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Daren Givoque, CDFA, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. There are many things to think about when it comes to retirement. How am I going to fill my time? What type of lifestyle do I want to enjoy? And most importantly – How am I going to pay for it? After being a financial advisor for many years I have learned a lot about how to guide people in the right direction financially when it comes to retirement. Unfortunately, there are still some major pitfalls that people fall into when planning for retirement that can generally be avoided. Three big ones come to mind. Over the next few weeks I will be going over the top three mistakes that people make when planning for retirement. Hopefully this will help you avoid them and ensure that you have the money you need to finance the retirement that you want. If I asked you what your biggest expense is what would you say? Your mortgage or car payment may come to mind. What would you say if I told you that your biggest expense is actually tax? Many people forget about it because it is worked into your expenses in incremental amounts. However, in *2016 the average Canadian family (including single Canadians) who earned $83,105 in income paid $35,283 in tax. That’s 44% of your income going to taxes! In Canada almost everything is taxable. This includes your pension, salary, cottage, rental properties, RRSPs and RIFs, investment returns, the sale of a business and more. There are only three things in Canada that are considered tax free: your primary homes increase in value, your TFSA and insurance. Now there are a few others like the lottery, inherited gifts and exemptions for business owners, but these are unique and not easy to plan with. Now that you know what is taxable and not taxable are you using it to your advantage to save for retirement? This brings me to: Mistake #1 - Delaying using you RRSPs The whole idea behind RRSPs is to help you save for retirement in a tax-sheltered way. The money is only taxed once you start withdrawing it as income when you retire. The idea is that at this point you will be in a lower tax bracket and pay less tax on your withdrawals. At age 71 you must convert your RRSP into a Registered Retirement Income Fund (RRIF) and start to withdraw money. Many people wait until the last minute to start withdrawing money from their RRSPs but it many cases this doesn’t make sense tax-wise. The reality is every year you delay liquidating your RRSPs the government increases the percentage of tax you need to pay on it. By the time you are 80 you will be paying more tax than you would have if you started withdrawing money at age 65. Also, if you die and don’t have a spouse there is no one you can leave the money in your RRSP to tax-free. The day you die the entirety of your RRSP must be cashed out and if you have a lot of money left, it will be taxed at a high rate. For example, an RRSP that still has $340,000 left in it will be taxed at a 50% marginal tax bracket which means you will be losing half your savings. When planning for retirement it’s a good idea figure out the optimal age to start withdrawing money from your RRSPs to save the most tax. Unfortunately, there is no cookie-cutter approach. A qualified financial advisor will be able to look at your savings and retirement income and help you pinpoint the best course of action. There you have it. Mistake #1 when planning for retirement. * Taxes versus the Necessities of Life: The Canadian Consumer Tax Index, 2019 edition https://www.fraserinstitute.org/

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Any successful business person will know what their target market is. Knowing your customer is one of the most important things when it comes to creating effective marketing plans. These days however many businesses are taking it one step further. Niche marketing is being used by business people to hone in on their specialty and ensure that they are delivering a targeted, quality product to the right people. Here are some of the reasons you should think about finding your own niche and some useful strategies on how to do so. How does niche marketing differ from your target market? Finding your target market is an important first step to take before you settle into your niche. Your target market is the specific group of people you work for i.e. mothers with small children, middle aged business people, dog owners. Your niche is the service you specialize in offering to your target market. If your target market is dog owners a niche might be dog booties for dogs who have sensitive feet. You can see how specific this is and how, with this lens you would be able to develop a quality product that solves a specific problem for the people in your niche. You can become an expert in your field When you develop a niche, it is easier for you to become an expert in your field. With your specific focus you can build your knowledge base and use it to gain leverage over your competitors. Becoming the expert is a valuable marketing tool. Let’s take the dog bootie example again for a moment. Wouldn’t you rather buy dog boots off a company who has proven knowledge about canine paws and materials that will make the boots warm and withstand the cold, ice and snow? Sounds like a more quality product and something that you can put your trust into doesn’t it. That’s the power of being the expert and niche marketing allows you to be that without spreading yourself too thin. Lets you work with your ideal client or customer Niche marketing allows you to be so targeted in your marketing that you reach the people that will really appreciate and benefit from your product or service. Rather than having to convince people that they need what you are offering you will be one step ahead of the game, solving a problem that you know they already have. At the end of the day working with people that are grateful for the product or service you offer is a lot more pleasant than having to fight tooth and nail to close a sale. Happy customers equal quality referrals Many business owners fear becoming too specific in what they do because limits them in who they can attract as clients. While casting a wide net is one strategy being more targeted will ensure your work with people who appreciate what you are doing and will pass you name on to other people in their network who may be looking for a similar product or service. Referrals are a great way to get your name out there because it enhances your credibility when you have a network of satisfied customers backing you up. It also costs next to nothing in your marketing budget. Focus on your why In todays market people are looking for the stories behind the products or services they are consuming. The “Why”. As well-known marketing consultant Simon Sinek says, “People don’t buy what you do they buy why you do it.” Figuring out your “why” is a great step in identifying your niche market. Once you figure out why you are providing your product or service and how it benefits your ideal customer it will be easy to figure out a marketing plan that reflects these values. Getting people to buy into your why will ensure you have lifelong clients rather than one-off customers. You will also feel good about doing business because you are living and working in accordance to your own core values. Niche marketing really comes down to this: Would you rather be a small fish in a big pond or a big fish in a small pond? Homing in on what you do best, why you do it and who you would like to work with will not only enhance the customer experience but also make your job more enjoyable and profitable in the long run.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Let’s face it. Life insurance is not a desirable topic of conversation. This is because it can be expensive, and it only pays out if something bad happens. Who wants to think about that? For business owners though, big or small, there are a few situations where having life insurance can solve some pretty big problems. Here are a few scenarios where life insurance can be an invaluable tool for you and your company. Death of a key person Does your business rely heavily on the work of one or more individuals? What would happen to your business if that personal suddenly became ill or suffered an injury and was no longer able to perform their duties? Key person insurance can help cover day-to-day business expenses and ensure your business can continue on during this difficult time. One great thing about a business purchasing key man insurance is that the premiums are tax deductible. As long as the policy makes sense (i.e. you are not purchasing a $500,000 policy for a debt that is worth $100,000) you will be able to claim it as a business expense on your tax return. Equalizing an estate In the event of your death you will probably want to make sure all your children receive an equal percentage of your estate. If you are a business owner you may have a few of your children working with you, while the others may have chosen a different career path. Instead of leaving shares of the business to all your children, reserve those shares for the children who actually have a stake in the company. A life insurance policy will make sure that you have the cash to equal the value of those shares to give to your children who are not active in the business. This could go a long way to mitigating potential conflict in your family after you pass away. Covering taxes on death Surprisingly, death is the time in your life when you are most heavily taxed. When you pass away you will be deemed to have sold you private company shares. You may be able to claim the lifetime capital gains exemption up to $ 848,252 (in 2018) but you could end up paying 25 per cent tax on anything that falls outside that exemption. Having insurance is a good way to ensure your executor will be able to pay that tax bill upon your death. Providing for your heirs If you are one of many shareholders in your company, having an insurance policy on your life will help provide from them, or the company, once you are gone. Cash from an insurance payout can be used to buy your shares from your estate so your heirs can ultimately benefit from them. If you have left your shares to your family, cash from an insurance payout will allow active stakeholders to buy the shares from your spouse/kids so they get a payout and your business partners maintain control of the business. An excellent investment vehicle Whole life insurance has the benefit of paying out no matter what. If you die at 55 or 105 you will be paid out. It also comes with the added bonus of having an investment side to the policy. By overpaying the premiums, you build up an investment account which is not taxable. This is a great way for business owners and high net-worth individuals to shelter money once their TFSA and RRSPs are maxed out. These investments are tax-free and are available for you to use at any time. This is a great way to both save for retirement or leave a larger sum of money to your children. As a business owner it is a great idea to talk to an insurance professional to find out which insurance products would be the best for your situation. Proper planning will ensure that things both within your business and at home will run smoothly in the event of sickness or death.

Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Have you noticed older relatives cleaning out their basements, or sorting through old files? It may be part of a Christmas clean, or it could be that they are preparing their affairs in case they die or become incapacitated unexpectedly. As morbid as this may sound, anyone preparing their affairs should be applauded for their efforts as they are making it much easier for their loved ones down the road. Grab your favourite cup of tea or coffee and let’s consider a few ways to ease the transition for your executor and loved ones. How can I prepare my investments for a smooth transition? Take advantage of beneficiary designations. On your Tax-Free Savings Account, name your spouse as successor holder and your children, friends, or charity as the beneficiary. For your Registered Retirement Income Fund, ensure your spouse is designated as the successor annuitant or that your beneficiaries are up to date. Non-Registered investments are accounts where growth such as interest income, dividends or realized capital gains/losses need to be reported on your annual taxes. The proceeds of your non-registered investment will be paid to your estate and go through the process of probate. Making sure your will is up to date will help ease the process. Holding your non-registered funds in a segregated fund account through a life insurance company may allow you to name beneficiaries directly on the account and by-pass the probate process. If you hold digital assets such as crypto currencies, it is important to make sure your executor has access to your login information. Still have some old stock certificates lying around? Bring them to your investment advisor or brokerage to get the stocks converted to the direct registration systems so that they are easier to manage. How can I prepare my insurance policies for a smooth transition? Depending on your stage in life you may hold a mixture of term life insurance policies, permanent whole life policies, or universal life insurance policies. The first step is to confirm which policies are still in-force and which policies have been cancelled, surrendered, or lapsed. This step will save your executor hours on the phone trying to track down old life insurance policies which may no longer exist. Once you have tracked down all your current policies, speak with your Advisor to confirm the coverage amount and the beneficiaries listed on the policy. Take the time to consider who should receive the death benefit and then work with your advisor to make those changes. A few final tips to ensure a smooth transition: make sure your taxes are filed, update your will, and prepare a summary of your investments and insurance. It may be morbid to start thinking about it, but your loved ones will thank you for all the advance planning you did.

Cole Seabrook, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. This is a question that Advisors are frequently asked. Let’s review Tax Free Savings Accounts - how they work, their benefits, and how they can play a major role in your overall wealth plan. In 2009, the Canadian government implemented the Tax-Free Savings Account (TFSA) program to help Canadians grow their wealth while retaining more of their investment earnings. To open a Tax-Free Savings account, you must be 18 years of age and a Canadian resident and adhere to the contribution limits. Since 2009, the contribution limit has changed from year to year, ranging anywhere from $6,000 to $10,000. If an individual was age 18 in 2009, their total contribution limit as of 2022 would be $81,500. Individuals need to be aware of the contribution limits to avoid the penalties that can occur. TFSAs or RRSPs? It is important to understand how different investment account types can play a role within your overall wealth plan. RRSPs provide you with a tax deduction in the year you contribute, but you are taxed when the time comes to take money out of the account. With a Tax-Free Savings Account, you do not receive a tax deduction when you deposit funds into the account, but you are also not taxed on your investment returns or when you withdraw your money. TFSAs also do not have to pay capital gains tax on withdrawals as they would with a non-registered account. While TFSA’s have many benefits some people wonder how this type of account fits into their overall wealth plan. The nice thing about Tax-Free Savings Accounts is that they can be used for many different purposes and provide investors with flexibility. They can be used to increase savings to help supplement income in retirement, or to save for an investors next vacation, home improvement or renovation. If you have not opened a Tax-Free savings account, it may benefit you in more ways than one. Speak to your Financial Advisor today to see where a TFSA fits into your wealth plan. We welcome questions so feel free to reach out!

By Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. The deadline for filing your personal 2021 taxes has come and gone. Did you end up in the green or in the red? What will you do with that extra cash or how will you pay that CRA bill? With tax season still fresh in your mind, let’s take a step back to review 2021 and plan for 2022. For those lucky enough to receive a refund – have you considered what to do with it? The first questions to ask are: 1. Do I have credit card balances or high interest debt to pay off? 2. Do I have an emergency fund available? (Ideally enough to cover 3 months of expenses) If the answer is yes to either of these questions, that is where your funds should go. Neither of these is flashy or fun, but paying off consumer debt and building an emergency fund will help set you up for success in 2022. If you have these two covered, then you can begin exploring other options such as: 1. Discretionary purchases - the latest phone, new clothes, family trips. 2. Retirement investments - RRSP or TFSA are great options to build your wealth. 3. Lump sum payments on your mortgage – can you pay off your mortgage before retirement? 4. Home renovations – is now the time to build a deck or put in a backsplash in the kitchen? 5. Deposit funds to a child’s registered education savings plan – if you are within the limits, you will receive the 20% education savings grant. The answer may be to divide the refund and spread it across a few goals. A trusted Financial Advisor can review how each option fits into your overall financial strategy. A word of caution – if your refund was excessive, perhaps you need to re-assess what withholding tax strategies you are using. Remember a tax refund means that the federal government has had this extra money for the last 12 months – rather than in your pocket. What if you owe the CRA? Was this tax triggered by your regular income or was there an extraordinary transaction in 2021? For example, did you sell a rental property and had to pay capital gains taxes? Did you start receiving Canada Pension Plan or Old Age Security in 2021 but did not request withholding taxes? If you were in the red for 2021, make sure you pay the bill. The CRA begins charging 5% interest right away. Stepping back to review your 2021 taxes can help set you on a better course for 2022. Should you increase your RRSP contributions or increase the withholding taxes on your registered retirement income fund? Did you spend two days sorting through receipts and bills before you could even start filing your taxes? Perhaps in 2022 you could work on a monthly reconciliation, or take a more active approach to filing important documents like charitable donation receipts and health care expenses in a special tax file. If historically you always seem to owe at tax time, now is the year to start setting aside money monthly for taxes. This way you will be prepared for the next bill. 2022 is a fresh start, enjoy. Sarah Chisholm is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

By Cyndy Batchelor, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. I tend to receive numerous queries for advice and tips from people who need help with budgeting, help to understand certain products, or from people who are looking for general best practices when considering their financial day to day activities. I enjoy sharing knowledge that helps individuals and families feel more confident regarding their day-to-day finances. An integral part of my job as a Financial Advisor is the preparing of wealth plans. A Wealth Plan integrates all aspects of a client’s life and accounts for their dreams and goals. A Wealth Plan is when I take all your information, which includes your assets (house, investments & savings, pensions, etc.), liabilities (mortgage, loans, credit cards), income, and expenses, then project them out to the future. This allows you to see where you stand financially today and foresee where you will be at any point in time in future years. It is impossible to predict today that you will still be in the same job until you retire, what extra expenses you might have had along the way if you get sick and cannot work, or if you will win the lottery or get an inheritance. As life is continually changing, we will update your plan frequently to ensure it is as accurate as possible. As a Financial Advisor, I use reasonable expectations and returns and factor in risks. We prepare recommendations to mitigate risks and help protect your assets. We use Disability and Critical Illness insurance to mitigate against illness and injury if you do not have a Short-Term or Long-Term Disability plan through your employer. We use Life Insurance to protect against an early death, cover any debt you may have, and to create an estate for your loved ones. We use savings vehicles to plan for large purchases like cars, home renovations, and to set up an emergency fund. RRSPs and TFSAs are used for retirement and can help you save for a home purchase. If you are already retired, you may have a RRIF – which you are using to fund your retirement. A comprehensive Wealth Plan can forecast your financial future. The first quarter of 2022 has been a tumultuous one for investors. Our in-house Wealth Team provides a monthly market commentary. We invite you to contact us to sign up for this newsletter. After working for over twenty-five years in this business, the best advice I will give about investments is that it is not about timing the market, it is time in the market. Stay invested and stay safe. Cyndy Batchelor is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

By Cole Seabrook, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Everyone should have a Wealth plan. Unfortunately, many individuals do not understand the importance of planning or what a comprehensive wealth plan can look like. Anyone who has watched the news lately knows that the markets are volatile, interest rates and inflation are on the rise, and other economical and social uncertainties are prevalent. Many individuals are uncertain as to how these factors will impact their overall costs and standard of living. To start, let’s look at a few key areas that Financial Advisors commonly look at when building a wealth plan for their client. Your Advisor will help you determine the state of your current financial situation and discuss the goals and plans you have for the future. This could be anything from buying your first house to preparing for retirement. Some key points to know when looking at your current financial situation are: · Your annual income · Your savings or investments · Your current fixed expenses or debt liabilities Budgeting over the course of time can help an individual have a better understanding of what their monthly cashflow looks like. After having an accurate idea of an individual’s current situation, it is time to start the planning process. Some of the key areas are: · Financial Management · Emergency Funding · Investment Planning · Insurance and Risk Management · Tax Planning · Retirement and Estate Planning After the creation of the wealth plan, it is important to remember it is not a one-time event. A wealth plan should be reviewed on an annual basis and when significant life events happen either expected or unexpected. Some examples are a change in marital status, the birth of a child, a change of employment, etc. When your Financial Advisor builds a wealth plan, it helps you to stay on track of your goals from a financial perspective. A sound plan will also give you peace of mind that when there is financial pressure, the strategies that were put in place will help you get past the challenging times. If you are uncertain of where you are positioned to achieve your goals, it may be time to speak with your Financial Advisor. We are always open to questions and giving people a second opinion when it comes to their Wealth plan. Feel free to get in touch with us at any time. Cole Seabrook is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact him at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

In June 2022, inflation, the most closely watched, and potentially the most important economic datapoint(s) from an investors’ standpoint, disappointed. Reports for the twelve months ending in May 2022 showed that inflation increased to +8.6% in the US and to +7.7% in Canada. As both readings were above initial projections, market participants realized that the expectations of having reached peak inflation were premature, which brought in a turbulent market over the month of June. The US Federal Reserve followed up with a +75 basis points hike in policy rates, against the previously indicated +50 basis points hike. The Bank of Canada increased policy rates by +50 basis points at the start of the month. However, due to the higher-than-expected inflation numbers, the market expectations of a jumbo-sized hike (i.e., +75 basis points) during the mid-July policy meeting- have increased. The North American markets reacted to the above developments, with the S&P 500 Index and the S&P TSX Index declining by ~-9.0% and ~-8.4% for the month, respectively. Fixed income markets showed strain against the faster-than-expected pace of policy rate hikes. Bond yields increased by +43 and +39 basis points on 2-year term, and ~33 and ~16 basis points on 10-year term for Canada and US, respectively. We note that the industrials, metals, agricultural commodities, and crude oil prices have come off their recent highs (See chart 1) and US total manufacturing and trade inventories have been increasing (See chart 2). Does that mean the inflation numbers could veer to the downside in the next month’s report? We think it is possible, but even if it does, it will only support markets for a short-term as they are unlikely to react convincingly unless the data shows continuous improvement for a few consecutive months. Chart 1: Commodities have come off their recent highs Daily prices indexed to 100, June 29 2021 to June 28 2022 Chart 2: US Manufacturing & Trade Inventories, year/year %age change (MTIBYOY Index) vs. US Manufacturing & Trade Inventories, US$ billions (MTIB Index) Jan 2000 to April 2022 We believe a decline in inflation, along with some moderation in economic growth, are the necessary pre-conditions for the markets to react constructively. This would indicate that the Central Banks’ actions are yielding results, and that things are finally heading in the right direction. The messaging from the Central Bank authorities indicates that they believe such an outcome is possible, though the path to achieve this outcome is becoming increasingly more challenging. If Central banks achieve the above conditions, this will normally justify a slowed pace or pausing of rate hikes. We now think the odds have shifted in favour of them not taking their foot completely off the brakes due to a lingering risk of inflation beginning to rise again. The data on the underlying components of the latest inflation report indicated that inflation is becoming broad-based, thereby increasing the likelihood of becoming sticky. Since inflation expectations will be more difficult to contain the second time around, we think the probability of central banks erring on the side of caution is now elevated. The only exception to this would be if something breaks due to high interest rates, or the risk of something breaking in the economy becomes too great. Given the above backdrop, we continue to advocate for a defensive stance in portfolios by overweighting companies that are generating high cash flows, paying dividends, have defensive business models, and have low debt burden. Furthermore, adding alternative strategies with low correlation to traditional strategies and building some optionality to pick assets at bargain prices as the challenging macroeconomic environment plays out in the coming months should place investors in a better position as they come out on the other side of the cycle.

Daren Givoque, CDFA, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Buying a house is an important milestone but one that is becoming increasingly difficult in today’s market. Here are 5 things you should be aware of before you take the leap into home ownership. 1. Understand GDS and TDS Your Gross Debt Service (GDS) ratio and your Total Debt Service (TDS) ratio are the two numbers that lenders will use to qualify you for a mortgage. Your GDS ratio is the percentage of your income needed to pay all your monthly housing costs, including principal, interest, taxes and heat. Fifty per cent of condo fees are also included if applicable. Typically, your GDS ratio needs to be bellow 39 per cent in order to secure a mortgage for a new home. You TDS ratio is the percentage of your income needed to cover all your debts. This includes car payments, credit cards, loans and alimony. Most lenders will consider you for a mortgage if your TDS ratio is 44 per cent or lower. Because GDS and TDS are so important for being able to secure a mortgage having a good idea of your financial situation before you go to a bank or private lender is ideal says Tina Murray (Mortgage Broker from Dominion Lending). Pay down debts and make sure your credit is in good shape to improve your chances of qualifying for the mortgage you need. 2. Don’t be afraid to use mortgage loan insurance The down payment needed to buy a house in Ontario is 20 per cent. This means that if you are trying to buy a house that is $400,000 then you would need to save $80,000 for the down payment. A challenge for even the most fiscally responsible. If this is not feasible you have the option of putting down as little as 5 per cent of the cost of the house IF you insure the other 15 per cent. The Canada Mortgage Housing Corporation (CMHC) and Sagen are two organizations who sell insurance products that will allow you to insure the portion of the down payment that you don’t have ready to go. Generally, the premium will be around 3.5 per cent. Some people say it is better to wait until you can afford the entire down payment before you buy to eliminate the premium and interest payments that can add up over the years. That being said, if you wait to buy a house it is likely that you will be paying more in the long run anyway as housing prices tend to go up. As a generally rule it is better to become a homeowner sooner to help grow your net worth and improve your financial security into the future. 3. Have a budget The last thing you want is to be house poor. This happens to people who buy a house that they can afford on paper but haven’t taken into consideration extra costs like property taxes, legal fees, moving costs and house insurance. Therefore, it is extremely important to have a budget that takes into account all the costs associated with buying and maintaining the home. It is also important to include other living expenses that don’t factor in to your GDS or TDS in your budget like food and entertainment. The more accurate you can be with projecting your expenses in your new home the better. It is a good idea to have $5,000 to $10,000 set aside for extras so you don’t end up with unforeseen costs that you can’t pay. 4. Accept help Housing costs in Ontario are at an all time high with the average home costing around $600,000. Veteran real estate agent Geraldine Taylor says the issue is that housing costs have skyrocketed while the average income has increased at a much slower rate. This makes it particularly hard for young people to break into the housing market and many are turning to their parents to help. Taylor says that 80 per cent young homebuyers are depending on their parents to help them make their first purchase. Buying a house is an investment in your future so don’t shy away from help if it is available to you. 5. Buy as much house as you can afford It is important to plan for the future when purchasing your first home. As mentioned, you don’t want to become house poor but ensuring that the house you buy will continue to fit your needs down the road will ensure that you don’t have to go through the homebuying process again in just a few years. It’s expensive to buy a or sell a house with paying a real estate agent, legal fees and other moving costs. It makes a lot more sense to buy a home that you can grow into rather than one that you will need to turn on a dime and sell. Buying a house is a great investment and one that will contribute to your financial security as you age. It has been shown that people that get into the housing market early typically retire more comfortably than those who wait until later in life. Make sure you surround yourself with the proper experts (real estate agent, financial advisor mortgage broker etc.) to make sure you are well equipped to journey into the world of home ownership. Feel free to contact us if you have questions.

What has happened? The Global markets have processed a lot over these first two months of 2022. The establishment of high inflation and an anticipated interest rake hike have kept investors on their toes. The risk of the Russia/Ukraine conflict turning into a full-fledged war has become reality. The prospect of war had seemed low as the Russian President, Vladimir Putin, had repeatedly stated that Russia had no intention to invade Ukraine. He wanted security guarantees from the West, and he does not want Ukraine to become part of the NATO (North Atlantic Treaty Organization) Alliance. Although it seemed that diplomacy would avail, on the 24th of February 2022, Russia recognized the two separatists backed regimes in Eastern Ukraine as independent entities and immediately advanced its military forces on Ukraine. Putin pushed out the narrative that Russia is carrying out a “special military operation” to ‘demilitarize’ Ukraine, blaming the current government for planning a “genocide” in eastern Ukraine. What is happening? The World saw through the false narrative and understood that Putin’s ultimate plan behind the invasion of Ukraine was to dismantle the current democratic government and install a “puppet government.” His play is to keep the “puppet government” from becoming a part of NATO which would thus keep the “threat” from Western Countries at bay while creating a buffer zone between Russia and the NATO countries. Having previously experienced the retaliation of the Western World on its misadventures in the neighbouring regions; Russia had expected a blunt round of sanctions and had prepared in advance by building up its foreign exchange and gold reserves to ~$630 billion and dramatically reducing its holdings of US treasuries in 2018 (see chart). Russia also strategically reduced its gas exports to Europe to a minimum in Q42021 which depleted gas inventories and exacerbated the energy crisis in Europe. Europe depends on Russia for about half of its natural gas imports. Putin believed this would serve as a deterrent to imposing effective sanctions against Russia. Source: Bloomberg, as of March 2, 2022 In our view, Russia seemed to be planning this operation well in advance and had expected to quickly take Ukraine and succeed in its power move. As the World watches, the advance appears to have not gone according to Russia’s plan. The Ukrainians have shown remarkable grit to defend their homeland and are putting up stiff resistance to Russian advances. The stories emerging from Ukraine have made the Democratic World realize that this is a war for democratic values which brought the Western governments to enact effective sanctions on Russia. Sanctions include: banning Russian banks access to SWIFT (Society for Worldwide Interbank Financial Telecommunication) banning transactions with the Russian Central Bank Switzerland broke from the tradition of remaining neutral and decided to implement all sanctions imposed by EU Several companies are halting operations and severing ties with Russia. These measures have inflicted heavy economic pain on the Russian economy. Russians are lining up at ATMs to withdraw cash, the Russian currency has lost about 30% of its value against the USD, the Russian Central Bank was forced to increase interest rates to 20% from 9.5% and an estimated $400 billion of the $630 billion in foreign exchange reserves have been frozen. What is likely to happen? We think it is unlikely that Russia will back down from its aggression any time soon as such a move will mean losing face to its domestic audience and portraying weakness to the Western World. The fact that only the deputy ministerial level delegation from the Russian side was present during the negotiations with Ukraine implies that the probability of a resolution is minimal. It is likely that the war is going to continue longer than expected as Ukrainian soldiers fight side by side with civilians who have picked up arms to help defend their country. Even if Russia dismantles the military infrastructure and installs a “puppet government” in Ukraine, it will be costly for it to maintain the status as the Ukrainian people will continue to rebel. Ukraine’s application to be a member of the European Union is currently under consideration. Ukraine had also submitted its bid to be a part of NATO in 2008 and has been on the path to meet its requirements. In our view, this provides sufficient ground to believe that the tensions between Russia and NATO in the coming years will stay elevated. The economic fallout and the implications for risk assets The Covid-19 pandemic exposed the fragility of global supply chains and highlighted the need to move towards independence from interdependence in key areas. The Ukrainian/Russian conflict has brought energy security discussion to the front as Europe is dependent on Russia for about half of its natural gas imports. As companies and countries rethink their supply chains, this will lead to increased costs and inflationary pressures. Crude oil, natural gas, aluminum, and wheat are some of the commodities that have been directly impacted by this war and have seen their prices appreciate. Russia’s already weak economy will now have to bear the fallout of severe sanctions and the cost of funding this war will further strain its economy. However, given that it constitutes only 3% of global GDP, the overall impact on global growth will be minimal. Nevertheless, upward pressures to already high inflation put together with elevated geopolitical risks and the start of an interest rate hike cycle, indicate the backdrop remains challenging for risk assets in the near-term. Historically, the impact of such regional geopolitical events on markets has been rather limited and lasted for only short-term. This should be the case this time too as we expect the conflict to remain confined in Ukraine. In our view, we believe managing high inflation and risking interest rates is relevant in our planning. We believe it is best managed by staying well diversified and overweighting areas that tend to do well during such periods. This includes a preference for ‘value style’ over ‘growth style’ investments, a preference for companies with high pricing power, and a preference for companies leveraged to higher commodity prices. We acknowledge there is a slim chance of this conflict spilling out of Ukraine, in which case the geopolitical risk will increase dramatically and would warrant an increase in allocation to cash. Your Team at O’Farrell Wealth & Estate Planning is closely monitoring the evolving situation and will advise accordingly if it becomes necessary.

William McChesney Martin Jr., the Chairman of the US Federal Reserve from 1951 to 1970 famously said, “The job of the Federal Reserve is to take away the punch bowl just as the party gets going”. In other words, start the interest rate hike cycle as soon as the economy is back on track after a recession. The economic growth on both sides of the border was quite robust during 2021 (+4.6% in Canada and +5.7% in the US) and is forecasted to stay healthy during 2022 (~+4.0%). Unemployment levels have also dropped closer to the pre pandemic levels. As a side-effect of a strong economy, inflation has risen and to levels (+4.8% in Canada and +7.0% in the US) that have made the Central Banks (Bank of Canada and the US Federal Reserve) increasingly uncomfortable and unable to continue to hold low interest rates. Higher interest rates make it costlier for consumers to borrow and consume, which reduces demand. As demand falls more in line with supply, inflation falls as well. The Central Banks’ challenge is to determine the optimal pace and magnitude of interest rates hikes. Going too slow and low would mean inflation continues to run high and if it becomes entrenched in expectations, the Fed might be forced to raise interest rates even higher and faster later. Going too fast and high has its own problems as this throttles the demand more than required and leads to an economic slowdown or even a contraction, i.e., recession. Both central banks have indicated that a rate hike cycle is imminent starting in March, however, have used language that suggests they have given themselves enough room to adjust the course of the policy depending upon the economic data. As Central Banks turned decisively hawkish in January, the stock markets have been hit with turbulence and witnessed a sharp sell-off. Given the flexible approach adopted by the central banks, we believe markets will be guessing at their next move and this will give rise to more volatility with the ebb and flow of expectations – the takeaway: diversification is key to mitigate volatility. We note the recent sell off was more pronounced in growth stocks that typically have a higher valuation multiple (see graph). A stock price can be explained as a function of a ‘valuation multiple’ and ‘earnings’. Valuation multiples tend to contract when interest rates rise and thus lead to fall in share prices. Given that the trajectory of interest rates remains upwards, we believe the macro environment remains challenging for companies with high valuations. Therefore, the burden of returns will now fall on earnings – the takeaway: skew portfolios towards names trading at a low valuation and that are generating good earnings. Source: Bloomberg Policy error remains a risk to the markets, however, given that the GDP growth and corporate profits are expected to grow at a healthy rate which makes the case for a constructive outlook on the North American equity markets remains intact. January in Review The North American stock markets started the year on a cautious note with the S&P 500 index and the Technology sector heavy and the NASDAQ entering correction territories (defined as >10% drop from peak to trough). Investor concerns were fanned by Federal Meeting minutes on the 5th January that indicated in addition to hiking interest rates, some policy makers also favor the start of a shrinking of the Federal Reserve balance sheet. After the Federal Open Market Committee (FOMC) meeting on January 26th, the Federal Reserve indicated that it would start raising interest rates soon and confirmed that it expects to start the process of shrinking its balance sheet after the liftoff has begun. Against market expectations of a rate hike, the Bank of Canada held the interest rates at current levels after its first policy meeting for the year, however, indicated interest rates will need to increase to control inflation. The Bank of Canada expects inflation to stay around +5.0% for the first half of the year and thereafter declining to ~+3.0% by year end. The headline inflation number for December came in at +7.0% for the US and +4.8% for Canada. The unemployment rate declined to 5.9% in November from 6.0% in December in Canada and declined to 3.9% in December from 4.2% in November in the US.