Three Common Money Problems for Busy Professionals
CONSTANTINE LYCOS, FOUNDER AND CEO AT LYCOS ASSET MANAGEMENT
There are three common money problems that busy professionals may not even be aware of. These are problems I commonly see when people come to us for advice. The reasons may be multiple, such as couples never having the time to look at their overall finances if married. Especially if one partner makes more money than the other partner, they’re reluctant to sit down together, with their partner, and talk about these issues. Or, they may not even be aware that these issues exist, at all.
The Number One Problem…
The most common problem I see is assets and liabilities are not optimized, especially for taxes. Interestingly, many issues like this do not necessarily require changes to spending. In other words, you can increase savings without necessarily reducing your spending.
Some important considerations include:
- Where is the best place to hold certain income-producing assets, versus capital gains-producing assets?
- Use a TFSA or RRSP or a non-registered account?
- Pay down the mortgage versus put money towards a TFSA?
- Whether or not to use a spousal RRSP?
Problem Number Two
Next, there is income-splitting. Especially couples seem to miss out on certain income-splitting opportunities. And the other thing they miss out on is making the balance of their assets and liabilities roughly equal. This is usually a good objective to have for farther down the road for income-splitting, possible divorce, or other reasons.
Problem Number Three
Last, but not least… Most busy professionals are very successful at what they do, they earn good money, are very sensible with their finances, are very responsible, and they save and invest well. However, they have no long-term financial projections. It is important to have at least estimates on:
- retirement income,
- retirement cashflows,
- balance sheet,
- life expectancy,
- what’s going to be left to the estate, or even
- pre-retirement projections.
So, the majority of people that come to us for advice experience all of these money problems. Fortunately, though, there are solutions for each one. At Lycos Asset Management, we try to do our best to solve all of these issues, and more.