All posts by citicinn

The Scariest Thing a Client Can Tell Their Financial Advisor

Ten days ago the Bank of Canada raised interest rates for the second time in less than 2 months. The prime rate is now 3.2 %. This increase will affect variable rate mortgage holders and those who carry a balance on a line of credit. The reason for the increase is that the Canadian economy is healthy. Collectively, Canadians carry a large amount of debt, and perhaps the Bank of Canada would like to curtail Canadians’ love of borrowing, since more rate increases are predicted.

This event nicely dovetails with a question clients have asked me a few times recently. It is also related to the title of this blog post.

The question I have been asked is: Which is better: To pay off your mortgage faster or to invest? I would answer: Both or it depends. No I am not playing round and round the mulberry bush.

Mainstream media has a habit of making generic pronouncements without too much background information. In order to properly answer that question to get the maximum benefit for your personal situation your own unique financial factors must be considered.

A general rule of thumb is that if your borrowing rate is less than the rate of return you could get to invest then it is more profitable to invest. However, with careful planning both objectives could be accomplished.

There could be situations where the debt would take precedent. Two examples of that would be where future income would be lower, or where the interest rate on borrowing is obscene(think rewards credit cards.)

An increasing rate environment is not good news for those with unproductive spending habits. If someone lives pay cheque to paycheque when times are good(full employment, ample salary, 2 incomes, or healthy), the inevitable financial storms will find them unable to cope with unexpected events which oftentimes are expensive.

So what is the scariest thing a client can tell their financial advisor? It is: ”I don’t care about next year!!” Since this is a blog post I will have to add this was said with emphasis, despair, and a bit of panic.

Unfortunately how this person arrived at this point could have been completely avoided if there had been FULL disclosure of financial factors that would have to be considered in any advice given by a professional. The advice a professional gives will only be as good as the information that is disclosed. Professionals are not mind readers!

Don’t let market forces of the economy persuade you to deviate from your future financial goals. I could write a book on the many wild goose chases and rabbit trails that can tempt clients off their financial journey.


Alberta Through the Eyes of a Visitor

It has been a while since I wrote a blog post. There were many topics and events I could have blogged about, but the chances were few readers would have been interested.

I hope all of you had an interesting and enjoyable summer! This summer will be memorable for me because of the vast amount of time I spent watering(did I plant too much?) and our visitor from Trinidad.

My husband’s cousin had never been to Western Canada. She spent 10 days with us, and I played tour guide, taking her to the sights of Alberta. We had a lot of fun together. The conclusion I drew from her visit was very humbling. We citizens of Alberta have a lot to be grateful for and proud of! The everyday things we take for granted are not lost on a visitor. She remarked on the clean and wide streets and logical layout of the highways. She noticed how everyone she met was so friendly and welcoming compared to the only other part of Canada she has visited.

While she was here we went shopping a few times. Now some of you probably know shopping is not one of my favorite activities. My goal when shopping is to spend the least amount of time in the store, focusing with laser precision only on the items I need. For instance, we went to Dollarama(the only dollar store I go to). Usually I make a beeline for the bags of dirt and try to get out the door in under 5 minutes. But she got a cart! So I was forced to browse, and actually got an education on what Dollarama sells. And I learned another humbling lesson. She wanted to spend and shop in Alberta because the other provinces she would be visiting had sales taxes. Not only that when she calculated the conversion from Canadian to Trinidad dollars she found the prices here to be very reasonable. And I was shocked at what she would have to pay for those items in her home country.

Which brings me to the lesson I learned. Sometimes I grumble at what I consider to be inflation creep or companies that have expensive prices. However, what we pay in Alberta is less than prices in other parts of Canada or elsewhere. I should never take my buying power for granted and use it carefully as she did.

Here is an anecdote on how prices involve a lot of perception and comparison. Before she came I found out from a friend that the gondola ride in Banff was a must see and cost $35 which at the time we agreed was pricy. The day before we planned to take her in August the website was giving the price as a minimum of $56 and a maximum of $62. That made $35 seem reasonable, in comparison. But was it? We decided not to go. This is why in restaurants the second most expensive item is the most sold, because people use the most expensive one as an anchor to help them decide what to order.

Next up: Should you be concerned about rising interest rates?

Put Yourself In the Driver’s Seat

So far this year I have had the pleasure of assisting 3 clients with their offer letters. All 3 wanted another set of eyes so to speak, or a second opinion.

In 2 cases the clients were not sure if the terms were acceptable enough for them. Let’s take a look at these examples.

In the first case the applicant had 2 choices. Take an approximately 10% higher salary with no vacation and zero benefits. We counted the beans and the lower salary with benefits and vacation was a better deal. I also calculated the tax owing at both salary points.

The second client was in a similar position. Wanting to move to an employer where there was more potential to grow and learn she felt stymied by the approximate 10% salary cut she would be facing. But the position with the higher salary had no benefits. The position with the lower salary had benefits and matching RRSP program. When we counted the beans the supposedly lower remuneration was very close to what she was giving up. The calculations also included tax owing at both wage points. After all it is what is in your bank account at the end of the day that counts.

In the 3rd case the offer came with various group investment benefits and matching as options. The choice of varying matching percentages and timing of entry into the programs is important. Our discussion can help you get maximum benefit out of any options an employer may offer.

Financial planning includes all aspects of your financial situation. I am your resource to call on whenever you have a challenge or query.

Let’s Chat!

This is an opportune time to review how my sponsoring company Portfolio Strategies Corporation(PSC) and I communicate with you. I appreciate the feedback you have given me so far.

First of all by law PSC must send a quarterly statement. Shortly after the end of each quarter you will receive an email from PSC with a link for the investor access portal. Otherwise you will get a paper statement in the mail. If you chose electronic delivery you have a user name and password. Thank you to the clients that get e delivery.

If you don’t remember your username I can give it to you again. I can also tell you your original password. However, if you have changed your password, your only recourse is for me to give you a temporary one and then you reset it to one more meaningful to you.

Please let me know if you have any questions about the information on your statement. Please note the since inception rate of return is not that meaningful because it is only for the time I have been with PSC, which is only 3 years. Many of you have had your accounts far longer than that.

Also in most cases for any switches or purchases the fund facts must be sent to you prior to the transaction. The fund facts are sent to you via an internal website. Therefore, when you receive them they are not from me but PSC. Clients have informed me that sometimes there are glitches. I appreciate that feedback, as that helps us do even better with the evolving technology.

Unfortunately some clients have told me they do not access either the statements or fund facts because they think it is spam from an unknown source. Thank you for letting me know. The hesitation is completely understandable, as hackers are becoming increasingly skilled at impersonating genuine providers.

For some time now, I have adopted the practice of sending meeting notes after each of our meetings, be they in person or telephone or email. Sometimes in lieu of meeting notes I keep our email correspondence. Please review these when you receive them. I welcome your comments. The meeting notes pdfs are best viewed on a computer or tablet, rather than a cellphone. The pdfs often show up blank on a cellphone.

One client had an excellent suggestion for me to send a quick email when the fund facts get sent by PSC prior to our meeting.

I would like to emphasize the importance of regular communications with me. If we are in regular communication you will get the maximum value out of our professional relationship. Your investments will benefit from regular review and rebalancing, which in turn will enable you to achieve your goals. Of course an in person meeting is the ideal, but even a phone conversation is helpful. Many life events can impact your financial future, but if I am not made aware, I cannot advise. Also my hope is that with each meeting you will be empowered with the knowledge you need to achieve your goals.

Your life’s journey and staying on track with your financial goals needs our ongoing professional partnership and communication. Better information through communication leads to a more ideal outcome for you.

Protecting the Treasure You Didn’t Know You Had

Tripping on a rock in the dark on the way to the hot tub in your backyard, you injure your back and leg. Your friend is suffering with anxiety and depression associated with caring for an aging parent who lives with her.

Which of those scenarios make up more disability claims?

Mental conditions are more than 3 times the number of claims than accidents. Over 30% of disability claims are for that reason. Claims due to accidents are only 8%. The statistics on disability are not what people assume them to be.(1)

So your contingency plan should look something like this:

It is highly advisable to have AT LEAST 1 month’s worth of living expenses as short term savings. In other words do not always spend every penny of your monthly salary.

If you are employed, you hopefully have some type of disability policy. You need to review it to know what benefits you are entitled to, and how to make a claim. We can review it together if you like.

If you do not have a group disability plan you need to ask yourself the question: Is it worth it to spend 1% of my income to insure 100% of it over a period of time? Why roll the dice especially if you are self employed or own your own business? Please speak to me to know what options you have.

The Disability Tax Credit(DTC) is an often overlooked tax credit that can be invaluable if used and applied properly. The DTC will decrease your tax owing if you or a close relative is “markedly restricted’ in one or more of the activities of daily living, ‘for a prolonged period’. Those include dressing, eating, toileting/bathing, walking, speaking, seeing and hearing, and the associated mental functions. A medical professional is required to complete a part of the application.

The DTC is transferable to a close relative in certain circumstances, mostly if you live and/or care for the disabled person. Examples are an aging parent living with a child, a child with a disability whose DTC can be transferred a parent, or in my mother’s case, the credit was transferred to my dad, which helped him pay less tax.

I have made several clients aware of their ability to qualify for this credit. And if someone is less than 49 years old and receives the DTC you can open a Registered Disability Savings Plan(RDSP) which has matching government grants on contributions. Please contact me if you or someone you know needs more information.

Life has a habit of happening in bunches. In 2013 I became unexpectedly and very seriously ill and was hospitalized. They only reason I was let out was if I followed a self administered antibiotic IV program. Then my mother contracted aspiration pneumonia and after a few days passed away. All of this happened in the span of a few weeks. The associated stress from those 2 events could have easily carried on long term, and impacted my ability to earn a living. Please know the stressful road has pit stops and assistance along the way, and that you don’t have to go it alone.

(1) WHO November 2013

Protecting the Treasure You Didn’t know You Had


I apologise for the long time since I last wrote a blog post. There has been no shortage of news to report on but I have to keep in mind that what I find interesting might put readers to sleep faster than drinking a glass of warm milk.

Let’s begin this 2 part blog post with an exercise and a few questions.

Take your yearly salary or household income and multiply it by the number of years you expect to be able to earn that amount. You can consult your recent tax returns if needed.

Example: $50,000 multiplied by 30 years =$ 1,500,000. Now say something like: “are you kidding me?”

This is an important exercise for 2 notable reasons:
The day to day routine and expenses gobble up a lot of our attention, and often we lose sight of the bigger picture. You don’t want to look back many years from now and wish you had done something different. That is why clients tell me our professional relationship is so important.

Now I am going to ask you a question:
What is your most valuable asset? It goes without saying that family and relationships are #1. But of your material and financial assets which is the most important? Most readers will probably answer incorrectly.

Your human capital, and your ability to earn an income are the most valuable of your financial assets.

Your house, car, investments are less important than your ability to work. It is interesting that we willingly have insurance on things that are more easily replaced than earning power.

How well do you respect your earning power?

What would you or your family do if you were suddenly unable to earn an income? Think job loss physical impairment, accident?

How long could you maintain your lifestyle and pay your bills? Dip into savings if you have, rely on a spouse, hope you will get employment insurance benefits or…?

There are fancy words for the planning of this eventuality, risk mitigation, contingency plan. But the essence is that the planning must be done before the unfortunate circumstances occur. We cannot predict the future. The risk mitigation must be in place while you still have your earning power. Part 2 will elaborate on that.

The R Word and a $1000 Question

Here are 3 interactions from clients that are interesting and meaningful.

Do I need a million dollars to be able to retire comfortably?

That question needs to go a bit deeper in order to provide a relevant answer. As you know by now I am not a fan of financial information provided by mass media, which presents ideas without explanation. The million dollars for retirement is industry speak and generally accepted as a benchmark. However, the phrase retire comfortably has different meanings for different people which I will discuss in a minute.

Successful retirement should carry an aspect of financial independence. That is you will not be totally reliant on outside sources for your income, such as government benefits or rent from an income property. Financial independence means little or preferably no debt, and productive spending habits. It’s a vicious cycle, when the people with destructive spending habits are the ones that most likely will want a million dollars but are the least likely to be able to achieve that. The less financial responsibility you have in the future the more flexible you can be with your retirement date and your retirement goal in dollars.

In other words a million dollars isn’t the only thing you need for retirement. More importantly what is your realistic achievable number for your retirement? As we work together in our professional relationship we will uncover your own personal number. And it may not be a million dollars.

In a recent meeting with a husband and wife we discussed different terms for the period in our lives where work is not front and centre. He said retirement she said financial freedom. The conclusion to our discussion was that they would like to arrive at a point in the future where work was an option, not mandatory. For instance working part time or starting a business. Whatever term you choose to name that period of your life in your future it must be relevant to you. The relevance will give you motivation to carry out the plan to achieve your goal. Again I must stress that ‘retirement’ involves financial independence which means little or zero financial responsibilities. Financial responsibilities are debt and dependents.

A client recently asked me: If you were me would you get an advisor for your investments?

Before I joined the profession of financial services and got my CFP designation I did have an advisor. Many years have passed since then, and I would still answer yes. The main reason would be that it takes a lot of time, expertise, and inside knowledge to be able to responsibly manage money. When I am ‘retired’ I want to spend 90% of my time outside in the garden. Don’t worry I love what I do right now, and it is a joy to work with my clients.

The period of your life when work is less important will involve more than a dollar figure. From now until that time you should be working to increase your which is assets minus liabilities. Ask yourself when do I want to retire and when is that achievable? With the answer to those 2 questions we will work to make it happen.

The Value of Having a Financial Planner: Guest Blog

Author: a current client

I’ve never cared about finances up until now.

When I was 30, I told my brother I had no savings. He freaked out and demanded I started an RRSP right then and there and introduced me to Cindy online.

At that time, I was living overseas teaching English, not caring about anything and being absorbed in my own little problems. The world of finance seemed complicated and was always the furthest thing away from my mind.

I’m 40 now and recently joined an investment firm in their marketing department. The questions the sales people often ask clients really got me thinking. Do you have enough money to retire? How do you envision your future? Do you want to travel?

Lately I’ve started asking those same questions. What do I want to save up for? What will make me happy? The answers are simple. I want to travel. I want to retire and live comfortably. I want to have passive income.

Every year, I receive financial statements but don’t know how to read them so I’ve never paid close attention to them.

I finally took a good look at my statements today.

At 30, I invested $2400 and I’ve been contributing $2400 religiously each year. Today, at 40, my investments are sitting at $58,000.My boyfriend was astounded. He said he’s been investing for 15 years in a regular bank and he’s only at $50,000. How in the world did I make $58,000 in 10 years time versus his 15 years of investing? Because a bank’s main business is not investing, it is lending.

That means Cindy has done well in making my money work for me.
If I had cared sooner, I would have done things differently and invested more money. Regrets aside, the point is, if you don’t/haven’t cared about your finances, the time to act is now.

If you don’t have any savings, or you know someone that does not, start today and talk to Cindy on how to invest wisely in your future.

I’m glad I did. I only have RRSPs but you can open up your world to other options and potentially greater rewards such as extra income for travel or to purchase your dream home.

I cannot emphasize enough the value of having a financial advisor and I cannot thank Cindy enough for taking care of my finances for me when I wouldn’t.

Cindy has been faithful in rebalancing my portfolio and always checking in with me each year to see where things are at in my life. I never fully understood what a financial advisor does but after seeing the long-term results, I am truly grateful and deeply value having a financial advisor. Thanks Cindy.

Can You Have your Ice Cream and Eat it Too?


About a month ago I was at the warehouse store. Going down the spices and baking aisle I almost fainted into my supersized cart. The price of a bottle of vanilla was $27.99 for slightly less than half a litre. I thought back to the many times I baked and spilled my vanilla or put too much.(Don’t worry the family never noticed).

I like to always have a spare on hand. The spare bottle of vanilla in my basement I bought a while back cost me less than $10. And silly me, I thought that was pretty expensive.

My vanilla story illustrates how the stock market functions. Scarcity and demand drive up the price of a company stock or in the case of vanilla, items to buy. Demand and scarcity are interconnected. Now had I had any inkling of the price increasing 3 times back when I bought my spare bottle of vanilla what would I have done?

Even the perception of value can cause the price of a stock or good to increase. If Ice cream lovers and bakers’ favorite flavor continue to be vanilla guess what? Already since my observation of a price of $27.99 the price has increased to $29.99. Would you pay that much for a bottle of pure vanilla?

If the price keeps increasing, however, there will be a point that sweet tooths will say, “enough!” and switch to artificial vanilla or say smoked chipotle pepper. Economists have fancy words for those price movements but the more important principles here are that the investment managers we choose together who work on your behalf.

Investments managers with the support of their research staff participate in the stock market, buying and selling company stocks at opportune times. They are professional investors, unlike the investing public which is made up of individual investors. They have knowledge, experience, and expertise. They meet with management of companies to ask the difficult questions, and their staff has access to data not available to most people.

Investment managers often have predetermined target prices and will sell a stock once that price is reached. Many also do not want to overpay to buy a stock. The managers we choose together mitigate risk, they do not want to permanently lose the capital they have been entrusted with. Also their professionalism allows them to understand which geopolitical events will influence the stock market and which are simply noise.

So next time I attend a presentation I will ask the presenter if his or her favorite flavor is vanilla and if they are buying stocks in companies that manufacture vanilla. And maybe I will have to find another flavor to put in my baking.

What Is the Meaning of Legacy For You?

How many of us would consciously leave our front door unlocked when we leave home? Or not lock your car and leave valuables in plain sight? Of course none of us would deliberately do that. There is a fancy phrase to cover how careful we are with our actions to avoid loss. It is called risk mitigation.

When investors think of risk the first thing that comes to mind is the stock market’s volatility. However, there are other risks that exist but don’t make the headlines. That is until a major catastrophic event occurs, which is costly in terms of lives lost, damage to the planet, and monetary loss.

Remember the Deepwater Horizon explosion and oil spill in the Gulf of Mexico? And the fatal fire in a Bangladeshi clothing factory?

More and more institutional and individual investors are wanting to invest where their money will make a positive difference anywhere on the planet. In the past these motives were termed socially responsible investing or ethical investing. But somehow, especially in Western Canada that term has become a moldy pigeonhole. Mention socially responsible Investing to people and they immediately equate it with the green movement or as being anti fossil fuel, before their eyes glaze over and they say “Oh no not another tree hugger!”

The correct more accurate term would be sustainable or responsible investing. And sustainable investing has a very broad universe of companies to consider. It would only exclude tobacco and arms manufacturing.

Sustainable investing acknowledges that the world has a finite amount of non-renewable resources and that the world’s population continues to grow. By 2030 which is less than a generation away, 50% more food and energy and 30% more fresh water will be needed.(1)

Investment companies that participate in sustainable investing know that resource optimization will be a key factor in handling this increased need. Resource optimization has many facets and encompasses many industries. Maybe you wouldn’t think that food packaging and agriculture are part of responsible investing. What about potable water management or pollution control?

Responsible investment companies focus on governance and initiating dialogue with companies to influence their corporate policies. Here are 2 Canadian examples of a sustainable investment company’s shareholder engagement in action:
Working with CN Rail to improve their safety record after rail disasters in 2005. CN now includes safety measures in metrics for executive compensation and has a chief safety officer. Their environmental, social and governance(ESG) measures also influence executive pay.

Shareholder engagement with Goldcorp led to the company voluntarily increasing royalties at their mine in Guatemala and committing to respecting traditions of the indigenous people through their human rights policy.

In 2013 a major sustainable investment company had 47 dialogues with companies of which 33 had positive outcomes.(2)

Sustainable investing is risk mitigation in action. Just as you lock your front door or put your valuables In the trunk of your care, companies take similar risk mitigation actions.  Corporations are now realizing that good environmental and social governance positively affects their profit. Social media has helped the individual investor have greater influence though both their purchases at the retail level and through investing. Responsible or sustainable investing does not sacrifice rates of return, in fact it can add to returns.

The majority of citizens don’t want their purchases or consumption to be to the detrimentof others or the planet. Also our children will inherit the planet one day, we would want them to know we did our best to be good stewards of the earth they will inherit.

(2) ENG_NEI Ethical Funds SRI Brochure.pdf