Retirement Strategy #1

Someone once told me that the only way you can retire is when your money starts to make a paycheck for you or other people work and make money for you. Soon after I found out that even when other people make money for you, you are still working and really can't call yourself a retiree. For your money to earn money, you need to ensure that it is invested in the right place at the right time. Not only that, you need to also ensure that a regular love and attention is paid to grow this tree to receive its fruits on time.

Here is three step strategy that has been working well with professionals and Business owners, feel free to adapt, comment and share if you see fit...

1. Pay Yourself first with after tax income. As soon as you have paid taxes, next is your RRSP, TFSA, basic mortgage/life, critical illness, and disability coverage premium. I don't preach anything that I don't practice in my own life and perhaps this is a big reason why I am blessed to have a very trustworthy group of family as my clientele.
2. Pay your taxes on time and regularly. Most my clients know that before they even look for their first home, they need to ensure that it is only 40% of net income that they can spend towards lifestyle. If that means buying a smaller home initially, be it! Sometimes, it makes more sense to have a simple lifestyle and have a second property that would pay you rental income when you retire. (wish someone guided me on this point when I was 25, buying my first big home).
3. Use dead money or (fixed income) of your investment portfolio and invest it into a whole life policy. This would pay you most tax sheltered income during your retirement and most tax free benefit to your Estate for Estate planning. The key to purchasing a life insurance policy, is to buy it when you are young and healthy. By the time most business owners feel ready to make this decision, it is already too late.

Always work with a Certified Financial Planner, someone who has the knowledge and expertise to help you with all five steps of financial planning in life.