Tim Paziuk’s Blog

Don’t invest solely for tax savings!

January 16th, 2013

One thing going around this time of the year is tax schemes like flow-through shares.

A simple word of advice – never make an investment solely for tax savings.

Always look at the investment first and the tax benefits last.

I recently asked an accountant to review a flow-through share offering that one of my clients was given the opportunity to buy. Here’s what he said:

1) The number one selling point for this is the 57% tax savings on the investment. It is never a good idea to invest just for the tax savings. Tax savings is a common marketing ploy.

2) There is a push to do it by November 30th or it will be SOLD OUT. This is another classic marketing ploy.

3) Most […]

Investing in life insurance? Guess who wins?!

January 14th, 2013

I’m still seeing way too much life insurance being purchased for investment purposes. I think this is a huge waste of money, and the only way that it’s going to stop is if the public stops buying it.

If you need insurance, buy insurance. How much depends on what risk you’re trying to cover. How long you need it depends on what you’re insuring. If it’s a mortgage, that’s easy to calculate. If it’s your income or your estate, that may be harder to quantify, but in any case only buy what you need.

When you invest in a life insurance policy, you’re paying a cost for insurance each year, as well as all the related costs of that policy. Let me give […]

Have you heard about PRPPs?

January 11th, 2013

A PRPP is a Pooled Retirement Pension Plan.

In June of this year, Bill C-25, an Act Relating to PRPPs, received Royal Assent.

Bill C-25, which applies to PRPPs, sets out the broad framework for the operation of these new vehicles for retirement savings. The basic structure is similar to a defined contribution pension plan, with the major difference being that PRPPs will be administered by third-party financial institutions rather than directly by employers.

Basically, the government is trying to force Canadians to save for their retirement. The way it’s supposed to work is that your employer sets up a plan and you are automatically enrolled in it. Your employer doesn’t have to contribute and, if you want out, you have to opt out.

I really […]

Do your investments stand a chance?

January 9th, 2013

People have been taught to think of risk as losing your money. “If I invest in the stock market, I might lose my money,” is a common fear, but is that really what you have to worry about? I don’t think so.

When you retire, you will need income. At the same time you have to protect the purchasing power of your income and assets. Let’s look at two scenarios.

Say you have $100,000 to invest. You take your money to Royal Bank and purchase a 5- year term deposit that will pay you 4%. Although 4% today is not offered let’s pretend that you were getting $4,000 per year which will provide you with $333 per month. Because you’re retired, the […]

If it’s not broke, don’t fix it!

January 7th, 2013

In my book The Financial Navigator: Managing your Success, I wrote that when something is working for you, why would you change it? Successful people don’t change what works for them, so why should you?

I was recently reading a great book written by Charles D. Ellis titled Winning the Loser’s Game: Timeless Strategies for Successful Investing. What I found on page 112 was exactly what I’ve been teaching for years.

To quote from the book, “Don’t change your investments just because you have come to a different age – or have retired. If you can afford fine paintings, you wouldn’t change the ones you love most simply because you had reached retirement or had celebrated your 70th or 80th birthday. It’s […]

What is Fiduciary Duty?

January 3rd, 2013

There’s an interesting discussion going on in the financial services industry right now that could affect every investing Canadian.

The discussion is between the Canadian Securities Administrators (CSA), the financial services industry and the public. The topic? The Standard of Conduct For Advisors and Dealers: Exploring the Appropriateness of Introducing a Statutory Best Interest Duty When Advice is Provided to Retail Clients. Specifically what they’re discussing is whether to impose what is referred to as a fiduciary duty on advisors.

To understand the significance of this, you have to understand what a fiduciary duty is. According to a CSA discussion paper, a fiduciary duty is a duty to act in another person’s best interest.

What most people in Canada believe is that this […]

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