May 2017 - Beacon Family Office

Investing in Real Estate

Real estate can be a very attractive source of income. It can also be a great way to enhance the diversification and return on an investor’s portfolio. To be a savvy real estate investor, it requires good analytical skills and proficiency in raising capital. From a basic investment property to “flipping” or trading property for profit to operating a real estate investment group, there are many approaches. Knowing how to invest and doing the proper research is important. Here we outline some of the basic points you should understand when looking to invest in real estate.

Growth

A location with steady growth in jobs can signify a strong rental market and make for a good investment. Also, look for areas with overall economic growth, as when the economy increases it drives businesses to hire more people and require more space. A smart investor should ensure that a full analysis is undertaken on unemployment rates of the area that you’re looking to invest in, along with market rental rates and overall consumer confidence.

Vacancy Rates

A review of the location’s vacancy rates is also important. A rise in vacancy rates will, in turn, lead to a decline in rent per square foot and can also result in an increase in turnover in the building.

Absorption

Also, take the time to evaluate the location’s absorption rates. The absorption rate tells you the rate of sales for available properties in a given time frame. A high absorption rate indicates strong demand and reflective rental rates.

Income Stream

For investors looking to have an income stream in rental properties, they need to have a clear perspective on comparable buildings in the area and overall market rental rates. You would typically want to see a cash flow demonstrating positive returns over ten years with low volatility.

Land Value

Finding areas with low land supplies can be a good indicator of potentially increasing land values. Also, gateway markets and emerging markets with limited land supply are attractive investment choices.

When to Buy

There are many factors at play when deciding to purchase. But when you find a property with high returns and low volatility set in a location fostering stable economic fundamentals, low vacancy rates, positive absorption, and strong demand for living and working, you should consider buying.

Securing Money

Research all the different types of mortgages that will be available for you at a favourable interest rate. If you don’t have the equity to buy on your own, you can look at partnerships or capital raise projects with private investors.

Investing in a REIT or Fund

You may also prefer to invest into a Real Estate Investment Trust (REIT) or a Real Estate Mutual Fund offered by a professional investment company. These entities purchase and hold a portfolio of properties, and you can purchase shares in the company. Look for companies that have historical solid returns, strong property management teams, and know-how to make a profit by adding value to undervalued properties. You can also maximize your returns and reduce risk by investing in a variety of real estate mutual funds, to create better diversification in your portfolio.

Real estate can be an excellent investment vehicle if you know how to navigate the system. But it also can be challenging for those who don’t have direct experience in the industry. Working with a financial advisor specializing in investments can help smooth over the process, and ensure you understand all the ins and outs of the complex system of property investment. Speak with your financial advisor from The Beacon Group of Assante Financial Management Ltd. to explore your options.

A Closer Look at the Probate Process

When it comes to creating a will, you should also become familiar with the probate process. This approval process is crucial for your estate and your executor. Applying for a probate approval confirms that your executor is the right person to be handling your money after death and ensures they’re using the most recent version of your will. Plus, the process can involve probate fees that will need to be arranged. Taking a closer look at the probate process can help you to properly prepare your will and executor to be ready when it comes to distributing your assets.

When is a Probate Required?

After death, your executor is responsible for securing the assets of the estate, paying your debts, and determining if probate is needed. The situations in which your executor will need to apply for a probate is:

If you pass away with debts
If there are bank accounts or registered investments without a named beneficiary
If there is owned property that isn’t being passed directly to a spouse or common-law partner through joint ownership

Why is a Probate Recommended?

Institutions like your bank will want proof that you passed away, confirmation that your executor is the right person and that they possess the final testament of your will. Many institutions will also want a proof of probate to avoid any legal issues if the will becomes contested.

How Does the Executor Apply?

The executor will need to visit the province’s probate court to be granted probate approval. There are different laws for each province, so it’s important for your executor to understand your province’s rules, approval process, and the costs involved. If they have issues obtaining or understanding the information, they should talk directly to a lawyer.

Are There Fees Involved?

Each province sets out their own specific amount of probate fees. Some charge a flat rate, while others charge a percentage of your assets.

How Can You Better Plan to Distribute Assets?

You can arrange to have two wills; one that will be used to distribute assets that need to go through probate, and one that will be used to distribute assets that do not. Legal counsel can help you arrange to have the two wills properly worded. If this option is not available in your province, you could also give cash gifts to family instead which may be exempt from tax. Another option would be set up a trust or private company to own your assets, this way your assets will not go through probate.

The probate process can be difficult to understand, not only for you, but your executor as well. Hiring a professional who can help guide the both of you through the process can ensure your estate planning goes smoothly and as intended. Book a consultation with your financial advisor at The Beacon Group of Assante Financial Management Ltd. today.

Why Family Vacation is Important

Feeling that dire need to take some much-needed downtime? How about taking a trip that the whole family can enjoy? Taking a family vacation is an excellent way to spend quality time together and create lasting memories, strengthening your relationship with your spouse and children.

Time Together

A family vacation is a great time to really get to know each other. At home, you can easily get caught up in work, school, and activities that are done separately. A vacation gives you time to do activities as a family and spend more time talking with each other, discovering each other’s interests. Kids are much more likely to open up on a sandy beach or dinner in New York City, versus at home playing video games.

Experience New Things

A family vacation can help you teach your children more about the world around them. They’ll have the opportunity to experience different food, climates, environments, and cultures together. Seeing different places first hand can give your children a whole new perspective on the world. And they can gain new experiences they would have never gained at home.

Recharge the Batteries

Sometimes life at home can become hectic – from work and school to extracurricular activities, errands, appointments, and everything in between. Taking the time for a family vacation can really help everyone enjoy some downtime away from the hectic schedules and get some rest and relaxation time. We all know it’s important for our health to recharge our batteries every few months, but it’s also crucial to ensure your children get a break from their busy routines as well.

Become Fun Parents

At home, you’re viewed as a parent – the person who throws down the house rules. But on a family vacation, your kids can finally see the silly, fun side of you. Letting your hair down and having some fun with your kids can really help them to see you in a whole new light.

Spouse Time

Family vacations aren’t only beneficial for strengthening relationships with your kids – they can also help to strengthen your bond with your significant other. Taking the time away from your hectic daily routines and life stresses can help you focus on each other and grow closer together.

Spending family time together outside your busy schedules is important. A family vacation is worth the investment. It will help bring you closer together and provide memorable experiences that will last a lifetime.

Bon voyage!

How to Get the Most Out of Working With Your Spouse

It can be beneficial to combine your personal relationship with your career. Working with your partner has many advantages, including synchronized schedules to meet family needs, and the fulfillment of shared accomplishments. Of course, there can be challenges, too. However, in taking some initial time to prepare and plan it all out, you should be able to overcome any obstacles you may face. Here we show you how you can get the most out of working with your spouse.

Try it Out First

Don’t just jump in blind. Instead of outright quitting your current jobs, start working together slowly and find your groove before fully committing. This way you can find out if it’s the right decision for your relationship dynamic. Small issues and incompatibilities can be ironed out, but major red flags may signal that you’re not suited to be business partners in addition to life partners.

Define Roles

Make sure you take the time to work out a business plan that defines your roles and responsibilities. You should base your roles on your individual abilities that highlight strengths and complement each other’s skillsets. This will help you avoid stepping on each other’s toes, or repeating work. You should also define a common goal and check in with each other often to confirm you’re both on the same page.

Manage Risk

Putting all your eggs in one basket can leave you susceptible to financial risk. Create a strong monetary plan that will safeguard you in case of any market fluctuations or business issues.

Work/Life Balance

Balancing your work life and your home life can take some practice. But it’s important to find ways to separate your work from your personal life. Otherwise, you’ll never feel as if you can get a break. Try to make time for getaways or days where you can unplug and spend quality time away from the office. Avoid talking about work at home – any disputes or issues should only remain in the workspace.

Spend Time Apart

When you work together and live together it often can feel a little overbearing. Try to plan for some time apart, perhaps one day a week where you can spend some time with friends, or out by yourself. This will help give you space and build a strong foundation for your relationship.

You can work with your spouse and have a fulfilling marriage and career. Taking the time to find what works for your relationship can save you from challenges further down the road. If you keep communication open, and your marriage first, you’ll be able to handle anything together.

Starting an RESP For Your Grandchildren

As a grandparent, you want what’s best for your grandchild. With the increased costs of education these days, there is no better way to support your kin than to start a Registered Education Savings Plan (RESP). An RESP is simple to start and comes with government incentives that help to increase the value. It’s an excellent way to shelter a little more cash from taxes while contributing to the future of your loved ones. Here we discuss what you need to know when contributing to an RESP.

How does an RESP work?

As a subscriber, you would make contributions to the RESP. The promoter, often a financial institution, will register the RESP with the Canada Revenue Agency. Your contribution, along with government grants and tax-sheltered income earnings, will accumulate in the account. The promoter will then pay the income earned along with the contribution amount when the beneficiary, your grandchild, is enrolled in an education program.

How much can you contribute?

You can contribute as much as you like each year and with a lifetime limit of $50,000 for each beneficiary. Just know that your RESP contributions are not tax deductible but are tax-sheltered.

How does the withdrawal work?

The contribution amount you contributed is after-tax income so, it can simply be withdrawn and made payable to you or your grandchild with no further taxes to worry about. The Educational Assistance Payment (EAP) amount however, is a withdrawal of funds that originates from the tax-free government grants (Canada Education Savings grant, the Canada Learning Bond, and amounts paid under the Provincial Education Savings Program) and tax-sheltered income earnings. For this reason, these payments will need to be included in your grandchild’s income statement for their annual taxes, but at the student’s minimal tax rate.

What if they don’t attend school?

If the beneficiary does not go to post-secondary school, then the contribution amount is paid out to you, the subscriber, at the end of the contract. At that time, you would not be required to include the contributions in your income statements.

Benefits

In Canada, all the contributions you make into an RESP will grow tax-free until withdrawn. You may also be eligible for the Canadian Educational Savings Grant where the government will match 20% at $500 per year and $7,200 over a lifetime. This makes an RESP a better inheritance contribution for your grandkids than money, as the money that you were planning to give your children can now be shielded from taxes as it grows. This won’t happen with cash inheritance and real estate.

If you’re interested in opening an RESP, reach out to a trusted advisor from The Beacon Group of Assante Financial Management Ltd. today who can walk you through all the necessary rules and regulations set out by your province The sooner you put in, the more the contributions will grow for your grandchild’s education.

The Importance of Daily Physical Activity

We all know that exercise is good for us, but beyond the fact that it makes us look and feel better, what exactly does it affect? From your health to mood to preventing disease – here are just a few good and important reasons to make time for daily physical activity.

Combats Weight and Makes Us Feel Great

When you maintain a daily active lifestyle, it’s a key factor in the maintenance of a healthy weight. With all of those endorphins running through your body when you exercise, your brain triggers those “feel good” vibes that boost self-confidence and positivity.

Improve Balance and Coordination

Exercise doesn’t necessarily mean that each day you need to involve high-intensity workouts at the gym. The key is to find more moments throughout your day to move your body, whether it’s taking a brisk walk around the park during your lunch break or taking the stairs instead of the escalator. Stretch before bedtime, attend yoga class, play street hockey with the grandkids, go golfing with colleagues, or go swimming. Just move! When you do, you’re helping to strengthen your bones, joints, muscles, and connective tissue. This is especially crucial as we begin to age, since exercising can help reduce inflammation and pain and give us that boost that allows us to carry out our daily activities with ease.

Improve Cognitive Function and Mood

Aside from daily physical activity helping to improve our mood and coordination, it also helps to boost our brainpower and cognitive functions. Being active helps enhance and sharpen our thinking, learning, and judgement skills as we age.

Reduce the Risk of Disease

Incorporating exercise as a part of your regular routine has been proven to combat the onset of various diseases and ailments, including cardiovascular disease, type 2 diabetes, and even lower the risk of some cancers. In addition, regular exercise helps to lower blood pressure, improve circulation, and lower cholesterol levels.

If you’re not getting enough exercise throughout each day, it’s time to make it a priority. Try to begin by committing to 30 days of walking more, taking the stairs, or incorporating simple ways to boost up your level of physical movement throughout each day. By setting this timeframe, it can help you get started, and develop it as a part of your regular routine thereafter. Gradually start to incorporate more intense activities and workouts to keep your body and mind sharp so you can enjoy life to its fullest.

Is it Time to Merge?

When owning a business, you can be faced with many tough decisions to help better your company. One of those decisions may be whether it’s the right time to merge your company with another. Knowing if a merger or acquisition is the best move for your business can be challenging, so we’ve put together the main reasons why businesses chose to merge with one another.

Grow Market Share

You can grow your business quickly, and potentially with little effort, by merging with another company. By entering into a horizontal merger, you can easily grow your market share by purchasing a competitor’s business. This is especially useful if the competitor has other products that are doing well on the market that you would like to offer. You can obtain their loyal customers and have more production power.

Diversify

By diversifying your company through a merger, you can reduce your exposure to the risk of being invested in only one industry. The goal would be to buy another company in a complementary, but different, industry or market sector. By doing this you avoid having all your eggs in one basket, and you can widen your performance margin.

Vertical Merger

To improve your company’s profit margin, you may want to consider buying out one of your suppliers. This can help you cut the margin costs that they add to your bill. Another option would be buying out your distributor to cut down your shipment costs.

Improve Performance

If two companies can merge and create more revenue than either was able to make on their own, or streamline processes to reduce costs, it’s considered a synergic merger. This method can improve the financial performance for the company’s shareholders.

Enter Foreign Markets

It may also be beneficial to merge with firms in other countries. This can help protect you from risk in a time of recession in your country. Plus, it can reduce your foreign exchange risk if you wish to sell your products to other regions or countries.

Access to Financing

Sometimes your growth becomes stunted because you don’t have access to debt and equity financing. If you can merge with a larger business that has better access to resources, you will have more access to debt and equity than you had before.

If you’re ready to grow your company and improve the strength of your profit margin for your stakeholders, a merger may be right for you. Consider seeking professional assistance in conducting important research and underwriting. A financial advisor from The Beacon Group of Assante Financial Management Ltd. can help you make a better-informed decision that is right for your business now and in the future.

Discuss Your Inheritance Plans

You may be surprised to hear that many Canadians have not created a solid inheritance plan, even though they are expecting to leave assets to their loved ones. Creating a strategy is an important first step, but so is the discussion with the beneficiaries and a financial advisor. Keeping your inheritance private can cause all kinds of surprises and complications after your death. Here we explore the steps you can take to discuss your inheritance plans in advance.

Planning with your Partner

The first thing you should do is to create a plan with your partner on how your wealth should be distributed. This will involve outlining which of your family and friends will be beneficiaries, your financial situation, and your initial inheritance goals. You should also consider those who may need special financial assistance, if it will be equal share, and the necessary provisions.

Create an Inventory

Once you have a strategy, take some time to review your assets that will be included in your estate planning. Make an inventory of all the items such as your house, car, investment properties, personal belongings, and financial investments. Also, note any debts you may have and any fees that will be associated with probate.

Include a Financial Advisor

You should always discuss your inheritance plans with a financial advisor. They have the expertise to help you understand the tax implications, capital gains, and other financial responsibilities that will fall onto your beneficiaries.

Discuss Assets

You may expect that one of your kin will be thrilled with inheriting your belongings, but they may not feel the same. Not everyone can bear the burden of the costs of a house or cottage. Talking to your family before you finalize your inheritance plan for assets can help you both plan what is the best for everyone.

Communicate about Money

Communicating your plans to your family regarding money is also important. You may be considering charitable gifting to your beneficiaries as part of the inheritance. While it may be attractive to some family members, not everyone may prefer this over heirlooms.

Probate Planning

Joint investment or bank accounts with your children can help them to avoid probate fees after your death. But this can cause some issues and complications if there are other children involved. A discussion with your family members in advance may help smooth over any potential bad feelings.

Discussing your inheritance plans with your family, beneficiaries, and financial advisor is the best decision you can make to ensure that everything is left as you wish, and that everyone is as content as can be with your decisions. Your financial advisor at The Beacon Group of Assante Financial Management Ltd. can advise on estate planning strategies to ensure your wishes are met.