Financial Cup of Tea – Financial Jargon Round Two By Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. In April, we dove into Financial Jargon, the acronyms used to identify investment accounts such as RRSPs, RESPs, RRIFs, and TFSAs. Now, as promised, we will look at investment holdings jargon including stocks, bonds, ETFs, crypto etc. So please grab your favourite cup of tea or coffee and let us dive in. Stocks and bonds are at the heart of most investments. Stocks represent a direct ownership in a corporation. This means you can participate in the corporate success by receiving dividend payouts and through having the value of the stock increase (capital gains). Conversely you can also participate in the failures or challenges and see the dividend payments paused and the value of the stock drop (capital losses). You may also hear stocks referred to as shares or as equities. Equities are often discussed in terms of geography, sector, and capitalization. Large cap stocks refer to corporations whose market value is greater than $10 billion. In comparison, small cap stocks refer to corporations whose market value is less than $3 billion. Depending on the country of origin or the type of corporation, you can follow equities in the general sense by following different indexes such as the TSX in Canada or the S&P 500 in the United States. Bonds are also connected to corporations or to governments. With bonds, you lend money to the corporation or government and in return you receive payments (coupons), typically, on a semi-annual basis. Your coupons are based on a locked in or variable interest rate for a set term. At the end of the term, you receive your money(principal) back. With bonds you often hear the term “yield”. Yield helps represent the return on your investment based on the coupon you receive and the amount you paid for your bond. Yield is important because you can buy bonds at a discount or at a premium. Rather than holding stocks or bonds directly, many people use mutual funds or exchange traded funds (ETFs). When they were first introduced, ETFs primarily tracked specific indexes. Now you can choose from a variety of mandates including passive, active, or leveraged. With an ETF, you can buy the fund any time during trading hours and instantly know your purchase price or sell price; whereas with a mutual fund a sell or buy order is processed at the end of the day based on the closing values. Finally, we come to the digital world with crypto, bitcoin and NFTs. Cryptocurrency refers to a wide range of digital currency options available. Digital currencies can be used as a currency (to buy products or services), or to hold as an investment asset with the goal of the currency rising over the long run. Bitcoin is one of the many cryptocurrency options available. NFTs (Non-Fungible Tokens) is a record of ownership of a digital or physical asset. Each NFT is unique and is connected to a specific asset such as a digital artwork. Financial jargon is truly endless, however, there are always resources available to help you navigate any questions. Reach out to a trusted Financial Advisor, read the news, take a deep dive into the mutual fund or ETF fund facts. These are all great starting points to expand your financial knowledge and confidence. We welcome questions so please reach out and follow us on Facebook @OFarrellWealth. 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.

As a rule of thumb, contraction in Gross Domestic Product (GDP) for two consecutive quarters is considered a recession. Officially, the NBER (National Bureau of Economic Research) is the authority that decides on dating business cycles. For NBER, apart from a mere contraction in GDP - a host of other parameters such as real income, employment, industrial production, and retail sales etc. are also factored in to determine if a period can be officially classified as a recession. The above premise is necessary to appreciate the complicated environment currently faced by investors. The US GDP contracted for two consecutive quarters (-1.6% during the first quarter and -0.9% during the second quarter) meeting the technical definition of recession. However, the other conditions such as employment levels, retails sales etc., are too high to come to a such a conclusion. On the other hand, Canadian economy fared relatively better with 0.3% expansion in May as per Statistics Canada. During the second quarter earnings season so far, companies have fared better-than-expected in general but the forward guidance from Walmart, Target and Best Buy suggests consumers are beginning to hold back on purchases and inventories are rising. Overall, the trajectory of economic data is indicating that economic activity is slowing down. We had argued in our previous updates that a little moderation in economic activity and levelling off or softening of inflation data are the necessary conditions for markets to react constructively as this would indicate Central Banks’ policy actions are yielding results and things are heading in the right direction. In the US, the headline inflation at +9.1% for the month of June (reported in July) was ahead of market expectations of +8.8% and +8.6% for the month of May. In Canada, the headline inflation at +8.1% was lower than market expectations of +8.4% and ahead of +7.7% for the month of May. Nevertheless, the equity markets in July traded on expectations that inflation has peaked and will begin to show signs of moderation in the coming months. During the press conference after the FOMC (Federal Open Market Committee) meeting on July 27th, the US Fed Chair, Jerome Powell, mentioned that policy rates at about 2.5% (after the 75-basis points hike) are now at a level what the committee broadly considers as a ‘neutral rate’. Earlier, the Bank of Canada had raised policy rates by a full percentage point to 2.5%. A neutral rate is the policy rate that is neither too stimulative nor too restrictive for the economy. Expectations of peak inflation and the interpretation of Jerome Powell’s comments as the bulk of rate hikes are now behind us and the pace of future rate hikes might slow down if future economic data co-operates led to a positive reaction in the markets in July. The recent market cheer is justified if future reports confirm that peak inflation is achieved as investors can begin to put the scare of runaway inflation behind them. That said, it would only be half the battle won as bringing inflation back to 2% target would become the next goal post. While central banks recognize that future rates hikes are going to be restrictive for the economy, as long as unemployment remains at historic lows, we believe the risk of a wage price spiral will keep central banks on a hiking path. With estimated about two job openings for every unemployed looking for work and labor force participation not increasing as expected, the risk remains elevated. In addition, the war in Ukraine, and the ongoing Covid-19 lockdowns in China adding to inflationary pressures from the supply side indicate it does not yet look like a cake walk from here. In other words, to break the back of inflation central banks might have no choice but to increase unemployment and reduce demand by inducing a recession. The yield curves on both sides of the border have inverted (see chart 1) and historically inverted yield curves have been a harbinger of recession (see chart 2). This implies the resilience of corporate earnings could be put to a test in the coming quarters. Though the markets have already priced in a lot of bad news, the outlook suggests there are several reasons to stay cautious in the near-term. Long-term investors with risk appetite to withstand near-term volatility can go bargain hunting as many quality assets are now trading at cheap prices. However, investors with shorter time horizon and/or lower risk appetite would be well served by staying invested defensively until darker clouds clear the horizon. Chart 1: Yields Curves: Beginning of the year and now Source: Bloomberg Chart 2: US Recession and yield spread between 2-year and 10-year treasury note Source: Bloomberg We welcome questions so please reach out! Follow us on Facebook @OFarrellWealth.

The month of May began tumultuously with the S&P 500 and S&P TSX Indices, at one point, down by ~-8.5% and -5.8%, respectively. The markets recovered most of the losses during the last week and ended almost flat for the month which allowed investors a much-needed respite. The bond markets witnessed similar movement with 10-year bond yields that initially moved over 3% on both sides of the border early but shed about 20-25 basis points in the second half to finish the month at 2.75%-2.80%. Market jitters increased after the US Fed chair, Jerome Powell, stated in an interview with the Wall Street Journal that the Fed would continue to push through the interest rate hikes until there is convincing evidence that inflation will move down towards the targeted 2%. These remarks undid investors’ hopes that the Central Bank could ease the pressure after the US inflation report indicated that the US inflation has probably peaked. The inflation numbers for the 12-month period ending April 2022 stood at 8.3%, lower than 8.5% in March but above the expected 8.1%. Canada witnessed inflation numbers for April 2022 increase to +6.8% from +6.7% in March 2022. The pivot in equity markets came after the sell-off in the S&P 500 index exacerbated to briefly push it into bear market territory (technically defined as a peak-to-trough decline of >20%). Bear markets in absence of a recession are rare and are short-lived. Given that the incoming economic data is indicating an overall strong but somewhat moderating economic activity, the market participants saw the sell-off as overdone. The PMI (Purchasing Manager’s Index) numbers for manufacturing and services activity in the US have declined from their highs, but at +55.4 and +57.1 for the month of April (See Chart), they remain well above the threshold of 50 (a number above 50 indicates the activity is expected to expand and below 50 indicates the activity is expected to contract). Chart 1: PMIs have declined but remain at healthy levels as compared to history Source: Bloomberg In addition, the Federal Open Market Committee (FOMC) minutes released later during the month indicated the Federal Reserve members agreed that front-loading the hikes (i.e., larger hikes at the start of the cycle) would leave the bank in a favorable position to re-evaluate and readjust, if needed, later this year. This also raised market hopes that the federal Reserve is wary of the impact of policy tightening and is likely to take a cautious approach as long as the inflation trajectory remains on track. Thus far in the cycle, the markets seem to have discounted the inflation headwinds and the policy path, in other words - the valuation multiples have contracted. As the central banks continue tightening the financial conditions, the market narrative is now beginning to focus on the impact on the real economy and, in turn, company earnings. In other words, the inflation worry is gradually giving way to growth worry as the impact of tighter financial conditions begins to take hold. A drop in the earnings would be the second shoe to drop and strengthen the protracted bear market narrative. We think some dialing down of earnings expectations is likely as inflation eats through the companies’ margins and falling demand forces companies to reduce prices. However, unless the fall in earnings expectations is significant, this would be consistent with the narrative of moderating economic activity and align with the Fed’s objective of a softish landing, in our opinion. Rather than be in the bear camp so early in the cycle, we like to view growth and inflation as a trade-off decision, i.e., some demand destruction and not demand decimation could be enough to bring down the inflation. We acknowledge the war in Ukraine, potential impact of unwinding ultra-loose monetary policy during the pandemic, and the zero covid goal of China; the world’s manufacturing factory, has muddied the outlook for the Fed to navigate successfully and thus increased the likelihood of a policy error. The Fed might well continue to tighten the financial conditions and put the economy into a recession, however, that seems more likely to be a 2023 scenario, in our view. In the interim, moderating inflation put together with moderating economic activity thereby giving the Fed a reason to potentially go slow on the hike path could give tailwinds to the risk assets.

Daren Givoque, CDFA, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Over the past few years there has been a rise in people feeling like RRSPs aren’t the great retirement savings tool they claim to be. Registered retirement savings plans (RRSPs) are a tool that many people use in Canada to finance their retirement. Contributions that you make throughout your working career are income deductions on your taxes which leads to a lower tax bill and may mean you receive a tax refund cheque after you file your taxes. Any investments or transactions made inside your RRSP are not subject to tax, however when you take money out of your account it is taxed as income. In simple terms you can look at RRSPs as a giant tax deferral tool. At the age of 71 you must convert your RRSP into a registered retirement income fund (RRIF). It is at this point that people must start taking money out of the RRIF in minimum withdrawals, mandated by the government. Unfortunately, some people are reporting that they are being taxed at roughly 50 per cent on the dollar when they withdraw their money, causing them to feel like the RRSP they had been paying into their entire career is a tax trap, rather than a valuable tool to support retirement. While this situation is unfortunate, it is the exception not the rule. Recent studies have shown that RRSPs are no worse than any other savings options if your tax rate in retirement is the same as it was when you were paying into the RRSP. For most people their tax rate actually decreases in retirement, so they end up paying less tax on their RRIF withdrawals than they would if they had used a different tool to save which wouldn’t have had the same tax deferral benefit as an RRSP. Regret over using an RRSP normally comes when they see a portion of their savings going to taxes, however it is important to remember the tax breaks you received when you were paying into your RRSP. Many people are choosing to use tax free savings accounts (TFSAs) as they see it as a better way to save for retirement. While withdrawals from a TFSA are not taxed as income, contributions are not tax deductible. This means that there are only tax savings if you will have a higher tax rate in retirement than you did in your working years. TFSAs are ideal retirement savings tools for low income Canadians as they won’t trigger a clawback of the Guaranteed Income Supplement. For others though, TFSA contributions may not be enough to build significant retirement savings as the limit you can contribute per year is $5500. The percentage of tax filers who make contributions to RRSPs has been on the decline for the past 15 years. Partially because of the economy but also because people are believing in the unfounded belief that they are a tax trap. Don’t believe the rumours. For most people RRSPs are a great savings tool and making consistent contributions will help ensure your financial stability in retirement.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Having a family cottage is a great asset. Not only will it provide you with some great family memories but like a lot of real estate it will likely grow in value over time. That being said, from a wealth management point of view the family cottage needs to be given different consideration than your typical investment. One thing to keep in mind is that there are often a lot of emotions tied up in the family cottage and this needs to be accounted for. It is extremely beneficial to be open and realistic about your plans for the cottage and make sure that everyone who has stake in the property is in the loop. It is not uncommon for a mother or father to promise their children that they will never sell the cottage, when in reality they need to money wrapped up in the property to fund their retirement. If the plan is to transfer the cottage to the next generation the most important thing to consider is the capital gains tax on the disposition. The capital gain is the amount that the proceeds exceed the tax cost. Even if parents gift the cottage to their offspring it still triggers a capital gain at fair market value. To reduce capital gains tax, it is often recommended that clients document tax costs, which not only includes the initial cost of the property but also the amounts paid on improvements to the cottage over its lifetime. This includes things like redoing a deck, building a boathouse or other significant upgrades (not routine maintenance). Make sure to keep a spreadsheet of the improvements with invoices and receipts to back up the costs. If you want to be strategic about how much tax you pay on capital gains you will also want to be aware of the true market value of the property. With cottages there can be a lot of variance even if they are on the same lake. Things like the view, quality of the lakefront and which direction the cottage is facing can all play a role in its value. It might be worth it to get an appraisal of the property so you know exactly what you are getting into. Another major tax issue when it comes to the family cottage is probate fees on assets. In Ontario people have to pay $5 on every $1000 on the first $50,000 of assets and $15 for each $1000 above that amount. This can add up when it comes to something as valuable as a family cottage. One way to get around probate fees is to gift the cottage to children before you die rather than leaving it to them in your will. This only works if you don’t need the money for your own retirement or if you don’t want your kids to use their own assets on the cottage transfer. Another way to reduce probate fees AND capital gains tax is to change the title on the property to joint tenancy with one adult holding the right of survivorship. In this situation three people would legally own the property and you would only be taxed on disposing one third of the property to one of your children. When you die the other two thirds would automatically be transferred to your child triggering a capital gains tax on the rest of the property. In the end the estate would end up paying a smaller amount of capital gains tax and probate fees than if the cottage was just left in the will. While this type of planning is useful it can be complicated, and it is important that everyone who has stake in the cottage be on board. The last thing you want is for the family cottage to turn into a breeding ground for arguments and discord in your family. The best way to plan for cottage transfer is to start thinking about it early. Talking with a financial advisor can help lay everything out for you so that you can carve a path forward that works for you and your entire family.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Life insurance is all about risk mitigation. It’s about protecting your loved ones financially if something should happen to you unexpectedly. There are so many insurance products out there that it is often difficult to sift through policies and find the one that is right for you. Insurance companies aren’t always great at being clear about which insurance plans are best for each individual client. Here are a few things you should know about life insurance and some tips on how to pick the policy that is right for you. Insurance companies are for profit businesses Insurance companies make their money off calculating risk. Typically, the more likely you are to die the higher your insurance premiums will be. Insurance companies group people into different categories of risk (ex. non-smokers, smokers) and they know how much they need to charge in premiums based on calculating the risk of death for each grouping of people. A smoker will typically pay 3-5 times more in insurance premiums than a non-smoker because of statistical data that indicates that smokers are more likely to die sooner than those who don’t smoke. When it comes down to it insurance companies do protect you in case of unexpected death, but they are also in it to make money. The best policy is the longest you can afford As a general rule, the longer the policy the better. A Term 20 insurance policy will cover you for 20 years with a fixed premium that will not increase. A Term 10 policy will provide you with the same coverage but only for 10 years. At this point if you wanted to keep it you would face a premium increase. Term 10 policies are cheaper than Term 20 because there is less risk involved for the insurance company. A Term 10 policy might cost you $20/month while a Term 20 policy would be $30 or $35/month. While paying $20 for the same coverage might seem attractive in the short term, the issue comes up when it is time for it to be renewed. At the ten year mark it is certain that your insurance premiums will go up as you will be a decade older and if you decide to keep the original policy it could cost you as much as 3 to 5 times more premium. One option is to apply for a new policy altogether but there is no guarantee that you will be healthy enough to qualify for a new policy ten years down the road. This is why paying a bit more for a longer-term policy is better than saving $10-$15 a month for a shorter policy. You end up paying less in the long run and are guaranteed the insurance pay-out for longer should something happen to you unexpectedly. In certain situations, it might also a make sense to buy a Term 65 (which guarantees you coverage until you are 65) or Term 100 (which guarantees you coverage until you are 100). However, these policies are more expensive because it poses more risk for the insurance company. Buy young It may seem counter-intuitive to buy life insurance when you are in your 20s, have no money and likely no dependents to look after if you pass away. However, this is the best time to buy life insurance. Unless you have a health condition it is likely that you will be in the best shape of your life and as a result your insurance premiums will be at an all time low. Think long-term. If you buy a Term 20 insurance policy when you are 25 it will last until you are 45. In that time are you likely to have built a career? Gotten married? Had a family? Probably. Therefore, it is good to get locked into a plan young. It will never be cheaper to get insurance than right now. The most important part of buying insurance is understanding your options. A good financial advisor will typically look at how much debt you have, what your annual income is and if you have children or a spouse to calculate the amount of insurance you need. Using this information, they will be able to advise you on the insurance product that works best for your situation. There is no reason to go into a meeting with an insurance agent blind. Know what your needs are and what you are willing to spend before you buy into a policy to avoid getting trapped in an agreement that is not in your best interest.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. When you purchase a home and get a mortgage through a bank it is likely that they will offer you Creditor Insurance. Also called mortgage insurance or loan insurance, creditor insurance makes sure that you are able to pay off your mortgage or other loans with the bank in the event of your death. While this may sound like a good idea there are some significant drawbacks to creditor insurance that you need to be aware of. Premiums can increase at any time Generally, these insurance programs are not contractually guaranteed meaning the bank may increase their rates at any time without consultation. They are also “age banded” which means they have the ability to increase the premiums as you age as the initial agreement is usually only valid for one year. It is inflexible Creditor insurance does not allow you to take the death benefit in a lump sum cash payment and continue to pay the mortgage. As soon as your mortgage and loans are paid off the insurance coverage is terminated. This also means that the insurance coverage is only as valuable as the mortgage, which is decreasing in value over time as you make payments. Finally, if one spouse dies prematurely the other may not be covered. It is not a legal contract Creditor insurance is not a legal contract and banks have the authority to terminate it as they see fit. With 30 days notice, the bank can cancel your coverage leaving you without Mortgage, Life or Critical Illness insurance. The insurance is also automatically terminated if you move your mortgage to another financial institution. It does not cover mortgage penalties There is often a penalty when it comes to retiring a mortgage early with a bank or other lender. Typically, this amounts to approximately three months interest. This penalty cannot be included in the coverage offered by creditor insurance which means you will be paying the penalty out of pocket. If you have any health issues you won’t be covered Generally, if any of the health-related questions are answered “yes” you will not be offered coverage and no underwriting will take place. Also, if the institution finds out about a health issue after the fact, even if you didn’t know about it when you applied for the insurance, your claim may be denied. Luckily there is another option: A Term Life insurance policy is generally a better way to protect you and your family in the event of sickness or death. Premiums stay consistent and will not change throughout the term of your policy. The coverage does not go down as you pay off your mortgage. You can choose who your beneficiaries are and in the event of your death they can choose whether to use the payout to pay off the mortgage right away or invest the money. You hold the cards when it comes to your policy, not the insurance company. Only you can cancel the policy and it stays with you even if you change banks or pay off your mortgage. The insurance company will also do a full underwriting before the policy is issued, not at the time of the claim so you are unlikely to have any unexpected surprises. Under a combined plan, if one spouse dies unexpectedly, the other is still insured. Banks will make you feel like creditor insurance is the way to go, but they are just trying to sell you a product. The same coverage can be achieved through a term life insurance policy which gives you much more safety, flexibility and freedom than a creditor insurance plan offers.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. The new year is a time to look towards the future and many people mark the occasion by making new years resolutions. If you are going through a divorce or separation the holidays were likely a very challenging time and it can be difficult to look towards the future. However, with the right attitude, you can make some valuable new years resolutions that will help you start the new year on the right foot. Here are five examples of new years resolutions that will help you move past your divorce and build a new life for yourself. Practice forgiveness Forgiveness is a key component for moving on after divorce. Resolve to forgive your ex for the pain they caused you both during your marriage and the divorce process. Hanging on to anger and resentment will only cause you more pain, especially if you have to stay in contact with them for the children. It is also important to forgive yourself. You may have done some things throughout your marriage or divorce that you aren’t proud of. Practicing forgiveness is a key component in healing and will help you move forward and be a much better person in the long run. Be a cooperative co-parent Having kids makes divorce that much more complicated. It usually means that cutting ties completely with your ex is not a possibility. Resolve to be civil with your ex when it comes to milestone events that involve your children. Cooperate when it comes to parenting time and don’t badmouth your ex in front of your kids. You children shouldn’t be worried that Wold War 3 will break out every time you are in the same room as your ex. Being a cooperative co-parent is truly the best thing you can do for yourself and you children, no matter how difficult it may seem. Start exercising This one may seem a bit cliché, but it has been proven that regular exercise can significantly improve your mood. If you are going through a tough divorce it is likely that you are experiencing many difficult emotions. Taking the time to be active in a way that you enjoy will help stave off depression and make you more resilient in the new year. Something as simple as going for a walk or taking a yoga class 4-5 times a week can make a big difference in your mood and help you work through the difficult feelings you are having surrounding your divorce. Be kind Divorce can bring up all sorts of negative emotions and it can be difficult to be nice to those around you as well as yourself. Be kind to yourself by making time to do things you enjoy. Maybe that means taking up a new hobby or making time to meet friends for coffee. Practicing kindness will not only help you move on but will making you an all-around happier person. Take control While it is important to be practice self compassion when going through divorce it is also very important to have all your ducks in a row. Divorce affects every aspect of your life and it is important to know that you will be able to support your life financially. Create a budget, analyze your retirement savings and look at your investments. Talking to a Financial Advisor or Certified Divorce Financial Analyst who can help you look at your current situation and plan for the future is a great idea to ensure you are making informed decisions in the new year.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Rebecca Cronk, Fitness Trainer & Owner Becca Langstaff, Fitness Trainer Get Cronk'd Fitness Studio Create a budget It is very important to understand your cash flow. Most people tend to spend frivolously and don’t realize where their money is going. Tracking your spending will help you cut spending where you need to, so you can save for the things that are most important to you. This is also important when starting any sort of fitness program or regimen. It is easy to spend a lot of money on gym memberships, personal trainers and fancy work out gear. Know what you want to achieve and a realistic budget for what you are willing to spend to help you get there. You should never have to suffer financially in order to reach your fitness goals. Know your credit score It is very important to understand your credit score because it reflects your financial credibility. It also affects lending. Your ability to finance a car or get a mortgage all depends on the health of your credit. Review your credit score on a regular basis to make sure there is nothing on it that shouldn’t be there. Trans-union and Equifax are both companies where your can check your credit score online for a small fee. Borrowell.com and creditkarma.com are websites where you can check your credit score for free, but you should be aware that they will try to sell you a loan. It doesn’t matter how you do it, having a handle on your credit score is an important part of knowing where you stand financially moving into 2020. Know your options When it comes to fitness there are many avenues you can take. If you aren’t sure where to start check out your local gym’s new client offerings and promotional specials. Most fitness facilities will offer trials/consultations to help you find the best option for you. This can be a great way to try out new classes without any significant financial commitment. Pay down high interest debt Credit card debt is a silent killer. Credit card companies take roughly 20 per cent of every dollar you put on the card in interest, making it very difficult to pay down. If you only ever pay your minimum payment you could be in debt for 35 to 40 years. Make it your focus in 2020 to get rid of your revolving high-interest debt. Taking care of that debt will do wonders in improving your financial fitness in the new year. SAVE Using the tools available to you for saving is an essential part of improving your financial fitness. Use your RRSP and TFSA to invest your money and save for the future. Putting money into your RRSP will also give you a tax break which could lead to a refund that you can reinvest. Strategic borrowing can also be used to boost the amount of money you are putting into your RRSP every year*. Protect your income One of the biggest mistakes people make is not understanding what might happen if they cannot work. Critical illness insurance, disability insurance and life insurance are all important to have in order to protect you and your family. Using five cents on every dollar to protect the rest of the dollar is what insurance planning is all about and it is an important part of ensuring that you are financially stable no matter what happens. Make the commitment When it comes to physical or financial fitness it is important to make the commitment. You don’t have to be putting away thousands of dollars a month or working out every day to make progress. It’s all about finding a routine that works for you, your budget and your schedule. Getting help from a professional like a financial advisor or fitness trainer can help you outline realistic goals and keep you motivated. There is no reason why 2020 cannot be your best year yet, both physically and financially! *Using borrowed money to finance the purchase of securities involves greater risk than using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. Leveraging carries its own risks and is not for everyone. Talk to your financial advisor for advice on properly managing those risks.

Hugh O’Neill, Insurance Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. An important part of the succession process is the estate plan. Regardless of where you are in life; young, old or middle aged, it is important to have your estate plan in place. You should be at ease with how your estate is set up had you passed yesterday. Many farm families get tied up in the thoughts about; who is running the farm? How do family members interact on a day to day basis? Who holds the voting, non-voting shares? How will the brothers or sisters get along? The list goes on. While these are important issues to work through, it is Important to pull yourself away from the day-to-day issues and take a bird’s eye view of the farm and how you want your estate to look. Once you establish what your vision is for the future of your farm, you can begin taking the necessary step that will get you there. Many people are not comfortable talking or thinking about what the world will look like when they are no longer around. It is a difficult subject to bring up with family. However, there is a great relief to getting things out in the open. After setting up the plan, we often sit with the whole family to reveal the business side of the succession plan, letting all family members understand how they will be treated when their parents are gone. It is often assumed that the parents will die first. However, you must consider what will happen should the younger generation; new shareholders of the farm, pass away. People do not always die in order. A plan cannot be complete without considering this possibility. The following questions need to be considered; will the spouse want to retain the shares owned by the partners? Will the partners want the shares to be owned by the spouse? How will the estate of a deceased active shareholder be compensated for the equity held in the farm? Getting back to the parents estate: If there are multiple children on the farm, but not all are farming, what is the appropriate compensation needed for equalization to the non-farming children? Many farmers want to leave pieces of land to non-farming children, however this does not often work well. The farm may need the land to support the operation and the non-farming children may not want to hold the asset and be landlords to the farm. There is also a tax consequence: the land rollover to a non-farming child will likely not qualify for the Section 85 farm rollover provision. You need to work with a good farm succession advisor to get through this part. The final answer lays with the parents to work out what is right for the farm and family situation. The next part of the equation is taxes. Wealth planning is about setting up a plan that will minimize taxation. Many assets are subject to Probate thus your estate will lose value immediately. Also, unnecessary capital gain taxes and income tax may come into play if your estate is not set up correctly. Sound wealth planning can greatly reduce the erosion of your family wealth due to tax. The old saying of “Shirt sleeves to shirt sleeves in three generations”, meaning your family will go from working class to wealthy to working class in three generations due to the erosion of family wealth due to taxes and dissipation of the wealth among multiple heirs. A comprehensive wealth plan can reduce or eliminate that phenomena. Lastly, a good wealth planning team will welcome the participation of all of your advisors, including your accountant, lawyer and lenders. An experienced and knowledgeable team will produce a much better solution than one advisor working alone. Ensure the team you select are welcoming to participation of all the professionals involved in your life.

Daren Givoque, CDFA, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. When a person or couple starts looking into divorce it is hard to know where to turn. It is commonplace to have a lawyer or mediator handle the legal aspects of the divorce and ensure the division of assets are equitable and fair. While divorce lawyers and mediators are excellent at applying the law, understanding people’s rights and negotiating with other lawyers in a legal framework, they don’t specialize in the intricacies of dividing assets. In many cases finding a situation that is fair to both parties may not be as simple as dividing the assets 50/50. This is where the Certified Divorce Financial Analyst (CDFA) comes in. A CDFA provides clarity, accuracy and equity through a collaborative divorce process. They are an expert in all the financial aspects of divorce. A CDFA’s role is to help divorcing couples address the financial issues of divorce using data to help achieve equitable settlements. They are well-versed in analyzing financial records and investments and identifying possible tax consequences that come along with liquidating assets. A CDFA will work with the divorcing individual or couple to create a comprehensive wealth plan. This report outlines all the assets involved in the divorce, taking into consideration the tax consequences and future value of each one. By doing some simple analysis, a CDFA will make it clear that what may seem like an equal division of assets may not actually be fair because of the long-term outcomes of each. For example, a family home may only ever be worth $300,000 while a pension could one day be worth $1 million. If a client is particularly set on keeping the house or the pension a CDFA will be able to help equalize the two so they can be traded in a fair and equitable way. A CDFA can also look after long-term financial planning and give their clients a look at how their life will be affected based on different settlement scenarios. For example, in some cases it may not be financially viable for someone to keep a family cottage as it may be difficult to keep up on a single income. When deciding which assets to keep in a divorce it is important to look at how this will affect your financial situation long term. A CDFA will do that and create a comprehensive wealth plan to help ensure your financial stability going forward. There is no way around it, divorce is stressful. Many people come to their initial meeting with a CDFA scared and unsure about what the future holds. Using a CDFA will help mitigate stress and allow you to go into meetings with your lawyer stronger and more confident about the settlement you want and what the future looks like.

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. The investment markets recently seem to have no end in growth. In fact, just when you think that nasty correction will rear its head, some global treaty is signed, or tensions deescalate from a potential conflict. Trouble is may would say the markets are oversold, expensive and a correction is all but waiting for the right catalyst. This has left many investors feeling uneasy. The biggest challenge with investing is getting wrapped up in the emotions of the market. People tend to look at their money emotionally. It symbolizes the cottage, their family trip or a new home. When the market goes up they see the realization of their goals and when it goes down they see them circling the drain. When you use your emotions to invest it is easy to get in over your head. The rollercoaster of the stock market is a tough ride when you panic and sell every time there is a dip. Thankfully, there are a few things you can do regularly that will help you stay on an even keel even when the stock market is going up and down like a yoyo. Complete a personal investment risk assessment This is a questionnaire that you can fill out before you start investing. It asks a series of questions that will help you figure out where you stand as an investor. Some people are comfortable with a lot of risk, while others prefer to protect their money in safer investments. Fill out this questionnaire when you are feeling calm and level-headed. That way you can look back on it to help you stay the course when you are feeling emotional about your investments. Consider buying pooled investments Pooled investments (Mutual Funds, ETFs etc.) allow you to pool your money with other investors and buy into multiple and varied investments. This helps spread the risk around so that if one stock tanks your other investments will help balance out your portfolio. As the age old saying goes: Don’t put all your eggs in one basket. Rebalance annually Get into the habit of taking a good look at your investments every year. When times are good you should consider taking the gains and sheltering them. When the stock market is down, consider buying into profitable companies when their stock prices are low. You also want to make sure you consider building a portfolio that has both equities and fixed income investments. During your yearly review you can look at your investments and make sure that they match your risk tolerance. Picking a specific time of year to rebalance your portfolio is also important. That way you aren’t tempted to act emotionally if there is a dip in the market. People who take the time to rebalance their investments yearly typically do better with their investments as they are making use of the rule of protecting gains and staying within their risk tolerance. Dollar/cost averaging When it comes to the investments having a fixed amount that you are willing to spend and buying a little bit at a time is your best bet. When the market is high you will get fewer investments for your money and when the market is low you will get more. Those who practice dollar/cost averaging tend to do better in the stock market than those who buy emotionally and without a plan. Have a wealth plan When investing in the stock market it is always a good idea to have a wealth plan. Decide what you are trying to do with the money you are investing. Having a time frame and a financial goal will help you figure out the amount of risk you would like to take. Talking this over with a financial advisor will help you create a solid plan and they will also be able to give you professional advice about your investments. Speaking to a neutral third party can help take emotion out of the equation and make sure that you buy into the investments that will help you reach your financial goals. Investing in the stock market is like watching a little boy walk up a hill with a red yoyo. The yoyo will always be going up and down, but the little boy is on a constant, steady incline. It is important that you remember that, like the boy, the stock markets historically go up over time but reacting to the yoyoing of the market will just make investing gut-wrenching and unproductive. When it comes to the stock market stay the course and talk to a professional. Financial advisors are there to help when it comes making the best choices possible for your money.