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Following the Toronto Maple Leaf’s game one payoff loss yesterday to the Columbus Blue Jackets I was reminded that many championships are won with defence. 

Kyle Dubas, General Manager of the Leaf’s, is promoting a puck possession game without much grit under the philosophy a good offence is a good defence.  For the last three years the Leaf’s have been eliminated from the playoffs in the first round and are two wins away from that happening a fourth time. Are they continuing to try to put a square peg in a round hole expecting different results?  

Many investors fall into the same mindset when it comes to their investing and wealth.

I’ve coached competitively for years and it’s been my experience that defence wins more games than does offense. 

It’s not the person with the greatest wealth when they die wins.  It’s the person with the greatest wealth after-tax who wins, if you want to be competitive.  Let’s not talk about being competitive.  Let’s talk about creating!

Real effective investing is about maximizing its value after tax.  To do that, effective investing needs planning.  

Effective investing should incorporate all the 4 D’s of tax – Deduct, Defer, Divide, and Discount. Many utilize the first three.

The fourth D, Discount, endorsed by all the major accounting firms, is life insurance, where premiums are pennies on the dollar, that are commonly a fraction of tax that will be payable if you do nothing. 

Life insurance creates people with the opportunity to redirect wealth they would otherwise send to CRA to their family and/or charity. 

The Discount strategy for many may be like abandoning an offense first philosophy for a defence first philosophy. It’s looking at things differently – thinking outside the box.  

We are conditioned to think that the only way to increase our wealth is by growing it.  Wealth can also be earned by collecting tax savings and by buying money at pennies on the dollar – life insurance.

Due to Covid we should expect an increase in income taxes and capital gains tax rate from 50% to 66.7% or 75%, new tax on sale of principal residence, and/or on wealth.

People to invest to stay ahead of tax and inflation. And guess what, people also buy life insurance to stay ahead of tax and inflation! No more capital efficient vehicle exists on the planet.

I will be the first to admit this is not a need for wealthy families. When you do your research you will find life insurance will be a want because nothing else will provide this opportunity.

You need a ¼” drill bit to get a ¼” hole.  Life insurance is like a ¼” drill bit. It is the tool that creates tax-free cash at pennies on the dollar exactly when it is needed. 

This discounting strategy, if executed, will generate billions and billions of wealth to families and charities.

For those wanting to donate to a charity, the charity will gratefully recognize you.  The same donation you would otherwise pay to CRA receives no recognition.   

This is a great time to acquire life insurance. Relaxed underwriting is now available.  And it’s on sale – until your next age-nearest birthday.

Just like parachuting from a plane you must put on your parachute before you jump – put life insurance in place before you wake up rated, uninsurable or not at all.

Are you fixed on using an offensive strategy as the Leaf’s when a defensive strategy may work better or in addition to?  

Are you trying to maximize a return on your wealth that you don’t need with its associated risk that you don’t need to take?  

Or can you achieve your goals by assuming less risk using a different strategy?

15 May 2021

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