startup your financial future - mars best practices

Download Startup Your Financial Future - MaRS Best practices

Post on 05-Dec-2014

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This session highlights what entrepreneurs should consider at the start of their venture, what they need to do as the company grows and what needs be done as the business matures and the owner contemplates an exit or retirement.

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  • 1. #MaRSBP
  • 2. Start Up Your Financial Future Zoe Adrian, BASc, CIM Investment Advisor (416) 359-6383 Zoe.adrian@nbpcd.com
  • 3. Agenda Where Will You Be? Protecting your personal finances Tax Efficiency Risk and Reward Retirement and Succession Planning Managing Corporate Assets Plan for the Unexpected
  • 4. Where will you be at 65? Pick 200, 40-year-olds today. Where will they be at age 65? Men Women Wealthy 1 1 Financially Secure 8 2 Must continue to work 14 11 No longer alive 24 4 Require financial assistance 53 82 Who do you want to be?
  • 5. Protecting Your Personal Finances Keep business separate from personal finances Credit Cards Incorporate Consider creditor-proof investing options eg. Seg funds Your RRSP may be A pension plans is
  • 6. Have a Personal Plan Business owners don t have time to think about personal financial plan, but they do worry about it. Near Term Goals Pay down debt in 5 years Buy house in 3 years Save for childs education by 2020 Build up emergency fund by 2013 Long Term Goals Freedom to do the things you want to do Retirement in 2030 Delegate!
  • 7. Your Comprehensive Wealth
  • 8. Savings Strategy What percentage of your income do you currently save? Rule of Thumb - At least 10% of net income Gold Star Maximize your RRSP and TFSA contributions
  • 9. Tax Efficiency Registered savings TFSA (Tax-Free Savings Account) RRSP/RRIF RESP s Non-Registered Savings Investment Accounts Universal/whole Life Insurance
  • 10. Paying Yourself Tax Efficiently Total Income by Age DividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividends T4 Income DividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividendsDividends $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 Dividends T4 Income Retirement: Age 65 Incorporate Business: Age 35 Initiate Pension Plan: Age 45 TFSA RRSP IPP
  • 11. Risk and Reward What is your investing strategy? Tailor your investment risk to suit overall risk Risk vs reward expectations Historical return of stocks/bonds/cash
  • 12. Asset Allocation With Increased Risk Comes The Potential For Increased Return
  • 13. -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 140% 0.2 0.7 1.2 1.7 2.2 85% 48 months 81% 43 months -17% 6 months 63% 32 months 82% 40 months -26% 17 months -15% 8 months -25% 13 months -35% 11 months -39% 12 months 288% 81 months 253% 61 months -25% 4 months 44% 25 months -20% 10 months 203% 90 months -28% 4 months 109% 24 months -38% 13 months 16% 6 months -21% 6 months 168% 68 months -43% 9 months 59% 34 months 320 240 160 80 0 -30 56 60 65 70 75 80 85 90 95 00 05 11 S&P/TSX Composite Index to December 2011 Market Volatility Bull & Bear Facts* Average gain in bull market: +121% Average length of bull market: 46 months Average loss in bear market: -28% Average length of bear market: 9 months * Based on data since 1956. See page 2 for more details. %Change(logscale) Source: Mackenzie Investments (Datastream: month-end data points as at December 31, 2011; total return, local currency)
  • 14. Succession Planning This is a significant part of your planning When to harvest value from your company? What are the trigger points? Who is going to buy it? Partner, children, key employee, another company? Be proactive! Discuss with your advisory group accountant, lawyer, investment advisor etc.
  • 15. Retirement When to retire? What will fund retirement? OAS, CPP, RRSP, Sale of company How much will you need? What if you can t sell the company? Importance of Planning Discuss with your advisory group accountant, lawyer, investment advisor etc.
  • 16. Managing Corporate Assets Corporate Cash Need to keep liquid and secure 1 million+ consider active cash management to get some return Remember Banks are proprietary. Ie. No incentive to give you the best rate.
  • 17. Plan for the Unexpected What happens to your business if something happens to you? Or worse, something happens to your partner? Insurance Life Disability Key Employee Buy-sell agreements
  • 18. Summary 1.Protect Yourself 2.Be proactive 3.Delegate 4.Use the right tools at the right stage of your business to be tax efficient Questions?
  • 19. BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Lte provide this commentary to clients for informational purposes only. The information contained herein is based on sources that we believe to be reliable, but is not guaranteed by us, may be incomplete or may change without notice. The comments included in this document are general in nature, and professional advice regarding an individuals particular position should be obtained. BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Lte are indirect subsidiaries of Bank of Montreal and Member-Canadian Investor Protection Fund. BMO (M-bar Roundel symbol) is a registered trademark of Bank of Montreal, used under licence. Nesbitt Burns is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under licence. BMO (M-bar roundel symbol) is a registered trade-mark of Bank of Montreal, used under licence. Nesbitt Burns is a registered trade-mark of BMO Nesbitt Burns Corporation Limited, used under licence. BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Lte are indirect subsidiaries of Bank of Montreal. The comments included in this publication are not intended to be a definitive analysis of tax law or trust and estate law. The comments contained herein are general in nature and professional advice regarding an individuals particular tax position should be obtained in respect of any persons specific circumstances. All insurance products and advice are offered through BMO Nesbitt Burns Financial Services Inc. by licensed life insurance agents, and, in Quebec, by financial security advisors. If you are already a client of BMO Nesbitt Burns, please contact your Investment Advisor for more information. The comments included in the publication are not intended to be a definitive analysis of tax law: The comments contained herein are general in nature and professional advice regarding an individual s particular tax position should be obtained in respect of any person s specific circumstances. Disclaimers