Episode 135: Double Your Investment Dollar: A Smith Maneuver-Like Strategy for Growth, Deductions, and Legacy – Part 1

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What if you could get one dollar growing in two places at once while creating an income tax write-off just like the Smith Maneuver, but also get a life insurance death benefit for free? 

In this episode, we explore how Canadian investors can use a Smith Maneuver-like strategy on a high early cash value participating whole life insurance policy to leverage for investments, while creating a tax-deductible interest expense. By funding a specifically designed participating whole life insurance policy and borrowing against the cash value to invest in the same assets they would have originally chosen—stocks, real estate, or other investment opportunities—the Canadian investor not only creates a valuable tax write-off from the loan interest, but also benefits from a free death benefit that will pay out upon death of the insured person. While this strategy can be supercharged when the policy is purchased inside of a Canadian corporation, today we will focus on what this strategy would look like for the unincorporated Canadian investor with part 2 of this episode coming soon for our Canadian incorporated business owner listeners.

This Immediate Financing Arrangement (IFA) leveraged permanent insurance strategy shares similarities with the Smith Maneuver, with some subtle differences. The main value-add for using the Smith Maneuver is converting non-tax deductible interest on your home mortgage to tax deductible interest, while this leveraged insurance strategy creates tax deductible interest with a free permanent insurance death benefit as a bonus. While this strategy can be used as a second leveraged investment strategy alongside the Smith Maneuver, the leveraged participating whole life insurance strategy can be seen by some as more conservative as you are not leveraging against your primary residence and instead only leveraging against an insurance policy. If you’re a Canadian investor looking to create multiple wealth-building streams without sacrificing one goal for another, this strategy offers the best of both worlds: growing your investments while securing a legacy.

What you’ll learn:

• Learn how funding a participating whole life insurance policy can enable you to achieve tax-deductible interest and estate protection while investing in the same assets you had planned to invest in.
• Discover how this leveraged participating whole life insurance strategy provides free insurance for your estate, effectively combining legacy planning while continuing your original investment growth plans.
• Understand the long-term benefits of using an Immediate Financing Arrangement (IFA) to create multiple growing financial buckets, one for investments and one for legacy, without restricting your investing potential.

Tune in now to discover how this conservative permanent insurance leverage strategy commonly known as an Immediate Financing Arrangement (IFA) can supercharge your wealth-building strategy while offering invaluable tax benefits and legacy planning simultaneously.

Resources:

• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX.  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Achieving financial independence requires smart planning, especially when it comes to growing your net worth and generating passive income. We explore conservative leverage strategies such as the Smith Maneuver to convert non-tax deductible interest on your primary mortgage to tax deductible interest as well as conservative leveraged life insurance strategies including immediate financing arrangements (IFA). For business owners, navigating the complexities of corporate structures, tax implications, and investment strategies can feel overwhelming. From understanding capital gains rules to leveraging life insurance for wealth optimization, the right approach can transform your financial future. By aligning your strategy with tax-efficient tools, you can unlock the full potential of your business and investments, ensuring sustainable growth and long-term independence.

Transcript:

Jon Orr: When I was in a business class, one of my university classes, I took a lot of business classes in my program. And I remember a professor always hinting at this word synergy, this idea of one plus one equals three. And it always kind of stuck with me as a math person. One plus one is two, isn’t it? But one plus one is three. And he was like, that’s the definite synergy. And I remember it was on a test. And was like, you had to answer that equation. One plus one equals? And it was like, if you didn’t write

three or more, then you got it wrong. And it was like this idea of like, stuck with me because I think that when we think secret sauces on our wealth building journey, we think about how do I either get more for every single dollar I have, or save and spend, you know, get get more for less in a way. And I think we talk about tax savings, we talk about credits, we talk about, you know,

you know, when you invest, get more for, you know, compounding effect. We talk about all of those secret sauces here on this, in this episode. And today we’re going to jam. We’re going to jam even more in here because we’re going to talk about, you know, the idea of the synergy. But really this, this, do I get my $1 to earn more than $1? If I put my dollar to use, how can I get that same dollar to earn more just by putting it into a structure?

We want to talk about that specifically. want to relate that to the Smith maneuver. We’ve talked about the Smith maneuver on our podcast because it is an extremely important type of strategy and structure and mindset to go around. And we’re going to talk about legacy. We’re going to talk about all of these things and at the personal side and the corporate side. So Kyle, a lot to talk about. We’re going to jam it in. Let’s go.

Kyle Pearce: Yeah, I love it. love it. And a great way to frame it here, because I think this is one of the key pieces. And it makes it complex. It makes this world complex. And it also answers the question that you might ask yourself when you listen to some of our episodes and you go down the rabbit hole. Or if you’re a business owner who’s been in our master class that you can find over at CanadianWealthSecrets.com forward slash master class. When people come back and it’s like the light bulb goes off on some of these strategies, right? Whether it’s the Smith maneuver,

or whether it’s something else that we’ve been working with clients on, they come back and often say, like, why isn’t everyone doing this blank, whatever it is, whatever the strategy is? The reality is, that there is thinking to be done. And I think, like you said, if you’re going to do this synergy idea, if you’re going to make one plus one equal more than two, it’s going to take some time and effort, right? Otherwise, as you had mentioned, it would.

the same thing for everyone. Everyone would be doing the same thing. So what we’re gonna be talking about here is starting from square one. Now we know our audience, we have a lot of folks out there that love the idea of the Smith maneuver. Now I say that because even those people that are like, makes perfect sense. It takes a long time for people to get those wheels turning. For those who have got the wheels turning, amazing, great job, awesome work.

And ultimately it’s like, once they figure out that they go, had a dollar that I wanted to put into investments anyway. And they take that dollar and instead of sending it directly into the investment, they first send it to their mortgage on their primary residence, which is not tax deductible interest on that mortgage. And then it opens up available dollars inside a home equity line of credit, which they are then going to borrow.

in order to put into the very same investment. you know, I already see like $3 floating around here. Like we started with one, we put that dollar over here, we borrowed another dollar, because it’s not the same dollar, right? It’s like a bank is giving you this extra dollar to put into the same investment. You still end up with the very same investment that you had planned on, whether it’s in the market and real estate and private investments, equities, whatever, totally up to you. But you now have created

a tax deduction at a personal level. And that’s a very valuable thing. Where people often get misunderstandings out there about Smith Manoeuvrer is they think that their mortgage is going to get paid down, like their debt is going to go down, when in reality, the debt stays exactly the same. You just now have created tax deductible debt. So $100 of debt a moment ago, I put $1 down. I now have $99 of debt against my home.

and I have $1 of investment debt that I’ve now put into the market. Now some people are going, ooh, that sounds scary. I thought we’re not supposed to borrow when we invest, but remember you already owed $100 on your home. You still owe $100 on your home. It’s just that one part of that debt is now tax deductible, which is super helpful if you’re earning income or if that investment you’re making is going to create income now or.

down the road, right? That’s the goal of the investment. So it’s a really logical strategy for people to use. What we want to do here today is we want to talk about how we can use this same idea. We’re going to start, as you mentioned, at a personal level, and we’re going to work our way to how it’s even more supercharged inside the corporate structure. But we’re going to start at a personal level where we can take, this is a different dollar.

because if we’ve already put it through Smith maneuver, you know, you really get complex if you try to incorporate both, although we do have some clients that do. But if we take a different dollar and you plan on taking that dollar and you plan on putting it into an investment, we have another opportunity for you where you can do Smith maneuver like moves and get some other benefits here.

Jon Orr: Yeah, yeah, for sure. So let’s, let’s outline the specifics here and the tool. If you’ve listened to many episodes before, you know, the tool, because we’ve, we’ve talked about this benefit before is, is let’s, let’s take that dollar instead of putting in, say on our mortgage to create that deductible debt or then, then borrow back on the, on the home equity line of credit to create say deductible debt. And if we’re going to invest it, we’re to take that dollar in an hour, going to say, use that dollar to open up a whole life insurance policy.

and that insurance policy will have a cash value associated with it and a death benefit associated with it. And that’s the special version of the whole life. So this isn’t just a regular whole life policy. It has to be specially created to have a high cash value so that you can maximize that dollar and put that dollar into the two uses just like a Smith maneuver. So we want to say, open up the policy.

Soon as we open up that policy, we’ve got now this cash value that is high and we then can use that cash value. So let’s take that dollar that we would have put in, say, an investment and let’s borrow like we were going to do on the home equity line of credit idea is we’re going to borrow that dollar from the policy. So we’re going to use a policy as collateral. We have a couple options we’ll talk about there, but

but we could borrow that from, let’s say from the insurance company, we can get a policy loan and we’re gonna borrow that dollar and now we’re gonna put it the same investment we were going to, but now we have basically that $1 is invested, so we did that anyway, so we took that same dollar, we invested it, but now we have a whole life insurance policy practically, almost practically for free. Yeah.

Kyle Pearce: Yeah, and I want to talk a little bit about the freeness here because, you know, we’re going to use the $1 as sort of a base.

Jon Orr: Because that’s the best that’s people are going to throw up a barrier, Kylie, like, wait a minute, how does that for free doesn’t sound like for free.

Kyle Pearce: Exactly, because you’re going, well, wait a second, you know, like there’s, you know, there’s interest and so forth. So let’s let’s talk about this for a second. Let’s assume it’s $1. When I buy that policy, okay, and I put that dollar into that policy, we like to consider this policy like a pass through structure, because the goal here for us is that I don’t want to say it has to be all the dollars, by the way, but most of the dollars that we send through a policy, have the goal of those dollars being reused synergy, as you had mentioned,

into other asset purchases. Now, for us, it’s not always immediate because we look for real estate opportunities quite a bit, right? But for other people, it might be right into the market. It might be right into private REITs. Totally up to you. You get to decide. But when I take that dollar and I put it into the policy, here’s the nuance that’s really important to understand. When I do this for my home on the Smith maneuver, my home is going to be worth whatever it’s worth, regardless of whether I’m here or not.

And luckily, there is no capital gain on that home. Okay, so when I pass on, if I’m using the Smith maneuver on my primary residence, right, which is where people use the Smith maneuver because there’s no tax, capital gains tax on the growth of this property if I were to sell or if my estate were to sell. Now there are other expenses and we can consider that as well. But you’re get to keep most of that value.

The difference here is like, we’re gonna take this dollar, we’re gonna put it into opening a policy, which has a cash value, which has its value, you know, that it’s worth now, which may only be about, you know, 75 cents or 80 cents in the very first year, okay? So that’s really something, and we’ll talk about how we overcome that challenge. It’s not the exact same dollar, and it’s not worth exactly a dollar right away. Really what that is, is it’s the insurance company saying, listen, we want you to stick around here,

Are you in or are you out? And if you’re gonna cancel the policy, they’re only gonna give you 75 cents or a dollar back, right? So they’re basically saying, listen, we’re gonna intentionally make this not as favorable for you in year one, because otherwise you might just cancel and ask us for the money back. But let’s put this dollar in. And what you get out of that is not only cash value that we can then leverage for the investment.

which we can then write off because I am borrowing against this particular asset in order to put into an investment with the intent to earn income from this thing. So now I get a tax write-off just like the Smith maneuver, except the nuances is that there’s also this added layer of this thing called the death benefit. And if you’re a middle-aged average Canadian, you know, non-smoker,

fairly healthy, we say fairly like just like standard rating, you’re looking at about 15 times as much death benefit as the premium that you’re putting in right away, okay? And again, it’s gonna vary a little bit depending on age and so forth, but around 15. So I put a dollar in, I get my cash value, which is gonna be a little less than a dollar right away. We’ll talk about how we get around that so we get that full dollar back. But I have a death benefit worth about,

15 dollars and when I think about that for for just a moment here is what I get is I get to still make my investment and if I were to pass away in that moment you know I set all this up and then moments later I take my last breath my estate gets to walk away with 15 dollars one of which has been borrowed which means they get 14 dollars which is also tax free and

They also get whatever that dollar was invested in. Probably hasn’t had enough time to create a capital gain if it was moments after we made the investment. However, you get the idea here that basically what we’re getting is the same interest write-off that the Smith maneuver can provide us when structured appropriately. So don’t go just do this blindly. Don’t just go to the corner. The insurance guy on the corner that usually sells auto insurance, that’s not where you want to go to do this type of thing.

But what you’re getting is essentially free legacy planning. You’re getting free death benefit, and you’re still getting the investment that you were planning to do anyway. And we’ll talk about some of these nuances and how we can maximize that dollar. Because for some people, they say, well, if I can only invest $0.75 of that first dollar I put in there,

Now that’s like now I got to do the math on it. I got to go like, well, if I invest 70 75 cents instead of a dollar, like how much better am I going to be if this investment does? We can do all of those things. But what we would suggest is that, hey, listen, if you’re serious about doing something like this, we structure it so you can actually get the full dollar back right away. So you can do the process. And you know that each year, every single time I put dollars in, I get those same dollars back for investment. Plus I get

more and more death benefit on the other end. And as the amount of money that goes in and is borrowed out grows, that death benefit is still growing above it as well. And I know that I have this investment bucket over here, like I plan to do anyway, plus I’ve got this extra bucket of, we’ll call it a legacy or estate maximization that’s also growing at the very same time. So I didn’t have to decide how many of my dollars go into investing. how many go into legacy planning and you get to essentially have your cake and eat it too.

Jon Orr: You got both. Now you said, you said there are ways to get that full dollar because right now if, if I, like if I want to do this in year one, cause I know that, you know, in a few years that dollar I put in is going to be worth more than a dollar when I pull it out. Okay. So that’s going to come in a couple of years, but right away, if I put that dollar in, a generally that structure, like you said, it’s going to give me 75 cents, maybe, maybe 70 cents, maybe 80 cents that I can now invest.

Okay, but that’s because I’m going to use a policy loan and the policy, you know, the insurance company is going to say, look, we’re going to give you up to this much in cash value to take as a loan. Um, it’s kind of like a HELOC, you know, when you have a HELOC, it’s like, I have, have, if I have an unlearned, you know, a ton of HELOC room, I still can only take a certain percentage of the actual, you know, value of the, you know, the, the value of the house or the current value of the house. so there’s that, that side too, but What do I do to get the full dollar?

Kyle Pearce: Mm, I love it. if your policy has enough premium, which typically would mean enough cash value, right, meaning it’s large enough, then we would go to a third party lender. OK, and a lot of times this is just to the big bank. Like we go straight to the big bank. We work very closely with some of the big banks in Canada. And we know their teams. You know, these are typically like, you know, not at the branch. You know, we’re not going to the branch person. We’re typically going up.

the chain and we’re working with those who deal with this type of lending strategy. And really what we do is we come to them and we say, listen, if this policy is large enough that the bank sees it being a benefit to them, remember everyone’s got to win here, right? Like people ask me like, well, doesn’t the insurance company make a lot of money when, you know, when this sort of thing happens? I’m like, yep, that’s what they’re that’s their business, right? Their business is to make money.

on these types of strategies and structures. So 100%, just like automakers do it as well. We still buy cars even though they make a lot of money off of the vehicles. Same is true here. And the bank, there’s no exception. The bank looks at it goes, listen, John, your first policy that you put in force was similar to my first policy I put in force, right? It was probably, I don’t know, something like $12,000 a year, something like that, a small policy. A bank’s not going to be interested in

lending against that asset at the very first year because it’s so small. They’re like a credit card has a bigger credit amount than the cash value here, right? So the bank’s like, no, no, no. But if the policy is large enough where the bank sees some benefit there, right? Now, every bank’s a little bit different. We usually say, like, if there’s a couple hundred thousand dollars in cash value, we can actually go to the bank.

And not only can we get 100 % of cash value, but we also have different secondary lenders who are willing to do a top up so that you get 100 % of your premium. And that’s a really important thing, because in year one, remember, your premium, that $1 is premium. It goes into the policy. It is not worth a dollar of cash value on day one of this policy. But basically what we’re saying is we have lenders that are willing

to lend against the full $1 because they know that this policy, as you continue to fund it, it will continue to grow. within the first few years, usually by year three or four, every dollar we now put into the policy actually turns into more than a dollar of cash value, and it evens things out. And therefore, they say, like, within the first few years, we are now back to essentially just 100 % of cash value financing instead of in year one where it’s 100 % of premium financing.

Jon Orr: Yeah. Now let’s, I think you may, you may be, people might be kind of like going, Ooh, when you say we have, you know, there are some lenders that will do that. Now people are like, okay, well sure. Any lender will be able to lend based off, say an asset. But then it’s like, interest rate, right? So it’s like, it’s like, now I’ve got to worry about that. Like, are you talking about like, is my interest rate going to be astronomical? And they’re, they’re

Yeah, and therefore it doesn’t even matter anymore when I go to invest because how do I, you know, how do I make sure that the arbitrage between my investment and this rate is actually a winner or a long-term winner? Like that might be worrisome to some folks.

Kyle Pearce: Yeah, no, exactly. And I would say that when we’re working with the banks and the lenders we work with, and this will change, right? So if you’re listening to this five years from now, I don’t know what is going to be offered at that point. Just like back when we were in COVID, I had no idea that COVID was going to offer us such low interest rates, right? So it could go up, it could go down. But typically what we see is that when the policy size is large enough that they’re willing to lend at prime or

better, right? So the bigger the policy, the better the rate actually gets. Like a lot of people might be shocked by that. But you go, wait a second. You mean the more quote unquote debt I take on, the better the interest rate. And the reality is yes, because it’s secured against a big bucket of cash, right? And again, you’re slightly underwater in year one and two because you’re being 100 % financed on premium. However,

by year three and four, it’s like you’re now back just to about 100 % of cash value. And from there, it continues to go on each and every year from there. We’re creating interest that is tax deductible because we are borrowing to invest and you’re getting the same asset growth that you were getting over here as well with the nuance that the day that I move on,

right? Sometime in the future, I’m going to move on to the next world. And my loan balance is going to be equivalent to the cash value, except once I pass away, the cash value no longer exists. Cash value is the value while I’m alive. And since that is no longer the case and will never be the case in the future, unless Elon Musk figures out a way to bring me back, there’s no more cash value. It is a death benefit. And that death benefit will always be higher than the cash value.

up to age 100 where they are equivalent. So ultimately at the end of the day, you will essentially be creating yourself a free death benefit. Now it’s going to be net of the loan payout, but or the payoff I should say. However, you have now free permanent insurance in your pocket to take care of your estate and the entire time when you built that investment, which was probably for your retirement.

You now have no worries spending that bucket down because you know that there’s this legacy bucket coming that did not restrict you from creating the assets you needed to create in order to sustain the cash flow and the lifestyle that you were trying to achieve.

Jon Orr: So I’m going to flip back to my one plus one equals three in synergy of like the secret sauce is in a way it’s not that we’re putting the same dollar to use and it grows over here once. It actually grows twice, right? Because it’s like, I’m going to take that dollar, I’m going to lend against it, and the arbitrage between my interest rate and my investment is going to grow. That is going to grow at that, arbitrage rate.

But contractually, inside the policy, the policy’s cash value will grow and it cannot decrease, it cannot go backwards. So it will go up every single day because it’s a dividend paying whole life policy that we’re using to use this tool. So that’s gonna go up. And then it goes up over here on this side. you got two, it’s not only just two uses, it’s two growths. And so you’ve got the compounding effect that never gets interrupted on the policy.

but then you also get say the compounding effect that happens over on the investment side. and then when you think about safety, if you compare that back to your Smith maneuver, is that because the value of the policy won’t ever go back down, you can’t say that about your home. So I think, so when, and I think where people get scared about the Smith maneuver, so if like you’ve been like the Smith maneuver makes so much logical sense, but emotionally it’s hard.

Kyle Pearce: I was gonna say I’m so happy you said it.

Jon Orr: because I’m now going to borrow against the value of my home to make my, you know, my investments. And if, my investments are mediocre, you’re still saying like, this is secured against my home’s value. And what happens if my home’s value goes down, you know, can I make sure that the value of say, if I, if, know, if ever I needed to figure out how to pay off my balances, my debts, it’s like.

Well, my house was supposed to do that, but now maybe it can’t. And so that might scare some folks from the Smith maneuver, but in this case, it’s not gonna happen, right? Like the value of that is not going to decrease. So it’s a safer move. this is partly why you get the better interest rate from the lender is because the lenders look at a whole life policy and go, I know I’m going to get paid out here at exactly I need because this person is…

is gonna be here or they’re not. And when they’re not, I get paid out. And when they are, I get paid out. So this loan as a lender is like A plus. So why wouldn’t I give them a good rate on that particular asset?

100%. And you know, I wanted to speak to this as well, because not only about the house going down in value, but like you live there, you know, like that’s your primary residence. So you live there and you’re like, if the like, let’s say, for example, let’s pretend the market didn’t go down, but something else in your life didn’t go well. I always like to say, let’s pretend the Armageddon took place in your own life, right? You lost a job, you this, you that, whatever, who knows what could happen in the future.

where the Smith maneuver becomes scary to people is that first of all, you’re leveraging against your home. Now you already had a mortgage on it and the idea was that now your mortgage amount’s still the same. So you’re not necessarily taking on any more risk, but that dollar went into an investment and maybe the investment’s up or down as well. So there’s like volatility on both sides with the Smith maneuver that can play with people’s minds. We know over the long run, like 20 year time span, 25 year time span.

Smith maneuvers, you’re going to be miles ahead. But what I can’t tell you is how you’re going to feel this year, next year, or the next couple of years because of market volatility. Whereas if you got into trouble with the Smith maneuver, it might mean, let’s pretend the market didn’t even go down from a home ownership perspective. So it’s like, hey, my home still has enough equity in it, but I can’t afford the mortgage payments for whatever reason because I lost my job. You might still have to sell your home.

and then use some of the proceeds to pay off the mortgage or whatever you need to do in order to make that happen. And that’s like very scary. Want to pause for a second. Let’s pretend that instead not and I’m not suggesting we don’t do Smith maneuver here, but I’m saying let’s pretend for a second that instead we did this strategy with insurance. Here’s what would happen if Armageddon took place in your life. We put a dollar in the dollar comes out to make the same investment that you would have done with the Smith maneuver. This happens for

any number of years, maybe it’s 10 years from now, who knows? Your cash value is worth a million dollars, let’s pretend. You have a loan that’s worth a million dollars, okay? And you have an investment bucket that hopefully is worth more than a million dollars, right? Otherwise, probably not a great investment. So you’ve got these two growing buckets, but you do have one loan. And let’s pretend Armageddon happened in your house, in your life, in your situation.

Kyle Pearce: and you’re like, can’t do this anymore. And it’s like, and I need to sort of like get out of this. I don’t have to sell my home with this strategy. What I do is I have to cancel my policy. And when I cancel that policy, my cash value, which is worth a million dollars, can be used to pay off that loan of a million dollars. Now, what I can’t tell you in this example is if there’s any tax that will be applied. Because if your cash value was growing, which it was,

Only conservatively, there may be some tax on depending on the growth of the policy. Because now you’ve basically said, it’s like taking your RSP and pulling the plug on it all at once, right? Right.

Jon Orr: Right. That’s what it is. We’ve been saving the tax because we know that you will be tax free if you use the death benefit to pay off the loan. if you’re going to use this vehicle as actual investment, you’re going to pull, you’re going to you know, pull, right, exactly. You’re going to take value from this, which means you’re not, you’re interrupting the compounding effect. Then you’re going to be paying tax on the difference.

Kyle Pearce: Exactly. take on investment income, essentially, right?

However, what we also have is this other investment bucket as well. So I want to just pause for a second. And let’s say you got to this place and you’re like, ooh, I got this million dollar loan against, the million dollar cash value, which means a net zero there. And again, there could be a little bit of tax here. But I also have this other investable bucket. As you had mentioned, there’s like two growing buckets. And there’s only one bad bucket. There’s only one debt bucket here. So that one bucket cancels out the other one.

There may be a little bit of tax, which might mean you might have to take a little bit out of this investment in order to help you sustain things. But one thing that you didn’t do was you didn’t put yourself on the street. You didn’t have to sell your primary residence, which might be your lifelong dream to live in that home or whatever it might be. It is a abstract bucket. It is a policy.

and we are taking a policy alone against it to do exactly what we were doing with the Smith maneuver. But here’s the optimal scenario is that we either offset the premium into that bucket after, you know, I usually say a 10 year runway is a good number, but the longer you can go, the better. But if let’s say I fund it for 10 years, I’m not going to be able to like keep taking money out in order to invest it. I might just have my cash value maintaining the interest here.

but my death benefit is still there and still growing. And if I hold that asset until I move on to the next place, I know that that death benefit is going to be larger than the cash value unless I die when I am exactly 100 years old. That’s where they become equal. I will never be upside down with this strategy. All that I need to be doing is making sure that if I want to take on a strategy like this, what I get to get is an investment

the original investment and a legacy plan at the very same time without having to restrict any of the dollars out of my investing bucket in order to do so.

Jon Orr: part two, part two of this episode is going to come out and we’re going to specifically talk about that structure, the Smith maneuver, but now inside your corporation, in your business. How can we use that same structure to create the same effect on basically getting a tax deduction for your investments against your business income? So we’re going to talk about how to use that inside the business and part two. So come on back.

for that, we’ll be putting that out in the next episode. The other thing that you want as, say maybe, a takeaway or your next step is I want you to kind of go back in the catalog. We’ve got a number of episodes that have Smith maneuver in the title. Go back and look at those, know, listen to those Smith maneuver type episodes. Start thinking about whether the Smith maneuver makes sense for you or maybe the…

in, you know, whole life policy move makes sense for you or maybe a combination of both. Like Kyle said at the beginning of this episode, if you’re a business owner, then we’re going to encourage you. can front run the next episode. You can get over to Canadian wealth secrets.com forward slash masterclass in our masterclass. it’s a course. It teaches you how to create this system inside your business. So essentially you could generate cash.

free cash, know, tax-free cash flow for your, from your business. We’re gonna, we’re gonna talk about some, some of those structures in the next episode for the, for the corporation side. So those are the two kind of call to actions at this point. In other words, we’re gonna see you in the next episode, folks.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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