Archive for 2017

Should couple focus on paying off their mortgage or saving for retirement?

June 23rd, 2017

The Globe and Mail – Financial Facelift by Dianne Maley

It has taken time, but Jerry has built his consulting business up to the point where he is grossing $112,000 a year. That’s up from $45,000 in 2014 “and much less before,” Jerry writes in an e-mail. For the past decade, his wife Janice kept the family finances on an even keel thanks to her teacher’s salary.

Jerry is age 47, Janice is 45. They have two children, ages 5 and 8.

They have some savings and Janice will be entitled to an indexed defined-benefit pension when she retires. Their only debt is the mortgage on their B.C. home. Now that they have some spare cash, they wonder whether they should focus on paying off the mortgage or saving for retirement. They wonder, too, whether Jerry should take out disability insurance and whether his corporation might offer some tax-planning strategies.

Longer term, Janice wants to retire at age 58, while Jerry plans on shifting gradually from full-time to part-time work starting at age 60. Their retirement spending goal is $84,000 a year after tax.

We asked Brinsley Saleken, a financial planner and portfolio manager at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Jerry and Janice’s situation. Macdonald Shymko is a fee-only financial planning firm.

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May 16th, 2017

ADVISOR.CA – Simon Doyle and Katie Keir

Larry Jacobson, a fee-only advisor with Macdonald, Shymko & Company in Vancouver, receives many pitches to sell syndicated mortgage deals to his clients.

These lucrative, private debt agreements for real estate projects often promise attractive annual returns of 8% or higher. Most, Jacobson says, come with risky backing or excessive commissions, and he throws them in the bin.

It’s the solid-looking offers he takes seriously, scrutinizing their details, the project’s prospects and the quality of the underwriting. He visits the land for a literal sniff test.

“I drive to the site. I drive the area. I look at competing properties. I look at the cars and apartment buildings across the street. I get down on my hands and knees and smell the dirt,” says Jacobson, who’s been with MS&C since the mid-’70s. “We really do a thorough job of inspection.”

This may be what’s needed to properly scrutinize syndicated mortgage offers amid surging property valuations and housing sector risks in Toronto and Vancouver.  While real estate booms mean more investment, more construction, big commissions and nice returns, they can also mean sky-high valuations and riskier deals.

While syndicated mortgage offers can be great investments, experienced advisors are warning their colleagues to not be tempted by nice-looking commissions or pushy investors who want into real estate. “We find that most of the syndicated mortgages around today are garbage,” Jacobson says. “The underwriting process is really critical in these deals.”

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April 21st, 2017

Financial Facelift Revisited: Special to The Globe and Mail – By Dianne Maley

Bethany bought her first house two years ago with a big mortgage. It has risen substantially in value since then. Today, at age 56, she is house rich and cash-flow poor but happy. “Sort of.”

Her house (in the Greater Vancouver Area) was recently assessed at $330,000 over the purchase price, Bethany writes in an e-mail. She brings in $88,130 a year from her government job plus $680 a month in rental income from a basement apartment. Her defined benefit pension plan will pay about $3,300 a month at age 65.

Bethany is tired of her job and really wants to retire in four years at age 60. “I want to travel extensively,” she writes. She is striving to pay off a line of credit taken to pay for a new roof, to upgrade the basement suite, “and for all the extras that come with purchasing a home, things that I was not aware of or prepared for,” Bethany writes.

“I am putting every extra cent toward paying off this debt, and I am living more frugally than I ever have.” She is also repaying money borrowed from her RRSP under the federal Home Buyers’ Plan.

Her questions: Can she retire in four years and perhaps work part time in some other job? Will she be able to take at least two big trips a year? “Do I have to sell my home in retirement?”

We asked Ngoc Day, a financial planner at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Bethany’s situation. Ms. Day holds the certified financial planner (CFP) and registered financial planner (RFP) designations. Macdonald Shymko is a fee-only financial planning and portfolio management firm.

What the expert says

Ms. Day prepared two forecasts, one where Bethany quits at age 60 and another where she continues working to age 65.


February 1st, 2017

Danielle Kubes, Special to Financial Post

The TFSA is new enough that Canadians haven’t had time to experience its long-term investing implications, generally preferring to focus more on the S-for-savings.

But that could be a mistake.

“The TFSA is the ideal place for long-term equity investment and the power of it comes from that long-term compound growth and not as a savings account with cash in it,” says Steve Bridge, a money coach from Money Coaches Canada.

He gives the example of someone in a 40 per cent marginal tax bracket stashing $5,000 in cash at one per cent interest. They earn $50, so only save $20 from sheltering it within a TFSA. If you compare that to an equity investment that grows at 5 per cent, earning you $250, they’re now saving $100 in taxes.

“That’s five times the amount of just having cash in there,” he says. “If you add in the long-term power of compounding, now you’ve gotten yourself a powerful retirement tool.”

The best fit for a TFSA, most advisors will tell you, are equities that have steady and stable growth.

“It’s not a place for speculative securities,” says Ian Black, a fee-only financial advisor at Macdonald, Shymko & Company Ltd. “If it works out, you’re fine, but speculative more often than not doesn’t work out.”

Instead, Black suggests ETFs.

“Not just picking one or two stocks, but using more exchange-trade funds to get exposure; reducing the risk,” says Black.

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January 30th, 2017

The Globe and Mail – Kira Vermond


When Jason Heath, a certified financial planner with Objective Financial Partners Inc., in Markham Ont., is on a shopping excursion with his three kids, the 38-year-old dad has a convenient, ready-made response when faced with pleas for a new stuffed animal or treat.

The word starts with “N” and ends with “O.”

“It’s important to not always give your kids everything they want,” he explains. “I say no more often than I say yes.”

Mr. Heath is trying to instill family values in his children that place experiences above accumulating things. (Those stuffies will likely just end up forgotten in a heap on the floor within days anyway.) Teaching the kids to delay gratification now, he hopes, will leave an impression and help them stay out of debt as adults.

Giving their children a jump-start on financial literacy is a tactic that many thirtysomething parents are trying, particularly as they face 2017 with a pledge to get their own finances in order. Money is often a top stress at this age as mortgages, car payments, daycare costs and piano lesson fees converge.

Here are a few tips to get you off on the right track this year.

Gina Macdonalda fee-only financial adviser and portfolio manager with Macdonald, Shymko & Co. Ltd. in Vancouver, teaches her four kids, aged 10 and under, about good spending habits while at the grocery store. They evaluate prices between large tubs of yogurt and lunchtime convenience packs. When comparing price and volume, the larger tubs are the cheaper, better bet.

“These are such basic life survival skills,” she says.

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