Professionals well-established in successful careers often plan for significant future expenses early on. Whether to ensure the best education for their children, save for a down payment on a starter home for their children or simply for a comfortable, worry-free retirement, MDL will design a plan that grows financial resources so that they can fulfil spending needs over the long term.
MDL planning services for wealth accumulation include designing a financial and investment plan that leverages tax optimization strategies. Successful wealth accumulation strategies also demand flexible allocation of client resources to grow assets to their fullest potential over the long term.
Naturally, stable long-term wealth accumulation depends on sound investment advice. MDL enshrines our Client’s situation, appetite for risk, and life goals in the design of their personalized investment strategy. Some Clients will take on a little more risk to ensure that their portfolio returns a little extra. Other professionals are perfectly happy with stable, long-term returns from a more conservative strategy as they value some certainty as much as they value growth. Whether life goals include saving for retirement or extraordinary family expenses, MDL will design a financial plan that offers the best chance of realizing these goals.
Core to our financial planning services is asset allocation, portfolio diversification, and account structuring and restructuring whenever required. MDL will rebalance asset allocations periodically to ensure that our Client’s plan is on the right track or to adjust for lifestyle or situational changes. Our ultimate goal is to offer busy professionals a financial design that brings home solid, long-term, stable returns while minimizing risk.
We offer risk management services and insurance advice to protect our Clients’ future. Insurance coverage is a critical safeguard for families in the event of unforeseen, tragic circumstances or events. Conducting an insurance needs review for professionals before middle age is best, as premiums are lower for adults under 55.
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MDL 6 Step Financial Planning Process
Without a GPS, you can’t get to your destination. The same can be said about financial planning. With our help, we will help you get to where you want to go.
- Initial Consultation
At your first meeting with your MDL Advisor, you will learn about the services we provide, what to expect from our financial planning process and how we are paid. Together we will determine how decisions will be made and how frequently we should meet.
- Gather information, discuss goals and objectives
You will be asked to provide personal data and financial information so that we can review your current financial situation. By examining your current cash flow, net worth, insurance, investments and other financial areas, we will be in a better position to analyse your financial position and discuss your future goals and objectives.
- Analysing Financial Situation
Using proprietary tools and resources, your MDL Advisor will analyze your finances to determine whether your goals and objectives are realistic, and if you should consult with other professionals as part of your overall financial plan.
- Developing & Presenting Financial Plan
Your MDL Advisor will develop your financial plan and make recommendations. If the plan involves other professionals (lawyer, accountant etc.) they will present the parts specific to their expertise. Remember this is your plan, so you MDL Advisor will not any concerns you might have and revise recommendations when necessary.
- Implementing Plan
Once you have agreed to recommendations and timelines, it’s time to put your plan into action. Your MDL Advisor will help you prioritize what needs to be done, complete any relevant paperwork, and coordinate meetings with other professionals.
- Monitoring & Reviewing Financial Plan
Financial planning is an ongoing process. At subsequent meetings, you will review your progress with your MDL Advisor and identify any changes in your circumstances (having a baby, divorce, death in family etc.) or objectives (change of career, wanting to buy a new property etc.) that would require changes to your financial plan.
Tax Free Savings Account (TFSA)
This is a registered savings account that accumulates tax free within the account. While contributions are not tax deductible, the withdrawals are not taxable. It applies to any individual who is a Canadian resident, over the age of 18 and eligible to establish the account. The CRA determines the contribution based on the filed TI. It allows individuals to contribute up to:
- An annual maximum ($6,000 for 2020)
- Withdrawals in the previous year are added to the contribution
- Unused contributions from the previous year are added
The TFSA can hold the same investments as a registered retirement savings plans, including:
- Mutual funds
- Fixed income investments
- Certain shares of small businesses
If this sounds like something you might be interested in, contact our office for more details.
Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan is sponsored by the federal government that lets you and your spouse (or partner) contribute until the plan holder reaches age 71. The CRA allows any contributions to be deductions on your annual tax return and the earnings are tax exempt. However, the tax is due with withdrawals from the plan. It can hold a number of different types of investments:
- Mutual Funds
- Segregated Funds
- GICs & Term Deposits
Other options include:
Spousal RRSPS – This is when you can allocate any or all of your maximum contribution to be placed in your spouse’s RRSP. This splits the income and with a spouse’s lower tax rate, the eventual tax is reduced. There are some options for withdrawal:
- RRIF (Registered Retirement Income Fund)
- Home Buyers Plan – This will let you withdraw money to buy a home for yourself or a relative that is disabled.
- Lifelong Learning Plan – This includes training or education for you or your spouse or partner.
If you have questions about this RRSP program, let us know.
Registered Education Savings Plan (RESP)
These are savings plans that are tax deferred until the beneficiary withdraws funds for post- secondary education. Because the student is presumably at a lower tax rate, there is little or no tax due.
Limits – At this point there is a limit of $50,000 per beneficiary for contributions. Each beneficiary can receive a maximum of $7,200 through the Canada Education Savings Grant. The rant amounts are not included in the lifetime RESP contribution limit.
Canada Education Savings Grant (CESG) – This is paid directly into the RESP and will add $0.20 to $0.40 for each dollar put away for education. The beneficiary must be 17 or younger. This is a significant benefit to the student.
Amount of CESG – The minimum grant is 20% of the RESP contribution to a maximum of
$5,000. Any additional amounts are based on family income. Check the CRA RESP website for
Additional CESG – As of January 2011 the income brackets were revised and they are reviewed
annually. Some of the changes included:
- The educational facilities include university, college, vocational and technical schools
- The maximum RESP was increased to $5,000.
- Lifetime contribution per beneficiary increased to $50,000
If the student does not complete the program, or opts for another career choice, the income gets to remain in the group plan but the original contribution is returned to the parent. Check the website for details.
Financial Institutions – The RESP plans can vary from one financial institution to another including different features, exclusions and limitations. It is critical that the parent review all the options and choose the best for their circumstances.
Types of RESPs – There is a Scholarship Trust where the contributions pool with other investors. The Self-Directed lets you make the choice of investments from mutual funds or other opportunities.
Benefits – According to the federal sources, saving inside a RESP with the Canada Education Savings Grant gives a return of 40% higher than investing outside the RESP.
This can all be confusing, but if you contact our office, one of our specialists will be happy to address your concerns.
A mutual fund is an investment opportunity that pools money from many investors. It is managed by a single entity but there are a number of different types of funds available. Since goals change over the years, the mutual fund has the flexibility to adjust to your needs. As an investment firm, we will monitor your fund and your situation and make appropriate recommendations.
It is a good investment choice because it allows a smaller investor the benefits of purchasing power since it is pooling many different investors money. Because the managers have access to securities at discounted rates, the savings are passed on to you and your co-investors.
One of the key components is diversification. This will help you and the others during market or industry fluctuations. With a wide portfolio, when one stock goes down, another investment will probably increase and offset any losses. This is a huge benefit to the smaller investor who has less money to risk.
Types of Mutual Funds – There are a number of choices:
- Equity – this invests in shares of corporations. They can vary by company demographics, industry or geography.
- Bonds – This is for interest income and capital gains. It is a long-term investment.
- Money market – This is a short term, very liquid investment, but pays better than a bank savings account.
- Balanced – This is sometimes called asset allocation. It allows greater diversification because it can include all the above in a single account.
Access – One of the primary advantages of a mutual fund is the availability. We are able to move funds from one account to another or cash out some or all of the investments. It also allows for regular additional investments or systematic withdrawals.
Our Expertise – Our professionals understand your goals and can help select the best type fund for you. We monitor both domestic and foreign markets so that you will have the greatest advantage possible. There are thousands of funds available in Canada and through our discussions we are able to customize your program and portfolio.
A Last Will and Testament is a legal document that you execute before witnesses. Among other things it designates the disposition of your property, or who inherits what. It also:
- Specifies who is to administer the estate (the executor)
- Says what is to happen with the assets and liabilities of the estate
- Lists certain other wishes such as guardianship of children and burial instructions
- Takes effect only upon the individual’s passing
After you have passed away, the Will is filed with the probate court and administered by handling all the items stipulated and dealing with any problems.
Executor – Under a Will, the executor (or administrator if there is no Will) is designated to manage the estate by paying bills, keeping the accounts, distributing assets, etc.
Guardianship – There are many situations that would warrant a guardianship to be established. Usually it is for underage children, but it can also provide for an elderly relative, someone who is mentally or physically incapable of managing their affairs.
Living Will – This is really a power of attorney. It provides the authority to a designated individual to make medical decisions if you are unable to do so. This can include the removal of any life support systems or authorizing resuscitation.
Benefits of a Will – If you don’t have a legal, written documentation of how you want your estate distributed, it reverts to the laws on the books. That includes how the assets are handled and the beneficiaries. A Will allows you to:
- Choose who will be your executor(s)
- Choose who is to receive the benefit of your estate
- Indicate who you would prefer to look after your minor children
- Other personal instructions that you may wish to make
- Specify an age for beneficiaries to receive their inheritance, if appropriate.
In short, it makes things easier and you get to decide who gets what.
Intestacy – If there is no Will, it is called intestate. In that case a spouse or relative will petition the Court to deal with the matters. If no one is able to serve, a Public Trustee will be appointed. This could lengthen the process to have your estate distributed to the heirs.
What is covered – The Will should address all of your assets and liabilities. It should specify the province that will have legal jurisdiction but can deal with property located in other provinces as well.
The Will only goes into effect after you have died. It can be prepared and executed at any time before that event, but should be reviewed every five or ten years or when life-altering events occur, like the death of a spouse or children who are now adults. It will stay in effect until another Will is issued or it is officially terminated.
You should discuss these issues with your family, attorney, and financial advisor. We are able to answer some questions if you like.
The goal of an estate plan is to handle the distribution efficiently and as you designate. Without a plan, even in small estates, the costs of probate and other fees plus delays can seriously affect the value or amount of assets available for distribution.
In Canada there is no estate tax, however there is a “deemed disposition tax”. With a good estate plan in place, all the assets are titled appropriately to minimize taxes and any other financial exposure. It also provides for coverage if you become incapacitated and unable to manage your own affairs. It is a comprehensive look at your assets and liabilities as well as your wishes for their disposition. It is a critical planning tool that should not be overlooked or ignored.
Estate planning is neither complicated nor expensive. It should involve your financial planner, attorney or other key members of your family. Larger estates may require some additional preparation like trusts.
Our office is very happy to help you explain our role in your estate plan and to answer any questions we are able to address. We can also refer you to other professionals who are able to help resolve any issues.
The Income Tax Act was created to establish a method for each citizen to pay their fair share of taxes in order to continue the efficient running of the government at all levels and to afford the rights of the citizens. The Act is also designed to allow for some adjustments to minimize the taxes legally.
Tax planning does not start in April. It should be a primary concern throughout the year. Financial decisions are often made on the basis of immediate need or circumstances. A good financial advisor like MDL Financial Group can help you understand the full impact of the decisions. They help deal with:
- Income exclusion rules
- Key tax credits
- Retirement plan contribution options
- Investment rules
It can affect saving, spending, borrowing and investment decisions.
The income tax rules change annually. Keeping on top of these differences can be a full time job. That is where a good financial planner comes in. They are able to monitor the changes from year to year and understand where the best decisions can be made to the benefit of the taxpayer.
The tax planner will help organize your finances to take advantage of the rules to help you keep the maximum amount allowed by law or to defer some items into the future. There are a number of different strategies depending on the type of assets and personal situation of the individual. It can involve:
- Income deferral
- Income splitting
- Retirement contributions
- Capital gains and losses
- Property ownership
- Charitable contributions
The tax and financial planner will help develop the right combination for your circumstances. They will always follow the rules but when applied correctly can prove to provide significant savings.
We are happy to advise on tax planning opportunities. Ask one of our specialists how we can assist.