Episode 168: The Hidden Tax Traps of Scaling Real Estate and Day Trading Without a Plan

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Are you trying to scale your real estate investments while navigating the complexities of day trading profits, corporate structures, and tax strategy?

If you’re building wealth through real estate and trading but feeling unsure about how to structure your finances for growth, this episode cuts through the noise. From managing income inside a Canadian corporation to optimizing your tax position and knowing when to use personal vs. business funds—this is a deep dive into smart, scalable investing.

Here’s what you’ll walk away with:

1. A clear understanding of how to structure active trading income for maximum reinvestment and minimum tax drag.
2. Strategic guidance on when to keep properties in your personal name versus transferring to a Canadian corporation.
3. Insights on using holding companies, shareholder loans, and even RRSPs to fund future real estate acquisitions—all while staying liquid and protected.

Press play now to learn how to build a high-performance wealth strategy that supports both day trading and long-term real estate growth.

Resources:

• 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!
• 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.
• 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.

Navigating the world of day trading and real estate is only the beginning for entrepreneurs looking to master wealth generation in Canada. True financial growth demands deep financial literacy and smart investment strategies that go beyond basic mutual funds and ETFs. From optimizing RRSP room and leveraging capital gains to understanding the nuances of salary vs dividends in Canada, it’s essential to align your corporate structure with your long-term goals. Whether you’re exploring alternative investments, managing property investments, or using the Smith Maneuver to maximize your mortgage, having a sound plan for personal vs corporate tax planning and corporate structure optimization is key. Strategic wealth building also includes phased selling, optimizing your investment performance, and using a smart investment bucket strategy to align with your personal and business cash flow needs. This level of financial planning and wealth management is crucial for Canadian entrepreneurs aiming for sustainable success, especially when balancing business owner retirement planning, Canadian retirement strategies, and effective financial systems for entrepreneurs.

Transcript:

Jon Orr: Are you earning a solid income but still unsure how to build lasting wealth without burning out, or living a lifestyle that doesn’t interest you? If your business or for income is thriving? Maybe you’ve been testing real estate waters or building your confidence in investing in the stock markets. Then this episode is your playbook for turning income into sustainable tax efficient wealth.

Jon Orr: Listen in as we speak with Canadian wealth secrets. Longtime listener Brad, and Brad is here today to share his journey from working 6 to 7 days a week in his business, generating 30 K per month and then figuring out what do I want to do with those profits, and been dabbling in real estate investing. So Brad is often unsure.

Jon Orr: And here are some main questions we’re going to answer with Brad in this episode. Should I buy future properties personally or through my corporation? How can I use profits from my my business to fund new assets without getting hammered by taxes? Did I make a mistake keeping my rental properties in my personal name? When should I think about insurance as part of my financial strategy and not just protection?

Jon Orr: So we’re going to dig in with Brad here. So, and stick around to the end. We’re going to be unpacking. Brad’s kind of, overall financial health audit in his own financial health system, using our four stages for wealth journeys. So stick around to hear Brad’s report card.

Kyle Pearce: Tell me a bore about your day trading. Like, how long you been doing that for? And and what’s going on there?

Brad: We’re doing so we I guess I’ll go back a little bit. We bought a couple properties. Rental properties, and they’re doing well. And we’ve had just about three years. Well, one of them, the other one two years. And then we were kind of like, you know, let’s keep this roll in. And then we kind of got that analysis paralysis and was like, man, am I are we over leveraging ourselves that like, we don’t really have any systems in place.

Brad: We just kind of flying by the seat of our pants. So I started looking into like financial literacy, like training, kind of mentorship. And it came across there. I think they were out of Ontario called Trust Your Talent. They’re like a real estate coaching mentorship. And so we started the courses in December. So there was the Nasdaq futures.

Brad: And then we also just started trading with gold as well. So yeah, so far I mean we’ve taken profit at 30 just over 30 grand each month. So that money we took a couple 100,000 out of our headlock and put it into the we formed a corporation for this. And then we’ve been paying that 30 grand back to our to our like from like the shareholder loan.

Brad: I guess it was called. Yeah. Yeah. So we’re kind of, you know, if things continue down this path, we’re going to be, you know, all of our borrowed money paid back a lot faster than I anticipated. I didn’t anticipate to make this much profit. So I’m kind of just trying to get a kind of a path forward, like looking down the road a bit into the next couple of years.

Brad: If we do continue to make this kind of income, how we can best better serve ourselves with it, keep buying assets.

Kyle Pearce: Yeah, well, good for you. Good for you. That’s awesome. I’m glad to hear that. That it’s going well and, you know, it’s it’s it’s one of those I always, you know, suggest to folks that are like, active trading. And so forth, just, you know, sometimes it can be hard to go, okay, set myself a timeline. No, you know, don’t try to scale up too fast or too aggressively.

Kyle Pearce: You know what I mean? Just, you know, kind of get that consistency going. And so long as you can kind of keep that, you know, that sort of, you know, mindset going, then then at least you’ll, you know, kind of protect yourself from, you know, who knows. Right. The markets are are a finicky thing, but it sounds like you got a good system going.

Kyle Pearce: So good for you both.

Brad: The margins like that one point, you know, with this strategy, with all the volatility with Trump, it actually creates more money for us. But at one point, you know, you have to be able to put in a couple, they say 3 to 1 on your reserve funds. So when the margins start to climb up and you get over leverage, you got to keep adding money to the CMC trading market account just to keep yourself from your.

Brad: If your margin levels drop, then they liquidate everything and we don’t want to have that happen. That’s the that’s when things go bad.

Kyle Pearce: So sure sure. Yeah. You want to be able to stick in even when things get a little dicey, right? You know, when things get dicey, when usually the margin calls start and so forth, right? So as long as you’re on top of it, right?

Brad: Yeah. So that’s kind of where the trading started or came from. And so, so far so good with that. And I guess part of this is just kind of understanding if the trading account should be separate from everything. Because I guess back to your point, the my account kind of grounded me. She’s like, so I’m like, oh, I have a business now.

Brad: Like I can start writing off, you know, all these expenses going for lunch and anxious for the day trading. There’s none of that I can’t really claim anyway, because I had all these big dreams and and then she showed me right down and kicked. Brought me back to reality pretty quick.

Kyle Pearce: Is your account feeling like the day trading is active? So it’s going to be considered active income?

Brad: Yeah, and that was the other thing because I have a well-established, decent paying job that I was and everything I was reading was like, you know, maybe I could claim as capital gains, but I’m doing, you know, a couple hundred trades a day, this strategy. So she’s like, no, that’s active. And I’m not capital gains. So yeah.

Kyle Pearce: Well it’s actually better to be that way as long as you’re incorporated. So obviously it wouldn’t be super helpful if you were doing it on a personal level. That was my big question in my mind, was just making sure that, you know, your account is feeling like the number of trades you’re doing is active, because if you went to a corp and let’s say for whatever reason, it was passive, it’s actually not going to be helpful to you at all.

Kyle Pearce: It’d be, you know, quite a, quite a high, tax rate whose capital gains you be kind of halfway, you know, halfway between both. Yeah. And then, of course, active is fantastic now. So that’s great. So I’m glad to hear that. You know, it’s it’s considered there’s enough. I mean, heck, if you’re doing like hundreds of trades a day then, you know, obviously cra is going to be going like oh, okay.

Kyle Pearce: That’s clearly fairly active here. So so that’s a good thing. So good for you guys. Yeah I like I like the way you’re structured, the nuance on the back end. Did you probably heard in some of the episodes it’s like it’s all good and bad, right? It’s like when I earn it in the corporation, I get tax deferral on that.

Kyle Pearce: Because really what it is, is you’re going to pay your 10 to 12 ish percent on that active income, which is great. But then as soon as you take it out personally, that’s where essentially you’re kind of undoing all of that. You’re taking it on personally and then going into these higher brackets. So then it becomes, okay, now what do we do with all this money?

Kyle Pearce: And usually what that would mean and say, oh, well, we take that money and then we put it into other assets inside the corporate structure. Right. So I’m not sure if that sort of maybe some of where your mindset right now is like, so.

Brad: That’s where all the whole focus is.

Kyle Pearce: Yeah. Okay. Perfect. Perfect. Yeah. So you’ve got the one company, the properties you own her personal, right, I believe.

Brad: Yeah. No. Before we open the corporation, we talk to the accountant. And because of our high tax bracket, the first year, like when we were doing the underwriting, we weren’t going to be very profitable. We were going to be just breaking even on the cash flow. Yeah. So we decided, you know, to keep on their personal name, like currently.

Brad: And then, you know, last year we had a rough year with some damage to one of the suites and the tenant with loss of rent. So we that it was we were short like our cash was like $8,000 on one of the properties, which we were able to write off against. My personal income. So for that reason.

Brad: Yeah, that we so that’s why those are in our personal name still.

Kyle Pearce: And honestly, I don’t I’m the type of person. It’s like when you have it’s like having some assets in my personal name, even if sometimes in some years maybe you might, you might lose a little bit on the income side. But the reality is, is that if you own those properties in the corporation versus out, you’re still going to be paying and you’ll be in the highest tax bracket in the corporation, not necessarily personally.

Kyle Pearce: So I would argue keeping them out is probably going to be from a tax perspective, the better the better move over the longer term if let’s say they’re ever fully paid off and you don’t remortgage them, let’s say you just were taking this income, remember, same result. What happened in the corp. You’re going to lose 50% personally. You may or may not lose 50% because you may or may not have a tougher job at that time.

Kyle Pearce: Right? You might choose to work less or you might choose to, you know, a full time day trade in the corporation, and now you can control your income. So I like it. To be honest, I actually think it’s a it’s a good move. And I think a lot of us investors almost think like it was a bad move.

Kyle Pearce: I get a lot of people calling saying like, hey, you know, should I move it into the corp? I feel like I made a mistake or this or that, but I actually really like it. And I think having those assets there, especially down the road when let’s say you want income and you want to borrow it instead of, say, sell in order to get more income or to get a chunk of money.

Kyle Pearce: Right. It’s going to put you and I think, a really, really good spot.

Brad: Okay. Well, that’s good to hear. Yeah. The only thing I my concern would be is like we’re going through these courses and part of the next step is like actually going out, taking some action and buying some more properties. Now the ones we’re looking at are a little bit larger, like multifamily, like 5 to 10 units. Yeah. Which in the corporation they look at the Invicta property has its own business in it and it’s, you know, operating income and all that, that space for more.

Brad: So but I think that’s how you get approved. But is there like down the road restrictions on borrowing power? For me personally, if I buy more properties in the personal because I keep having like five properties is kind of the cap for people personally.

Kyle Pearce: It’s somewhere in the range of, I would say four, sometimes six. Every lender’s a little bit different, but I would even I would argue though, like you’re now entering into this place where you’re going to start having this money, quote unquote, trapped in your corporation or in your structure. Right? So you have this active company. Great. If you buy more property, you probably so you’ve already got a couple personally.

Kyle Pearce: Great, because now you have money that was earned in the corporation. Those dollars should be probably reinvested in the structure. You don’t want to take money out personally, get hammered in tax and then try to reinvest those dollars. So in a way, the timing sort of suggests that I would say this next property you buy probably does make sense to do in the structure, right?

Kyle Pearce: Because now you’ve got money in there. And and again, you might still owe yourself some money. Like maybe it’s not all profit right now in terms of, you know, end of retained earnings. But as you keep doing that, you’re going to have more and more money stuck in there. You’re going to want to reinvest it in there.

Kyle Pearce: So you might want to open up, let’s say, a holding company, where you could buy the property. Money can travel between those two corporations without any sort of tax. As long as it doesn’t come out to you personally, you’re not going to take on personal tax. So basically, yeah, like that would be in my mind. And then now you also open the door like you had said, that now the property’s considered a business.

Kyle Pearce: They’re going to underwrite it like it’s a business. Like is this thing profitable or is it not. You know, your debt service ratios are going to be you know, probably 1.25 is what they’ll probably look for with traditional financing. Maybe it’s 1.1 if you do CMHC, MLP, select, you know, if it’s more than more than four units and it’s residential, so you’ll have a lot of flexibility there.

Kyle Pearce: So in a way I feel like, you know, you’re kind of setting the table pretty, pretty nicely. Right now to go. All right. More and more income in this corporation. Probably a good idea to do that. Next one in in a corporation instead of say in your personal.

Brad: Yeah. And then so like the property we say we bought it in the corp and then the mortgage because all of our mortgages convert to lines of credit. Those mortgages okay. How so if we had the same set up for, let’s say this, we’ll call it the new property, the earned income from the day trading. I can use that money to pay down that mortgage as long as it’s in the corporation.

Kyle Pearce: Exactly, exactly. So you could do. Yeah, you could do that now. Now, the the negative of doing that is like, obviously you’re losing a write off, right? So you’re losing, you know, some of that interest to write off. So the faster you pay off the mortgage the less expense you have, you know. So in a way, if those dollars like, let’s pretend every dollar earned inside this corporation is sort of money that you’re not planning to use personally for some time.

Kyle Pearce: You know, I’m guessing that’s probably the case, unless you want to like the job tomorrow, assuming that’s the case, I would probably say there’s no rush to pay off the mortgage. It’s quite the opposite. You want to keep the mortgage, let that do its thing as slowly as possible, write off interest as normal, and then any additional cash flow you want to put into other investments as well.

Kyle Pearce: So you get kind of like kind of the the double win versus, say, making debt equity on an investment property in a way, you want to keep that equity out. You want to be able to, you know, take that money and put it into other assets and essentially stay as liquid as possible. I know you’re opening up a line of credit, which gives you flexibility, which might feel good to know just because you know, you don’t have, let’s say, cap capital sitting there burning a hole in your pocket.

Kyle Pearce: But I would argue that, you know, those traditional mortgages and just I would say slow and steady on those is probably going to be a better bet given inflation. Right. So the debt’s worth less and less every day. Is it right off? High. The rental income is going to be taxed at the passive income rate in the corporation.

Kyle Pearce: So in a way you’re going to want those write offs so that you’re showing less profit on those properties.

Brad: And that passive income rate for a corporation.

Kyle Pearce: So every province a little different. But basically the lowest is Alberta which combined it’s going to be 46%. The highest is I believe it’s Ontario at like 50.17 or something like that. So it’s basically like in your mind you can pretty much expect whatever the highest tax bracket. Personally in B.C. is the passive income tax rates around that number.

Kyle Pearce: And it’s done. It’s done by design. Right. Like it’s the government basically saying, listen, if you if you’re making money actively in a corporation, you are taxed at a low rate. The reason you were taxed at the low rate was because we’re trying to help small businesses. But if you got all this money sitting around and you’re buying assets in the corporation, they’re saying, well, I guess you’re not that small of a business.

Kyle Pearce: So they start to really, really hit you hard. They’re saying the reason you kept it in the corporation is because, you know, if you take it out, you’re going to get taxed at the highest level, which you would. Right? Because you’re like earning a lot. So you add another 100 K to that a year or 300 or whatever it is that you’re earning in the corporation.

Kyle Pearce: You’re in the highest tax bracket. So they’re like, well, if you’re going to invest all that money, we’re gonna tax the profit on that money at the highest tax bracket. So that’s sort of the arbitrage that you’re trying to create. You’re going, okay, if this is like if I want this corporate structure to be like a wealth generating machine, I want to defer my personal taxes as long as possible, hopefully forever.

Kyle Pearce: And then I want to create more and more assets. But I also don’t want to rush to have too much profit showing or really rental income is is essentially, a passive income, whereas capital gains, you know, you can let them ride, you know, so if you buy the building and let’s say there was no let’s say you’re breakeven for the next 30 years, you don’t pay a dollar, a tax.

Kyle Pearce: And when you sell the building there’ll be a capital gain, of course. Right.

Brad: Yeah.

Kyle Pearce: Honestly, I think you’ve got a really good thing going on here. I love the idea. You can still, let’s say, on this next property if, let’s say there’s not enough profit in the corporation, you can still lend from your personal key lock or the investment property Helocs lend shareholder loan to the company and then get some of that back, you know, over time, whatever it is.

Kyle Pearce: So all that would still be, you know, the same at a personal level like your your income’s high enough that it well, even even your spouse is, is high enough that it might still make sense if there’s extra money in your life to fund some rrsps just to get some tax back. Now that we have a little diversification of where your assets.

Brad: Are, in my earnest piece. So after reading Rich dad, Poor Dad, I kind of gave up on my aerospace. Sure. And I’ve been just focused everything on alternative investments, real estate, the day trading stuff I have. I just moved, I had about two, just over 200,000 my IRS piece that I moved into it into Olympia Trust, and then it threw them into a like a bill to rent private equity like limited partnership, real estate venture in San Antonio.

Brad: Now, my first piece are they’re still in my IRS piece, but they’re now in a different investment. And that was part of the the other reason when I was listening to your guys podcast. And then I’m starting to do these courses and then we have like your, our team members and they always talk about like a, you know, a wealth advisor, sometimes a financial planner.

Brad: But in the past, my financial advisor was just like someone solely based on my RSP account. So they manage that and I would check in with them twice a year. But I guess kind of what I’m looking for. Hopefully with you guys, it would be someone that kind of has a full understanding of everything that we have, and just making sure everything’s kind of going in the right direction.

Kyle Pearce: Yes, God.

Brad: Is kind of what I’m looking for.

Kyle Pearce: Gotcha. Yeah. And, you know, that’s something that like we typically how we typically model what we do and the clients we work with, first and foremost, we try to be as helpful as possible to everyone in the community, meaning anyone who reaches out. We try to, you know, make sure they get some next step, some confidence, you know, kind of with what they’re doing, what we what we typically do is we’ll work with them and really I’ll call it it’s fair, I guess it’s informal.

Kyle Pearce: And then hopefully at some point as you progress down this path, typically you’ll notice one of the main, strategies that we utilize ourselves is leveraged insurance strategies. And typically what ends up happening is as you build specifically those who have investments or businesses and corporations, you’ll eventually need to have permanent insurance built in. So we do a lot of structuring of that.

Kyle Pearce: So we’ll actually do that. And then that way we actually don’t have to charge anything to anyone for any of this advice. So we just we just hop on calls as often or as little as people are after. And then sometimes people are going to require that extra help in order to set up a structure. Other times they’re not going to need it yet, but typically people on this path will eventually need it.

Kyle Pearce: So that’s sort of been our model. So we we don’t actually have we have a lot of people asking that, like we want private, you know, or one on one mentorship or we want group coaching. So we’re actually starting like a group coaching sort of experience, and we’re just going to open it up completely free to the community.

Kyle Pearce: So it’ll just be something we do once a month, you know, once every six weeks something like that. And so that is coming. I wouldn’t say like at this stage, you’re at a place where, you know, you necessarily need to rush into, like, you know, into a leveraging permanent insurance sort of, structure.

Brad: You know, good life insurance like term life plans right now. I’m just renewed for another 25 years earlier this year.

Kyle Pearce: Awesome. So, like, you know, assuming that those death benefits that are there are enough to sort of make up for the shortfall of income for investors and we’d say over like, you know, I would say a significant period of time. You guys are still pretty young, let’s say, over the next 15, 20 years, if that’s a big enough death benefit, it’s probably all you need at this point.

Kyle Pearce: Once you have like so two things once you start having money, quote unquote, trapped in the corporation, which you’re not far off from having, by the way, right? Like you’re going to assuming you continue to trade and everything goes well over this next year or two, you’re going to fairly quickly find yourself in a spot where you go.

Kyle Pearce: Now, what do I do? You know, like, how do we get this money? Like, what do I do with it? Or how do I make sure that when I’m ready to get it out, that’s where like a leverage strategy, a leverage insurance strategy might make sense? Who knows, maybe down the road you have more than two dogs as dependents.

Kyle Pearce: And you know, those sorts of things start to come in. But I would say, like right now I don’t see a like a need for it. The only other aspect would be there are sometimes people would come in and they go, I want to get myself prepared for that. That journey. And sometimes people kind of, you know, start the process a little bit early.

Kyle Pearce: But, yeah, I feel like you guys are in a in a good spot. You’ve got your term, you both got good jobs. It looks like good income. So it’s not like any of this money sort of needs to come out anytime soon. So I would say you got a little bit of time, you know, over the next handful of years to kind of hone in on the trades, the next property you’re taking.

Kyle Pearce: And then as that, you know, I would say probably after that happens and, you know, you start to gain a little more momentum from there, you might find yourself now asking the question of like, okay, now like, what’s the next step? Know, how do we how do we make sure that when we’re ready to take this money out, we’re not going to get taxed in the highest tax bracket, you know, down the road, right.

Kyle Pearce: Would you say based on and I think your wish here was just kind of like you know, that overview here. How are you feeling from today’s call? Like do you feel maybe some affirmation about what some of what you’re doing? Is there any other questions maybe still circling around that you’re, you know, hoping that we were able to dig into here today?

Kyle Pearce: And then I guess, what would you what would be your next step, you know, along the journey here.

Brad: Yeah. I think well, the big one for me was just understanding the next couple properties, because I think that’s the next steps. The day trading stuff is, is pretty passive. Like we use it. There’s an I bought that does the trading. So you know, I check my phone to make sure the, the scripts running in the background. And I kind of leave that alone and then make sure we have reserve funds in case we get overleveraged.

Brad: I got to send money into the account fairly quick. So my real focus is always that’s all going as it should. It’s just acquiring a couple more properties. And I was understanding personally or the corp, which I think you explained fairly well, and then, just confirming that I was able to use the income from the day trading to fund if I need to do anything for the next property or to love it, and then trying to get those cash flow and, and paid down to a point where I if I can use that whatever I’ve paid down in the next five years, take that money out and buy a second property and kind of

Brad: grow it like that.

Kyle Pearce: Okay. I would also say to kind of I meant to comment on this before you just triggered it in my memory. You know, the rrsps to date that you’ve put through Olympia Trust. That’s a great move, especially if that sort of the asset class that you want to be heading into, like, you know, into other alternative investments and so forth.

Kyle Pearce: So continuing to take advantage of Rrsps only because you’re specifically in a really high tax bracket, if you don’t need all that 240 ish or whatever it is that you’re earning, it’s not a bad move to get some in there just to get some of that kickback and then that kickback, you can decide to do whatever you want with it, right?

Kyle Pearce: You send it to the trading corp or into a tax free savings account. I’m a big advocate for real estate. First alternative assets as you’re doing, you know, like doing all of those things. But then as you’re getting those wheels turning not to permanently ignore the registered buckets, I think sometimes we go all in, you know, like we’re or we’re encouraged by maybe some of, you know, the books we read and stuff to go, it’s like real estate or bust or it’s, you know, this or bust or whatever.

Kyle Pearce: And it’s like, you know what? I promise? I say promise. I can’t promise. I feel very strongly that in 20 years from now when I, you know, am ready to just kind of pull income from wherever, I’m going to be happy that I have more than one bucket to be able to kind of draw from, instead of it all being like, you know, one thing and it’s like, imagine if maybe, you know, something changes down the road and I go, oh, crap.

Kyle Pearce: You know, I, you know, I went all in on this one thing and maybe something changed, I don’t know. So so I like that you’ve got some rrsps and I would say, yeah, keep, keep add in a little bit there and because you already know about Olympia Trust, you do have access. You know, you don’t have to hand them off to RBC or you know, whoever was was investing for them for that money.

Kyle Pearce: Isn’t that.

Brad: Awesome? We’ll be in touch.

Kyle Pearce: All right, my friend.

Jon Orr: Okay. So now let’s, dig into, looking at the Kennedy well, secrets financial health report for, this long time listener, you know, Kyle and and, Brad here, discussed many, many opportunities, many, things that they were strengthening. One of the things that they’re working on answered a lot of questions in this and in this interview, this coaching call.

Jon Orr: So let’s unpack, say, the four stages for every financial health, system. So just as a recall or reminder here, the stages are, stage one is designing your vision for freedom. So this is your goals. You know, being clear on, where you’re trying to go. Stage two is establishing your corporate or your personal wealth reservoir. This is your access to capital.

Jon Orr: This is your access to emergency funds. Having that is essential for healthy system. Stage three is optimizing wealth plans with structure. So are we using Rrsps tax we savings can we making sure that we’re making use of the available structures. We have opportunities for for tax efficient strategies. And then stage four is legacy and estate strategy. Are we planning for optimizing the value of our estate today?

Jon Orr: But also making sure that you were passing it on and making sure that we’re not passing out and losing a bunch of that to tax. So structuring, you know, in optimizing, the, the estate that as a, as it will pass on, but making sure that we’re using the value of your state now. So those are the kind of the four areas.

Jon Orr: Let’s just quickly go over Brad’s kind of report here. Now in the first stage, which is designing your vision for freedom, we’re going to give Brad a B-plus. Like, he’s got clear aspirations for passive income. He’s been you know, he’s been looking at different asset classes. He’s got, you know, his business income. He’s got his you know, he’s looking at investment.

Jon Orr: He’s got strong financial literacy kind of protecting him in certain areas. But it will say where he needs to say to get an A is he needs to basically clearly articulate well, like what is the long term look like and what is what is the end goal look like? Like where are you? Where is that position of of making contributions and looking in your in your years of gain and in your early years of like adding to your pile?

Jon Orr: And then where do the years look like of, say, using that pile? And where does that transition into, like where does it where’s that transition time happen? And do we have a clear pathway, like a structured pathway with certain asset classes with trajectories, which means we’ve extrapolated the data to say we’re here and we want to go there.

Jon Orr: And then we have a number. A Brad needs to kind of know what that number is and then structure that pathway to get there. So we didn’t hear that in this call. So this is why he would get to say a B here. So you get an A when when you have that clarity of where your numbers are and where you’re trying to get to and, and are the asset classes that you’re contributing to.

Jon Orr: Now, if you project that out, will it get you there? And I think this is the part that you need to have. So, stage two, we’re going to give him an A minus here. He’s establishing his corporate, or personal wealth reservoir. He’s got he’s got an effective use of his corporation. So he’s making sure his his business is safe, performing well in there.

Jon Orr: He’s been talking about passive income inside there versus active income. He is understanding some of the dynamics there that are needed, to make sure you’re maximizing those components. But I think he needs to also formalize, a system for so inter corporate lending, between his companies, making sure he’s tracking those things. But also, does he have access to capital using his rental properties, using his corporate structure?

Jon Orr: Do we have some of those reservoirs that we’re building up inside there? We didn’t hear a lot of that here today. So there’s some improvement there. Stage three is optimizing your wealth plan. He’s actively investing in real estate, exploring tax shelters. He’s got a mix of rrsps and alternative investments. So that’s great. He’s been looking at, you know, evaluating different capital allocation strategies.

Jon Orr: So that is good. Some of the some of the moves he could be making is is thinking about optimizing those registered accounts. Are we making sure that we’re maximizing RRSP. But also our tax free savings account. And do I have access to say some structures that that could be now, you heard Kyle and him talk about they’re making some, some, some, some headway in this area.

Jon Orr: And he didn’t feel like, say, using a tool like, whole, high cash value, a whole life, insurance policy was at this time, needed for what he’s trying to do. It’s not always needed, but but it is something he’s probably going to need in the future because it can optimize further. Your wealth plan here in taxes, especially as you go into stage four, which is your legacy.

Jon Orr: An estate strategy also gives you opportunities for your your wealth reservoir, which is stage two. So we talked about that’s not really a great fit for him just yet. We want to be making sure that we’re optimizing some of those rrsps and tax free savings account structures first. So he’s getting a B-plus in that area. Stage four he’s going to get about a C, which is natural for his kind of like thinking.

Jon Orr: But I think we can always do better on stage four, which is kind of a going we know we’re trying to, plan for long term. Like, you heard him talk about a term life insurance, and it felt like it was a good use of covering his, his, his income so that if he if he did pass, we’ve got that covered.

Jon Orr: But there is also no estate plan or institutional wealth strategy being discussed on the call. So either he has it and we don’t know about it or we don’t. We’re not sure he has a plan for it. So we’re going to give him a c-plus here because there is some work to be done there. So overall, Brad’s got a strong financial position, active cash flow, successful, you know, business foundational real estate assets.

Jon Orr: Those are some great, great fronts. There. But he’s also got some some next steps to think about, some optimizing those four areas. Overall, he’s kind of like the plus area, which is a great, great spot for, an entrepreneur. So if you also want to know about your, say, pathways or your stages, head on over to Canadian Wealth secrets.com/pathways.

Jon Orr: You can fill out our survey there. And we can help pinpoint which of those zones or which of those phases, you want to start with or where you want to say optimize for form. We’ll give you some next steps along the way. So again, that’s Canadian secrets.com/pathways. Just as a reminder, the content you heard here today is for informational purposes only.

Jon Orr: Snacks through any such information or other materials legal, tax investment, financial or other advice. Kyle Pierce is a licensed life and accident sickness insurance agent and president of Corporate Wealth Management with Canadian Well Secrets.

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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