A Community Working Together
On Tuesday of this week, I had the pleasure of attending a presentation of a cheque to the Children’s Wish Foundation, which is exciting enough. But what was moving about the presentation is that it was derived from 10 years of work on behalf of the community through an annual golf tournament. The staff at the Bayview Credit Union (Formerly Charlotte County Credit Union) has been planning and hosting the event, which is going into its 11th summer. Almost
Presenting the Cheque from Concentra to Children’s Wish Foundation on behalf of all Sponsors in the St. George Area
$200,000 has been raised, granting countless wishes to sick children. The ladies at the Credit Union are quick to thank all of the sponsors in the small town of St. George and surrounding Charlotte County area. Over 150 business come together to donate their time, money, supplies and prizes to make the event a success each year.
It is amazing that so many businesses that co-exist together in a small area can come together and set aside any differences or competition in order to support a cause that truly makes a difference in the lives of so many children and their families. That effort was certainly rewarded this week when Bayview Credit Union’s wholesale finance partner Concentra received a letter from the local branch describing the efforts of the community. Concentra responded with a donation of $25,000 to the Children’s Wish Foundation, the first donation of its kind from Concentra in Atlantic Canada. The event organizing staff was very excited and humbled by the generous donation. Sponsors that were invited for the cheque presentation were very excited to see the results of the efforts and excited for the 2017 tournament to get underway.
I feel very blessed to have a business in this little caring
May is money month at JDS Financial Planning Inc for 2 reasons:
- Summer is coming and tends to be when our finances take a bath
- I like alliteration
The first thing we need to learn about money is that it is in fact a game. One thing that we all know is that the person who hates the game (whether that’s monopoly, risk or poker) is often the one that is losing the game. So don’t hate the game!
Once you have understood that it is a game, and one you have to participate in, the better you will play the game.
Now that we’ve established that we are playing a game, you need to get strategic. Strategy number 1 is simple in theory but sometimes harder to accomplish: Spend less money than you make. Strategy number 2 of the money game is to make a budget. Cue the eye roll and deep sigh, I know that it’s tough, but it can be easy if you start small.
Start by taking control of the game. How do you do this? You get to $1,000 of cash as fast as you can without borrowing any more money to get there. This is a mini game itself. Get creative. Take on an extra job, start a rigid schedule of $100/week for 10 weeks. Or sell some of the stuff wasting space in your house. Doesn’t matter how you get there, just accumulate $1,000 as fast as you can.
How fast can you get to $1,000 in cash?
How Fast can you get to $1,000 in cash?
Once you have done this, you have proven to your brain that you can plan this game. It’s like getting back to the gym, you don’t need a full training program, you just need to show up for 3 weeks straight and develop the habit. Now that you have $1,000 saved up, this will be your emergency fund. Use it in emergencies only and keep this in cash so that you can pay the plumber or right away when your tab explodes and you don’t need to rely on credit cards.
Take a minute and think about how you would accumulate $1,000 as quick as possible.
Maybe another minute, I don’t believe you thought hard enough.
What did you come up with to get to $1,000? Did you take a new job or start a side hustle? Did you cancel HBO and other channels you don’t watch or need? Did you sell some stuff lying around the house? Whatever it is that you did, keep it going. Sock that $1,000 away, but keep the process going.
You have now shown sacrifice to the money game, and the money game rewards sacrifice. Just so you know, you have just created a simple budget in your head and it wasn’t all that difficult, was it? As you get a more detailed budget, you will find that there are plenty more dollars that are wasting on things you don’t even want, let alone need.
Budgeting is less excel spreadsheets and more mindset. (I can hear accountants yelling at me). Now you have some momentum going and your brain believes you can play the money game. The next step in article 2 of May Money Month will guide you through utilizing that momentum to the best of your ability.
Recently I received an email from some scam artist enlightening me on an investment that is a sure thing. “An aquisistion is about to be completed by a very large company” This email gave me insight that no-one else would ever know. “They’re buying out a small medical firm at more than 20 times what they are currently trading at”. The email has the elements of curiousity for a reader like myself. I know it is a scam, yet I can’t keep my brain from thinking “What if it IS real?”.
“This means that every ten thousand bucks you put in will turn into two hundred grand the moment the announcement becomes public”
This got me thinking; how many people fall for the next big thing without research and without getting real advice? If I had to guess, it would be more people than you think. Several people come to my office looking to invest something that their co-worker or relative talked about. Although your friends and family are looking out for you for the most part and this email is meant to be malicious, doesn’t mean that they are all that different. Let me explain, both are meant to encourage an action on your part. Both are looked at as “sure things” as they are giving you information of past performance or future performance. Both normally have no research completed with it. And both are not recommended based on your current and future needs. It is interesting when we hear of these things that are too good to be true we still can’t help be interested.
To protect yourself and your hard earned dollars, make sure you seek out advice from professional. Make sure that professional is licensed in the province that you are in and also make sure they are asking YOU questions, and listening to your answers. The best advisors listen more than they talk. And when they talk they are not selling, but educating. Always feel comfortable with your decision before signing any papers or moving money.
Completing my Life Insurance Offerings
One size does not fit all. That is a philosophy that I’ve been thinking about lately. Every client that I’ve seen recently had very different needs and wants. In the past few months, I’ve brought on more life insurance products that better support the different clients that I have.
Years ago, I worked for Freedom 55 Financial, and although they have some excellent insurance products from Great West life and London Life, they were limited. Limited to selling only to healthy people that lead a safe lifestyle (the kind of people insurance companies want). The problem that I had, however, was that by limiting my offerings, a client would leave my office without the proper coverage often because of issues with health and lifestyle.
Since then, I’ve made it a mission to offer the financial products that clients need. Not only ones that they can get approved for but ones that won’t hurt the wallet as well. Although all insurance companies use similar data when creating their pricing structures, some are more efficient than others. This means we can have similar coverage at a better price OR a much easier and less intrusive underwriting process. Let me explain with an example:
A 40 year old male, non-smoker needs $500,000 of 10-year term life insurance
Option 1: Sun Life Financial
Underwriting: Full Medical Questionnaire (with agent); Paramedical Questionnaire;
Blood Sample, Urine Sample, Vitals; Possibly Attending Physician’s Statement
Approval Time (From Application to Approval): 3-6 weeks depending on underwriting
Benefits: Level premium for 10 years; Renewal after 10 years at a pre-set price; conversion
opportunity to Whole Life & Universal Life without medical at anytime.
Option 2: HuGO – Humania Insurance
Underwriting: Full Medical Questionnaire (with agent and can be done over the phone)
Approval Time (From Application to Approval): 15 minutes – 6 weeks depending on underwriting – if questionnaire has concerns, other underwriting might take place
Benefits: Level premium for 10 years; Renewaal after 10 years at pre-set price (2 options at time of application), conversion to longer term product (Including Term-100) without medical at anytime.
So what does this all mean? In a nutshell, it means that depending on what the client’s need is, I am able to provide value in more ways than just lower premium. How many people are terrified of needles? How many people can’t line up times to meet with me in person to get the questionnaire and signatures done. How many people have a hard time lining up with the nurse to get their blood and urine samples comleted? Unlike the majority of the insurance agents in New Brunswick, I am able to offer very competitive and flexible products all from JDS Financial Planning. No more shopping around, let us do that for you! Let us give you advice for where you should be buying your products. In the above example, there may be many reasons why the more expensive one should be used, but we won’t know that until we have done a proper analysis on you and your situation.
YOU DO NOT FINANCE YOUR VACATION. ONLY PEOPLE WHO CAN AFFORD
A VACATION SHOULD TAKE A VACATION.
For a free budgeting tool, email [email protected] and I’ll gladly send you one.
During the first two months of 2017, you are allowed to utilize RRSP contributions to reduce your taxable income in 2016. This is an excellent way to reduce your taxes for 2016 and saving for the future.
Many of you probably have an RRSP, TFSA, or some other savings vehicle. But are you using it to its full potential? Here are the Top 5 Mistakes Most People Make With their Savings:
- Not saving or not saving enough
- Not investing those savings in a properly structured portfolio
- Withdrawing from savings pre-maturely
- Not taking full advantage of tax-efficient vehicles
- Not working with a dedicated advisor (which you are probably already paying for even if you don’t see them. Check your Dec 31 statement)
Although these mistakes aren’t felt very much today, they can have significant impacts on your ability to retire or spend in the future. Be sure to discuss your savings and retirement plans with your advisor often.
JDS Financial Planning Inc.
Quadrus Investment Services Ltd.
For anyone who missed us in the St. Croix Courier February 3rd. Here is the feature written about us.
We’ve all heard the horror stories of travelling without insurance where a medical expense wasn’t covered while out of country and someone got slapped with a very large bill. Thousands for an ambulance? Hundreds for an X-Ray? Tens of Thousands for a longer stay? These people vowed to never travel again, and so did people close to them.
But as we close up the cottages and put the boat away after another excellent summer and beautiful fall in Canada, travelling starts to become top of mind. The thick layer of frost I scraped off my windshield this morning and the red poppies being worn throughout the country are sure signs that we’re wading into another Canadian winter. We are finishing up our pumpkin spice latte craving and moving to peppermint mocha’s and chestnut praline lattes. Very charming of course, but a margarita on the beach might just do the trick by the time January hits us.
Alright, so that vow of never travelling again is nothing but a distant memory. The question is: “How do I prepare properly for medical emergencies while travelling?”
- Review and Understand your travel insurance
BEFORE you leave for your trip is the opportunity you have to review and understand your travel insurance. By doing it before hand, you can make changes if you need to, or purchase more. You want to review that you have adequate emergency medical coverage which should be a minimum of $1,000,000. Review the pre-existing clauses; for those under 65, many insurance companies will cover your pre-existing conditions if there is a period of at least 6 months of stability. Travel Insurance is for emergencies and unforeseen medical expenses, it is NOT a Medicare program. Make sure you know how long you are covered, for the “Snow Birds” make sure you have a plan that covers your entire trip.
- Write your policy numbers down
There are two things that are important on your travel insurance card: the Policy Number, and the toll-free phone number. Write them down all over the place. Write them on your itinerary, in your wallet, in your rental car, everywhere! This is not something you want to lose, and you want it to be accessible if you are rendered unconscious and can’t provide that information. Remember when claiming to call the number first before being admitted to hospital, the insurance company will handle the billing and negotiations for you.
- Think about the added benefits
Do not assume that all Travel Insurance Policies come with baggage protection. Are you concerned about this protection? Make sure you review to find out if it is covered. If not, it can be available through a top-up plan. Other added benefits include: cancelation, repatriation (bringing your body back), emergency return (if a family member dies back home), travel assistance, etc. Be sure to ask your broker what is available.
- Use an Insurance Broker
Most Life Insurance Brokers can sell travel insurance. A true broker can sell several plans rather than just one. You may not be getting the best deal by simply buying the extra insurance at the travel agent.
By preparing your travel insurance, you will rid the horror stories of not having the proper coverage. We hope to never use Travel Insurance, but if needed we’ll be glad we have it.
Jeff Scammell is a Financial Advisor and Insurance Agent for JDS Financial Planning Inc. in St. George, New Brunswick. He can be reached at [email protected]
Investing and Saving in a World of Negatives
By: Jeff Scammell, Financial Advisor, JDS Financial Planning Inc.
It is no secret that the world is falling apart. Terrible crimes are happening all over the world including on our home turf. Our closest neighbours are dealing with some major issues that could bring their society into the 21st century with the rest of us. There are multiple 24-hour news channels built to spread the good word, or in most cases, the negative word. It’s unbelievable that these “reporters” jobs are to spread negative thoughts and theories as if they were fact and concrete. When a good news story comes up, it gets poked full of holes. If Obama’s administration provides something great, they dig up something negative about him from the past in attempt to discount the positivity that is present NOW.
With many of the large news networks running what seems like a “negative mandate”. It is no wonder that when it comes to personal finance, the majority of us are scared. It seems as though every piece of data sends the financial markets into a tailspin. Or instead of a tailspin, a huge upswing. Yes, the markets are volatile. And yes, volatility is translated by many as a form of risk. And yes, risk is considered scary. Let’s break a few myths here.
- The major news networks are always credible: This is a myth, they often report in real time, meaning the story or the issue is developing. A developing story does not have all the details and when some details are missed, it can change the entire ending of the story. Have you ever heard a joke from someone who missed the punchline or a key piece of information? It made you feel a little uncomfortable didn’t it? Same thing happens when you miss a piece of a story. When telling jokes, we set key words that steer the listener toward one ending and then the punchline lands them in a completely different ending than expected. That creates humour. If these key words are used in delivering the news, added in with missing details, the reporter can steer us to a conclusion they want us to hear and we fill in the rest of the details. Think about the last time you talked to a friend about a big news story, you filled in a lot of details didn’t you? “I think he was going crazy”, “I think that is the problem with America”, “If I were there, this is how it would have gone down”. The news reporter gives some detail, sets the tone and direction of the conclusion, and you filled in the rest, thus validating it in your own head.
- Volatility is bad: Volatility is caused by human beings trading stocks based on what they think other human beings will be doing. They are speculating that because XYZ Company lost a contract, that it would not make a lot of money this year so they sell it. This doesn’t mean the company isn’t still going to grow, and isn’t still a great long term company. When it is sold, someone buys it at a discount. Therefore, the volatility has actually helped someone purchase a long term investment at a discount. Volatility in this case wasn’t great for the short term investor who got scared and sold, but volatility was good for the long term investor who just picked up a bargain.
- Risk = Reward: Although this is a very broad definition, it is not necessarily true. Typically, in life, things that are hard or considered risky, will most likely have a bigger outcome in the end. We have all seen enough Shark’s Tank and Dragon’s Den to know that this is not always the case. So when putting together portfolios and considering which advisor is best, don’t get bought in by the risk=reward tactic. While this is generally true, it must be taken cautiously. Since garbage portfolios are also considered risky, and typically with no reward, there are many other factors than risk that measure the quality of the investment. So do not make your decision based on risk alone.
So what is the main message of this blog? Sometimes I struggle staying on task. What I want you to take away from this is that the information that gets plugged into us on a daily basis over decades, is not always factual. In fact, when someone gives financial advice to a general audience, it will most likely be wrong for you. That includes the blogs that I write and post. The reason being, you are very unique. Your family is unique. It would be impossible to write out scenarios that fit every family across Canada. So here is the real piece of advice: Consult a real financial advisor. Not an advisor on the bank rotation, but an independent financial advisor that helps you build your customized portfolio. And more importantly, they are going to help you build the habit of saving in the first place.
Last week we brought you part one of what the Canada Child Benefit is. We helped you figure out how much you may be receiving. If you haven’t read part one, you can find it here. In the previous post we talked about Registered Education Savings Plans and Life Insurance for your child. In this post, we are going to discuss the final two items to spend your Canada Child Benefit on. In closing, we will wrap up all four items in a case study so you can see it at work.
Critical Illness Insurance
Continuing on the discussion of insurance for your child, as Critical Illness Insurance is often overlooked. Many people have either not heard of Critical Illness or they have never had an understanding of what it is. Simply put, Critical Illness provides a tax-free cheque to the parents of a sick child. There are certain conditions that are covered, but the biggest are Life Threatening Cancer, Cerebral Palsy, Muscular Dystrophy, Bacterial Meningitis, etc. (a full list from a typical insurance company can be found here).
So why would this be important? No one wants to think of their child getting sick. No one wants to think of making money when their child is sick. The reason it is important is because many health plans both private and provincial do not cover such things as traveling to the hospital, taking time off of work, staying in a hotel, wheel chair ramps, hiring help at home, flying in family members to help out, extra daycare for the child that isn’t sick, etc. The list goes on. Remember, that for us living in the great province of New Brunswick, our closest children’s hospital (which is a wonderful hospital) is in Halifax, NS. Travel and lodging and time off of work becomes a big, big issue.
The primary function of this type of insurance is to keep your family’s faces off of a pickle jar at the local gas station. But some secondary options are also available. These options can provide conversion to an adult plan for the child. Meaning they keep the coverage into adulthood should they ever get sick and their family needs the cash. Another option is that you can actually receive 100% of your premiums back at age 25. There is no interest on your money, but it would certainly make sense if you can use your increased cash flow from Mr. Trudeau.
Family Contingency Fund
One important thing that should be in place is a family contingency fund. We can call it an emergency fund but contingency fund sounds better I think. Straight up, this is a fund to be used only when needed. You and your spouse should define specific reasons why this money should be used. It is not to be used because the couch is getting old. This is a last resort next to hauling out the credit card for something that is urgent and NEEDED (not wanted).
To start, put enough away that you will have $1000 in 6 months. That’s about $167 a month to start off. Then, continue to put $50-$100 each month to build it up. Try to never let the pot drop below $1000. Remember, this could be your deductible for your home insurance should something happen to your home. Or it could be the refrigerator that just stopped working that helps your family EAT!
Canada Child Benefit – Photo Credit Servicecanada.gc.ca
The Final Verdict (Case Study)
Now that you have had a brief on the 4 things you should do with your Child Benefit money, let’s get to the numbers. Below you will see a case study with the example that we started with. 1 child under six, and receiving about $315/month. Let’s make the assumption that that child is a 1-year-old female with no current health concerns (it may also be important that the parents and possibly grandparents do not have hereditary conditions).
Life Insurance: $75,000 Whole Life (with $150,000 Guaranteed Insurability Benefit) = $59/month*
Critical Illness Insurance: $75,000 with Return of Premium (at age 25) = $47/month**
Family Contingency: $167/month for 6 months
Education Plan: $42/month until 6 months are up, then switching to $200/month***
At Age 18: Education Plan would have over $50,000 in it
At Age 25: Critical Illness Return of Premium would amount to over $13,500
At Age 25: Cash value of life insurance would amount to over $21,000 (and the death benefit would have already increased to over $179,000)
In this scenario, we have protected your family in the event of a sudden loss, sudden sickness, as well as a disaster that could hit your household. We have also saved a great chunk of money for your child’s education. We have also provided the option to have over $34,000 to use in their twenties for a down payment on a home, a wedding, start a business, etc.
Although this scenario isn’t the answer for every family, it is certainly worth taking a look at. I feel that we have put this tax-free money from the government to good use and is now truly benefiting and protecting your family from now and in the future. Be sure to discuss this scenario with your financial advisor. If you do not have and advisor, certainly reach out to me to see if this is will work for your family.
*In this example, we used the Great West Life Enhanced Legacy Participating Whole Life Policy at 2016 current dividend scale
**In this example, we used the Great West Life Child Oasis Critical Illness Insurance Plan with Return of Premium at expiry. This policy is convertible to an adult product upon expiry.
*** Assuming a full 20% match and 5% annual return compounded.