The Money Scope Podcast

Today, we bring you another live episode, this time from the Annual Canadian Physician Financial Wellness Conference. We answer a series of compelling audience questions — drawing on information from past episodes — that meaningfully impact both sides of the client-advisor relationships. To kick things off, we break down the best time to incorporate, the downsides of incorporating too early, getting money out of your corporation tax efficiently, and common misconceptions around tax efficiency. Next, we discuss the changes in capital gains tax and if it still makes sense to incorporate despite the increase, whether you should pay debt or invest as you juggle all your different priorities, and when to take dividends versus salary. We also get into the topic of corporate bloat and how to address it through measures like smoothing out consumption, why you need to know your notional account balances, insights on dividend-paying ETFs, and advice for alternative investments, including real estate. To close, we discuss how you can determine when you’ve reached financial independence and how a professional financial planner can help you make that call, along with a few final audience questions. Join us to hear the full scope of today’s conversation on navigating the ins and outs of getting incorporated, tax efficiency, and much more!

Key Points From This Episode:

(0:00:31) An update on Money Scope and the tools we’ve been developing. 

(0:03:32) Our first audience question: when should you incorporate? 

(0:05:59) Getting money out of your corporation to pay off credit tax-efficiently. 

(0:08:01) Common misconceptions around tax efficiency and tax deferrals. 

(0:13:19) Unpacking if it’s still better to incorporate after the capital gains tax increase. 

(0:16:03) A breakdown of whether you should pay off your debt or invest. 

(0:20:19) The conditions under which you should take dividends versus salary. 

(0:23:12) Insights on corporate bloat and methods for addressing it. 

(0:32:14) How to come up with an optimal compensation strategy. 

(0:36:50) What you need to ask your advisor or accountant about: notional account balances. 

(0:39:01) Exploring whether there’s a role for dividend-paying ETFs during long-term investing within a corporate investment account. 

(0:45:29) Reasonable alternatives to investing, other than ETFs, particularly when you reach the passive income limit. 

(0:53:32) How you can tell when you’ve reached financial independence. 

(0:59:08) Ways to approach optimal charitable giving throughout your life. 

(01:01:02) The role of a family trust as a way for inheritance planning within a medical corporation. 

Links From Today’s Episode:

Salary and Dividend Optimizer Calculator — https://www.looniedoctor.ca/ccpc-income-disperser/

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://x.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Today’s episode comes to you live from the 22nd Institute for Advanced Financial (IAFP) Planning Conference in Gatineau, Quebec, recorded in front of an audience of professional financial planners. For this special episode, we cover key planning issues for incorporated business owners and walk through the lifecycle of a business owner or professional who eventually chooses to incorporate. We discuss crucial financial decisions they face along the way, particularly as corporate assets begin to grow, and wrap up with a Q&A covering topics like tax brackets, salary offsets, and more. Our conversation also tackles common misconceptions and explains strategies for income smoothing, tax deferral, and managing 'corporate bloat.' With today’s conference theme inspired by Star Wars, expect plenty of niche references along the way!

Key Points From This Episode:

(0:00:17) Introducing the topics that will be covered in today’s special live episode at the 22nd Institute for Advanced Financial Planning Conference in Gatineau, Quebec. 

(0:03:57) Guidelines and benefits of becoming incorporated, including income smoothing. 

(0:06:49) Advice for navigating taxes when becoming incorporated. 

(0:08:42) Common misconceptions that people have regarding getting incorporated. 

(0:13:53) How to capitalize on the benefits of tax deferral in a corporation. 

(0:16:24) Key insights on tax integration and eligible dividends. 

(0:20:07) Achieving optimal compensation and how it solves the problem of “corporate bloat.” 

(0:25:08) Ways to treat and prevent corporate bloat. 

(0:28:47) The math behind Mark and Ben’s optimal compensation algorithms. 

(0:32:08) Advantages of planning over products for solving optimal compensation. 

(0:35:10) Audience questions and answers, from tax brackets to Star Wars. 

Links From Today’s Episode:

Institute for Advanced Financial Planning Conference — https://iafpsymposium.ca/Salary and Dividend Optimizer Calculator — https://www.looniedoctor.ca/ccpc-income-disperser/ ‘Dividends To Maximize Your Corporate & Personal Cash Flow’ — https://www.looniedoctor.ca/2023/06/30/pay-dividends-corporation/#algorithm

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://x.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Understanding the implications of the 2024 Federal Budget and its proposed changes to capital gains taxation is crucial for individuals and corporations alike. In today’s episode, we take a deep dive into the Canadian federal budget for 2024 and its impact on capital gains taxation. In our conversation, we discuss the technical details of capital gains taxation and its historical context and offer practical advice for navigating the proposed changes in the 2024 federal budget. We discuss the increase in the capital gains inclusion rate and how these changes will affect individual investors and corporations. Discover the mechanics of capital gains tax in Canada, essential tax planning strategies, the importance of diversified tax exposure, and the concept of capital gains harvesting. Gain insights into the impact of the changes on the retirement plans of incorporated business owners and professionals, the role of optimal compensation in realizing capital gains, and approaches for navigating the proposed changes. Join us as we delve into the complexity of tax planning for incorporated business owners and the importance of long-term projections, personalized advice, and strategic decision-making for realizing a capital gain. Tune in now!

Key Points From This Episode:

(0:00:00) Overview of the changes and their relevance for Canadian investors. 

(0:07:59) How capital gains tax works in Canada and its impact on taxable income. 

(0:13:34) Reasons for the variation of capital gains inclusion rates. 

(0:18:18) The differences in tax treatment for individuals versus corporations. 

(0:22:41) Capital gains in a CCPC, how it works, and the role of a shareholder. 

(0:29:36) Implications of the changes on Alternative Minimum Tax (AMT) in Canada. 

(0:37:58) Learn about the ‘breakeven horizon’ and essential capital gain considerations. 

(0:46:35) Capital gain harvesting and how optimal compensation ties into it. 

(0:58:17) Explore the trade-offs of realizing a large capital gain and tax-reducing strategies. 

(1:12:30) Hear case studies that illustrate the application of various tax-reducing strategies. 

(1:29:56) Impact of capital gains inclusion rates on retirement planning for CCPCs. 

(1:37:36) Final takeaways and tax planning recommendations. 

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://x.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Episode 10 & 11: Case Conference — https://moneyscope.ca/2024/04/12/ep-10-11-case-conference-corporate-investing-puzzle-pieces/

Episode 13: Optimal Compensation from a CCPC — https://moneyscope.ca/2024/04/26/episode-13-optimal-compensation-from-a-ccpc/

Rational Reminder: Episode 304 — https://rationalreminder.ca/podcast/304

The Loonie Doctor Calculators — https://www.looniedoctor.ca/canadian-financial-calculators/#tax

Realize or Defer Capital Gains Calculator — https://research-tools.pwlcapital.com/research/realize-gain

Conquest Planning — https://conquestplanning.com

Business owners often have reservations about paying into the Canada Pension Plan (CPP). Many think they’re getting a bad deal by paying both the employer and the employee portion of the contribution, but can they do better by paying themselves dividends? In the last two episodes, we did an extensive review of how you can compensate yourself as a business owner through a private corporation. Today, we take a deeper look at two of the payroll expense aspects that often come up in discussions with financial planners: CPP and Employment Insurance (EI). If you are self-employed, there are a few things you need to consider, including your decision to pay yourself a salary or take dividends. We discuss that in this episode, as well as whether self-employed business owners are really getting the short end of the stick when it comes to CPP and EI contributions. Tuning in today, you’ll learn about some of the unique features of CPP, how it’s calculated, and the three major risks it offers protection against, plus we walk you through various models to illustrate the consequences of paying yourself dividends versus salary. We also delve into EI for self-employed business owners, the special benefits thereof, models that consider different amounts of income and consumption, and much more. For a comprehensive guide to CPP and EI for self-employed business owners, don’t miss this episode of Money Scope with Benjamin Felix and Dr. Mark Soth!

Key Points From This Episode:

(0:00:20) Reasons that today’s topic on CPP and EI is so complex. 

(0:04:04) How CPP is calculated: an overview of what you pay and what you receive. 

(0:05:59) Whether or not business owners get a bad deal with CPP. 

(0:11:34) Viewing CPP as a tax and when paying dividends versus salary is favourable. 

(0:17:33) The unique features and benefits of CPP and the risk protection it offers. 

(0:25:15) Assessing the value creation and performance of a pension fund like CPP. 

(0:30:42) Crunching numbers to calculate a combined CPP benefit for a household. 

(0:33:52) Making the comparison between paying CPP and investing in a corporation. 

(0:37:23) Tax planning consequences of paying dividends to avoid paying into CPP. 

(0:41:16) Various models to illustrate many of the scenarios we covered in this episode.

(0:48:36) Why paying into CPP and dying early results in a bad financial outcome. 

(0:51:36) Comparing CPP with other corporate and personal investment options. 

(0:59:54) Key takeaways on CPP; a chance to buy into a truly inflation-indexed annuity. 

(1:01:48) An overview of employment insurance (EI) for self-employed individuals. 

(1:05:38) EI special benefits that self-employed business owners can access. 

(1:13:55) Insight into EI for incorporated versus non-incorporated business owners. 

(1:23:43) Our post-op debrief of today’s episode on CPP and EI! 

Links From Today’s Episode:

Dr. Mark Soth (The Loonie Doctor) — looniedoctor.ca

Dr. Mark on X — twitter.com/LoonieDoctor

Benjamin Felix — pwlcapital.com/author/benjamin-felix 

Benjamin on X — twitter.com/benjaminwfelix

Benjamin on LinkedIn — inkedin.com/in/benjaminwfelix

Aravind Sithamparapillai — ironwoodcanada.com/aravind-sithamparapillai

Sebastien Betermier — sbetermier.com

Papers Mentioned:

‘Five Examples of Direct Value Creation and Capture in the Pension Fund Industry’ – papers.ssrn.com/sol3/papers.cfm?abstract_id=4616266

When it comes to creating an optimal compensation strategy plan, there’s a lot to navigate. And while there may be a plethora of general rules floating around on the internet, each individual’s optimal strategy is ultimately going to be dependent on their unique situation. That is why we’re using today’s conversation to break down the findings of our mental model algorithm. Tuning in you’ll hear a detailed explanation of the five steps for creating an optimal compensation strategy plan, and how to apply them. Find out how to plan your consumption, account for mandatory income, clear out notional accounts, use salary to make up the difference, and utilize salary dollars that aren’t for spending. We also cover key areas, like Canada Child Benefit (CCB) clawbacks, incorporating income splitting when using your salary, and how to pay yourself a salary bonus to bring the corporate active income down. Join us today to learn how you can implement a dynamic salary and dividend strategy for optimal compensation, and much more. There’s a lot to unpack here, so get your note-taking devices ready, and let’s get started!

Key Points From This Episode:

(0:05:19) Optimizing integration: general rules and exceptions in different contexts.

(0:07:48) The first three steps in our mental model algorithm: planning consumption, accounting for mandatory income, and clearing out notional accounts.

(0:15:25) A quick warning on thinking about money in terms of inflation-adjustments, and why it’s important.

(0:16:11) How to use capital dividend accounts (CDAs) in different situations and why it’s generally the most useful notional account.

(0:28:03) An overview of Eligible Refundable Dividend Tax on Hand (ERDTOH), how to use it, its status as the second most useful notional account, and why it’s considered more useful than CDAs in certain cases.

(0:30:58) Important details on Non-eligible Refundable Dividend Tax on Hand (NRDTOH).

(0:32:42) Everything you need to know about the General Rate Income Pool (GRIP) in various contexts.

(0:41:01) Situations where it may make sense to pay extra dividends and key factors that impact personal tax rates.

(0:56:31) A breakdown of the Canada Child Benefit (CCB) clawback versus Notional Account Release, and key factors to consider.

(01:03:22) Factoring in RRSP contributions when paying yourself a salary and how to take advantage of them.

(01:08:39) How to incorporate income splitting using your salary depending on the situation.

(01:13:48) What to do with salary dollars that you won’t take for spending.

(01:18:46) Key insights, analysis, and caveats on bonusing down the SBD rate; how to pay yourself a salary bonus to bring the corporate active income down.

(01:30:19) Implementing a dynamic strategy of salary and dividends, how it might unfold over time, and examples of analysis that we’ve done.

(01:37:19) Our post-op debrief: a review of our mental model algorithm and creating an optimal compensation strategy plan to pay yourself from your corporation.

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Corporate to Personal Salary Dividend Optimizer — https://www.looniedoctor.ca/ccpc-income-disperser/

Whether you’re self-employed or you own a small business, there are many nuances to how you can pay yourself from your business. Our episode today hones in on how we pay ourselves personally from a corporation (along with other key employees, including spouses) and the many intricacies you need to understand when making decisions about this process. While today’s episode may be our most complex and ambitious one to date, we hope it will serve as a useful resource for helping you get the most out of your business. Tuning in, you’ll learn about the benefits and drawbacks of paying yourself with a salary versus dividends, how to optimize your meetings with accountants and financial planners, and much more. We get into key topics such as employee insurance (EI) in different contexts, the benefits of the Canada Pension Plan (CPP), why you need to put together an income smoothing plan, and how to use shareholder loans without consequential missteps. The final portion of our show is dedicated to income splitting, the best ways to go about it, and how to make sure you adhere to Canadian Revenue Agency (CRA) requirements. Today’s episode covers a lot of ground and serves as a useful reference for listeners to return to. Join us today for this expansive conversation and arm yourself with the knowledge you need to get the most out of your corporation!

Key Points From This Episode:

(0:02:42) Important disclaimers and exceptions concerning today’s topics.

(0:05:37) Common questions on taxation of active business income, personal income, the nuances of tax integration, business expenses, exemptions, and deductibles.

(0:19:32) A breakdown of how net active income is taxed, what to do with retained earnings, and navigating the dividend gross-up system. 

(0:28:57) Planning for retirement, asset allocation, and determining your time horizon. 

(0:34:44) An overview of General Rate Income Pool (GRIP) as a notional account for tax tracking purposes and an example of how GRIP works with active income. 

(0:38:03) Looking at tax rates and tax integration as you move through different tax brackets and how rules vary between various jurisdictions in Canada. 

(0:56:02) Unpacking what you need to know when it comes to paying yourself a salary and paying employees (including spouses).

(01:01:08) Employee Insurance (EI) in different contexts, the distinctions between arm’s length and non-arm’s length employees, and navigating Canada Pension Plan (CPP) payments. 

(01:05:18) The many benefits of the Canada Pension Plan (CPP), and why the reservations people have due to it being government-mandated is not unhelpful in this instance. 

(01:08:20) Key insights on the Canada employment tax credit when considering the salary versus dividend debate, and how salaries can create other financial planning benefits.

(01:16:38) Putting together an income smoothing plan, how to keep yourself in a lower tax bracket over your lifetime, and how to work with a financial planner.

(01:25:17) A Breakdown of shareholder loans, how they work, the tax risks involved, and the best ways to use them.

(01:27:32) Other ways to get money out of your corporation efficiently, like with your capital dividend account (CDA), and optimal ways to use your CDA.

(01:34:25) The concept of income splitting, its benefits, the best strategies for going about this, and how to adhere to Canadian Revenue Agency (CRA) requirements.

(01:45:17) A recap of what we covered today and what we have coming up next time.

Links From Today’s Episode:

CRA Interpret Bulletins - https://www.canada.ca/en/revenue-agency/services/forms-publications/current-income-tax-interpretation-bulletins.html

Dr. Mark Soth’s Calculators — https://www.looniedoctor.ca/canadian-financial-calculators/

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Today’s Case Conference episode is a supplement to Episodes 10 and 11 and uses several case studies to examine key subjects such as corporate bloat, tax-efficient retirement planning for high-income earners, the importance of diversifying your asset allocation, and more. For our first case, we take a step-by-step look at the decision to retain earnings in your corporation, and examine why you need to consider using some of that money for things like your personal RRSP and TFSA accounts. Our second case includes a number of examples. Using multiple simulations, we unpack how you could potentially sabotage the benefits of a corporation by letting its passive assets get too big. To wrap things up, we discuss another common temptation: the urge to transform your corporation into a tax-efficient, eligible dividend-generating powerhouse. We cover a lot in today’s episode, so be sure to tune in for a deep dive on everything from addressing corporate bloat to diversifying asset allocation!

Key Points From This Episode:

(0:02:16) Our first case study concerning corporations, RRSPs, and TFSAs.

(0:08:32) When to use a TFSA and why it will depend on your unique circumstances.

(0:11:30) Our second case study on corporate bloat and optimal compensation for tax efficiency. 

(0:16:38) Simulations of different combinations of earning and spending using Mark’s optimal corporate compensation algorithm. 

(0:19:50) Breaking down tax-efficient retirement planning for high-income earners. 

(0:29:06) An example detailing a high earner and their spending, passive income limits, corporate bloat, and tax implications. 

(0:35:12) Why it’s so important to be able to measure progress towards your financial goals. 

(0:38:12) Strategies for dealing with corporate bloat, tax optimization, and more. 

(0:41:41) Our third case study where we examine what happens when you’re overly focused on Canadian dividends and capital gains. 

(0:43:43) Why it’s so important to diversify your asset allocation. 

(0:50:51) Negotiating fees and how this could be affected by upcoming regulations in 2024. 

Links From Today’s Episode:

Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Accountants and financial advisors offer excellent professional support, but it’s also important to keep yourself informed and understand key tax implications when it comes to managing your corporate account. In today’s episode, we take a closer look at the type of information you should arm yourself with to help you optimize your tax planning and manage your corporate investments efficiently. Tuning in, you’ll learn why personal investing can often be surprisingly tax-efficient, why the biggest challenge is moving money out of the corporation into your personal accounts in a tax-efficient way, and why the best way to achieve this is with a CDA. We break down key aspects of tax drag and tax deferral in corporate investments and what you need to know about tax planning for a corporate account. Our conversation also covers how to use ETFs and corporate class funds for tax deferral within a corporation, why spending and giving are important financial skills that you should practice, how to be a good steward of your wealth, plus a whole lot more. For all the important details on tax planning and how to manage your corporate investments, be sure to tune in for this informative conversation!

Key Points From This Episode:

(0:01:27) Managing investments with accountants and financial advisors, keeping yourself informed, and the missteps Ben has seen when onboarding new clients.

(0:04:21) The major buying power that CDAs represent.

(0:05:34) Taxes, investing, and prioritizing a diversified executable investment strategy that suits your goals and risk tolerance.

(0:07:43) An overview of tax drag with corporate investing.

(0:12:41) The active-passive income limit problem and how to avoid it.

(0:14:25) A rundown of corporate tax deferral on investments. 

(0:19:42) Relevant details on tax planning for a corporate account. 

(0:24:31) Navigating more complex products and strategies, like insurance.

(0:34:09) How to use ETFs and corporate class funds for tax deferral within a corporation.

(0:41:19) Asset allocation, location, managing risk, and a reminder to be careful that the downsides don’t exceed your tax savings.

(0:44:08) Advice for avoiding inefficiencies in corporate investing when you have a high income and don’t spend much personally.

(0:46:10) Why spending and giving are important financial skills and why you should prioritize being a good steward of your wealth.

Links From Today’s Episode:

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

HXS ETF vs Conventional S&P 500 ETFs in a Corporation

HXDM ETF For International Exposure in a Corporate Account

HXCN vs ZCN Tax Efficiency in a Private Corporation

Corporate Class Bond ETF (HBB) in a Private Corporation

In today’s episode, we delve into the complex topic of investing in Canadian corporations, something that will be deeply relevant to many of our listeners. Given the intricate interplay of investments and taxes within this context, it's crucial for corporate and business owners to grasp the fundamentals. We start off by unpacking key details of what defines a corporation, the intricacies of taxation for Canadian companies, and the nuances of passive income. Our conversation then goes on to cover tax integration, how to navigate its advantages and disadvantages, and what you can do to ensure that you avoid a large tax bump. We also break down the distinction between notional and real accounts, how they are used, tax deferrals, capital gains, and how to implement good insurance and estate planning. Today’s episode covers a lot and makes for excellent reference material. Tune in today for a comprehensive breakdown of everything you need to know when it comes to investing in Canadian corporations!

Key Points From This Episode:

(0:01:01) Investing in Canadian corporations and why it’s such a complex subject.

(0:03:44) Understanding exactly what a corporation is and what a corporation isn’t.

(0:06:06) The main reasons for a separate operating company and a holding company. 

(0:08:08) Navigating liability and investment properties as a physician. 

(0:11:42) Taxation of active and passive investment income inside of a Canadian Controlled Private Corporation (CCPC). 

(0:16:06) What is considered passive income and the nuances within that. 

(0:20:50) Tax integration, advantages and disadvantages, and how to avoid a big tax bump. 

(0:23:43) Fears around the passive income limit, and why these concerns are overblown.

(0:26:23) Taxation of corporate investments and why tax is a secondary consideration. 

(0:27:16) A breakdown of notional and real accounts and how they are used. 

(0:33:42) Eligible and non-eligible dividends and dividend tax. 

(0:43:49) Understanding unfavourable tax integration with foreign dividend income. 

(0:49:04) Tax deferral, capital gains, and the most valuable notional account. 

(0:54:09) How to implement good insurance and estate planning. 

(0:58:48) A review of today’s content and what we’ll be discussing next time. 

Links From Today’s Episode:

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

The overarching theme of today’s conversation revolves around prudent financial decision-making, including tax-efficient investing, risk assessment, and leveraging home equity for investment purposes. This acts as supplementary material for the main episode, where we take a deep dive into the nuances of tax. Join us as we look at taxation and income through the lens of common scenarios that often lead people to make poor decisions with their investments. We uncover the importance of structuring investment portfolios with tax implications in mind and venture into the realm of corporate-class bond ETFs, assessing their potential benefits and complexities. You’ll gain insight into the free dividends fallacy and the benefits of high dividend yield stocks. We also unravel the strategy of leveraging home equity to defer tax and share our personal experiences and insights, along with essential criteria to determine your risk profile.  Tune in as we turn dollars into sense and pave the road to a prosperous financial future!

Key Points From This Episode:

(0:01:32) Optimizing investment portfolio structure without relying on dividends.

(0:03:33) Essential aspects of taxes on capital gains and dividends. 

(0:06:41) The risks of dividend-chasing strategies. 

(0:09:56) A case study comparing premium with discount bond tax efficiency. 

(0:12:26) Practical examples and steps for leveraging discount bonds effectively. 

(0:19:11) Income after tax between discount and premium bonds. 

(0:22:52) Using corporate class bond ETFs for tax deferral. 

(0:25:07) Another case study that demonstrates leveraging home equity to invest. 

(0:28:15) Risks and complexities of leverage investing. 

(0:33:32) The value of a clear plan and reasonable expectations regarding your risk profile. 

(0:36:31) Mark’s experience of leverage investing. 

(0:40:06) How he used leverage investing to reach his financial goals. 

(0:47:39) Final thoughts and key takeaways. 

Links From Today’s Episode:

Rational Reminder Podcast: Professor Samuel Hartzmark — https://rationalreminder.ca/podcast/273

BlackRock — https://www.blackrock.com/ca

Horizons ETFs — https://horizonsetfs.com/

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/