Putting Kid$ Through University
(Saturday 11:30 a.m.)
I was talking with Jane this morning over pancakes and coffee - our usual Saturday morning routine, where I get up, make the coffee and pancakes....
She mentioned that many in mid-life are now paying for more than one child to attend university and that this was a daunting feat for those who were already stretching the budget thin. As a financial adviser, I have noted how this one element of middle class family life can become an underlying stress factor for a family -the proverbial straw to the camel's back.
Most financial advice one will receive has to do with saving for retirement through an RRSP. If one tries to take money from that vehicle there is a big penalty.......and we don't even know if we will make it to age 69. So while there are obvious benefits in the RRSP program, there are also opportunity costs that one must endure while that money sits there accumulating for "retirement".
I thought I would write about one relatively safe way of financing some of the education cost if you don't have the money available for this purpose.
If you are interested in exploring this strategy further, since everyone's situation is unique, I would suggest you talk to your adviser first or call me during office hours at 450-201-1724. You can even have your adviser call me.
This method might also be used to reduce and pay yearly taxes or for up-grading the home.
Many will already be familiar with using a home equity loan - but most people only know to pay the loan from their earned income (out of pocket). There is another way.
What if you created an investment with the loan first and had the FIXED monthly dividend from that investment pay off the monthly loan and leave you enough to pay for tuition? Then when the need for tuition is gone in a few years, cash in the investment and pay off the lower balance of the loan? You then keep the difference and take a vacation.
The benefits are:
a) Paying for tuition from an investment.
b) Having the investment pay off the loan monthly...
C).. from cash flow that is not coming from your employment earnings or RRSP savings.
D) You might consult an accountant and find that the interest of the loan during the year, may be used to reduce taxes.
The key to the strategy is the use of a monthly fixed income investment (NON DSC or "Deferred Sales Charge") and wholesale or "zero commission" cost by the investment investment adviser.
If you live in Ontario or Quebec, I can help set this up. (Outside of those provinces I could perhaps link you up with an adviser who would help you with this.)
Modest Example
Based upon owning a paid off home worth $175,000 or more IN CANADA.
A) A $110,000 home equity loan invested at a cost of $10.00 per unit/share.
B) Equals = 11,000 units that each pay 8 cents per month ($880) to your bank account at month end. (use a high yield bank account "no fees or cost").
C) Pay the bank loan the approximate cost of $650 / month, leaving you $230.
D) To strengthen the investment compounding and 'pay-out' power, reinvest $50 per month from the $230 buying, approximately 5 more new units every month which will simply increase your monthly payout (monthly raise!) and increase the number of unit shares you own.
E) This leaves you with$180 per month (x12) or $2160 per year to contribute towards tuition/books/transport or boarding costs.
F) All the while, the loan is being paid off by the monthly investment dividends and not by your cash flow that is already being used for your cost of living.
If you have a home worth more, you could even go for more, say $200,000 which would pay out $330.00 per month (or $3960 per year) net of loan cost.
What are the RISKs?
Market Risk
Even if the market drops and the investment value goes down for a while, there is no "call" on your owned unit / shares. The bank is only concerned that the loan is paid every month.
Since you do not sell the units and only "hold" them, they keep paying your loan.
Investment Company Adjustments
One risk is that the investment company might one day decrease the fixed payout (or increase it - but that is good and not a risk.)
If this reduction does occur it will eat up the reinvested portion ($50) every month and perhaps decrease your disposable amount for tuition somewhat. But this is not too bad a problem and still enables the monthly allowance even if reduced.
Interest Rates
Another risk is that interest rates on the loan will rise.
So you use a 5 year 'fixed' 25 year amortization and not a variable loan.
Then if you wish, pay it off in 5 years with the investment balance.
Or keep it going and re-invest the amount that was going for tuition that has been eliminated. You can then even use it to buy a new kitchen or new car...whatever...
What if the Investment stays the same value or goes down?
Well, if you have a value of $100,000 after 5 years invested (having invested a loaned amount of $110,000) and paying out to you all those dividends, you can still pay the balance of the loan and have some left over... to perhaps pay for an Insurance Policy to cover possible future problems while you are alive if you are ever diagnosed with something serious...or you could contribute to your Grand Kids RESP...
Not bad.
If you have questions, call me or your financial adviser.
It is a tool that is being used by many right now.
Keep in mind that investment is not simply about gambling in the "market".
There are many kinds of investments ranging from risky to not risky.
Just like doctors with medicine, you have to use the right medicine to address the right problem. So too with the world of investment. The strange and wonderful thing about this "tool" is that you make more in cash per month as the "market" goes down!
(Saturday 2:30 PM)
I added something above .
You'll notice I write things and then if you look again a little later, the diction, or message may have changed somewhat due to afterthoughts. In today's case, it's due to procrastination. I am really supposed to be doing chores like cleaning the electronic filters... but then I get a thought and come back here to write it down.
Writing to me is like golf to my friend Bob H.
L
Saturday, March 29, 2008
Sunday, March 23, 2008
Happy Historical Easter
(For those who may be historically sensitive, please change the channel.)
What do you think of at this time of the year?
Hunting for eggs?
I remember going to St.Andrew's United Church Sunday School and singing hymns led by good old Mr.Reid and Mr. Longlay. Our grade was up in the back rows -familiar names - Oliver-Butt-Bossart-MacLean-Artagnan-McConnell-and others.
"..He holds the anchor... etc.
Church...organized religion.
Here is the church
and here is the steeple,
open the doors and
there's all the people.
Let's look back now - way back.
Let us take the blind folds off for a bit and put them back on later.
Imagine way way back, in Bethlehem, then Nazareth and Jerusalem, one becomes "the chosen" and ends up crucified. All the good philosophic strains are extracted from the movement and made into a religion.
A tax collector has an epiphany coming home from work and changes his name.
He goes out on the road with his perception of 'the message', - to Rome, where the market is a bit rougher - they feed Christians to the lions. To survive and adapt, they make changes to 'the presentation' of the message to make it more akin to those who are following the Sun God in Rome -Constantine and friends.
Hence - the holy day of the week is changed from Saturday to "Sun" day to make it less Judaic and more Roman. They change the originator's birthday to make it more convenient to Roman 'days off' and cleanse many of the Judaic 'House of David/God of Abraham' trappings to a more and Roman-ized spin- changing the wrapping to gear themselves to the desired new audience.
A new development emerges in the future times, -Rome- "improves" the home grown idea - "where two or more are gathered in my name, there I shall be", and inserts an ecclesiastic Latin speaking intermediary between the individual and her/his God - and adds some new secret handshakes, smoke and passwords.
Fast forward into the future, at a big meeting (long, long after the originator's untimely demise), (Easter), they award, in absentia, three things in one shot to the founder's nature, he is voted retroactively, a man, a spirit and a God. A Miracle.
Later, against the intermediary 'priest' idea, a spiritual and philosophic rebellion takes place in Holland and the west; a "Protest -ant" group of rabble rousers break free.
Not being able to pass up a good opportunity when he sees one, King Henry the 8th in England, needing some cash and wanting to change marital/divorce laws to his liking, snips free of Rome with the help of "Parliament' and creates the new Church of England while stealing all the gold, silver and precious objects, not to mention Real Estate (Feb. 4 1539), from the Catholic monasteries for the new church -which is led by -you guessed it- King Henry 8 himself.
As time goes by, in the "so-called" new territories across the ocean, First Nations peoples not-withstanding, Churches of various stripes, like good spiritual lube, lead the way to "appropriating" Real Estate for the good of our ancestors and therefore -us today. We also get our own brand of cigarettes and lung cancer. "Was it good for you?"
But Let us not forget the original message irrespective of wrapping - "Do unto others as you would have them do unto you."
Just where does Peter Cotton Tail come in to this?
Not 'Thanks-Giving' anyway.
Perhaps Halloween?
Damn! I can't eat chocolate due to high cholesterol.
Now where is my blind fold?
(For those who may be historically sensitive, please change the channel.)
What do you think of at this time of the year?
Hunting for eggs?
I remember going to St.Andrew's United Church Sunday School and singing hymns led by good old Mr.Reid and Mr. Longlay. Our grade was up in the back rows -familiar names - Oliver-Butt-Bossart-MacLean-Artagnan-McConnell-and others.
"..He holds the anchor... etc.
Church...organized religion.
Here is the church
and here is the steeple,
open the doors and
there's all the people.
Let's look back now - way back.
Let us take the blind folds off for a bit and put them back on later.
Imagine way way back, in Bethlehem, then Nazareth and Jerusalem, one becomes "the chosen" and ends up crucified. All the good philosophic strains are extracted from the movement and made into a religion.
A tax collector has an epiphany coming home from work and changes his name.
He goes out on the road with his perception of 'the message', - to Rome, where the market is a bit rougher - they feed Christians to the lions. To survive and adapt, they make changes to 'the presentation' of the message to make it more akin to those who are following the Sun God in Rome -Constantine and friends.
Hence - the holy day of the week is changed from Saturday to "Sun" day to make it less Judaic and more Roman. They change the originator's birthday to make it more convenient to Roman 'days off' and cleanse many of the Judaic 'House of David/God of Abraham' trappings to a more and Roman-ized spin- changing the wrapping to gear themselves to the desired new audience.
A new development emerges in the future times, -Rome- "improves" the home grown idea - "where two or more are gathered in my name, there I shall be", and inserts an ecclesiastic Latin speaking intermediary between the individual and her/his God - and adds some new secret handshakes, smoke and passwords.
Fast forward into the future, at a big meeting (long, long after the originator's untimely demise), (Easter), they award, in absentia, three things in one shot to the founder's nature, he is voted retroactively, a man, a spirit and a God. A Miracle.
Later, against the intermediary 'priest' idea, a spiritual and philosophic rebellion takes place in Holland and the west; a "Protest -ant" group of rabble rousers break free.
Not being able to pass up a good opportunity when he sees one, King Henry the 8th in England, needing some cash and wanting to change marital/divorce laws to his liking, snips free of Rome with the help of "Parliament' and creates the new Church of England while stealing all the gold, silver and precious objects, not to mention Real Estate (Feb. 4 1539), from the Catholic monasteries for the new church -which is led by -you guessed it- King Henry 8 himself.
As time goes by, in the "so-called" new territories across the ocean, First Nations peoples not-withstanding, Churches of various stripes, like good spiritual lube, lead the way to "appropriating" Real Estate for the good of our ancestors and therefore -us today. We also get our own brand of cigarettes and lung cancer. "Was it good for you?"
But Let us not forget the original message irrespective of wrapping - "Do unto others as you would have them do unto you."
Just where does Peter Cotton Tail come in to this?
Not 'Thanks-Giving' anyway.
Perhaps Halloween?
Damn! I can't eat chocolate due to high cholesterol.
Now where is my blind fold?
Saturday, March 15, 2008
Who We Are -What we make of ourselves.
Who would have thought back in high school that I would end up being a Financial Adviser/Investment Adviser, by day and an aspiring writer by night?
Unfortunately, back in the day, I really had no use for math. It was akin to memorizing the rules of Scrabble without ever playing the game. Much later, that point of view changed. I went back and recaptured what I had left behind - but with motivation.
I thought I might like to be a Lawyer - but the reasons were too superficial, so after doing the B.A. in Political Science and a good deal of thinking...I thought "not".
To be fair, who really knows in high-school, what they would like to be by profession, if never having had a stab at experiencing a given trade beforehand? My guidance councellor -Mr. O'Connor? - recommended my becoming a mechanic. I was insulted at the time given my IQ, but in university after having read Zen and the Art Of Motorcycle Maintenance by Robert Pirsig, I thought ...hmmmm.
Yet, I look back at such people as Tom McKee and think, "Now there is someone who knew what he wanted, -went out and did it."
He said he wanted to be a lawyer, trained to become a lawyer and yes, became a Lawyer.
I believe, given the discipline shown in high school and the fact that he actually seems to have gone in such a straight line, that he is probably successful too. But who really knows? I have not seen him since high school.
Then there's the lovely Anja Mechielsen, whose first word in her year book ('69), was 'Travel'.
Her stated ambition -'Airline Stewardess'. Can you guess what she is today? Right- a Stewardess.
Perhaps it's about following a dream or at least a consistent direction?
Norman Perry comes to mind.
Do you recall his story?
I'll tell the myth version of it.
Why myth version ?- Simply because I'm not sure how much is fact, versus fiction added by the retelling of the story by all our old friends over the past 35 years.
When I was 8 years old, my parents moved us from our modest apartment in Ville-La-Salle to a house in Chateauguay, away from the long Hockey season of the city arena to short season and hose sprayed rinks where pins and needles became a dear feeling, ever-so close to my toes.
Our Seigniory Park team had one real claim to fame - besides the twins who played defence and stood still as Bob Oliver skated crazy eights around and between them to finally score and put us out of our misery.
That claim to "local fame" was our goalie, - Norman Perry. And not for his prowess in the net.
Norman could always be depended upon for having the very best of equipment from colour coordinated Montreal Canadian uniform, through to the best pads of red white and blue.
Norman, more locally known as 'Door Mouse' -since we all took on nick names when we turned 12, was and probably still is, a natural organizer, not patient with those not having something of value in the way of effort, to contribute to the latest project.
The summer of the Beatle music emerged out of nowhere and Norman acquired a set of Ludwig drums. I suspect drums presented the easiest way of not having to spend five years acquiring musical talent. Of course it was also very tempting for us in the peanut gallery to quip that his parents had money. But this was not accurate. I'm sure his parents were 'of means' to whatever extent, but this should not be seen as the source of Norman's ability to acquire 'only the best'.
Norman had a paper route - at minimum one- which allowed him disposable income. He was, in short, money wise and highly capable of cutting through the circle to get to his goal.
It could also be that our gang got into a scrum and exercized the arcane process of decision making,- throwing 'evens and odds' and then to make doubly sure, perform the ritual 'one potato, two potato, three potato four', to determine who would play guitar-bass, lead, rhythm and then who ended up with the short straw, to play drums.
Norman, in all summers, could be counted upon to lead us into some form of unique if not exciting organized activity. From having us all write and sell a weekly newspaper for two weeks as a method to acquire funding, to equipping ourselves with MAN FROM UNCLE secret agent cases that could shoot real plastic bullets, - or to organizing a boxing match out back of Poirier's featuring a "Fight to The Finish" between the ... "5 ft. 7in. muscular Kaj Larsen in this corner representing Northern Circle and his opponant, weighing in at a full 92 pounds, almost a full five foot 2 and 1/2 inches, the lightening quick, Leslie "Torn-Knees" McConnell, representing Seigniory Park." ( I believe this a was supposed to be, in actual fact -and unbeknownst to me, a comedy in action. Who would have thought my dad's lessons to me in boxing would one day pay off? My Dad was a 'Golden Gloves' one year in St.Henri Montreal. -Sorry I digress, this is supposed to be about Norman.) And yes even this digression, is, to some extent an element of Norman's method. But I think the outcome of it surprised him -everybody else, not the least of which - was me. I won.
The summers and winters eventually gave way to changes in our lives. And sadly, Norman's dad, Ken Perry, passed away when we were all teenagers in grade 9/10. He was a good man. My Dad and Mr. Ken Perry and Mr. Harry Gulkin, used to water the Seigniory Park rink on freezing February nights all by themselves. And just as sad for all of us kids, Norman, Stevie, Linda (their older sister) and Mrs.Perry soon after, moved back to the city.
But this is where the mythical adventure to his greatness begins.
I am told that Norman had a number of paper routes (The Star and The Gazette) delivered by him, brother Stevie and others. It is also thought he was able to sell these as little franchises before leaving, although I doubt this, I think he simply understood at a very early age, the secret of saving money and having it create self perpetuating income streams. (I show people how to do this today.)
It is said, that after a season back in the city, Norman took his savings, rented a 'hole-in-the-wall' near the Montreal forum, purchased music equipment 'on spec' - drum skins, guitar string packs, electronic gear etc. from Steve's music across town and packed his new abode. Norman's sister Linda, may have been a friend of band promoter Donald K. Donald -whose office was right around the corner from the forum. From there, legend has it, he had his sister introduce him to DKD, whereupon he taking the man for a walk over to his 'space'.
I can just imagine Norm... " Mr. Tarlington" he might have said, "Just look at this! Here we are across from the forum, no other music equipment supply store around for miles - The Stones come to play and Keith Richards is running low after having already played New York, Chicago, and Toronto. One of Mick's michrapones is on the fritz again, Charlie put a hole in his bass tom-tom... Mr.Tarlington -DKD if I may, -where is the line of resistance? Where do you think they'll go for replacements, across town or here?"
I can just see the light going on above DKD's head and thinking, "This kid, not even 19 years old, has figured one of businesses greatest lessons! Damn! I should have had this angle first. It's my line business !"
In my minds eye, DKD looks at Linda, then to Norman and smiles that big Donald K. Donald smile.
The rest is history or myth.
So Norman apparently pulls out of Westmount Highschool to do business. No CEGEP no University, no degree, just vision and action. Chutzpah!
The myth goes on. Not only do DKD and Norman Perry start one store; they replicate the concept across Canada and the USA. Allegedly after being introduced to Norman, Mick Jagger, -no slouch at business opportunities himself, asks Norman what he thinks of perhaps taking control of the Stones Merchandise concession inside the Form, -if all goes well, perhaps consider setting up in venues at all stops along the tour in North America.
So then, one goood turn deserves another, all DKD promoted bands from Jethro Tull to Pink Floyd come through this North American set-up, using the Norman Perry/DKD supply chain.
If this is true, it is one hell of a story. It also reinforces one thing I know....we are responsible for making our own lucky breaks. Norman was damned good at this. I bet his mom is proud.
So I guess at the end of the day, one should do what one has a penchant for- and reinforce it with a "plan" of action, based upon a vision or dream.
And don't stop dreaming.
It is never too late.
Everyday we have a new page.
Right Fred?
Who would have thought back in high school that I would end up being a Financial Adviser/Investment Adviser, by day and an aspiring writer by night?
Unfortunately, back in the day, I really had no use for math. It was akin to memorizing the rules of Scrabble without ever playing the game. Much later, that point of view changed. I went back and recaptured what I had left behind - but with motivation.
I thought I might like to be a Lawyer - but the reasons were too superficial, so after doing the B.A. in Political Science and a good deal of thinking...I thought "not".
To be fair, who really knows in high-school, what they would like to be by profession, if never having had a stab at experiencing a given trade beforehand? My guidance councellor -Mr. O'Connor? - recommended my becoming a mechanic. I was insulted at the time given my IQ, but in university after having read Zen and the Art Of Motorcycle Maintenance by Robert Pirsig, I thought ...hmmmm.
Yet, I look back at such people as Tom McKee and think, "Now there is someone who knew what he wanted, -went out and did it."
He said he wanted to be a lawyer, trained to become a lawyer and yes, became a Lawyer.
I believe, given the discipline shown in high school and the fact that he actually seems to have gone in such a straight line, that he is probably successful too. But who really knows? I have not seen him since high school.
Then there's the lovely Anja Mechielsen, whose first word in her year book ('69), was 'Travel'.
Her stated ambition -'Airline Stewardess'. Can you guess what she is today? Right- a Stewardess.
Perhaps it's about following a dream or at least a consistent direction?
Norman Perry comes to mind.
Do you recall his story?
I'll tell the myth version of it.
Why myth version ?- Simply because I'm not sure how much is fact, versus fiction added by the retelling of the story by all our old friends over the past 35 years.
When I was 8 years old, my parents moved us from our modest apartment in Ville-La-Salle to a house in Chateauguay, away from the long Hockey season of the city arena to short season and hose sprayed rinks where pins and needles became a dear feeling, ever-so close to my toes.
Our Seigniory Park team had one real claim to fame - besides the twins who played defence and stood still as Bob Oliver skated crazy eights around and between them to finally score and put us out of our misery.
That claim to "local fame" was our goalie, - Norman Perry. And not for his prowess in the net.
Norman could always be depended upon for having the very best of equipment from colour coordinated Montreal Canadian uniform, through to the best pads of red white and blue.
Norman, more locally known as 'Door Mouse' -since we all took on nick names when we turned 12, was and probably still is, a natural organizer, not patient with those not having something of value in the way of effort, to contribute to the latest project.
The summer of the Beatle music emerged out of nowhere and Norman acquired a set of Ludwig drums. I suspect drums presented the easiest way of not having to spend five years acquiring musical talent. Of course it was also very tempting for us in the peanut gallery to quip that his parents had money. But this was not accurate. I'm sure his parents were 'of means' to whatever extent, but this should not be seen as the source of Norman's ability to acquire 'only the best'.
Norman had a paper route - at minimum one- which allowed him disposable income. He was, in short, money wise and highly capable of cutting through the circle to get to his goal.
It could also be that our gang got into a scrum and exercized the arcane process of decision making,- throwing 'evens and odds' and then to make doubly sure, perform the ritual 'one potato, two potato, three potato four', to determine who would play guitar-bass, lead, rhythm and then who ended up with the short straw, to play drums.
Norman, in all summers, could be counted upon to lead us into some form of unique if not exciting organized activity. From having us all write and sell a weekly newspaper for two weeks as a method to acquire funding, to equipping ourselves with MAN FROM UNCLE secret agent cases that could shoot real plastic bullets, - or to organizing a boxing match out back of Poirier's featuring a "Fight to The Finish" between the ... "5 ft. 7in. muscular Kaj Larsen in this corner representing Northern Circle and his opponant, weighing in at a full 92 pounds, almost a full five foot 2 and 1/2 inches, the lightening quick, Leslie "Torn-Knees" McConnell, representing Seigniory Park." ( I believe this a was supposed to be, in actual fact -and unbeknownst to me, a comedy in action. Who would have thought my dad's lessons to me in boxing would one day pay off? My Dad was a 'Golden Gloves' one year in St.Henri Montreal. -Sorry I digress, this is supposed to be about Norman.) And yes even this digression, is, to some extent an element of Norman's method. But I think the outcome of it surprised him -everybody else, not the least of which - was me. I won.
The summers and winters eventually gave way to changes in our lives. And sadly, Norman's dad, Ken Perry, passed away when we were all teenagers in grade 9/10. He was a good man. My Dad and Mr. Ken Perry and Mr. Harry Gulkin, used to water the Seigniory Park rink on freezing February nights all by themselves. And just as sad for all of us kids, Norman, Stevie, Linda (their older sister) and Mrs.Perry soon after, moved back to the city.
But this is where the mythical adventure to his greatness begins.
I am told that Norman had a number of paper routes (The Star and The Gazette) delivered by him, brother Stevie and others. It is also thought he was able to sell these as little franchises before leaving, although I doubt this, I think he simply understood at a very early age, the secret of saving money and having it create self perpetuating income streams. (I show people how to do this today.)
It is said, that after a season back in the city, Norman took his savings, rented a 'hole-in-the-wall' near the Montreal forum, purchased music equipment 'on spec' - drum skins, guitar string packs, electronic gear etc. from Steve's music across town and packed his new abode. Norman's sister Linda, may have been a friend of band promoter Donald K. Donald -whose office was right around the corner from the forum. From there, legend has it, he had his sister introduce him to DKD, whereupon he taking the man for a walk over to his 'space'.
I can just imagine Norm... " Mr. Tarlington" he might have said, "Just look at this! Here we are across from the forum, no other music equipment supply store around for miles - The Stones come to play and Keith Richards is running low after having already played New York, Chicago, and Toronto. One of Mick's michrapones is on the fritz again, Charlie put a hole in his bass tom-tom... Mr.Tarlington -DKD if I may, -where is the line of resistance? Where do you think they'll go for replacements, across town or here?"
I can just see the light going on above DKD's head and thinking, "This kid, not even 19 years old, has figured one of businesses greatest lessons! Damn! I should have had this angle first. It's my line business !"
In my minds eye, DKD looks at Linda, then to Norman and smiles that big Donald K. Donald smile.
The rest is history or myth.
So Norman apparently pulls out of Westmount Highschool to do business. No CEGEP no University, no degree, just vision and action. Chutzpah!
The myth goes on. Not only do DKD and Norman Perry start one store; they replicate the concept across Canada and the USA. Allegedly after being introduced to Norman, Mick Jagger, -no slouch at business opportunities himself, asks Norman what he thinks of perhaps taking control of the Stones Merchandise concession inside the Form, -if all goes well, perhaps consider setting up in venues at all stops along the tour in North America.
So then, one goood turn deserves another, all DKD promoted bands from Jethro Tull to Pink Floyd come through this North American set-up, using the Norman Perry/DKD supply chain.
If this is true, it is one hell of a story. It also reinforces one thing I know....we are responsible for making our own lucky breaks. Norman was damned good at this. I bet his mom is proud.
So I guess at the end of the day, one should do what one has a penchant for- and reinforce it with a "plan" of action, based upon a vision or dream.
And don't stop dreaming.
It is never too late.
Everyday we have a new page.
Right Fred?
Subscribe to:
Posts (Atom)