What You’ve Been Told About Retirement Planning is Wrong
You’ve done your homework around retirement planning. You’ve researched registered retirement savings plans, stayed on top of your RRSP contributions, looked at the best RRSP providers, and then some. But there is so much more about retirement planning that is not usually covered, and that could greatly benefit and enhance your retirement strategy.
Traditional retirement planning education is not showing you the full picture
There are key financial principles that are taught consistently: put your money into a savings account and invest in a retirement fund. However, there is a critical resource that has been left out of nearly all financial education, and it’s the one that can truly help you grow and manage lasting wealth.
Conventional wisdom and education about retirement planning and money in general, leaves out essential information which banks and the wealthy have used for generations.
The retirement planning process always starts with your why and what you want. Start by learning how you can uncover your true needs and goals by viewing our process here.
Which retirement would you prefer?
Plan A: Assets of $2,000,000 with no control, risk, and tax payable of $1,000,000.
Plan B: Assets of $2,000,000 with complete control, reduced risk, tax payable of $0, and about the same retirement income as plan A.
Most investors have plan A. Why? Because they are unaware of a plan B and because the government and investment firms benefit when you do plan A.
What you need to know
If some of the things you believe to be true about retirement planning turn out to be untrue, when would you like to find out? This article aims to correct the common misconceptions that people have and provide you with better information for your retirement planning.
We help people find money they are losing unknowingly and unnecessarily. Traditional financial and retirement planning does not do this.
You don’t have to increase risk levels to increase returns
We’ve been conditioned that financial growth comes from giving up control of your money and transforming your tax-paid money into tax-infected money.
Most investors are balanced investors, yet they unknowingly end up as “risky” investors. Why? Because they have handed over complete control to others.
Some simply want better returns and end up taking more risk than they need to, to get what they need.
But what you really should focus on is the after-tax return, when you do that, you don’t need to take higher levels of risk.
Save before you buy
The recommended minimum savings rate for retirement has always been 10% of your income; if you’re doing this or more, congratulations! The average savings rate pre-pandemic reduced to 5%.
For years, marketers have convinced us that we deserve to have whatever we want without the money to buy it. They tempt us with no money down and low payments more for their benefit. Yes, you buying now helps the economy now. But what’s having it now costing you and your future retirement? When you think about it that way, the price is higher than you think.
I’m not suggesting you should not get what you want, but rather that saving in advance will always reduce what you will pay for everything you want. Saving the capital, you need for what you want in advance just takes time and a little discipline.
But, it’s not enough to save for what you want. Once you have it you need a strategy on how to deploy it.
You finance everything you buy, even if you pay cash.
When you borrow money for something you want, you pay loan interest. This interest is the penalty you pay for not saving first.
Even when you save before you buy you are paying interest. This interest is the opportunity cost lost on your money if you kept it invested.
Earlier in my career, compound interest was discussed a lot more than it is today. The law of compound interest is what Albert Einstein said is the eight wonder of the world. “He who understands it earns it; he who doesn’t, pays for it.” Sadly, more pay it than earn it.
The longer you compound interest, the greater its benefits. How long should you compound for? The answer is for as long as you live.
Beware of tax incentives
Tax incentives always come at a cost. To get a tax incentive, you always must give up control over your money.
Registered retirement plans are not tax-free. They are an incentive to save for retirement only to pay tax later, more than the tax you saved initially.
Tax-Free Savings Accounts (TFSA) sound tax-free, but they’re not. They’re an olive branch to make up for the 43% tax you pay on your income every year from all the taxes you pay.
Avoid tax-infected assets
The government provides a tax incentive to sell its agenda. They tell you your income when you stop working will be lower than when you are working; therefore, the taxes on that income should be lower too. Has that been true so far? Absolutely not! In 1961 the average tax rate was 33%. It increased to 46% in 2000, and it’s currently around 42%. Now, with Covid handouts, what direction do you see it going? Don’t get suckered into their game.
The best asset you can own is a tax-free asset.
If you already have some of these tax-infected investments, the solution is to design a strategy to reallocate these tax-infected investments into tax-free investments.
Don’t give up control
It’s incredible how we have been taught to give up control of what we own in the hopes of a better return. Most investors invest in mutual funds, stocks, and exchange-traded funds. Why? Because that’s where we’ve been conditioned to believe the best opportunity for growth resides. At what cost? You, again, are giving up total control of your money.
Further, to participate, you must play by their rules. One of their rules includes enduring volatility on the whims of the emotion of the major institutional investors who control the sandbox.
Another example of not being in control is being forced to withdraw the money you don’t need from a RRSP (registered retirement savings plan) or RRIF (registered retirement income fund).
Henry Kissinger was correct when he said, “who controls money control the world.”
Protect your assets from loss
Next to your home, your retirement assets are the most significant asset you have. Not only do mutual funds, stocks and ETFs require you to give up control to play, but they also have zero protection from loss.
It continues to amaze me the trust people put in investment advisors who only offer hope of returns with no real guarantees of return of their retirement capital. You deserve to know that better options exist.
Own your debt, and turn your debt into assets
The banks would like you to believe they are your friends. They are not, especially on rainy days.
Banks have a conflict of interest. They want to lend you money so they can profit from you. Instead of making them rich you can hold your own debt and turn it into assets and make yourself rich.
Another reason you want to own your debt is control. When you own your debt, you play by your rules, not theirs. You also have no need to subject yourself to credit checks.
Why be the bank’s customer when you can be the bank owner?
When the police apprehend a bank robber, they ask them why they stole from the bank. The reply will likely be “because that’s where the money is.”
Everyone knows that the bank is where you keep money, and yes, a chartered bank is one place to warehouse your money, but it is not the only place.
When you have something you want to warehouse until you want it, you, assuming you don’t have room to safely store it yourself, can rent “warehouse” space. They will charge you a fee for that service and maybe some additional services. That’s what a chartered bank does.
You probably didn’t know you don’t have to warehouse your money in a chartered bank. Before the chartered banks came on the scene in the 1930s, people used privatized banks. Privatized banking did not go away, it still exists, but the government doesn’t want to tell you this due to their conflict of interest with the chartered banks.
Under privatized banking, you are the bank owner. As a bank owner, you need to create capital for your bank. That capital is your savings. When you have capital, you can borrow it to deploy for the things and opportunities you want. As the bank owner, you receive profits from things like mortgage and loan payments.
How much wealthier would you be had you known?
If you’re wondering how to be your own bank, you can download our free e-book here.
Leverage is preferred to liquidation.
You have been told to accumulate money for retirement and then to decumulate what you have saved to live on in retirement.
A well-structured retirement doesn’t include liquidating your existing investments (assets) to obtain funds to cover your living expenses. Liquidating a compounding asset that is increasing in value is illogical and is not recommended. Yet, this is what most retirement advisors promote.
Leveraging your compounding assets is the better option when you own your debt.
Don’t be a contributor to inflation.
Did you know that you are a contributor to inflation? Assuming you deposit money at or borrow money from a chartered bank, you unknowingly are. There is a better non-inflationary option.
Most people don’t know that you contribute to inflation when you put funds on deposit or borrow money from a bank. And when you do, you devalue your money. This is not a good retirement planning strategy. If you start working at age 20 and deposit $100, and inflation runs at 3% annually, by the time you’re age 65, your $100 purchasing power has reduced to $24.63.
There is a better way, as discussed earlier. It’s called privatized banking (PB). PB is not inflationary. PB allows you to own your debt, meaning the banks don’t profit when you borrow money. You do.
A better solution
We offer retirement planning in adherence to the above better framework that will create more wealth, with more control and less risk. We would love to hear your story and would be honoured to work with you towards a better retirement.
If you are ready for a better retirement plan
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