TK Dale Wealth Podcast

In this episode Trevor Dale talks about how having an offensive mindset financially is better than having a defensive mindset.

The best defense is a good offense.

Let's think about the hockey team who plays a defensive game and in the last period the score is 0-0. The team loses a key player and they become exhausted. Then the other team scores just one point and they lose the game.

This is the same as trying to save yourself to prosperity. You can only reduce your expenses to zero but at some point to raise your standard of living you will have to go on the offense. You can't change your financial outcome by purely reducing costs. 

You stay up late at night thinking about how to get more money from this rock and hard place you find yourself in. You argue with your spouse about spending and things are difficult.

Now imagine playing an offensive game. You're up 5-0 and the same scenario happens where you lose a key player and your team becomes exhausted. Now in this case the other team scores one goal and you still win. The other team perhaps scores 3 goals and you still win. By playing offense, you give yourself a moat to protect yourself.

In the podcast Trevor talks about ways to do this and has one simple action to take.

Get after it!

It’s easy to figure out that many people will need somewhere around $2.5 million in savings in order to have $100,000 of pre-tax earnings that is designed to last in perpetuity. The formula for figuring out this is below. Retirement planning is a simple process because of the straight forward math however because of the number of factors involved, it can become confusing and frustrating.

The questions that people have are:

• When can I retire?
• What will my retirement look like?
• Will I have to sell my house and downsize in order to afford retirement?
• How do I know that I’m getting the best service with my advisor?
• What fees am I paying?
• How do RRSP’s and RRIF’s work?
• Should I be contributing to a TFSA instead?
• I’m good, I have a pension…
• I didn’t think I would live this long (actual response)
• How much CPP and OAS will I get?
• How do I invest my money?
• I’m 5 years out from retirement and I should be all in bonds… or should I?
• I don’t want to change anything even though I’m not getting the best service.
• This list goes on and on with the many questions that I’ve had from clients over the years. A lack of knowing where they are and what they need in retirement is the cause of most frustration.

I’m going to illustrate some simple ways to start to understand what your retirement will look like in a few simple steps.

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Easy and simple bringing you comfort and security knowing where you are at. Transparency and knowing are the two things that bring me the greatest comfort and joy so that I know what I can and can’t do and I can shape my future accordingly.

Let’s use an example of a family making $200,000 before tax prior to retirement.

First, know this: Most people use about 60%-70% of their pre-retirement income in retirement.
 Do a quick budget and see how much you are spending each year. It doesn’t have to be too in depth but do an estimate. The think about if your kids will be out of the house or if you will be taking on extra expenses to take care of your parents. Will you want to travel more?

Take that income without the travel and multiply it by 0.7. This will give us $140,000 per year. Then you may receive Canada Pension Plan which the maximum for one person is over $13,800 per year. Keep in mind that this is taxable.

For two people that is $27,600 which leaves a desired income of $112,400 ($140k - $27.6k).

You may have a pension and let’s assume for simplicity that it works out to $12,400 for easy rounding leaving you with a required income of $100,000. The bigger your pension contribution, the lower the required generation of income from your investment portfolio.

Now let’s assume that you retire at 65 and that inflation is an average of 2%. Let’s also assume that you are going to get a 6% return on your investments.

How much can you pull out without eating into the principal amount? Your desired income of $100,000 should increase every year to account for inflation. Therefore you will can withdraw approximately 4% (1.06/1.04 = 3.92% or about 4%).

Therefore $100,000/0.04 = $2.5 million. Put another way, your desired annual income X 25 equals your required nest egg.

Keep in mind that this is based off of today’s money and also that your income is expected to grow. The required income in retirement will be greater due to inflation however your income is also expected to grow. You should be increasing the amount you save every year to account for this.

Now the question comes down to how do I get to having $2.5 million in investments? We will cover that in another post.

Remember that your desired income X 25 is the desired amount of investments.

Other factors to consider are:

• Other sources of income
• Inheritance
• Old Age Security
• Infla

Shadow banking in Canada is rarely talked about. However, given the B20 rule changes, we are starting to see some of the affects on the Canadian economy. As a positive, the Canadian banks are having better mortgages on their books than if they were qualifying people at the contract rate. As a consequence of this happening, the alternate and private sector is picking up deals that these banks no longer do. This is pushing a major growth in the private and alternate lending space. Trevor talks about history and leverage in the US prior to the credit crisis and where Canada is today. He talks about the affects and how it is affecting his investment strategy and also his mortgage strategy. Enjoy this insightful episode!

In this episode, Trevor talks about whether to go fixed or variable on your mortgage and some of the considerations that should happen... They likely aren't what you would expect.
Please note that all mortgage discussions are provided by Trevor Dale, who is registered as a mortgage agent under iBridge Capital number 13056.

Financial plans are at the core of what we do however in reality, plans are what we do all over our lives? So why don't we have a financial plan?

We plan to get to work on time, we plan to get our kids to school. We plan to get a new job. We make social plans and movie plans. We plan vacations and yet we lack financial plans. They are simple and should be done by everyone. Having some sort of a plan is necessary to tracking and making progress.

Progress is what we are all after. Without progress and direction we are lost. We are confused. We feel chaos in our decision making and it causes conflict with the people involved... usually a spouse.

I remember the first time I deal with someone in a bank branch. They gave me a bunch of options and yet I still felt like I was overwhelmed with the decision making process. I didn't know where I was financially, I didn't know exactly what my actions meant for me and I didn't know what changes needed to be made.

For families, each member must be on side with choosing the person handling their financial affairs. It is a big responsibility for both the family and the advisor.

The government of Canada has an list of 16 questions that can be a good conversation starter. In this video we review those questions and answer them about our firm.

It's a great resource and can be found here: https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/choose-financial-advisor.html

In this episode we discuss:

• Why work with an advisor
• How the term financial advisor is used in Canada and if it is regulated
• How advisors are compensated
• The 16 questions to ask a financial advisor

If you found this helpful then please share it with someone else and reach out to us so that we can answer any questions that you may have.

tkdale.com/articles

In this podcast, Trevor Dale owner and portfolio manager, discusses his thoughts on asset allocation when it comes to stocks and bonds. He challenges the traditional rule of thumb and strips out the facts from the feelings in making this investment decision. 

There are two questions that Trevor asks every client:

1. How much cash do you need?
2. When do you need it by?

Once you know how much cash you need, and when you know that expense or expenses are scheduled to go out then you can start to construct a portfolio. Those two questions are the basis for all portfolios.

In this episode I talk about how my kids avoid their responsibilities by not wanting to brush their teeth and get ready. I discuss how signing off on a trade is a form of responsibility sharing and that the client takes on much of the responsibility. Consider who should be the one to take the onus in the advisor/investor relationship.

This interview is with Michele Caranci, a realtor with Right at Home Realty covering most of Ontario. She’s sold everything from single family homes, to cottages, condos and assignments on new build homes.

Full video can be found at: https://tkdale.com/2019/04/10/realtor-michele-caranci/

My two biggest take aways from the conversation are:

1. Take action
2. Get help from someone to narrow your time and stress (it doesn’t have to cost anything)
3. Make sure that the person helping you is a good fit for your goal

Michele has two university degrees and was raised in a real estate environment. As a child, rather than playing “eye spy” she played “guess the value of the house”.

Her mom is a realtor and she works with her. She loves this because she gets to spend time with her mom while she works. Together they make The Jewel Home Team.

My biggest take away is that for anyone buying a home for the first time or even if you haven’t moved in a while you can do two things to remove the stress. First is to ask for help from a professional who knows the market, the rules, the procedures and your likes. Second is to find a professional that is a fit for you.

I can’t stress this enough. If there is a fit of personality then things will most likely go well because of an enhanced level of communication. That in turn will work out to better advice which will save you time, stress and frustration.

One overarching theme of this interview is to take action. I see so many people dream and never act. I live a life that when I get clear on what I want, then I go for it. Why wait? Have the discussions, explore and make a decision. It’s better to come to an understanding and make a decision quickly than to avoid it and not getting what you want. Take Action.

Michele uses the analogy of going through the mountain and not around it. Don’t take the long way around. Take the efficient way to the other side.

This means that once you’ve decided that moving may be in your future then explore it and explore with the help of a professional. Make sure that there’s a fit and move forward to make that desire a reality.

Michele’s blend of listening and understanding is what sets her apart. She really takes the time to understand what you are thinking.

Michele has a unique approach to selling real estate. She previews all the homes in the area when they come on the market so that when she talks with her clients she can quickly cut out houses that don’t fit. This is a big time saver.

When my wife and I bought our first house we viewed around 30 houses and we felt overwhelmed, stressed and couldn’t remember what was different from #17 to #27. They all started to blend together. I’m a big fan of having a realtor get to know me and my preferences so that I only view the most likely properties. It saves me time and stress.

One thing you won’t find in the interview is that she has a certificate in Geographic Information Systems. Basically this is mixing data with a physical environment and helped York Region develop plans in 3D.

I hope you find this interview interesting and helpful.

We did the interview at the Right at Home Realty office at 16850 Yonge St., Newmarket which is a beautiful new office with lots of room to meet. It’s also accessible being just north of Mulock.

A big thank you Michele for being on the show and the Right at Home Realty office in Newmarket for filming on location. Michele can be found online at:

Website: http://www.thejewelhome.ca/

Facebook: https://www.facebook.com/mcaranci3

Instagram: https://www.instagram.com/michelethejewel