Edgar Arthur Ollervides

09/01/2021

https://stableincome.ca/articles/your-phone-bill-might-be-costing-you-a-lifetime-income/

Life in Ontario is prohibitively expensive; we all know that. Today we will look at one example of a monthly fee we all overpay and the impact of putting those extra dollars to work for us. If you live in Ontario, you know firsthand that having a good job where one can pay their bills […]

08/23/2021

https://stableincome.ca/articles/cant-find-skilled-employees-white-collar-workers-who-want-to-do-the-job-cant-find-you/

I work almost exclusively with small business owners in high-risk trades; like roofers and contractors; I constantly hear that currently they are busier than they have ever been. Even before the pandemic, word in the street has always been we need more people. People in the trades blame the shortage...

01/26/2021

Your Financial Future has no base!!!

Your life probably looks like this, living expenses, savings account, retirement accounts, mortgages, debt payments, investments, all of it standing on a thread. Last week we introduced a recurring concept: the financial pyramid to build fulfill any money goal in life. The base on that pyramid is protection. The most underrated part, the one most people skip, and obviously the base of any other step. If you are ultra-rich, then you were born into money and inherited and over abundance of financial protection. The ultra-rich talk about investments, growth, innovation, hard work, all the exciting stuff. Truth is most of their money comes from the boring part, protection. We will talk about this some other time, but in summary most money of the ultra-rich comes from tax “deferrals” and “transfers”.

If you are thinking I am ultra-rich, and I worked for it; it has not been handed down to me! Then you are not that rich, and you should double or triple on that protection so you can pass it down. For everyone else from the poor to the people struggling to keep their lifestyle: You are probably overspread, and you have no financial base.

Being overspread is the tragedy of the modern world. A trend that has greatly increased in the last 10 years and even more in major Canadian cities where most people are enslaved to monthly payments. The poor struggle to make those monthly payments they continue to increase every year much faster than wages, those outrageous monthly fees for telecoms, insurance payments, etc. Every single monthly payment you give to someone else is a financial asset; it is an account payable that others can sell for profit.

Next time we will cover how cutting down your monthly bank fees can get you some income protection. Now let’s talk about why you do not have one. If you talked to a responsible finance guy once a year; just like a doctor visit; the guy would had told you to have some automatic monthly deposits to other accounts. I have seen tragic cases of struggling families depositing a few dollars on their RRSP, then $10 a month on their TFSA, a few dollars more to their kids RESP, then the bank told them to get a savings account with minimum monthly deposit, and even a non-registered investment account. Putting something aside every month is indeed a necessary plan to see that compounding grow; but you might be in this same overspread situation where having so many little monthly payments defeats the purpose. We live in interesting times where the value of our money is determined on future demand for that money. This means the Canadian dollar has value, because next year millions of people have to pay their property taxes in Canadian dollars. Companies work the same way; they will take your money, sure; but what they really want is a future guaranteed source of income.

I know how it sounds when in this next part I say stop giving monthly payments to other companies and instead give it to me. Stick around for a bit more to see how it works. That struggling family spread out is as many mini payments as the bank could get away with: In their case they should had put $30-$40 a month on an income protection insurance policy instead of spreading it out. They were depending on a single income; and if that person is unable to work for a single week the family cannot make rent at the end of the month. With income protection they will get a monthly income of $2000 (about the same a family of 5 was living on in the GTA).

The banker is going to object because it wants to keep the $30 deposit a month. They will say that you are throwing away $360 a year, $3,600 in 10 years or $5,000 something in 10 years with whatever interest they “promise” (they are not allowed to promise returns). You should be able to see the problem there. The average Canadian Middle-Class family would lose their entire life savings (average 10 years) with only 6 months of disability not earning an income. Most people living in the major cities live in poverty. This family would had lost 10 year savings in just over 2 months… assuming they get disabled 10 years from now, if it happens tomorrow, they are ruined.

The second objection about loosing all your monthly premiums can be fixed with a simple option offered by many Canadian insurance companies: Return of Premium. They would charge you almost double; the insurance company is effectively making you fund your own policy; but you get the money back minus admin fees. Effectively it is like putting your money in a negative savings account where you lose 1%. It might sound bad, but it is nothing compared to how much you get charged by investment admin fees. With $60 a month the family would be protected from financial ruin and at retirement they will have received $16,600 out of $18,000 paid after 25 years if they never had used the policy. I would say that paying a thousand dollars over 25 years to protect your family beats the “high interest savings rate”.

Finally, for those of you who are not that poor; I will give you a quick glimpse on how the rich people do it. First step, we will start breaking down the illusion that you can make money from investments: Compounding is great, but it will not make you rich. After getting income protection and investing on your retirement account…. After…. after all those essential steps you should deposit $200 a month on your grandchildren account every month in a secret account they cannot see until they are 65 years old. That should be just short of 1 million dollars. Good idea, but as you can see it is no money tree.

Instead, we all have this great government sponsored product called the RRSP. The greatest benefit is the tax benefits, not the investment part. You max out your retirement account to pay taxes at retirement instead of now; that amount is much bigger than any investment income.

Problem for struggling families: when there is an emergency that RRSP money will be gone in just a few months, you have to pay taxes from the money you take out, and your piggy is empty. Get income protection first!

The problem for people who are making more money. You have tons of cash on hand, so much that your greatest concern is the tax man. After getting income protection and maxing out all your other accounts with tax deferral options, your next option is insurance. This is the secret that makes wealthy people into rich ones. They use insurance policies like artificial RRSP’s with unlimited contribution room. Now you see why the ultra-rich are loaded with protection 😉.

Income protection is essential for everyone; the ones struggling to survive, the ones working extra shifts to keep their standard life, and for those rolling in bank in notes. Please go get some protection.

01/21/2021

Stop paying other people and start paying yourself. That is what I tell all my clients. Stop paying unnecessary fees, stop paying other companies, and put those monthly payments on you.

This however might not be possible for most people in the GTA living under heavy liability payments. We will cover this in depth, but in the mean time this is a better option.

Check Eligibility Now!

01/21/2021

Is your money working for your financial goals? Or is it working for your banker/Financial Planner?

What are your financial goals? That is probably the first thing people who want to help with your money, ask. It makes us feel special, unique. We are the center of attention, it is about my goals, my money, other people want to talk about with me!
Let’s start by choosing a player piece for monopoly. Just like you they are all uniquely different; not two pieces on the board are the same. We even imbue these silver pieces with our unique personality but… here comes the but: Regardless of what piece you choose we are all playing the same game with the same rules.
When someone asks you, what are your financial goals and you open up to talk about your plans, you have fallen prey to a sales tactic.

For 12 years I have worked in all sectors of the financial industry. There are hundreds of financial topics I want to cover, and this question about goals is the thing I hate the most about “Customer Service” in the financial world.
Regretfully every single financial point of contact with the public is a sales rep… even Non-Profits.

I will cover Non-Profits at another time, but even the government debt consolidation places work under a sales-oriented mentality. They need more assets under management to be viable. The only reason I bring the Non-profits up is because I have heard the same line from Bankers, Financial Planners, Insurance Agents, Pawn shops, money lenders, government and social workers dealing with financial products… hell even loan departments in universities. They all ask what are your financial goals?

I heard from a TV show that the only right answer to that question is: “To make more money”. It is funny, it is kind of true, but the reason I remember the quote is because in the show they nodded at the idea that there is a bit more to it. Oversimplifying things, we are all playing monopoly and we are all here to win the game… [Except the game is rigged in favor of Mr. Monopoly, but that is a future story to be titled Mr. Monopoly]

Next time you talk about your Financial (Insert whatever title, but actually a sales rep) do not say my financial goal is to make money. It might be funny for 3 seconds, but then they will talk nonstop on how their loan extension, or mutual fund, or whatever is their way to make that happen. Instead let’s dig a little deeper into this monopoly game before you meet with them.

At the high of my financial career I was working with statistics and researching how poor countries develop, and how poor individuals move up in a money base society. When looking at enormous groups of people it becomes obvious that there is a single winning strategy. In games like monopoly, if you have a computer to play it, you will find the most optimal strategy; in fact, you can google it. Games like chess are seemingly more complex, but grand masters have always suspected that if 2 super computers play one another white would always win. A curiosity of statistics is that overly simple games like tic-tac-toe are so simple that everyone can decipher the best play, but further ahead in complexity the opposite happens. A simple game like chess is extremely hard to optimize, as other games with hundreds of options, pieces, variables and choices are far easier to decipher.

A popular analogy would be people’s financial goals are like children in a candy store. Some kids spend all their money on chocolate bars, some kids save their money to buy a toy, some kids share their money and candy. There is no point spending any more time in the candy store because the analogy is misleading.
Here is your one and only financial goal:


You want to buy a home, send the kids to college, retire early, buy a yacht, go around the world… any combination of those, or all of those, or a derivative. Your sales rep is using an old strategy that came to pop culture from the movie inception. They are making you think it is your idea, they are drawing a pyramid with chocolate bars at the top and their mutual funds at the bottom. All our objectives are the same because if we take a step back and instead of melting chocolate, we should see money leaving our wallets. Your financial goal same as mine is to protect your (and yours) life, future, to get more (Or just enough… future article on how much is enough coming soon), and to buy that chocolate that makes you happy without trampling on the other two.

Follow me and subscribe to keep breaking down this and other topics. In the meantime, here is your quick step by step guide:

1.- Don’t be poor. If your monthly expenses surpass your monthly income stay tune for the first step. I have been there; I know it is hard. Hold Tight.

2.- Protect your income. That means you, no one else cares about you. If you cannot generate an income everything is over. Your employer provides disability insurance? Guess what that insurance is for them not you.

3.- Savings. Straight forward?... I wish. Did you know that Non-Profit executives earn more than their counterparts in a regular for-profit company? Remember that kid in the candy store that shares their money? In this world even if you want to be successfully altruistic you must generate excess incomes and manage that excess. More on this later. For the time being what is your bank doing with your savings?

4.- Yes investments… the holy grail of financial bu****it. Are you buying a home because everyone says it is a good investment? Or a rental property? Or that mutual fund, ETF, or the worst of all a GIC? (Please do not ever buy a GIC). The only way to win the game is doing this step but it is curiously the most misleading one. Furthermore, people love to jump into this one without having protection. Did you know that loosing your income for just 6 months will consume your 10 years of saving 5% of your income invested in the generic medium risk mutual fund they sell you in every bank?

5.- And then there is the cake.

Think of finance like buying a car. You better do your research before you go to the dealer or the sales guy is going to have all the cards. Regretfully finance is a lot more complicated, because there is so much misinformation spread by salespeople… like me.
Full disclosure, I am a financial services salesperson like everyone else because it is the only kind of job in finance. Wish things were different. I cannot change how the world works, but I can give you my unshakable commitment to always be honest first.