cedarlanefinancial.com

Hi All

Please note I will be on vacation for the first two weeks of August. I will be attending the Hastings Plowing Match the day after I arrive home  Aug 18 & 19.  See you all there  and enjoy whats left of the summer !! 

Hi All

We are having a summer heat wave !!!  Stay hydrated and stay cool .

Just a quick update on my CFP progress . We are finishing the third course  Comprehensive Practices in Risk and Retirement Planning . One quiz and the exam to go . Then course four . We are on target to write the first FPSC final 6 hour exam in Nov.  So far I have done well with the course material  and really enjoyed the class I attend once a week . Its been a great help and support .

When its too hot to be out side  stay in !!  Its a great chance to sit and do a mid year review of your investments   handy to have those June statements  and  go over all your other financial papers .  Is your will current ??  where is that life insurance policy  and how old is it any how ???? has any thing changed in the way of beneficiary designations ???  moved ???   married/divorced?? added to the family ??   changed employment or employment status ???  tally up a pre tax estimate

so many things to do in the cool of the basement

stay cool people

Here are a few of the major mistakes  we as agents see clients make when purchasing life insurance.

How many of these mistakes are costing you  time and money  ????

Top 12 mistakes people make regarding their life insurance

1. Blindly trust their advisor, any advisor

a. Many advisors specialize in gaining trust and selling product ONLY

b. Important financial decision for welfare of family

c. Mistakes can be costly (hundreds of thousands of dollars)

d. Use a specialist? Why not get a second opinion? Existing or new.

e. Get it in writing.

2. Don’t know why

a. Only one true need

3. Make decision emotionally (100%)

4. Don’t use guaranteed products

a. Usually based on greed + unrealistic expectations and salesmanship and misunderstanding of how these things work (most advisors don’t understand on this stuff works either).

b. Buy wrong type. Illustrates well but can result in overpaying and losing insurance

i. Examples include YRT Universal Life and enhanced Whole Life

5. Don’t optimize

a. See Life Guide survey

b. Calculate ROI

6. Don’t know what they’re buying

a. Get involved in grandiose schemes that they don’t fully understand (see 1. Above) and involve bank financing and/or complex tax strategies that can “blow up” if not carefully set-up (initially) and administered (on-going).

7. Misleading presentation

a. Purchase a policy without being fully made aware of their options and shown a market survey and

8. Double duty dollars

a. Cash accumulation doesn’t work. Double duty dollars.

b. Tends to result in overpaying for what you get

9. Don’t coordinate with other financial planning

10. Haven’t discussed their Bequest Preference

11. Don’t compare to alternatives

12. Don’t measure solution to determine viability and appropriateness

How to make sure you have the right policy.

1. I don’t know how much I have and why

2. I don’t know what type I have (3 types, some guaranteed, some aren’t)

3. I don’t know about structure (corporate) (beneficiary)

4. I don’t know if I’m optimized (cheaper, take advantage of features, understand what 300 contract pages say).

Biggest Mistake

1. Spend too much

2. Non guarantees that make insurance look good

3. Relying on salesman

4. Blind trust

5. Don’t put it in writing

6. If you don’t fix it early, you might not be able to

7. No on-going communication and reviews

What are most people not aware of:

1. Understand contract

2. No idea of how much and why

3. Understand different types

4. Short term focus/emotion

5. It’s part of a planning process

6. Dealing with unqualified people (knowledge is critical)

Wonderful weather at this time of year usually highlights   ….. tax season !!!

The latest budget brought some changes to our personal tax situations  and I will highlight a few here.

RDSP  starting March 2011  existing RRSP roll over rules will extend to RDSP  plans

In recognition of the fact that many families of children with disabilities are lower income and may not be able to contribute regularly to an RDSP the government proposes to allow a 10 year carry-forward of the grants and bands available .

Single parents  will now have the option of including the Universal Child Care Benefit amount in either his/hers income or the income of the child to  address the inequity of  the amount taxed solely under the parents income.

The Canada Child Tax Benefit  and UCCB  as well as GST/HST credit amounts  will now allow two eligible individuals to share the benefits  . The policy will apply when a child lives more or less equally with two individuals who live seperately.   This is effective July 2010

For a more detailed look at Budget 2010 analysis go to  www.fbc.ca

or for detailed tax information go to CRA ’s web site

Its getting to be that time !  Income taxes  and RRSP season go hand in hand

but we have a new twist this year   the TFSA   which is best for you?

Depending on your projected retirement income either could be the answer. Projections using just the math show both to be even bets in the long run   however if you have a significant RRSP account or pension  coming  look more closely at the new TFSA.  All the same investment vehicle qualify  and the market looks good to get in ! No more standing on the sidelines  people  its time to get your feet wet  in the investment pool .

If you have more questions contact me  or any professional advisor !  get the straight facts on investing

Its been too long since I updated  but I have a good excuse !!

I have gone back to school to pursue my Certified Financial Planners desigantion . It will take me over a year and consists of 4 modules and a 6 month proficiency course then exam. I am really enjoying the course material and to date we have covered  a variety of information from family law to government benefits. Our next module will  cover income tax ,  how exciting .   I will still try to update and post relavent educational material as time permits . Wish me luck !

Hi All

Its that time again   !!!

Come visit me at my booth at the Hastings Plowing Match  Aug 19 & 20

the match is being held on the farm of Art DeSnoo and his brother  in Thurlow

check out the Hastings Plowing Match web site for all the particulars

Hi All

Here is a fascinating article  written by an ordinary guy   a wealthy ordinary guy though.

He has some great tips and comments on building wealth and I really like his advice on educating oneself financially.  So take a rainy day and read  on how Hedley Dimock achieved his dream life .

For more advice on the agricultural ideas in the article see the following sites or links

www.fbc.ca       www.ofa.on.ca                    www.cra.gc.ca

•http://www.canadianmoneysaver.ca • September 2004
Wealth Creation and Preservation
Top Ten Techniques from
45 Years of Investing
Hedley Dimock
Let me start by describing where I am coming from
with these techniques and thus my bias. These
techniques (which would be called “secrets” if I
was selling something) have come from my experiences
as an investor and are focused on what has worked—
not on one or more theories of investing. I was a millionaire
at age 50 while earning less than $50,000 a year. So,
these are “in my pocket” techniques—no fancy charts or
graphs—and more successes than failures. But many of the
failures have consolidated my techniques, as it is one thing
to read about what not to do and another to then do it and
lose money. I am a retired university professor and organization
consultant presently just writing, operating a Christmas
tree hobby farm, and managing 9 financial portfolios
and some real estate. I am not in the finance business and
have nothing to sell you.
1. Take charge of my own investments.
No one is more concerned about my money than I am.
For many years I was too busy making money to spend
time managing my investments. I monitored Trimark’s Select
Growth’s rate of return compared to the Trimark Fund
of which it was a clone. As Select Growth produced over a
1% lower return a year, I converted my Select Growth without
cost as soon as the delayed commission (rear-end load)
feature expired.
2. Gather informed opinions and data from many sources.
I read, ask questions, listen to my friends and colleagues,
and file the track records of my present investments and
possible future ones. I tracked the 10-year return of the
Trimark Fund for 3 years before investing in it. It was first
then and still is 9 years later. I subscribed to three investor
newsletters for a few years before finding MoneySaver. Each
has taught me a lot and shown me new ways of looking at
data on returns and their tax implications. The single best
tax book I’ve read is Personal Tax Planning by the certified
general accountants of Ontario. I read it every year to keep
up with the tax changes.
3. It is not what I make but what I keep that counts.
My present net worth, while earning a modest income
(maximum $50K), substantiates this action. It was confirmed
years ago, for example, by my next door neighbour—
a financial advisor—who had 2 BMWs, 2 ultralight
airplanes, a beautifully renovated house and swimming pool.
I was getting a bit envious as our lifestyle was very plain
with only 2 entry level cars, until he went bankrupt and
moved away.
4. Taxes are usually the biggest taker of what you make.
There are marvelous ways to minimize and defer taxes. I
learned about them through my readings, but a few I had
to figure out for myself. Tax exemptions are part of minimizing
taxes. I am a member of the Ontario Federation of
Agriculture which exempts me from Ontario’s 8% sales tax
on farm-related purchases. My hobby farming makes me
eligible for reduced property tax, and I signed up with the
Conservation Tax Incentive Program for another reduction.
These are farming examples but there are similar exemptions
and reductions in many areas.
The best tax minimization and avoidance strategy I have
found is to do my partner’s and my own tax return. You can
do the paper return before, after, or with your tax consultant.
If I didn’t do it myself, I wouldn’t know the relationship
between and among the tax credits, tax brackets,
clawbacks, surcharges and comparable rates for my three
income sources. My learnings have included: how to split
income most effectively (dividends are best for the low-income
partner), which partner should declare medical expenses
and charitable donations, whether the donation credit
should be postponed to a future year, how to shift income
to be in a lower tax bracket while avoiding clawbacks and
surcharges, and how to withdraw money from an RRSP
tax-free. It is one thing to do last year’s return accurately
and use all the benefits available, but quite different to figure
out how you can save 10-20% on taxes for the next
return by rearranging your income.
•http://www.canadianmoneysaver.ca • September 2004
5. Split income.
Splitting our incomes has saved us a couple of thousand
dollars a year since I learned how it works. As we refined
our splitting, Mary was able to make at least half of my
income and pay little, if any, tax. This took a while. Mary
mostly worked part-time and had no pensions or savings.
But I finally found out that the baby bonuses that she invested
in our first farm entitled her to share the money from
selling the farm. Four other openings were also available for
splitting—only one was suggested by an investment advisor.
6. Set up and contribute to an RRSP very carefully.
RRSPs are not for everyone and there are many potential
drawbacks to consider.
When self-directed RRSPs came out in the mid-1970s,
I thought they were the best thing since canned beer, and
quickly got one. I was holding a number of corporate bonds
and preferred shares at the time and put them in my
SDRRSP. My maximum contributions in the ‘70s were low
as half the limit was taken by my university pension, so our
savings were mostly in non-registered accounts. This was
fortunate because I gradually uncovered the serious limitations
of my RRSP and stopped contributing.
After its conversion to a RRIF I started wishing even
more that I had not contributed as much as I did. My present
opinion on RRSPs agrees with the C. D. Howe report that
one third of Canadians with low incomes should not use an
RRSP as savings for their future. For the rest, people should
determine what percent of their retirement portfolio they
want in fixed-income securities (usually 30-60 %) and have
only those investments in their RRSP.
7. The plan and process of creating wealth is most important.
As David Chilton (The Wealthy Barber) said, “Ninety
percent of wealth creation is spending less than you make.”
The power of compound interest means that investing regularly
at an early age can outweigh the return of periodic
“hot” investments. A plan with clear goals and measurable
objectives for wealth accumulation beats opportunistic investing.
Work your plan with how much and when to invest
and don’t fret the “what”.
The wealth creation goal Mary and I established was to
be financially independent by age 50 or at least by 55. Independent
for us meant not having to be dependent on
future work income, government benefits, or company pension
plans. Our plan of consistent investment of 10-20%
of my earnings, the growing economy, and some good luck
enabled us to reach our goal at age 50. While there was no
theme for our success, three farms and solid blue chip-stocks
(Bell Canada was our rock) were the winners. The duds
were 80% of our mutual funds. Near disasters were Massey-
Ferguson, Dennison Mines and Royal Trust (near disasters
because they were preferred shares and we did receive some
compensation).
8. Invest in things you like and are going to use.
Investing is more fun when the things you buy can enhance
your everyday life or provide enjoyable activities. I
have reported my fondness for the Bank of Nova Scotia
stock as Nova Scotia is the location of the Dimock ancestral
home in Canada and my father’s birthplace. Our three
houses have been marvelous investments as have our two
cottages. We enjoyed a vacation farm so much that we moved
to it after six years and commuted by train to work in Montreal.
When we moved to Guelph, we bought another farm
near the city. Our hobby farms have been the single biggest
contributor to our wealth creation and my physical health
and emotional well-being.
9. Be very careful with mutual funds.
The media hype on mutual funds can be very misleading
if not pure B.S. (beguiling statements). The management
expenses plus brokerage fees for the average Canadian
equity fund is over 2.8% a year. Over a fifteen-year
period about one fund in ten will beat the index of stocks
to which it is related. The proliferation of iUnits and exchange-
traded funds covering most markets mean you can
be diversified, play a global or specialized market and beat
most mutual funds while deferring tax on the fund’s yearly
earnings and capital gains.
I was an enthusiastic mutual fund participant with my
first purchase 45 years ago (AGF Growth). As I watched
their performance and studied them more carefully, I have
reduced my enthusiasm and most of my fund holdings.
The two I haven’t sold, all or part of, are ABC Fully Managed
and Trimark Fund (though it is on my watch list after
3-4 years of mediocre performance).
10. Stay the course.
I did not start to increase our net worth until I had a
plan with clear and attainable goals and yearly measurable
objectives to see how we were doing. I have worked hard
not to get suckered out of position by flaky trends and the
media hype over the sexy avant-guard investment or hot
stock.
I did get scammed by a persuasive salesperson on a penny
gold mine stock. Well, everyone knows better, but there is
nothing like learning from experience. The stock changed
its name and then mysteriously disappeared. During the
run-up of sexy high-tech stocks, I held the course but got
caught by the Nortel shares I inherited from my large Bell
Canada holdings.
My attempts to predict the market have also met with
failure. I sold Imperial Tobacco (Imasco) when I saw a se
ries of lawsuits coming. By selling, I also lost Shoppers Drug
Mart and Canada Trust. Even after they were sold, all three
did well.
Stay the course or as Tom Peters said of the best run
companies (In Search of Excellence) “stick to your knitting”—
what you know best—and “never acquire any business you
don’t know how to run”.
Hedley Dimock, EdD, RR1, Puslinch, Ontario N0B 2J0
(519) 822-2749 hdimock@infinity.net

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I was asked by a good friend to write an article for her online adventures and if you follow the above link you can see half of it!

I will add the other half to my web site soon !

Enjoy the link   lots of great information and inspiration

Welcome to Spring  !

I recently was invited to the Farm Credit Canada ( FCC) forum entiltled Big Ideas . Three great speakers  and a super lunch  it was a really nice day.  Heres a recap of what I heard and came away with .

Rex Murphy   CBC commentator and journalist . This Rhodes scholar hailing from Newfoundland provides a perspective and forsight into todays affairs that is both real and funny . His description of life on the coast and the links between farmers and fishers was inspiring and thoughtful. The ever present dry wit and sarcastic intellect of Rex bring home a deep message of unity   but all with a smile on our faces and the occasional belly laugh.

Joan McCusker  Olympic Gold medal winner  Curling. Again funny and informational. Joan demonstrated the parallels of sports psychology and successful strategies used in bussiness , community and family. Her constant message   that ordinary people can do extrodinary things and build extrodianry lives .

Finally we get to my favorite  David Chilton  the author of The Wealthy Barber .

HIs best selling book on finances is one of my all time best reads ( for finances any how) . His common sense approach to financial planning and business take the intimidation factor out  and he factors in good doses of humour  so the message sticks even better .

After a quick review of how and why he wrote The Wealthy Barber  David got to what we wanted to hear  his take on the recent financial situation.

Despite the crisis enveloping the rest of the world he remains quite confident in Canada’s financial stability. With the increased globalization and complexity of todays market  there is a cascade effect to be expected. He deplored the Us housing situation  non recourse loans, no controls, the flawed theory of always increasing real estate values  and just plain greed.  He warned us to be careful when listening to the news  especially the economists from the big banks   have they ever been right ?

He folllowed with an ABC of ideas and comments . here are a few highlights

Advisors  with older clients   be cautious   but not too conservative   cash may not be the best holding if inflation comes back  ( my thought the same  for GICs)

Be real  use perspective when goal setting

Commonsense as your guide  use the power of Compounding for you not against you

Diversify  your holdings   pay off your debt ( compounding against you )

Estate Planning   we should be thinking of this  do we have too much money ?  give it away  before the government gets it

Forced Savings   pay your self first   simple concept   hardest to do   but there  are ways  ,  automatic chequing into a savings account  ,take it off the pay check firs,  his theory that budgeting never works  most people will or can not budget

Goal  set one   then put it in writing     g is for gold as well   a great inflation fighter

Health   dont take it for granted

Insurance  Davids my man   he likes life insurance   and most people have too little ,it can be another form of income during retirement ( whole life) and a market buffer

he ran out of time to do much more

but he did note that the one thing Canadians all have in common is to complain !

He wanted to tell us all to Cheer Up    we have it great here  and life is good !