Income Security with Less Tax

3D Realty Handshake

People regularly ask how they can find investments with a strong return, lower risk, and less tax. Here are some ideas to brighten your day …however we’ll leave specifics because implementing these ideas will depend on which type of advisory firm is serving you. It also depends on your individual circumstances. So as friends share with friends, here are some ideas you or other family members may find very helpful.

First of all, is there a clear “dividend” orientation in your accounts? Can you say, or can your investment person give you an idea what the dividend yield is in your investments? Without a clear mandate for dividends it’s possible you’re earning less than you should, experiencing more losses, and even paying too much tax. Does it sound like this is an important area to discuss?

A second area to explore is whether your investments include real estate. I’m not speaking of your home or cottage, or even a rental unit. I’m referring to a simple way of owning a mix of residential, industrial, and commercial properties around the globe that can support your enjoying a strong and rising income. As rents rise in such a mix of properties, your income can continue growing – obviously an important factor for us as we go forward.

Third can be “infrastructure” which is very rewarding on a scrabble board, and even more rewarding in an investment portfolio. In this category you would own assets around the world that look like highway 407, long expansion bridges, and other facilities on which tolls are paid. If you’ve noticed how highway and other tolls increase regularly, then you’d count yourself lucky to find an easy way to own that kind of property!

You know people invest in various forms of cash and bonds, but at today’s rates (lowest in >50 years) it has felt futile to seek income from cash or bonds. Yet corporations in and beyond Canada, and even foreign governments (ie. ones with low-debt and high-growth economies) can well provide strong income. In addition to this we have ways to reduce the tax bill that normally hits interest-bearing investments. Not only could you reduce tax, but also increase income from your investment.

Finally an astonishing form of income seems seldom offered by advisors, yet can answer a cash-flow crisis as well as reduce tax. You can ask an insurance-licensed advisor about Life Pay-out Annuities. And if it’s outside your RRSP or RRIF you can find tax advantages you wouldn’t at first believe. Annuity strategies are sensitive to age, how you want to draw the income, and guarantees that can continue paying to your beneficiary, your estate, or to charity. Even in today’s 2% interest-rate environment people may find 7% or 8% after-tax income. But remember, an advisor needs to be licensed and experienced to discuss this with you effectively.

As this is only a general and friendly note, I must caution that what I’ve shared with you today should only be implemented by a trusted advisor who is duly licensed. It also should only be implemented in the context of your proper financial-, income-, and estate planning. Because, as you know, your money is important to you. And the life you achieve for yourself or your loved ones, means more than the world to you!

Brian Weatherdon, BA, MA, CFP, CLU, CPCA, MDRT.
SOVEREIGN WEALTH MANAGEMENT INC.   (905) 637-3500  x 223
627 Guelph Line, Burlington, Ontario.  L7R 3M7
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The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. The views expressed are those of the author and not necessarily those of the issuer of any financial products for which the author may act as a distributor.

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