Episode 91: What Future You Wishes You Knew Right Now!

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Should you cancel your safety net structures like life insurance or disability when you reach your financial independence and are ready to retire early? 

This question is addressed when you consider how to balance your immediate financial needs with long-term wealth-building goals. 

Many people face the difficult challenge of managing both short-term expenses and long-term financial aspirations. In this episode, Jon and Kyle delve into strategies that help you strike the perfect balance between living comfortably today and securing your financial future. Drawing from personal experiences and regrets, they explore the importance of proactive planning and informed decision-making to avoid common financial pitfalls.

Whether you’re trying to achieve financial freedom (FIRE), manage your assets, or plan for your legacy, understanding how to align your short-term actions with your long-term goals is essential. This episode offers insights into the benefits of using tools like permanent insurance with high cash value to not only support your current lifestyle but also to ensure a secure financial future for you and your loved ones.

• Discover how to balance short-term financial needs with long-term wealth-building strategies.
• Learn about the potential of permanent insurance with high cash value as a tool for both financial freedom and estate planning.
• Gain insights into proactive planning techniques that can help you avoid financial difficulties later in life.

Listen now to master the art of balancing your financial priorities and take the first step toward achieving both immediate comfort and long-term financial security!

Resources:

• 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!
• 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.  
• Looking for a new mortgage, renewal, refinance, or HELOC? Reach out to Jon to share some options.

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 corporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

By hopping on a discovery call with Kyle, he will review your specific personal and corporate financial situation in order to determine if there are some quick wins available for you to minimize taxes personally or corporately, provide ideas for how you can increase your personal cash flow, and ensure that the net worth of your estate continues to grow in tandem.

Balancing your financial priorities is crucial for achieving both immediate comfort and long-term security. In this episode, Jon and Kyle explore how concepts like financial freedom, financial independence, and the FIRE movement can be aligned with estate planning strategies such as infinite banking and the “bank on yourself” approach. They dive into the benefits of using participating whole life insurance, permanent life insurance, and universal life insurance to create a robust financial plan that minimizes income taxes and leverages low tax rates. Whether you’re focused on achieving financial independence or securing your legacy, this episode offers valuable insights into effective wealth-building strategies.

Watch Now!

Detailed Episode Summary 

Balancing Short-Term and Long-Term Priorities

Jon and Kyle discussed the ongoing struggle between immediate needs and future goals. Jon highlighted the importance of balancing short-term and long-term priorities, using personal examples to illustrate the point. Kyle shared his own regrets about not prioritizing education and limiting alcohol intake while traveling. They both agreed on the necessity of pursuing both short-term and long-term financial objectives simultaneously, with a focus on growing personal assets while considering the long-term implications of present choices. The discussion was initiated by a social media post about term insurance, leading to a broader conversation on financial independence and personal finance management.

Financial Freedom and Proactive Planning

Kyle and Jon discussed the challenges and considerations of achieving financial freedom. Kyle emphasized the importance of making informed decisions to meet both current and future financial goals without sacrificing one’s lifestyle. He also highlighted the limitations of focusing solely on growth and equity in investment strategies and stressed the need to consider future needs and potential risks as one approaches their financial goals. Jon agreed with Kyle’s points and stressed the importance of proactive planning to avoid potential financial difficulties later in life. Both underscored the need for early estate planning to mitigate potential tax issues and to ensure financial security in the future.

Strategies for Financial Freedom and Asset Management

Kyle proposed a strategy for purchasing permanent insurance with a high cash value to achieve financial freedom and provide a supplemental income during retirement. He emphasized the potential of this tool to help manage capital gains and other taxes, and suggested it could be used to buy additional assets. Kyle and Jon discussed the importance of having a plan in place to pass on assets to future generations while minimizing tax liability. They concluded by reminding listeners that the content was for informational purposes only and should not be construed as financial advice.

Quick recap

Jon and Kyle discussed the importance of balancing short-term and long-term financial priorities, sharing their personal experiences and regrets. They also explored the challenges and strategies of achieving financial freedom, emphasizing the need for informed decision-making and proactive planning. Lastly, they proposed the use of permanent insurance with a high cash value as a tool for financial management and intergenerational asset transfer, while reiterating that this should not be construed as financial advice.

Transcript:

00:00:00:04 – 00:00:32:14
Jon Orr
Should you cancel your safety net structures like life insurance or disability when you reach your financial independence or, you know, financial freedom or when you’re ready to retire early? This question is addressed when you really consider how to balance your immediate financial needs with your long term wealth building goals. Let’s get into it.

00:00:32:16 – 00:00:37:17
Kyle Pearce
Welcome to the Canadian Wealth Secrets Podcast with Kyle Pearce and Jon Orr.

00:00:37:17 – 00:00:51:12
Jon Orr
We are recovering high school mathematics teachers and education consultants whose entrepreneurial spirit led us to begin multiple businesses in real estate investing, digital courses and coaching and consulting after the bell rang at dismissal time.

00:00:51:17 – 00:01:12:02
Kyle Pearce
Fast forward a decade later where we’ve grown our portfolios and our time freedom to the point where we can now help entrepreneurs, business owners and investors to grow their wealth into a legacy that lasts generations through hidden investment and tax secrets. Your financial advisors won’t believe our true.

00:01:12:04 – 00:01:31:02
Jon Orr
In this episode, we’re going to dig into whether you’re trying to achieve financial freedom, your financial independence, to retire early, like the fire movement that you may be you’re after, and how to manage your assets and plan for legacy and understanding how to kind of align short term actions with long term goals. We’re going to unpack how to balance those needs and think about them.

00:01:31:05 – 00:01:50:08
Jon Orr
And what are some of the thoughts and structures that you want to put into place to do that? So strategizing. We’re going to talk about plumbing insurance and with high cash value for estate planning, but also for financial freedom. And we’re also going to kind of look into proactive planning and techniques that can help you avoid financial difficulties later in life.

00:01:50:10 – 00:02:24:07
Jon Orr
Okay. We’re going to talk about sacrificing in this idea of sacrificing like future planning for current planning or future lifestyle for current lifestyle. Like there’s this tradeoff that we often do with many things. Sometimes it comes from looking back in regret or looking back and going like, I wish I had done this differently. And our future selves always kind of go back and go, Hey, past self, like past, John, you should have done this because I’m in a different position than you are, and I wish you had done this differently.

00:02:24:09 – 00:02:53:18
Jon Orr
Your current yourself is going like, Hey future self, you’re you might have to wait or I got to do these things now and future self. I got to put you on the backburner a little bit just because I got to like maintain. There are things in our lives that have this kind of pull in two different directions between sacrificing the future for the present gain or sacrifices in the present game, for the future, and in this episode we’re going to talk about like how you can do both and we’re going to do how you can do both for your financial wealth building journey.

00:02:53:21 – 00:03:13:00
Jon Orr
But this dual kind of pull occurs in lots of things like occurs. I wish my future self or like my current self looks back on my past self and says like, you know what, maybe we should have just I should have spent more time with kids when they were young because it’s like they’re only that age for so long.

00:03:13:06 – 00:03:31:19
Jon Orr
And my current self is going like I know the past self was going, man, you just got to survive and you need them to go out for a nap. You need them to go down for a nap and you need them to go spend the weekend at grandmas. And you know, you keep making these justifications because you need to survive.

00:03:31:19 – 00:03:58:18
Jon Orr
And then if you think forward, it’s like probably future John is going to be like, even though you’re kids, my current self is going like, why didn’t you, you know, take the DeLorean back in time to tell past John just to put colors in a page from each paycheck into an ETF or, you know, or into, say, some sort of fund back then and go be okay with this because you’re going to be a great, you know, in the future.

00:03:58:18 – 00:04:19:06
Jon Orr
And and I know that old John was like, don’t talk to me about future John because I want, you know, I need this money to do these things with like there’s this constant pull. And today we want to kind of talk about that constant pull. But really, like, how do you set yourself up to do both and make future John future self happy and present self happy?

00:04:19:08 – 00:04:37:05
Kyle Pearce
I think about a couple in my own life. I think about I’ve said it before on the podcast, the present Kyle wishes he could talk to past Kyle and say, you know what? Had you put a little more effort in and post-secondary, you would have done way better. I know I was smart enough to. I just didn’t have that there.

00:04:37:07 – 00:05:01:01
Kyle Pearce
The other one, John And you’ve experienced this firsthand, right? Especially when we’ve gone traveling and speaking and things like that. There’s like present Kyle wishes. And I guess this one’s a hard one because it’s like the next day present. Kyle wishes former. Kyle didn’t have that last adult beverage, right? When John says it’s time to hang it up and the past, Kyle says, Yeah, this is confusing now.

00:05:01:01 – 00:05:02:04
Kyle Pearce
Now I don’t know where I’m at.

00:05:02:10 – 00:05:06:17
Jon Orr
Future Kyle had present John and that moment going Yeah, yeah.

00:05:06:17 – 00:05:09:22
Kyle Pearce
It’s time It’s time to cut your losses and let’s move along right And.

00:05:09:22 – 00:05:10:07
Jon Orr
You’re like.

00:05:10:11 – 00:05:27:06
Kyle Pearce
We’ve all been there so you know why we bring up these sort of everyday things? Like, here’s the negative. You don’t want to flip all the way to the other side and start thinking about every moment of every day. I don’t want to do the wrong thing right? That’s the challenge we have as humans that we’re like, on or off.

00:05:27:06 – 00:05:59:10
Kyle Pearce
We’re all in, all out. So I don’t want someone who has a young child to be over worried about that and feeling like I’m not a good parent or I’m not this that’s not the intent here. But it is really what triggered this thought was, you know, we’ve had a lot of conversations and actually there was a post on social media recently from a CFP, Cody Garret on LinkedIn, and he had sort of thrown out this example and basically just said, if you reach financial independence, he stated you may not want to cancel your term insurance.

00:05:59:10 – 00:06:21:13
Kyle Pearce
And this sort of erupted into all kinds of different opinions coming back. And today we’re going to like move beyond this idea of term insurance. And what ended up happening in this thread was people talking about the idea of like just kind of taking care of yourself and worrying about growing your own assets and not worrying about what happens later.

00:06:21:13 – 00:06:44:10
Kyle Pearce
And really, I’m sure many people listening would know, like our stance is imagine if you could like do both. Imagine if I could not only be working towards my own financial goals because that right now, John, you and I were chatting about it recently, like that’s number one in our minds right now as we are in our working years or what we deem to be our working years.

00:06:44:10 – 00:07:12:18
Kyle Pearce
You’re thinking about what sort of lifestyle am I creating for myself both now while I’m working? Because right now, present Kyle is making choices that will benefit me now, but could also benefit or harm me later, right? So like we’re constantly doing this push and pull between our own selves. But then imagine as we fast forward and you get past that financial freedom number where that’s not an issue for you anymore.

00:07:12:18 – 00:07:35:21
Kyle Pearce
You’re like living that lifestyle and you’ve done all that quote unquote right things or the enough right things to put you in a position where income isn’t an issue. Later in life, what starts to happen is you start to think about things that aren’t so important to us right now, and that would be how much money should I spend so that I can leave something behind.

00:07:35:21 – 00:08:11:11
Kyle Pearce
Current Kyle Present. Kyle does not really care about what my kids get later on, but at the same time, based on all the learning that we’ve done, when I look at it and I go, there’s actually a way for me to get to outcomes that I can actually be working towards meeting my own financial freedom goals and without sacrificing anything, without having to like take from that plan and put it into this separate plan, which is maybe legacy or what will be left behind later on.

00:08:11:13 – 00:08:33:24
Kyle Pearce
I don’t have to do any extra. All I have to do is just be informed enough to know what is the appropriate decisions that I could be making now, so that when we fast forward to future future Kyle Elderly. Kyle When I look back and I go, Oh shoot, I did it again. We talked about Kyle when he should have said no to the last adult beverage.

00:08:33:24 – 00:08:43:22
Kyle Pearce
Well, guess what? Now the thing I regret is not thinking beyond my current financial freedom goal for my life and my life alone.

00:08:44:02 – 00:09:01:19
Jon Orr
Yeah, And I think what’s happening right, is that you’re making you’re on, you know, you’re listening this podcast, you’re making moves about planning for the future, but you’re probably goal is like ours. It’s like you’re trying to get to this point where you like you said, Kyle, you’re financially free. You’re you don’t have to be concerned about the money coming in anymore.

00:09:01:20 – 00:09:28:00
Jon Orr
You know, you feeling pretty confident about your, your lifestyle and the money that’s that’s supporting that lifestyle. But you’re trying to probably make good moves now to make that happen. So, like, you’ve got this target in mind and maybe you’re at the target now, but maybe you’re like us. You’re still maybe not exactly at the target. But what’s happening, right, is like because you’re making all these moves for now for the target, we’re not thinking about what happens when you get to the target.

00:09:28:02 – 00:09:49:07
Jon Orr
It’s like I’m planning for the target, I’m planning for retirement, I’m planning for spending while I’m on retirement, retirement, how much money will I need so that I don’t have to say work anymore, which is a lot, you know, a goal for a lot of people. But it’s like, okay, now what are the things that when you hit the goal that you’re going to have to worry about at that point?

00:09:49:07 – 00:10:13:19
Jon Orr
And what we’re learning and what you’ve been talking with so many people for the last year or two years about these types of things and planning for financial independence and planning for retirement and the people who are at that point, they’re all saying, like, I wish it on this. I mean, the tax problem now I’m in this scenario now, but I was all I was doing is concerned about getting here.

00:10:13:21 – 00:10:40:08
Jon Orr
And now I’ve got new problems that I’m now wishing. That’s the thing that we want to like talk about specifically is like, what are some of those issues and how can I not sacrifice the current me so that I have to like, plan to address the issues for future? Me Right. We can plan for our target of reaching financial independence and then also when we get there, go, Oh, I made some good moves.

00:10:40:08 – 00:10:43:07
Jon Orr
I made some good moves to put me in a self in a really nice spot.

00:10:43:09 – 00:11:06:24
Kyle Pearce
Right? And what I think makes this hard as well. So you have kind of two things going on. As you mentioned, you have this target that you’re focusing on. You’re putting all of your time and effort and energy into it, which makes sense, right? Like you want to make sure that I hit that target of financial freedom and you almost feel like there’s no energy left, no bandwidth left for me to be thinking about anything other than that.

00:11:07:01 – 00:11:46:23
Kyle Pearce
And then the second challenge we have is we have all the pros out there who are giving us information based on what might seem rational on paper, but not realistic when it comes to actual implementation. What I mean by this is when people are talking about ten, right? Dave Ramsey 12% returns. That’s under an assumption that first of all, every dollar that you have and every part of this plan is going to go into essentially growth equity type assets when in reality the vast majority of people don’t have an asset allocation where it’s 100% equities.

00:11:46:23 – 00:12:06:10
Kyle Pearce
It’s just not a thing. Right now. Some people out there like don’t get me wrong, I think Jim Chong, who is on the podcast, I believe he is like all real estate, all equities, but he is a one in a million type person. Like he is so convicted and he’s so into that approach and it does make sense for him.

00:12:06:10 – 00:12:28:14
Kyle Pearce
And I would say, hey, more power to you. But he’s also one of these people who sort of doesn’t care about anything beyond that target, which I think is slightly shortsighted because what ends up happening here as we build our assets, what you’ll notice is that, first of all, the vast majority of people are not 100% into growth or equities.

00:12:28:20 – 00:12:49:01
Kyle Pearce
They have some sort of mix. And for a lot of people it’s a lot closer to a 5050 mix. And maybe they even recognize when they actually review their accounts. So when people pull up their funds that they’re in, their ETFs, they’re whatever investments they’re in and they have a look, they might see one investment fund that earned 13%, right?

00:12:49:01 – 00:13:19:20
Kyle Pearce
But then this other one that earn two or 3%. And when you think about averaging these things out, this number comes way, way down anyway. But here’s the interesting part. As we start aiming for this target, if we can think a little bit beyond the target, if we think about the fact that my goal is to get to this target of financial freedom, that you know, that there’s a next step there, which is I’m going to want to start thinking about what is going to likely happen with my portfolio.

00:13:19:20 – 00:13:43:06
Kyle Pearce
And for the vast majority of people as they age, they start to get out of more risk on assets and they start to move towards risk off assets. They move towards fixed income, which means that the tables start to turn and they start to go to more of like, I just want to maintain my assets. I’m not looking to necessarily grow them.

00:13:43:08 – 00:14:08:16
Kyle Pearce
No one’s going to say no to growing the assets, but they’re more concerned about volatility. And what ends up happening is as people get past that target, so they’ve reached this financial future, this financial goal, they start to recognize that they’re older, they start to recognize that all their needs are met and they start to think about things that they never thought of back in future or current self, I should say.

00:14:08:16 – 00:14:38:08
Kyle Pearce
So your current self may not be thinking about how risk might actually not let you sleep at night anymore because you’re like, I don’t have any other income source coming in other than what I built. And I want to make sure that even in a down year I am protected. So when we start to see that, what will get is will get people that reach out to us and they say, is it too late for me to start thinking about planning for my estate?

00:14:38:10 – 00:15:02:00
Kyle Pearce
And the sad reality is for some people, once they’re in the seventies, for example, it becomes like really, really, really difficult for us to start looking at how do we deal with the massive capital gains tax that’s going to be coming for your estate later or the massive income tax hit that you’re going to get for this big RRSP that’s ballooned over time and you haven’t been able to melt down in time.

00:15:02:02 – 00:15:30:17
Kyle Pearce
These are the things that we want to start thinking ahead and go, What part can I do now that will allow me to help get closer to that second target down there without taking anything away from my path to the current target. And the reality is, is that it can be done. And actually, I would argue that if you think about that second target, it can actually help you get to the first target even sooner.

00:15:30:19 – 00:15:48:20
Jon Orr
Well, that sounds great. I think what we want is to share that information and go like, what are the things that we should be doing right now so that when I do hit my target, because the likelihood is if you do hit your financial goals, is that you’re going to be in that spot that you know, that you don’t want to be like my future self is to think about my estate.

00:15:48:20 – 00:16:01:18
Jon Orr
It was like, I don’t want to think about my estate, but your future self is going to be like, Man, we got too much money and I can’t spend it all and I have to figure out past self should have figured this out earlier. So you are going to get to that spot, especially if you listen to this podcast.

00:16:01:18 – 00:16:19:15
Jon Orr
You are going to get to that spot where you’re like, okay, all my financial needs are met and I still have this that I have to figure out what to do with. So I could just give it all half of it to the government, or I can figure out how to do that. But what Kyle saying is, probably by the time you feel like that, it’s too late.

00:16:19:15 – 00:16:36:15
Jon Orr
So it’s like, what do we do now? So that I get there and I’ve already accounted for this and I’m not sacrificing the short term gains or the the current gains of making sure that I’m secure now. So go talk to us. What do you think? What are some of the things we should do now?

00:16:36:17 – 00:17:17:01
Kyle Pearce
Well, the old school mentality for estate planning, for example, when we’re thinking about estate and we’re thinking about that second target, like way down the road was, okay, just buy just enough permanent insurance to have a big enough death benefit to deal with all the taxes. Still not a bad strategy, but the problem is, is the way those policies were designed, it doesn’t really give you much use for these policies in the interim, whereas the way we would structure a high cash value policy, what it allows for this tool to do is to actually help you in the shorter and medium term get closer to the first target, which is that financial freedom.

00:17:17:01 – 00:17:40:18
Kyle Pearce
Because remember, we’re going to make it high cash value so that we can leverage that cash value as an opportunity fund to buy additional assets. With additional assets comes additional tax consequences. These are good problems to have. Have you ever heard someone say, I’m not going to do overtime because I’m going to be in too high a tax bracket to make it worth it?

00:17:40:18 – 00:18:00:09
Kyle Pearce
I’m going to be worth it. It’s not going to be worth it. It’s like, no, no, it’s still really worth it. It’s just you’re in a higher tax bracket on that amount. Like you’re not losing all of that amount. You’re just going to pay more in taxes. Well, the same is true here. As we grow our estate, as we grow our net worth, we are creating larger and larger tax burdens.

00:18:00:09 – 00:18:22:19
Kyle Pearce
Now, that tax burden can be bared by us if we want to sell assets in our life. Right. And we want to use that income, or it can be paid by the estate later right when we move on and things are all deemed to be sold, whether they’re sold or not. And what you’ll see estates end up doing is that oftentimes estates have to sell assets in order to deal with the taxes.

00:18:22:21 – 00:18:43:12
Kyle Pearce
So that’s where permanent insurance in the traditional sense has helped in that case. But when we create that high cash value in that shorter term and medium term, what we want to do is we want to fund it in such a way that we’re not looking at it as an estate planning tool. We’re actually looking at it as a wealth generating machine, right?

00:18:43:12 – 00:19:03:24
Kyle Pearce
So it’s going to conservatively grow tax free, as we’ve talked about on previous episodes. This is supercharged. If it’s done inside of a corporation with active earned income, right? Because now we’re growing it in the corporation, we’re going to supercharge your corporation and the entire structure. And that death benefit down the road is going to payout tax free.

00:19:03:24 – 00:19:30:02
Kyle Pearce
So that’s helpful for estate, It’s helpful for the CDA from your corporate structure. But in between I’m looking at that policy and when I say in between, I’m talking about when I’m here, I’m looking at that policy as another income bucket for me. I’m not going to put that policy in place with the intent for it to sit there collecting dust on the side so that my estate and the next generation can benefit.

00:19:30:02 – 00:19:55:08
Kyle Pearce
While I don’t, I’m actually looking at it as another bucket that I can reach to and I can leverage to supplement my living expenses, my living style that I want. And I’m not going to hold back. I’m going to utilize that thing. It probably even more so than I would had I not had it. Because the beauty is, is if I build this policy, it doesn’t matter what the size is.

00:19:55:08 – 00:20:23:14
Kyle Pearce
Let’s say I build the cash value to $1,000,000 or so. The death benefit associated, depending how many years down the road could be two, three, four, 5 million. It depends how long the policies been in place, but ultimately the vast majority of that death benefit can be used to not only pay out my loans for my lifestyle in my retirement while I was pulling tax free income from this policy.

00:20:23:16 – 00:20:46:08
Kyle Pearce
But that death benefit is going to be bigger than that amount, and it’s still going to help us get some of that second target taken care of. Right. So dealing with the capital gains, dealing with any other taxes so that they don’t have to necessarily firesale all of the assets, especially for our real estate friends. They don’t have to go and sell a building because there’s this massive capital gains tax.

00:20:46:08 – 00:21:19:13
Kyle Pearce
I just had a call with a client the other day, bought a building for 500,000. It was a little less actually in Toronto in 2000, and they just sold it. This year. It’s 20, 24, 24 years later. And before you said that number, I said, I’m like, how do you feel about your capital gains tax? And he said, the entire down payment that the buyer bought because they bought the building for five point something million dollars, he’s like the entire down payment amount is going to capital gains and he’s holding the mortgage.

00:21:19:13 – 00:21:54:20
Kyle Pearce
So it’s like he basically sold this building and feels like he got nothing because he’s holding the mortgage and they’re going to pay him. Now, luckily, it’s a nice high interest rate, so each and every month he’s going to get a nice big fat check that the government’s going to try to take more from. But the reality, the moral of the story is when he bought that building back in 2000, he told me and I asked him, I said, So when you bought this building, were you thinking about whether if you were to sell this while you were alive, that you would potentially have to pay about $1.4 million in capital gains taxes?

00:21:54:22 – 00:22:30:03
Kyle Pearce
Is that something that crossed your mind? He’s like, Absolutely not. I’m like, Imagine if you were able to have something there to help you deal with this because you thought a little bit further ahead and he’s like, oh my God, He would have, of course, hands down, have set something up. Now, unfortunately, it was a little late, but I had said, I’m like, would you have considered keeping it if you could just refinance it and come out ahead by refinancing it and keeping this building and continuing to fund more policies so that it’s a win win at the end for you, your estate and everyone involved.

00:22:30:03 – 00:22:49:07
Kyle Pearce
And he’s like, oh my gosh, that seems like a no brainer as well. So the reality is, is that no matter what the choices that we make, even though we’re really hyper focused on this first target, which is like, I want to grow my wealth and I want to grow my financial freedom, I want to reach that financial freedom number.

00:22:49:09 – 00:23:10:08
Kyle Pearce
We should always be at least thinking about what happens after that point, because if you are committed to getting to that place, you will be there and you will look back and you will say, I wish I would of. And then you get to fill in the blank on what that is. You’re not going to be able to know everything along this journey.

00:23:10:08 – 00:23:32:22
Kyle Pearce
But if we’re able to give you some of these ideas to think about having an easy plan that can work alongside in tandem with that first target can be a massive, massive net worth multiplier. And the beauty is, is when you do move on, it can go up instead of down like it does for so many Canadians.

00:23:32:24 – 00:23:48:04
Jon Orr
I love it. And one of the things when you were saying about selling an asset and let’s say your future self goes, Thank you, present self or past self for starting this policy because maybe I do have to or I’m in a position where I’m selling an asset and I have to pay the capital gains on that asset.

00:23:48:04 – 00:24:09:01
Jon Orr
But let’s for a moment say for a few years leading up to that point, or maybe five years leading up to that point, like you said, Kyle, you were leveraging the policy to supplement your income because you can’t and all of a sudden you got a capital gains, you sell an asset and all of a sudden you got to pay the capital gains on that asset.

00:24:09:03 – 00:24:46:05
Jon Orr
And then let’s say the rest, the leftover. You now have this windfall right? Like this windfall now is going to be like, hey, now the windfall could go back on the policy, pay the policy loan off, and you just got like income in a way that you’ve let’s say you’ve supplemented your personal income for a number of years, tax free, whereas if you did not have this tool in place, you still would have paid the capital gains on selling that asset and you would have paid tax on whatever income you created or pulled from, let’s say, an RSP or let’s say like you had to pay tax on that personal income, so you had to

00:24:46:05 – 00:24:50:17
Jon Orr
pay both taxes. But if you use the tool that way, you only pay tax once.

00:24:50:19 – 00:25:12:21
Kyle Pearce
100% in a perfect world, when you have this other asset, some call it the and asset sitting there along side, it makes you feel better about doing something like, for example, mortgaging that property. Instead of selling that property. I can actually mortgage it. I can mortgage it conservatively if I want just to get to call it cash flow neutral.

00:25:12:21 – 00:25:31:17
Kyle Pearce
All right. So maybe it’s 50% loan to value. Pull this tax free loan against this property, which is an asset that you get to keep owning that’s going to continue appreciating, which means the capital gain later is going to be higher. But now you have two assets side by side. I have the money I need in my pocket.

00:25:31:23 – 00:25:58:03
Kyle Pearce
I send nothing to the government. Yet in capital gains, we can’t avoid them. They’re coming, right? They’re going to come for you whether you’re here or you’re not. That’s going to get paid. But it’s who’s going to pay it, how is it going to get paid, and then what’s going to be left over. So if I know that I’ve got this other tool that I’ve been planning for ahead of time as I’m on this journey, and don’t get me wrong, you might need to add more policies along the way.

00:25:58:03 – 00:26:22:09
Kyle Pearce
We’re not suggesting to have the biggest, thickest policy you’ve ever seen before you hit that first target, but by starting something small, it gets you on the right foot to go, okay, this is going to be helpful. Every dollar I put in this tool is going to help me deal with the tax issues on that tool. And as this one grows, I can leverage it, put it into more assets, creating more tax problem.

00:26:22:11 – 00:26:44:22
Kyle Pearce
And how do I solve that tax problem for me and or my estate? I put more dollars in a policy. Is it this policy or do I need to open up an additional policy to start funding it and dealing with that second tax target or that second target that we’re after down the road where tax is going to be an issue.

00:26:44:24 – 00:27:10:13
Kyle Pearce
So as you focus in, I think the secret sauce for me in this episode is looking at that first target is so key. Some people I just had a call this morning with someone who’s just working on starting a seed fund, right? So it might seem like so far off. Right? But imagine this. It’s like we’ve had conversations about emergency funds, seed funds being started through, say, a permanent policy.

00:27:10:13 – 00:27:30:16
Kyle Pearce
It might be really small, might seem inconsequential down the road, but it starts you thinking about the right things. You keep both targets in mind as you grow your net worth, because I’m telling you right now, as you build those assets, it starts to bother you more and more that the government is going to take a lot of it away.

00:27:30:19 – 00:28:05:03
Kyle Pearce
And you’ve been working so hard to build it all this time that you’re going to want to make sure that you keep as much of it within your family, within your estate as you possibly can. The government’s still going to get theirs, but a death benefit allows for you to not only help you deal with any loans you might have for your personal lifestyle and also to leave some money to deal with taxation and in many cases still leave some money for legacy for the estate and the next generation.

00:28:05:03 – 00:28:26:24
Kyle Pearce
Again, that’s like the bonus that you get out of it. But what you want to make sure that you’re doing is look at this tool as a means to get you to the first target. And then when you are getting closer to the second target, you’re going to look back and go, you know what former self I’m really happy that we did all of this thinking ahead of time and that we did it the right way.

00:28:27:04 – 00:28:53:01
Kyle Pearce
Because I’m telling you, when you’re later in life and the people I’m chatting with as they retire and they wind down businesses or they just want to slow down, the one thing that irks them so hard as the amount of time and effort that they put into earning money, investing money, and then coming to the realization that their estate is not going to get to benefit from all of it, that to me is a secret source right there for sure.

00:28:53:01 – 00:29:12:17
Jon Orr
For sure. That is the secret sauce. And we always encourage you to figure out and listen and kind of wonder what is your secret sauce that you pull from this? Maybe you’re listening right now and you’re like, I’m at that spot where I’m like, I wish I had done something earlier. And in a lot of cases, it’s not too late to kind of set these tools up.

00:29:12:17 – 00:29:31:16
Jon Orr
We encourage you to reach out to us. I can e-mail secrets dot com for such discovery can be well secrets dot com for us discovery and then we can work on a plan moving forward now also if you’re like I wish I had done this earlier send this recording send this podcast that you’re listening to right now in any format that you’re listening to.

00:29:31:16 – 00:29:52:07
Jon Orr
So if you’re listening on YouTube right now, or if you’re over on Spotify or Apple, send this to somebody could be your child. It could be a friend who is younger and starting this journey. Send this to them and tell them I wish I had done this earlier. Please listen to this and maybe they will get to that point and then pass that on to somebody else.

00:29:52:07 – 00:30:05:09
Jon Orr
And then we are trying to build a wealthier society, a smarter society that uses these tools appropriately or building their wealth so they can use it now, but also creating that legacy that last.

00:30:05:11 – 00:30:26:20
Kyle Pearce
Hey, friends, listen, links, resources, transcripts and all other goodies are on the Canadian Wealth Secrets dot com website. You can click the link in whatever platform you’re in right now to jump straight to the show notes page. Go ahead and do it. The discovery link is also in there as well. Give it a quick look down at that phone and we will be chatting with you real soon.

00:30:26:22 – 00:30:46:20
Kyle Pearce
Until next time, Canadian Wealth Secrets seekers. We will see you in the next episode.

00:30:46:22 – 00:30:55:20
Jon Orr
Just as a reminder, the content you heard here today is for informational purposes only, you should not construe any such information or other materials legal tax, investment, financial or other advice.

00:30:55:22 – 00:31:14:16
Kyle Pearce
John as a mortgage agent with bricks Mortgage License number m23006803 And Kyle is a licensed life and accident and sickness insurance agent with the Pan Corp. team, and he is the VP of Corporate Wealth Management.

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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