot tips and gut feelings from the mix. And, most of all, to never think about luck. What is needed is a rules-based investment model that distills years of market data and careful analysis into a clear set of rules that must be followed and never broken.

Prior to launching the Richard Dri Canadian Dividend Growth model, I hired Morningstar research company to compare the best dividend growth stocks over the last 35-years and identify whether these stocks had anything in common.

The study proved that many of the best-performing dividend growth stocks did indeed have similar characteristics. Armed with this information, we worked together and built an algorithm that matched these common characteristics. I tested the theory by following the buy/sell rules of the algorithm and recorded the returns over the previous 30-year period, and I’m proud to say that the model showed superior returns when compared to the S&P/TSX over a 10-year and a 31-year period.

It is important to understand that the model ebbs and flows like any other investment portfolio, however, what is critical is that the fluctuations are smaller in magnitude than the S&P/TSX. For example, as of June/30, the model’s 10-year return-on-investment is 12.4% versus the S&P/TSX at 7.4%.

Final thoughts

It is obvious that a robust model is needed to ensure that your retirement planning is successful. So I recommend that you ask yourself:

1. Is your portfolio keeping up with inflation?
2. If inflation increases up to the long-term average of 3.1%, will your retirement income be able to keep pace?
3. Do you know your retirement income sources and are they inflation adjusted?

If you have a nagging doubt with any of these questions, please call my office and arrange an appointment to discuss how to protect yourself against inflation.

---

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 P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/how-inflation-threatens-investment-success/

There was plenty for Market Watchers to digest this week including Q2 earnings releases, central bank news and economic data.

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In the U.S., analysts project profits for S&P 500 companies to rise 64% in Q2 from a year earlier – the fastest rate of growth in more than a decade – according to FactSet. In Europe, Q2 earnings are expected to be even stronger with the 600 biggest listed companies expected to surge 110% yoy for the April to June quarter according to Refinitiv IBES data. As impressive as the projections are, the measures come from a year ago period when both economies were brought to a standstill due to Covid. Turning to central banks, the BoC made no policy changes Wednesday leaving its key interest rate at 0.25%. The bank did, however, reduce weekly bond purchases from $3 billion to $2 billion. South of the border, Fed Chairman Powell presented the bank’s semi-annual policy report and testified before two separate committees Wednesday and Thursday. In remarks, Powell said the bank will continue to discuss the appropriate timing to reduce monthly bond purchases while re-iterating his stance the U.S. economy is “still a ways off” from fully recovering. Powell’s comments regarding inflation remained unchanged with him saying the upward move in prices is transitory. This despite yoy U.S. consumer prices rising faster-than-anticipated, up 5.4% in June, the biggest 12-month jump since August 2008. Turning to China, the world’s second-largest economy reported a Q2 GDP growth rate of 7.9% Thursday compared to a year earlier. Monthly readings of industrial output, retail sales, fixed asset investment and urban employment met or exceeded estimates in June. The readings, in combination with stronger than-expected import and export data released earlier in the week, suggest China will meet its full-year growth target of 6% or more. Finally in commodities news, the door appears to be opening for OPEC+ to reach a deal to boost oil production. Last week, a tentative deal faltered due to objections from the United Arab Emirates which appear to have since been resolved.

N.A. markets were a mixed bag this week

For the four-day period covered in this report, the Dow added 117 pts. to close at 34,987, the S&P 500 fell 9 pts. to end at 4,360 and the Nasdaq gave back 158 pts. to finish Thursday at 14, 543. In Canada, the TSX lost 74 pts. to settle at 20,183.

Read more

source https://richarddri.ca/equities-mixed-heading-into-earnings-season/

My special guest on the podcast today is Stephen Worrall, founder of Integrated Clean Air Services, and industry expert in the field of HVAC hygiene and Indoor Air Quality. A former member of the Canadian Armed Forces and a veteran of the 1st Gulf War, Stephen is very much a lifelong entrepreneur with a keen interest in financial services who has written and spoken about cryptocurrencies and blockchain at several events. He also sits on several industry committees and is a member and Committee Chair with the Oakville Chamber of Commerce.

In today’s episode, Stephen shares how he got started in the clean air business, what he means by the ‘golden quarter’, what his company looks like today and how they attract customers. He also discusses the role his wife plays in the company and how they are growing the business.  Stephen goes on to reveal his plans for the future, the low points in his journey thus far and the lessons learned, and finishes up by describing his savings and investments as well as his definition of financial independence.

Listen to the Podcast – Download the Transcript

Highlights:

• The ‘golden quarter’ is the quarter of the year where you tend to earn the most of your money.
• Stephen’s business is growing through providing white label services, and he is considering franchising as well.
• He has researched crypto and blockchain technology extensively and believes they will be instrumental in allowing derivatives to thrive.
• His low points occurred when a couple of his business partnerships broke up.
• For Stephen, financial independence is, in some ways, the size of your bank account, and also being able to go out every day and earn your own living.

Quotes:

“Middle of September the phones would really start to open up and you’d go crazy all the way through until mid-December. You would do almost a third of the year in that quarter.”

“My own system development is actually really solid. That’s one of the reasons I’ve been able to take on other projects or run multiple companies at the same time, because I’ve built such solid systems here that they can almost run themselves at this point.”

“One of the narratives inside the blockchain community is the democratization of finance or financial services, in that anyone can participate anywhere. It’s no longer just institutional only.”

“Take a swipe at it. If you’ve got a passion, you see an opportunity, go for it. And if you fail, you fail, just learn. I think that’s probably one of the most important things.”

“If you can travel and not worry if you don’t have enough money from one week to the next, and my wife doesn’t have to work outside of the home, that’s what I think is successful for us.”

Follow us on social:

Listen to more podcasts by Richard Dri:

Making your Passion Your Business with Marc Wilson

The Formidable Combination of CPA and Tax Law Expertise with Josh Kumar

Starting a Law Firm to Serve Corporations and Individuals Alike with Sara Erskine

source https://richarddri.ca/clearing-the-air-about-succeeding-as-a-lifelong-entrepreneur-with-stephen-worrall/

This is going to be controversial. However, my intention isn’t to capsize your retirement plans, rather, I’m just rocking the boat to see where your feet will fall.

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Most Canadians are homeowners

To preface my theory, in 2018, approximately 68% of Canadians owned their home and this number rose to over 70% for Canadians aged 65 and older, according to Statistics Canada.

The data is clear, Canadians love owning their own home and we all know why. Right?

I’ll answer the question by talking about my own real estate journey.

Toronto real estate has been a great investment

My late wife and I bought our first property 35 years ago. A three-bedroom condo in the Eglinton and Royal York area, and we paid $109,000. Fast-forward four years and we sold it for $199,000.

As a financial advisor, I couldn’t believe how much we’d made in just four short years. We quickly become firm believers in Toronto real estate as a profitable investment.

Our second home was not as profitable. We bought the house in 1990 for $450,000 and after 16 years, sold it for $660,000. A gain of approximately 3% per annum (simple interest).

Fortunately, my current property has been a home run, bought in 2006 for $925,000 it is now worth considerably more.

I can happily say my 35-year homeownership journey achieved its objective of increasing my net worth.

Maybe I could have achieved the same or better with an alternative investment portfolio, but I suspect my objective of buying a home is the same for most Canadians: increase net worth and provide a roof over their family’s heads.

Should retirement goals be based on capital appreciation or cash?

If Canadians are buying homes to increase their net worth, then, it is logical to assume our homes will one day fund all (or part) of our retirement needs Right?

For me, the answer is “yes”. My homes have always been part of my retirement plan. Soon, I plan to sell my current home and use the proceeds to fund my retirement. I know this is a controversial conclusion, but in retirement, my goal is no longer capital appreciation/accumulation but income needs.

The equity in my home will provide cash to fund my retirement lifestyle. Because, in retirement, my needs are different. I’m not interested in capital appreciation; I’m interested in cold stone cash.

Math and emotions

• According to a 2019 Sun Life Financial survey, nearly half (47%) of working Canadians believe there is a serious risk they could outlive their retirement savings.
• 44% of working Canadians expect to be employed full-time at the age of 66.
• Nearly a quarter (23%) of Canadian retirees describe their lifestyle as ‘frugal’.

Here’s the contradiction, most retirees own their home, yet almost half of Canadians (see above) feel they don’t have enough retirement savings.

It doesn’t make sense to own a paid-off home and live frugally. Yet, most retirees don’t consider their homes as retirement assets and have resorted to a life of frugality.

I think this is an emotional issue, rather than a mathematical one, because retirees may feel emotionally attached to their homes, which is preventing them from using the equity.

Let me explain:

Bob and Jane, both 65 years old, own a paid-off home in the GTA worth $1.2M and decide to sell the property and rent. The house proceeds will be reinvested in a basket of individual stocks.

Let’s assume an investment return of 4%, inflation of 2%, and a retirement lasting 30 years.

Given the above assumptions, the proceeds from the house will generate an inflation-adjusted annual income of roughly $50,000. That’s $50,000 every year for the next 30 years.

I have ignored tax implications because the payments would be a blend of capital repayment and capital appreciation, hence the cash flow will be very tax efficient.

Let’s be honest, a $1M+ homes are quite common in GTA so why not sell the home and live well in retirement? The extra cash would surely help improve any retirement lifestyle. Renters will face monthly rental payments, but a lack of housing expenses certainly offsets these costs.

Many Canadians wish to leave the home to their children

However, we can’t ignore the emotional aspect here. We’re all human, right? From my experience, many clients are reluctant to sell their homes because it may mean their children receive a smaller inheritance.

But I’m sure that if we asked your children, “would you prefer that your parents spend their inheritance or save it?” most kids would say “spend spend spend!”

Please don’t get me wrong, I don’t plan to squander my net worth by spending frivolously, but on the other hand, I don’t plan to live frugally either.

The principle of selling your principal residence

I’m sure that inheritance is still niggling at the back of your mind, and estate planning, is certainly an essential part of your retirement success. But remember, I’m recommending that you look into selling your principal residence not that cottage by the lake or your Miami condo. So instead of sharing cash with your children, why not arrange your estate to share the lake house instead?

Final thoughts,

I think that all retirees should investigate whether selling their homes and using the equity to improve their retirement lifestyle, makes sense to them and their wallets. Why not make an appointment today and Contact us.

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source https://richarddri.ca/retirement-and-realty/

U.S. stocks were closed on Monday for the independence day holdiday. International equities were lower as the dispute between Saudi Arabia and the United Arab Emirates remains unresolved increasing uncertainty whether the Organization for Petroleum Exporting Countries and their allies (OPEC+) will pump more crude to ease an inflationary price surge or allow crude to extend its rally. Under the new quota it is seeking, the UAE wants to boost its output by almost 700,000 barrels a day. In absence of an agreement, Saudi Prince Abdulaziz said there is a fall-back deal in place under which oil output does not increase in August or the rest of the year, potentially risking an inflationary oil price spike.

The breakdown of OPEC talks led the U.S. markets to open lower following the holiday but markets recovered by the end of the trading session. Markets were mixed as concerns arose that the economic recovery post the pandemic was plateauing following the release of Germany’s investor confidence gauge. The survey showed supply bottlenecks weighed on the manufacturing sector and spreading COVID-19 variants threaten the revival in services. The ZEW gauge of expectations slipped to 63.3 in June, down from 79.8 in May and well below consensus of 75.2, reaching the lowest since January.

On Wednesday, U.S. markets were steady ahead of the release of the FOMC meeting minutes. The minutes for the June meeting did not contain any surprises nor new perspectives to inform on the increase in the median 2023 dot in the latest forecasts. The minutes reiterated that “substantial further progress” remains a way off. Also, the outlook remains very cloudy, with some participants interpreting recent data as unclear about underlying momentum and assessing that more information in coming months would be necessary to take appropriate action.

U.S. stocks dropped on Thursday from record highs amid growing anxiety that the spread of COVID-19 variants will upend growth expectations, undoing popular reflation trades. International markets were lower as China unexpectedly shifted its tone, suggesting the pace of the country’s recovery may be weaker than it appears. The CSI 300 Index of stocks slid as much as 1.2% Thursday after policymakers hinted companies may need fresh funding and the People’s Bank of China (PBoC) could lower the reserve requirement ratio (RRR). The yuan also fell, and bond futures rose by the most in a year. Indeed, the State Council’s comments were an abrupt change in rhetoric with officials spending much of the last year stressing how excessive global liquidity risked fueling asset bubbles.

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source https://richarddri.ca/equities-weaker-following-the-holiday-long-weekend/