Archive for 2016

DOUG MACDONALD RECEIVES PRESTIGIOUS INVESCO CANADA AWARD FOR LIFETIME ACHIEVEMENT

June 6th, 2016

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At the Canadian Wealth Professional Awards dinner (wpawards.ca) in Toronto on June 2, 2016, a gathering of wealth professional from across the country, Doug Macdonald, one of the founders of Macdonald, Shymko & Company Ltd., was awarded a Lifetime Achievement Award recognizing his contributions to the financial services industry over Macdonald, Shymko & Company 44-year history.

The Wealth Professional Awards brings together leaders to celebrate excellence in the Wealth Management industry and are designed to recognize individuals, teams, and companies for their outstanding achievements and contributions to the field.

David Shymko and Doug Macdonald (pioneers in fee-only advice), got together in May of 1972 with a unique concept to create a new business model within the financial services industry. This concept was to offer Independent Comprehensive Financial Advice on a fee for service basis to individuals – a model similar to that of an accountant, lawyer or architect, and is now referred to as “Fee-Only”.

Doug Macdonald stated, “Forty-four years ago we received advice and counsel from many experienced individuals that this business model was not viable, there would be no demand for this service, and most certainly no one would be prepared to pay for this service on an hourly charge basis. Fortunately, we both were young, idealistic, and committed to the concept.”

Today, 44 years later, while the original partners David Shymko, Larry Jacobson, and Doug Macdonald are transitioning out of Macdonald, Shymko & Company, the six younger partners have taken to guiding the company forward with the same original values and vision. This business model has now been used by many firms and individuals within Canada, and in addition, there is an overall trend within the financial services industry towards fee-based advice.

In accepting his Award Doug Macdonald noted, “That the financial services industry in 1972 was very different, it was transaction based, commissions and trading costs were high, the concept of personal financial planning was unheard of, the education of participates was limited, and lastly, consumer knowledge was limited or often non-existent. Today there has been significant change, consumer knowledge and awareness is significantly higher, thanks in a large part to the media and the internet. Costs are greatly reduced, and the education level and professionalism of participants is significantly enhanced.”

This Gala Award Dinner is a national event where 20 different awards are handed out within various categories. Nominations are received from across Canada and then narrowed down to six finalists. In the category Private Client Award for Advisor of the Year, Gina Macdonald was one of the finalists for this category, which in itself was a significant achievement. Gina remarked, “The type of services by Macdonald, Shymko & Company provided in the beginning and today have resulted in advice centered on the client and the achievement of their goals and we have no plans to stray from that approach.”

Wealth Professional’s Wealth Professional Article.

 

5 Tips For Being a Good Millionaire

April 16th, 2016

CBC Radio Canada

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Although it is a dream for many Canadians hitting the jackpot is not easy. It is can be an intense upheaval that is accompanied by emotions, a multitude of questions, fears and important decisions. While some embrace their new life, for others, this blessing can quickly turn into a nightmare.

…But once the euphoria passes, there is another phase that the rich apprentices’ faces that are often best left alone with their millions. “Once our winners leave our office with their check, we do not contact them” says Jessica Gares, spokesperson for the British Columbia Lottery Corporation.

“Our role is to ensure that the winners receive their prizes. Each personality is different and it is not our role to advise them on their money. At most, we suggest they get close to a professional financial advisor.”

A graduate of psychology and financial planner for Vancouver-based firm Macdonald Shymko & Company Ltd., Gina Macdonald has received windfall clients in her office. She gives several tips.

The first (wise) decision to make as a new millionaire is to make time to breathe and digest the information. “Wait a while, or even months, before making big decisions and take the time to sit down to plan over the long term,” advises Gina Macdonald.  “Many lottery winners squander their entire fortune in a few years.”

“A financial professional will help you define your personal and financial goals, as you want to make your money last and plan for the long term. It is also about assessing and setting an expenditure ceiling depending on your financial plan, “explains Gina McDonald.

The financial aspect is important, but it is important not to overlook the psychological side, according to Gina Macdonald. Being rich may come with many complications we do not think about, said the specialist. Topics include relationship and family problems. A psychologist can help the winner to manage the stress of his present and future. Having a well thought out plan helps minimize stress.

We must also accept the fact that becoming a millionaire cannot answer all the problems of life. “Some people come into my office and are completely lost. I try to reassure my clients reminding them that money does not buy happiness, but it is a tool to accomplish your dreams” expresses Gina Macdonald.   Click here to read the rest of the article

WHAT TO DO WHEN YOUR ADULT CHILDREN ARE RUINING YOUR RETIREMENT

March 30th, 2016

The Globe and Mail – By Diane Jermyn

Generous parents could go broke paying for expensive weddings, children returning home to live, children in debt and children (or grandchildren) who want to buy a first home. Helping out adult children in a crisis is something most parents do if they are able, but when should you start saying no? If you are at, or approaching, retirement age, the help you give now could put your retirement in jeopardy that are completely removed from their business operations in case there’s a scorched-earth-type scenario with the business. Say one of them gets a disability and her involvement in the business was required to maintain its value: I would want to have some of their wealth removed from the business beforehand.

More than 10 years ago, a freelance industrial engineer bought a second house in Halifax (currently valued at $900,000) with the idea of renting it out to supplement retirement income for him and his wife.

But the couple, now in their 70s and semi-retired, haven’t yet been able to enjoy that extra income, which they had intended to spend on travel, small luxuries or maintenance on their principal residence in Halifax (valued at $1.5-million)

We asked three experts to weigh in on James’s situation.

Ian Black, fee-only financial planner and portfolio manager at Macdonald Shymko & Co. Ltd., Vancouver

The parents have $2.4-million of real estate and $200,000 in liquid investment assets, so they’re disproportionately invested in real estate.

We’re financial advisers, but a lot of it is dealing with human nature – saving people from themselves and from making bad decisions. That’s what this is. It’s difficult because the daughter has been living rent-free for a number of years. That needs to stop. Market rent in Halifax for a $900,000 house would be anywhere from $1,500 to $2,500. She could pay at least $500 a month with the realization that it’s going to be $750 in three months or $1,000 a year from now. That way they have to make some decisions about their own lifestyle.

We’d first ask the parents what they need to live on. We can use the actuary tables to say people of their age are going to pass away at age X, and we add some years to that. Then we’d say, “Here’s your asset base today, and you’re not going to make it, or your RRIF is going to be depleted at X and you’ll be left with CPP and OAS.”

If they still wanted to help the daughter, they could sell the $900,000 house and move her and her family into a two-bedroom condo worth $400,000. Then they would at least get some equity out of the house. The parents need to say, “You’ve had a good, long run at this. It’s our fault because we’ve supported you, but the reality is that it can’t continue or we may be forced to sell our own house and trade down.”

From an estate point of view, they should keep the ownership of the condo. If the daughter separates from her common-law partner, and the condo is in her name, he could claim half. If she doesn’t own it, there’s no claim against it. It’s good protection for everyone.

Another idea is for the daughter and her family to move in with the parents, even though that might cause friction. We all have to make choices in life. If that’s presented as one solution, it might motivate them to try to be able to provide housing for themselves. Click here to read the rest of the article

COUPLE’S RETIREMENT PLAN MUST RECONCILE SHORT-AND LONG-TERM PRIORITIES

March 12th, 2016

The Globe and Mail – Financial Facelift by Dianne Maley

Jennifer and George are in their mid-40s with two children, 8 and 10. Together, they earn a tidy sum.

“We only started saving when my husband finished his PhD and got a full-time job three years ago,” Jennifer writes. “Our income went up substantially, with potential for further increase over the next few years.”

Jennifer works part-time for the government, grossing about $31,500 a year, and hopes to begin working full-time within the next three years. She also earns about $7,000 a year in freelance income, but this will stop when she begins working full-time.

George earns about $120,000 a year in base salary. Bonus and other benefits lift his taxable income to about $150,000 a year. He has a group RRSP at work in which his employer matches his contributions.

In addition, they rent out a flat in their B.C. house for $800 a month. They bought the house two years ago.

As their peak earning years approach, they are wondering how to apportion their rising income.

“Our question is, what is the most effective way to build our wealth relatively late in life, with so many conflicting demands?” Jennifer asks. They hope to retire at the age of 65 with desired cash flow of $100,000 a year.

We asked Brinsley Saleken, a financial planner and portfolio manager at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Jennifer and George’s situation. Macdonald Shymko is a fee-only financial planning and portfolio-management firm. Click here to read the rest of the article

RETIREMENT IS DECADES AWAY FOR MILLENNIALS — AND THAT’S WHY NOW IS THE TIME TO START SAVING

February 17th, 2016

The Financial Post – By Danielle Kubes

Retirement may seem ages away for millennials — and it is — but there’s no better time to start investing for it than now.

Both the Registered Retirement Savings Plan and the tax-free savings account have their distinct benefits and drawbacks, but far more essential than which registered account you choose, is that you contribute to one (or both) sooner rather than later.

“The younger they are the more they should invest,” says Ngoc Day, a fee-only financial adviser at Vancouver-based Macdonald, Shymko and Co. Ltd. “Time and compounding are their best friends.”

Take $100, invested by a 25-year-old, that earns five per cent annually. By the time our young adult is ready to retire at 65, the funds will have grown to $704. The same $100 made by a 35-year-old will have only grown to $432.19 — about 63 per cent less.

Or, to put it another way, let’s say you estimate you need $1 million to retire comfortably. If you start at 25, you’ll only need to make annual contributions of around $8,280 at a five per cent annual return. If you don’t start saving until 35, you’ll need to contribute $15,050 every year!

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