April 2015
Thinking ahead.




Another tax season is soon to be behind us, and while we would like to take a mental break from our finances, we should still keep an active hand in our planning for the year. We hope you take in to account the below articles, which will give you some ideas on how to refine and reshape your financial goals for the second quarter of the year.


If you have any questions about your portfolio, please give us a call.


Be well.



Peter, Claudio and Joanna

Financial spring cleaning

by Sarah Milton - April 2015, retirehappy.ca


"One of the advantages of being disorderly is that one is constantly making exciting discoveries." - A.A. Milne


Even though I've lived in Canada for 15 years, I've never totally adjusted to the fact that the winters are so long. Every year, I expect Spring to start in April and every year Mother Nature sends at least one snowstorm to remind me that it's not going to happen! This year has been no exception but, with or without the snow, there's no escaping the fact that we're already into the second quarter of the year. With spring (almost) in the air and tax season well underway, it's a great time of year to do a little financial spring cleaning. Here are some suggestions:


Rearrange Your Goals

Given that research suggests that most of us will have abandoned our new year's resolutions by mid-February, spring is a great time to revisit our financial goals and get back on track. One of the key components of successful goal setting is having a strong motivator; too often we set goals because we think we "should" do something rather than because we actually want to. Without a definite reason to save or to eliminate debt or to learn more about investing, it's unlikely that we'll stick at working on our goal long enough to achieve it. If you find that you keep setting the same goal over and over again and never making any significant progress towards it, it might be time to either give up on it completely or to find a solid reason to work towards it that actually motivates and inspires you to keep going.


Declutter Your Payments

Often when I meet with clients and we go through their statements, there's at least one monthly payment that they've been meaning to cancel and never got around to. It might be a subscription to a magazine that you never have time to read, a monthly membership fee for a gym that you aren't taking full advantage of, or one of those insurance policies that your financial institution persuaded you to take on a 30 day free trial and you forgot to cancel. Whatever it is, taking 15 minutes to review your statements and another 30 minutes to make some phone calls could save you a significant amount of money each month; money that could be "repurposed" towards a financial goal or that could be used for something that you'll actually use and/or enjoy.


Tidy Up Your Spending

A spending clean up can be a powerful way to channel more of your money towards the things that matter most to you. Doing a clean-up of your spending means taking a look over your statements and finding all the places where your money is "drifting". This drift might be the result of any number of things. For example: overspending at the grocery store, picking up lunch or coffee on a too-regular basis, random purchases of things you didn't really need or too many cash withdrawals from the ATM. David Bach coined the phrase, "latte factor" to describe these small purchases that can add up to hundreds of dollars each month if we don't pay attention to them. It's not that treating yourself or indulging in the odd splurge is a terrible thing but the trick is to make sure that you're using your "fun money" to pay for those things and not money that you might have intended to use for something else.


Try a Money Cleanse

If you find that you've got too much money drifting away each month, why not try a 28 day financial cleanse? Science suggests that it takes 28 days of consistent action to create a habit (good or bad) so taking four weeks off from random spending and trying really hard to develop (and stick to) a consistent spending/saving pattern can be a really powerful tool when it comes to taking your finances to the next level. The first few days are the hardest but if you can make it through the first week there's a good chance you'll be able to see it through all 28 days. Remember that the point isn't to deprive yourself of everything that's fun; that's a sure-fire recipe for disaster in my experience! Rather, it's about creating a balanced approach to spending and saving so that you can enjoy your money without overspending and ensure there's enough left over for the future.


Effective money management hinges on building your understanding of basic money principles and creating simple systems that help you live within your means and pay yourself first. Taking a few hours every few months to check-in on those systems and make sure your spending habits aren't slowing you down is a time investment that's definitely worth making. If making some changes to your finances is something you've been meaning to do for a while, then why not take some time this week to think about what you could do to help spring clean your finances?


To view the original article, click here.

Have you had a family meeting about money?

by Dave Dineen - April 2015, brighterlife.ca


Who would look after your kids if something happened to you? Can your mother still live independently? The time to discuss such issues is now!


Be it Easter, Christmas, Thanksgiving or some other holiday, it's always the right time of year to offer your family a gift no one outside the family could ever give: the wisdom and insights of a family financial meeting.


In our family, this kind of meeting has become an important tradition. Several generations gather to share something more substantial than a meal, more enduring than gifts, more meaningful than chitchat. The goal is to share our collective financial insights, experience and wisdom - to help each of us achieve our goals.


We devote some quiet time, free of distractions, so that each person in the family can answer a simple question: "What's your financial priority and what are you doing about it?"


I can't promise that every moment of the family financial meeting will be fun, or that all topics will be happy ones, but I can almost guarantee you'll find the experience rewarding. You'll feel like a better member of a stronger family.

My family's most recent financial meeting was a bit different from most, because our daughter Cristina and son-in-law Jason were in Scotland, not Canada. But with Skype, distance is no excuse for not giving a family financial meeting a try. The answers to the following questions will help you get started:

What does a family financial meeting look like?


It's multiple generations of a family sharing their thinking about financial issues that are affecting members of the family. Face-to-face is ideal, but if that's not possible, use Skype, phone, email/texts or social media.


What gets talked about?

It depends on the ages, life stages and situations of the members of your family. Topics might include:

  • With Grandma's reduced ability to live independently, what are her options?
  • Will Mom or Dad's workplace health benefits cover their daughter when she starts university?
  • Should the new parents talk to someone about life and health insurance?
  • Who has signed up to be an organ donor?
  • Does everybody have a current will?
  • Where are important papers/account info/passwords kept?
  • Who would look after the children, if their parent(s) died?
  • Do your kids or grandkids need to adjust their expectations as you approach retirement?
  • Do any family members have definite preferences regarding religious observances at their wedding or funeral?

At our most recent family meeting, Cristina wanted to understand her mother's and my thinking about end-of-life healthcare. If my heart stopped, would I want to be resuscitated? If her mom was in a prolonged coma, what approach to treatment would she want? (Hey, my daughter is a bioethics specialist ... what can I say?) Thankfully, we started with lighter topics and then got into the heavier stuff.


Who should participate?

Ideally, all family members should attend.  If some are too young to participate, they can still pick up important life lessons by listening. If someone doesn't want to talk about his or her own situation, that's okay - this isn't an intervention.


Who shouldn't participate?

Professionals, such as lawyers, doctors or financial planners (unless they happen to be family members). The pros can - and often should - be consulted later, because a verbal understanding shared in a family meeting won't be recognized in court, in a hospital's intensive care unit, or by a bank or investment company. To transfer the legal right to make important health or financial decisions from one person to another, you need formal, legal documents, such as a will, a power of attorney or a power of attorney for personal care (which may be called something else in your province).


What are the rules?

No criticism is allowed. Offer only suggestions or ideas.


Can you combine the family meeting with a social gathering?

Yes and no. Yes, you could hold both on the same day. But no, a family meeting needs to be separate from a celebration. Set a time for the family meeting to start. Tell participants the meeting will be a serious conversation and you want everyone at their sharpest, so best hold it before the big meal with all the fixings.


At our house, family meetings have evolved. These days, they address the concerns of people ranging from ages 27 to 82. And though we don't all live on the same continent, our family financial meetings help keep us on the same page.


Bright Ideas: Tips for planning your family financial meeting

  • Let people know it's not a party.
  • Get everyone settled with tea or coffee first, to avoid distractions.
  • Start with light conversation.
  • Allow the meeting to take as long as it needs.
  • It's okay for some people to be quieter than others.
  • It's up to you to decide whether to include in-laws.
View original article here.

What's The Right Amount of Retirement Income?

by Marie Engen - April 2015, boomerandecho.com


"Money may not be the most important thing in life, but it's way up there with oxygen." - Zig Ziglar


How much is enough? That's a question that's asked often. Everyone measures the concept of "enough" differently. Some of us think in terms of dollars per month or year:

  • $50,000 per year
  • $5,000 per month

Or, you may think of a percentage of pre-retirement income - 70-85%.


Many want to know what the "average" Canadian needs, or what "most" people require.


The proper question is, "What is enough for me?"


If you are retired, or close to it, I'm going to give you an assignment (should you wish to accept it).  Spend some serious time with this. You are going to make three budgets.


Budget #1

The first budget details all your basic expenses - rent or mortgage payment, utilities, food, taxes, insurance, etc. Don't forget clothing, haircuts, what constitutes basic entertainment for you (meaning you will not give it up). Just look at your statements and receipts if you're not sure, but most of you will have a pretty good idea of these expenses.


Don't forget to estimate things like future upgrades to your house - new roof or furnace - or a new vehicle.


Budget #2

This budget will detail your full and complete "wants" picture. I don't mean a, "If I win the lottery I'll have a house on every continent," scenario. What would be a fabulous, but believable, retirement life for you?


You may need to do a little bit of research here. Don't just say, "I want to travel," or, "I want to spend the winters in a warm climate." You need to be specific. "We will spend $20,000 on a big trip every year." "It will cost $xx for the annual membership and fees at Plaid Pants Golf Club."


How much will the fun stuff cost you?


What money will be available to you?

I know I said you'll be making 3 budgets, but we need to take a moment here to see where the money will come from.


Find out from Service Canada and your company Pension Benefits administrator (if applicable) what your projected monthly payments will be. The closer you are to receiving the benefits, the more accurate they will be.


The monthly shortfall will come from your savings. The greater your income requirement, the more will be drawn from your own resources. Financial advisers say that a withdrawal of 4% of your portfolio should be sustainable for life.


When you retire you need to combine cash flow from government pensions, employer pensions and your own portfolio to provide reliable, steady income that will meet your needs.


Budget #3

This is the final working budget. How does it look? Chances are you will have to make a few adjustments to make it work for you.


Ideally, the basic necessities will be covered by your guaranteed income.

If it looks as though you may be withdrawing too much investment income come up with a plan.


Before giving up on your plans for travel, hobbies, or other entertainment, see if you can modify your basics to ensure you have an ample amount to spend on "non-essentials." Can you make do with just one car? You may have more time now to comparison shop for groceries and household needs. Would it be practical to move to a smaller home? Can you do the house- and yard-work yourself instead of paying someone else to do it?


You get the idea.


Then revise your fun activities. You want more than a minimalist life, but may have to have less than the full-meal deal. How about taking a big trip every two or three years instead of every year? You could eat out less frequently. Maybe you don't need to provide a lavish gourmet smorgasbord every time you entertain.


Spend money on things that bring you pleasure and add some "juice" to your life, but be mindful of what you are spending. What would you be prepared to discard if you had to?



Retirement is not a one-time event. It can span thirty or forty years (or more). Life happens and adjustments have to be made to your income and spending.

Consider your time-line for revenues:


Company pension plan paymentsCPP reduced paymentsOAS (GIS)RRIF min. withdrawalsAnnuity(?)

People tend to spend more in the first few years of retirement while they are trying new things. They have endless lists of interest, hobbies and sports that they never had the chance to participate in while they were working. They then reduce spending once they've settled into their chosen lifestyle. Early years typically involve greater travel and sprucing up the family homestead. Later on they have few material wants, and travel and recreational expenses drop.


In later years, though, you may face higher costs for medical care and home support. Paying rent at a senior's residence (instead of being mortgage free) draws down capital.


Final thoughts

I know all this calculating can be tedious and time-consuming, but two pitfalls of going into retirement are:

  1. Failing to plan, and
  2. Underestimating expenses.

The greatest fear of retirees is outliving their money. Regularly adjusting your lifestyle and financial plan as you go will bring you greater peace of mind than just leaving it to chance.


"I have enjoyed greatly the second blooming after age 60 - suddenly you find that a whole new life has opened before you." - Agatha Christie (1890-1976)


View original article here.

Issue: 53
Financial Markets
In This Issue
Financial spring cleaning
Have you had a family meeting about money?
What's the Right Amount of Retirement Income?

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Peter Bailey
Wealth Advisor
Worldsource Financial Management Inc.
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1 

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