Monthly Archives: March 2012

Invest with Certainty in an Uncertain world…

GMWBIt all started in the summer of 2008 when bankers and government officials were secretly meeting behind closed doors to see how the world could handle the worst financial crisis since the great depression. It would come to be known as the Financial Meltdown of 2008, and in many cases nearly 4 years later, we still haven’t recovered from the meltdown. Accompany that with all the troubles in the EuroZone, combined with the rising price of oil and you have a lot of uncertainty in the Markets.

So this creates a sentiment from investors that they do not feel comfortable contributing to their future savings program, even though the Markets have always outperformed every other way to invest for your future. But if you are in your Retirement Risk zone, watching your portfolio of assets go up and down is not very comforting.

Your retirement risk zone is 10 years before and after your anticipated retirement date. So if you are between the ages of 50 and 70, this could be the solution you have been looking for.

It is called a GMWB, or a Guaranteed Minimum Withdrawal Benefit investment solution, and these are the benefits. A GMWB allows you to invest in the markets, but have the confidence that even if the market’s decline, you will get a Guaranteed Income Base bonus of 5% per year, or the Market value, whichever is higher. And since GIC rates hover between 1-3%, this is a great alternative which provides both a guaranteed return, and the safety of your principle.

GMWB’s were introduced by Manulife back in 2007 under the name of IncomePlus, and since then, Canadians have invested Tens of Billions of dollars into GMWB products. As investors flood this market for safety and security, many other Canadian Insurers have also introduced their own GMWB, so now the choices and selection available will satisfy any investor’s needs.

The second benefit to GMWB’s is the ability to turn your Savings account into an Income account, with the benefit of receiving Guaranteed Income for Life. This means that no matter how long you live, you will receive your Income; Guaranteed. In essence it is similar to a Life Annuity, but the balance of your account that you do not use within your lifetime goes to your beneficiary, and not the Insurance Company.

By using this strategy, you guarantee your financial future, whether you live to 80, 90 or even 100 you are always guaranteed your minimum payment every month. This is why we call it your personal pension.

There are many different options available for you as an investor, and there are good and bad products out there just like everything else, but by having a simple review you can uncover how a GMWB can give you the peace and security you need to have a sound financial future into retirement.

Call our office today to see how you can implement a GMWB into your retirement plan, or to receive the Free Report “Income Stability in an Unstable World”.

Steffen deGraaf

How to create Tax Sheltered & Guaranteed Tax Free Income for Life

Tax Free IncomeHas anybody ever taken the time to talk with you about Tax Sheltered & Guaranteed Tax Free Income for life? Probably not if you are only working with the bank to create your retirement Income.

Many of the clients we work with believe that if they have $1,000,000 in their RRSP at retirement they will be financially stable for the rest of their retirement years. But it is not only how much money you have, but how much of that money will you keep after paying the deferred taxes within your RRSP?

As we say, its not how much you have, but how much you get to keep.

So this article will focus on three hot topics on every retiree's or future retiree's minds, how much will I have, how much I will keep & how long will it last? These are the most important factors when you are trying to create a solid sustainable income for your retirement years.

The First Fundamental to understand is that people are living longer into retirement these days, and the fear of running out of money is one of the hottest topics around. Author and Associate Professor of Finance at York University Moshe A. Milevsky Ph.D  recently published a book Pensionize your Nest Egg, which addresses the fundamental need to create a pension out of your savings as opposed to just hoping it will not run out.

The Second Fundamental to a successful retirement is knowing how much money you will have at retirement, and how much of an income will be provided by that sum of money. It is shocking to us, that when we talk with many families who are saving for their retirement that most of them do not know exactly how much Income will be provided to them when they choose to turn their Savings into Income. This should be your foundation for savings, if you do not know how much you will have, how do you determine how much you need to save?

And the Third Fundamental is how much of that Income will you actually keep after the erosion of taxes upon your savings. In a typical RRSP account there is a substantial amount of taxes that have been deferred along the way. In fact even the interest you make inside your RRSP savings account will be taxed as well. So you not only pay taxes on the money that sits in there, but also the growth of that money over time. This alone can add up to Hundreds of Thousands of Deferred Tax Dollars sitting inside your ideal $1,000,000 portfolio...

So how can you create a sustainable Tax Friendly investment over your lifetime, where you know how much you will have (Exactly) and how much will you receive (Exactly) and how long will it last (Exactly). This is where today's idea comes from.

Use a Tax Free Savings Account with a GMWB guarantee. Your Savings will grow over your life Tax Free , and when you choose to retire, you will know exactly how much you will receive Tax Free which is guaranteed, and you will know that it will last for your entire life, whether you live to 70, 80, 90 or even 100 years of age. All Guaranteed!

If you have not heard of this strategy for Saving for your Retirement, you need to give our office a call so we can show you exactly how this would work for you in retirement. Don't keep throwing your money into an RRSP which will become a Tax Burden to you in the future. Without a True Income Plan,  you will be dramatically surprised come retirement about the uncertainty of your savings...

When you ask why your Bank Advisor has not come up with this idea, do not be mad at them, they are not allowed to offer you this type of strategy, as it is exclusive only to the clients of an Investment and Insurance Advisor... Call us today to see how we can integrate this into your current retirement and savings plan.

 Steffen deGraaf


How to cover your Life Insurance needs for “Free” using 20 Pay Life Insurance…

20 Pay Life InsuranceIf I told you there was a way to cover your Life Insurance needs with literally no cost to you, would you believe me? Most people would think there is some sort of a catch or there was something shady going on. It sounds too good to be true. How can an Insurance Company do this, and where can I get mine?

The Life Insurance product I am talking about, is a good 20 Pay Life Insurance product.

Here is how it works, you choose the coverage amount you are interested in, say $100,000. But in this case, you are not going to be using cheap Term Insurance, you are going to be selecting Permanent Insurance. Insurance that will be there for you, no matter how old you are when you pass away. Because it is true, that it is not if we die, but simply when we die.

When the Insurance is selected, we choose the 20 Pay option. This means that you will pay for the Permanent Insurance only for 20 years, and at the end of the 20 years, there are two options available to you.

1. You like the Insurance and choose to continue on with the coverage. In this case you are not responsible for paying any more premiums past the 20th year, and the Insurance is guaranteed to be there for the rest of your life, with no more payments due.


2. You are satisfied that the Insurance coverage is no longer needed and you can then cash in the policy. Here's the "Free" part. Nearly all of the money you had invested over the last 20 years is returned back to you, as very tax efficient Accumulated Cash Value. The only part of the premium you paid every month that is not returned to you is the monthly policy fee, usually that equates to about $7 per month, so no big deal.

So here is a real world example to show you the value of this protection.

20 Pay Life insurance for a mother

Suzie is a 35 year old mother who has just had a baby and she is interested in making sure there is Life Insurance coverage in place, in case anything happens to her for the next 20 years. Suzie does not smoke, and is in good health, so she looks at a 20 Pay Life Insurance product.


The cost: $70 per month

The Time: 20 years

Cash Value in 20 years: $17,000

This is a great option for Suzie for 3 reasons.

1. She gets the affordable Life Insurance coverage she needs, not only for today, but for the rest of her life if she chooses to keep it.

2. If she chooses to cash out the policy in its 20th year, she will have a large sum of money that she may even choose to use for her newborns Education Cost, what a great little nest egg.

3. If she chooses to keep the Insurance, and does not have to pay another dime for it, she has created a $100,000 asset for her family and it only cost $17,000. A pretty nice return on her investment.

So when we look at Life Insurance, it makes sense to look at all the options available to you. Even in the case of the 20 Pay Life Insurance, you can add additional Term Insurance on top of it to increase the Face Amount of Insurance greater than $100,000, but a "good" 20 Pay life if set up properly will create a great asset into your future.

Call us today, as not all 20 Pay Life policies are the same, and through our experience over the last 40 years, we have selected some of the best companies out there to Insure our clients needs.

As brokers, you know we always work in the best interest of our clients, and are able to search the marketplace for the best solutions available. Call us today to help you implement this valuable coverage into your Insurance Plans.

Steffen deGraaf

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