Three Important Benefits That Health Insurance Can Provide

In addition to basic advantages of health insurance such as covered prescriptions and dental care, there are three other valuable benefits that health insurance can offer you.

1. Income Replacement

If a disability or illness were to prevent you from being able to work, an income replacement plan can help protect you. A plan of this nature ensures you will receive a monthly tax free income, in accordance with your standard of living, until you reach the age of 65.

2. Additional Income

Imagine you were diagnosed with a serious illness or faced some kind of health emergency. The cost of treatment and other unexpected expenses could be a financial hardship for you and your family. Rather than dipping into savings earmarked for your child’s college education or your own retirement, consider purchasing critical illness coverage. This type of insurance can provide you with the cash you need to handle the costs of up to 22 covered conditions

3. Assisted Living

Have you thought about living arrangements for when you and your spouse are older? Do you want to remain in your house or move to a care facility? Long term care programs, like the one that ZLC offers, provide you with a daily benefit to help cover the costs of care, regardless of whether you remain in your own home or move to a seniors residence.

If you’re interested in learning more about the types of health insurance ZLC can offer you, please email us.

March 22nd, 2011 | Posted in General, Insurance | Tagged , , , , | Leave a comment

Choosing an executor for your will

Determining who you should choose to be your executor can be a challenging decision. It’s important that both you and the individual you decide on understand the duties they will be assuming as an executor.

Your executor will be responsible for ensuring all of your last requests, as outlined in your will, will be carried out. This can be an involved and time consuming process, so it’s important to pick your executor carefully.

After making your decision, consult your chosen executor and ensure they feel comfortable with their role. Before the executor accepts the role, they should consider the following:

  • Can I handle family conflicts that may emerge as a result of executing the will?
  • Will my responsibilities be ongoing? Complex issues, trusts or disputes can span several years.
  • Do I have enough knowledge to make the complex financial and business decisions that may be necessary?
  • Are all assets outlined in the will located in the same country or province?
  • Will I have the time and energy to ensure the last wishes in the will are carried out

At ZLC, we can help ensure your executor is well-informed by providing an Executor Checklist which outlines the duties, responsibilities and obligations of an executor in detail. Email us for your copy.

March 15th, 2011 | Posted in Community, Estate Planning, General, Retirement Planning | Tagged , , | Leave a comment

How to choose the right amount of life insurance

By Matthew Anthony, B.A., CFP

If you are looking at your insurance needs for the first time or are reviewing the plans you already have in place, there is one important question you must ask: How do I know I have the right amount of life insurance?

To determine what amount of life insurance is right for you and your needs, there are several factors to consider:

  • What financial goals do you want to achieve for your surviving family?
  • Do you want to eliminate debt from credit cards, loans or mortgages?
  • How much capital is needed to provide ongoing income for your family?

A number of online calculators are available that can give you a good starting point. From there, your financial planner can walk you through a good “needs analysis” to provide you with an appropriate amount of coverage for your situation.

Whether your goal is income replacement, estate planning or business succession planning, defining your financial goals as a starting point can easily determine the amount of insurance that is right for you.

March 10th, 2011 | Posted in Estate Planning, Insurance, Investments, Retirement Planning | Tagged , , | Leave a comment

4 Tips for RRSP Time

Figuring out how much money you will need for your retirement is no easy task. Lifestyle, debt, pension plans, health and dozens of other factors all contribute to the amount of money you will need to access in your golden years. Rather than becoming overwhelmed with the dollars and cents of it all, begin by investing what you can in your RRSPs – and watch how fast your money grows.

1. Make regular contribution
The best way to start. Not only does this eliminate the risk of making a large investment at what may be the top of the market, but it also gives you the benefit of dollar cost averaging, or averaging the price that you pay for your investments throughout the year. Regular contributions can also be automated, taking the work out of investing.

2. Take an RSP loan
This is a quick and easy way to facilitate the investing process. Interest rates are still relatively low, which means its healthy alternative for people who may not have the disposable income at their fingertips to contribute. RSP loans allow you to get the tax deduction (which can be used to pay down the loan) while also meeting your retirement goals.

3. Make a contribution in kind
This means you can transfer investments you already own into your RRSP and get a receipt for the current market value. Any capital gains earned up to the date of the transfer will be triggered when you make this move.

4. Consider a spousal RRSP
This is a viable option for many investors. The higher income earning spouse can put money into their spouse’s RRSP. The higher earner benefits the tax deduction while the lower earner benefits from the RRSP contribution. This allows your family to balance your household income levels.

The last day for contributing to your RRSPs to benefit the 2010 tax year is March 1, 2011. You can contribute up to 18 per cent of your 2010 income to a maximum of $22,000. Your best bet to make sure you’re on the right track is to seek financial advice from a financial planner and review your retirement savings options now.

February 28th, 2011 | Posted in General | Tagged , , , | Leave a comment

Searching the World for Value

For a brief moment two years ago, markets around the world were trading at incredible prices. Bargains were abundant and everywhere. Fast forward to the present and prices are trading back to normal levels where earnings and corporate expansion have become the dominant drivers of growth, as opposed to just cheap prices.

Fortunately for us, Canada has been one of the best performing markets in the world, and foreigners have been scooping up our assets and currency at a fast pace. Consequently, Canadian assets have become more fairly valued, while our currency has seen its value rise back to par with the US dollar. This is an extremely generous exchange rate for us Canadians, given that based on equal prices, US goods and assets now cost between 10-15% less. We call that ‘purchasing power parity’, and it implies that foreigner’s love of our Loonie has made it roughly 10% overvalued.

This presents an opportunity for Canadians as we can use our strong purchasing power to acquire and capitalize on good bargains around the world. On top of that, we’re finding that the best opportunities from a value standpoint are from companies that are based in Asia, Europe, and the US. Relative to Canada, prices for these companies are anywhere between 10-20% cheaper overall.

When you consider these assets are priced in foreign currencies, the bargain becomes even more apparent with our current strong purchasing power. From an opportunistic perspective, this appears to be a good time to look at investing in international assets priced in foreign currencies. A similar situation was present during most of the 90’s, when foreign currency priced global equities outperformed Canadian equities.

While it is true that the Canadian dollar can stay at lofty levels for some time, or that Canadian equities can continue to outperform global equities, this does not change the fact that investing globally is a better value proposition today for Canadians then it was 10 years ago.

History has shown that some of the best returns come from focusing on out of favor investments that are cheaper on a relative and absolute basis. Some of the best bargains and potential relative returns are increasingly presenting themselves outside our backyard, where our money is strong and value is more abundant.

The world is on sale, even more so for us Canadians.

Vancouver based, Van Arbor Asset Management Ltd. is a division of ZLC Private Investment Management and ZLC Financial Group. Van Arbor’s core philosophy is to hold a focused portfolio of the best value based opportunities in the market, rather than mirroring the respective indices. This includes staying away from weaker sectors, while focusing on the few selective opportunities that have excellent growth potential and are trading at bargain prices. A focus on capital preservation alongside capital appreciation is a cornerstone of their strategy.

Van Arbor Asset Management Ltd. offers investors two unique active equity funds. The Van Arbor Canadian Advantage Fund, the number one Canadian equity fund in Canada over the last five year period; and the Van Arbor World Advantage Fund, one of the top 50 best performing global equity funds in Canada last year. (Source: Globefund, as at December 1, 2010)

Note: Van Arbor funds are offered through ZLC Private Investment Management

January 19th, 2011 | Posted in The Economy, The Markets | Tagged , | Leave a comment

6 Steps for Successful Investing

1. The risk of ‘safe’ investments (i.e. GICs) is that they don’t keep up with inflation. While this may not be a concern in today’s low inflation environment, no one knows what the future may bring. Even low rates will significantly erode your savings over time.

sixsteps

2. Time really is money. It’s easy to procrastinate, but one of best ways to grow your assets is to start early. Waiting too late means you may never catch up. For example: If you invested $5,000 per year for 10 years ($50,000 total) and didn’t touch it for another 10 years, at 8% growth you would have $169,198. However, if you waited 10 years then started to invest twice as much or $10,000 per year for 10 years ($100,000 total) @ 8% you would only have $152,455.

3. Don’t miss out by sitting on the sidelines. Buying low and selling high sounds good, but no one can time this.

4. Diversification equals less risk. Don’t keep all your eggs in the same basket. Having only stocks or bonds in your portfolio is risky if they are the only type of investment you have. Hold both government and corporate bonds along with a selection of large, medium and small size company stocks in a variety of different industries and geographic areas.

5. Time heals all. Don’t shy away from volatile stock markets. Over the short term they will fluctuate, but over longer periods of time they tend to be less volatile and offer more potential for the growth we need so we don’t outlive our money.

6. Remember: Canada is not the only opportunity. While investing outside our country may subject us to different risks like currency, economic and political influences, we’re only 4% of world’s market, and have a very high concentration in financials and resources. If we want to truly diversify our portfolios and take advantage of other opportunities, we need to think internationally.

January 17th, 2011 | Posted in Investments, Mutual Funds, Taxes | Tagged , | Leave a comment

How to Keep More of Your Investment Returns

What did it cost you when you didn’t re-balance your portfolio? Was it because you didn’t want to trigger capital gains tax by selling your winners? What were the consequences when your asset mix was no longer appropriate for your risk tolerance and goals? Did you take too big hit when you were over exposed to equities in 2008 and in other market declines?

Have you ever paid more tax than you had to on your bond interest? Would you have rather paid tax on only half your interest, and then only when you actually needed it?

keepinvestmentreturns
Has reported income ever reduced your government entitlements like OAS claw backs, lost age credits, lower health care or long term care subsidies, or put you in a higher marginal tax bracket so that you paid more tax than you needed to?

Did you ever pay tax on income that just remained in your account?

Ask your ZLC Associate to show you how you can switch investments without tax consequences, reduce and postpone tax on your investment income, and ensure you maximize your government entitlements.

IMPORTANT DATES?

March 1, 2011 is the last day to make RRSP contributions for the tax year 2010. Your limit is 18% of your previous year’s earned income (less any pension adjustments), up to $22,000 for 2010, and $22,450 for 2011.

On January 1, you can contribute another $5,000 to your Tax Free Savings Account, and repay any funds withdrawn in a previous year. This means your cumulative total since the program was introduced in 2009 is now $15,000.

January 13th, 2011 | Posted in Investments, Mutual Funds, Retirement Planning, Taxes | Tagged , | Leave a comment

Maximizing Your Retirement Dollar

While we look forward to ‘retirement’ (volunteering, vacationing golfing, travelling with our grandchildren, enjoying hobbies), new questions come to mind like, Do I have enough money to do everything I want?’ or ‘Where do I get money from now that my pay cheques have stopped (RRSPs, government benefits, non-registered savings)? or How do I pay as little tax as possible?

Here are some ideas to help:

RRSPs and RRIFs: Consult with your ZLC Associate or tax advisor to decide if you should melt down your RRSP early (for income splitting and use of pension credits), or if you should wait to convert your RRSP to a RRIF for as long as possible (the end of the year in which you reach the age of 71). At age 65, RRIF income is considered eligible pension income for tax splitting purposes.

Income Splitting: Structure your family’s incomes so that overall you pay the lowest tax rates and enjoy the greatest amount of tax deductions and personal tax credits. Be careful though, income splitting is not as easy as it sounds and attribution rules may apply if you gift assets to your spouse or minor child.

Pension Income: Many of us will have some form of pension income, whether it’s Canada Pension Plan (CPP) and Old Age Security (OAS) benefits or employer sponsored pensions including group RSPs.

You and your spouse can elect to transfer up to half of your employer sponsored pension income to your spouse to take advantage of lower tax rates and the pension income credit.

While you can’t split CPP income with your spouse, you can elect to share your pensions by having the government split each of your benefits 50/50.

For 2010, if your net income is more than $66,733 your OAS payments will be reduced, or completely eliminated once you’ve reached $108,090. OAS cannot be shared or split but you might be able to eliminate or minimize the claw back of your benefits by either lowering your income or increasing your deductible expenses.

Paying attention to how your investment income is earned and reported is key. While eligible Canadian dividends are generally the lowest-taxed form of investment income, for OAS claw back purposes, dividends often penalize seniors the most because they’re reported as 144% of the actual amount received. Compare this to capital gains which are 50% taxable or investments paying income as a Return of Capital or using Systematic Withdrawals (see chart).

maximizingyourretirementdollar

Capital gains exemption: Special planning needs to be done before selling a business. If family members are shareholders, you may be able to multiply the $750,000 personal capital gains exemption using an estate freeze.

Principal residence exemption: If you have more than one home, consider which one has the greatest unrealized gain before you sell it or designate a principal residence. Also, be careful before putting children on title as this can impact your ability to avoid tax on the property’s capital gain. Read More »

January 12th, 2011 | Posted in Investments, Retirement Planning | Tagged , | Leave a comment

Van Arbor December 2010 Update

CANADIAN ADVANTAGE FUND

November was an eventful month, with three major economic events taking place, namely the US Fed attempting again to stimulate the economy through liquidity, Chinese inflation leading to an interest rate increase, and the debt crisis in Europe taking center stage again. Most markets around the world ended the month down, with the exception being Canada’s TSX Index, which rose 2.18% on the back of oil & gold companies. Anticipation of more liquidity in the market has helped commodity companies push higher as of late; however, we question the sustainability of those gains in the face of stretched valuations and macroeconomic risks. The Canadian Fund finished the month flat, as our participation in the market remains defensive and on the lookout for better value opportunities in companies and sectors that are less volatile in nature. Overall, we look forward to seeing better investment gains from less cyclical companies with better risk/reward profiles as time goes on.

WORLD ADVANTAGE FUND

World markets saw some pressure in November, as global economic events tempered some of the optimism seen over the last couple of months. The World Fund fell 2.26% for the month, while the MSCI World Index also fell 1.62%. Overall, we are not satisfied with the Fund’s returns over the last three months, especially after our very strong start to the year. The Fund has been weighed down temporarily by some of the big reflation forces helping push down our investments in companies with commodities as inputs. Short-term aside, we continue to like valuations in global equities from Asia and the US, and should see some nice benefits once commodity speculation dies down. We are quite happy with our current portfolio from a medium to long term perspective, and look forward to springing back in the New Year.

Van Arbor Asset Management is dedicated to creating wealth using a disciplined, value based investment strategy with an emphasis on preserving capital while generating superior long-term returns.

December 6th, 2010 | Posted in Investments, Mutual Funds, The Economy, The Markets | Tagged , , , | Leave a comment

Family Business Succession

By Howard Young, CFP
ZLC Financial Group

As my late senior partner use to say with regularity. “Most business men spend more time getting their haircut in a year than they do on succession planning in their family business.”

According to a number of studies on the issue of succession in a family held business’s only 1in 3 survive intact and financially healthy with the passing of the original founder when passed down to the next generation.  Of course the most successful history of passing family assets etc is in Europe either through royal bloodlines or through the use of “primogeniture” i.e. the oldest son gets the gold and his other siblings get some form of value but not the bulk of it.  This can work as long as the oldest son is the most capable of the children to be handling the family assets.  Of course that is not the situation in many cases.

So how is a family business passed down to the next generation in such a fashion that it can remain intact and be managed effectively by the most capable sibling.  What leads to the next question when dealing with the children.  “What is fair and what is equal?” because the two are not necessarily the same.  Open and regular communication with your family becomes imperative to effectively design a workable estate plan.

Estate and succession planning is not a science.  There are no set formulas. You may distribute your assets in any fashion you desire.  The problem becomes one of taxation.  Every plan has a cost attached to it.  Once you have determined how you want the control and distribution of your assets done then you have to provide the necessary liquidity to pay the costs (typically capital gains tax liabilities triggered by deemed dispositions.

Properly planned life insurance is typically the most cost effective method of providing liquidity in these circumstances.

As Barry Kaye, a high profile insurance broker in the U.S. succinctly  likes to describe life insurance:

“You buy! You die! It pays! Any questions?

November 24th, 2010 | Posted in Business Succession, Community, Insurance, Retirement Planning | Tagged , | Leave a comment