Mark McGrath
@MarkMcGrathCFP
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I help Canadian physicians treat financial uncertainty. CFP®, CIM®, CLU®. DM's are always open. Meet a PWL advisor ⬇️
Squamish, British Columbia
Joined February 2021
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Advisors and wealth management firms often expect you to transfer your life savings to them before they do any work.
How do you know your experience will line up with their promises?
At PWL, we do things a little different:
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Make sure you know what you're retiring to.
This was a hard post to write.
I almost didn't write it in fact. I've started and trashed this story many times.
But I believe there are important lessons in this story we can learn from.
Warning: this does not have a happy ending.
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I'm a landlord.
At one time I thought I would build a portfolio of rentals.
I absolutely cannot stand it and can't wait to sell and never do it again.
No liquidity, high fees, and lots of headaches.
Some people are cut out for it.
I am absolutely not.
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As a financial planner, I didn't get any training in this.
We learn about the financial side of retirement but not enough about its emotional and psychological aspects.
About how our identities can be intertwined with our careers and our businesses.
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And remember, this was a guy who had lots of friends, social activities, sports, and hobbies.
And still, retirement undid him in less than 18 months.
Humans require a purpose.
And if that purpose is linked to your business, be careful leaving it behind.
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I'm a landlord.
At one time I thought I would build a portfolio of rentals.
I absolutely cannot stand it and can't wait to sell and never do it again.
No liquidity, high fees, and lots of headaches.
Some people are cut out for it.
I am absolutely not.
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I just want to say thank you to everyone who took the time to comment and send me a DM.
I'm overwhelmed.
I won't be able to respond to them all, but know you've been heard and have affected me deeply.
❤️❤️❤️
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So when you think about retirement, think about what you're retiring to.
Focus on your relationships, mental health, community, and purpose.
And spend time before you retire on finding a path to fulfillment.
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And when he sold his business, he stripped himself of his identity.
Now he was a nobody.
He lost his purpose, the very thing that made him who he was.
Whether he knew it or not, I think he loved the business because it gave him a sense of fulfilment he didn't know he'd miss.
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Why am I telling you all this?
Selfishly, because it's been almost a decade, and I'm not sure I've really had an outlet until now.
But also because I think I know what happened, and I think people can learn from it.
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What I think happened is that my dad's business became his identity.
He was the tile guy.
He was the guy that sponsored all of our sports teams.
In a booming town, he was the guy you went to when you needed tile.
He was the tile guy.
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It's wild watching people react to business owners talking about leaving.
"Bye!"
"Don't let the door hit you on the way out!"
They somehow fail to understand that small business owners are the backbone of the economy.
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Just checked TD's "high-interest" savings account.
The rate is 0.05% annually.
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By losing his purpose, he lost his essence, his spirit.
The thing that gave him his joie de vivre.
He had surmounted his biggest challenge and achieved his singular goal.
And there was nothing on the other side.
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The media keeps saying only 0.13% of Canadians are affected by the increase in capital gains inclusions rates.
That's wrong.
Publicly traded companies that earn capital gains just had their tax rates go up.
Anyone holding Canadian stocks is affected.
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Move over RRSP Home Buyers' Plan (HBP) - there's a new kid in town.
The Tax-Free First Home Savings Account (FHSA) arrives on April 1st, 2023.
What is it?
How does it work?
What are the benefits?
What strategies can you use to make the most of it?
I'm glad you asked.
👇
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Incorporated professionals got hit hard in yesterday's budget.
The biggest impact for many will be the increase in the capital gains inclusion rate for every dollar of capital gains in their corporation.
Let's look at the math to see how bad it is.
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If you don't want to listen to me, take it from one of the brightest tax minds in the country.
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Back from 3.5 weeks in Europe.
Things I learned:
1. People smoke a lot there
2. No-tipping culture is amazing
3. Most buildings are older than our entire country
4. Proper public transportation is amazing
10/10, would recommend
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Like many French Canadians, he loved steak and beer.
But any time he found himself getting "soft", he would just switch that off - he would diet and quit drinking for a month or so until he got his six-pack abs back.
I didn't realize as a kid how impressive that was.
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He called me one day from the UBC Psychiatric Ward.
He told me he was having dark, intrusive thoughts and thought he should get checked in.
I didn't realize how serious this was, but I noted that he had the wherewithal to realize it and seek help immediately.
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But slowly, he started to change.
After a few months of golfing near-daily, he got bored.
And then he got depressed.
He changed.
One day he said he didn't like steak anymore.
This man had eaten steak three times a week for over 40 years.
Something was up.
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@pewm12
Just keep in mind that sometimes, that decision is out of our control.
I've seen people get forced out of work for health reasons in their 50s.
And while I hope you have a long and illustrious career ahead of you, don't let work be your only meaning.
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He used to read books on longevity and admired the lifestyle of the people of Okinawa.
Okinawa has some of the highest life expectancies on Earth, and is home to one of the greatest concentrations of centenarians.
He planned to live a long, long time.
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I told them if I was driving across town in the middle of the night, I wanted to know why.
He was hesitant, but I was persistent.
Then he told me, "your father is dead."
I collapsed and remember only that I kept saying, "I had so much more to tell him".
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Within a month of returning from his trip, he was back working for the guys he sold his store to.
He didn't need the money - he just missed his store and his friends.
His best friend was his first employee - a man he had hired 30 years earlier.
This worked out for a while.
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If your definition of "rich" is anyone with more than you, you're part of the problem.
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I went to see him, and he had made friends with half the patients in the ward. Including a well-known ex-Vancouver Canuck hockey player.
He told me that night he had made a mistake by going there.
That this place was full of crazy people, and he wasn't crazy (his words).
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My only guess is that he crashed that car intentionally.
He went 100km/h through a red light straight into the j-curve.
He rolled it three times.
I think he didn't want his ID on him because he didn't want to be identified immediately.
But he was wearing his seatbelt...
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This is a story about my dad.
My dad grew up the youngest of four siblings in Quebec.
He, his siblings, and my grandparents moved to Vancouver in the 70s, and my uncle opened a tile store.
My dad worked for him for a while, then eventually opened his own store.
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My brother and I had a great childhood.
We played sports, went camping, and took family vacations.
I played high-level baseball and my brother played high-level hockey, and our parents never missed a single game.
We lived in a nice house and had everything we needed.
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He had rented a car for some reason, drove it to the middle of the Lion's Gate Bridge in Vancouver, turned on the hazard lights, and got out.
Then he jumped.
Two cyclists - one on the bridge, and one down below on the seawall - called it in.
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One day he told us he had sold his business and was retiring.
We were thrilled.
All he wanted to do was retire so he could keep travelling, golfing, swimming, and enjoying his life.
He booked a two-month trip to Asia to celebrate.
He was 58.
And then it all went downhill.
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Please don't borrow money at 10% to go on vacation.
Especially if you're already unable to pay your bills.
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He was fit, active, and a traveller.
He was a scratch golfer and swam 80 laps at the pool three times a week.
He was also a black belt in karate and extremely disciplined.
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They gave him anti-depressants, and he checked himself out.
He seemed better until a few days later.
We were scheduled for dinner at my mom's house, but he didn't show.
This was not like him.
After about 30 minutes, my mom panicked and said: "something is wrong."
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That night, on a foggy Thursday in October, I was awoken by a phone call from a private number.
I ignored it.
And they called back.
It was the police, and they told me my mom was upset and that I needed to drive the 40 minutes in the middle of the night to see her.
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My dad was private, and we never really knew his financial situation.
Growing up, we would ask him if we were rich, to which he always said, "no, but we have enough".
Eventually, my parents split up.
But they remained close and lived in the same neighbourhood.
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But something was nagging at me.
My dad was an exceptional driver.
And the crash location was a j-curve intersection he drove through twice daily on his commute for over 20 years.
I called his best friend to get his take.
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His best friend told me that my dad had called him right before the accident.
He told him he had stashed his wallet and ID under a garbage can in a parkade on the other side of town.
A parkade he had no business being at.
To this day I still don't know why he did that.
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Over the next few weeks, he was overcome with the fear that he would be arrested and put in jail because of the accident.
We tried to explain that no crime was committed, and that no one was hurt.
But he was adamant.
This fear paralyzed him.
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He was a relentless entrepreneur and a good father.
He was shrewd and pennywise. I used to joke that he would split 2-ply toilet paper to save money.
But he was also a savvy investor, and he did well in his business.
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He didn't care about tile and saw the business as a means to an end - a way to build wealth and retire.
He was laser-focused on this goal.
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People are confusing "corporations" with "the wealthy"
The majority of small business owners are not the ultra-rich that you think they are.
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We called the police, and they came by about an hour later.
In mid-sentence, the officer got a report about a car accident in his earpiece.
The vehicle involved fit the description of my mom's car, which he had borrowed.
He looked at us and said, "your dad is alive, but..."
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Then one day, I was on the Skytrain on my way home from work.
My dad called and said he had a fight with my mom and he was going to grab a hotel.
I told him to come and stay at my place for the night, but he didn't want to bother me.
That was the last time I spoke with him.
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We rushed to the hospital.
All we knew was that he was alive. We had no idea what the extent of his injuries were.
When we got there, there wasn't a scratch on him.
The paramedics told us they needed to jaws of life to pry him from the wreckage.
It was a miracle.
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My kids' RESP just crossed $70k.
I have 2 kids, aged 6 and 1.
I expect that by the time my oldest goes to school, the account will be well over $200k.
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It's scary to me how many people in the comments think this is correct.
BREAKING:
#Canada
increases capital gains tax to 66%!
Governments are out of control. Prepare yourself.
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I post daily, Monday to Friday.
Usually about financial planning for Canadian Physicians and business owners.
If you enjoyed this thread, please:
1. Follow me for more
2. Retweet the 1st tweet below
3. Book a no-commitment meeting using the link in my bio
Make sure you know what you're retiring to.
This was a hard post to write.
I almost didn't write it in fact. I've started and trashed this story many times.
But I believe there are important lessons in this story we can learn from.
Warning: this does not have a happy ending.
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Sobering stats on Canadians' retirement savings:
- average h/h saves 6% of their annual income
- 75% between 55-64 have less than $100k
- 44% in that age group have less than $5k
- 32% between 45 - 64 have nothing saved at all
Hate CPP all you want, but it saves people.
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Had 2 conversations with business owners today that want to leave the country.
Just saying.
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The more you learn about investing, the higher the probability you end up as an index investor.
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Client today has a $1M mortgage on a $1.6M property.
Variable rate means her amortization is now 38 years.
Considering locking in a 3 year fixed at 5%.
Payments would go from $4k to $6k monthly.
Combined household income is $180k.
Good thing they were stress tested?
😱
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Your house is a much riskier asset than a diversified portfolio of global stocks.
It just doesn't feel that way because you can't check the price every 2 seconds.
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Here's a monte carlo on a $600k portfolio with a 10% withdrawal rate and 10% annual returns over 30 years.
You run out of money around 70% of the time.
@JayBWealth
Come on Jay you gotta know by now the math doesn't work like that.
Total return is all that matters.
Tell me, what's the better outcome.
$600k invested at 10% annualized yield
Or
$1M invested at 10% annualized returns
?
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There is no $250k exclusion for capital gains in a corporation
There is no $250k exclusion for capital gains in a corporation
There is no $250k exclusion for capital gains in a corporation
There is no $250k exclusion for capital gains in a corporation
There is no $250k
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Just reviewed our wills with my lawyer.
We have included a spousal trust if one of us passes away.
Why?
Protection.
Say I die and she inherits everything.
We're young, so she might get into another relationship, perhaps with someone with kids from a previous marriage.
Or
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Thinking of selling a property to your kids for cheap?
Don't.
it will be double-taxed.
Say you bought a property for $500k.
It's worth $700k today, but you're thinking of selling it to your kids for $300k as a favour.
What happens?
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I kinda feel like if Canadian real estate crashed by 50% we'd all stand around and go "well duh"
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Multiple conversations lately with immigrants who have come here and are completely dejected by the high cost of housing.
These are people with high incomes who are terrified to lock themselves into a high 6 or 7 figure mortgage, and rightly so.
This can't be sustainable.
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I had no idea how divided this country was until I started talking about tax here.
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Client is 19 with $50k to invest. A gift from her grandmother.
We're going to put it all in a 60/40 portfolio.
She has the time horizon and risk capacity to go higher, but she's never invested before and doesn't know how she'll react to volatility.
Baby steps are ok.
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I'll be called a liar for this I'm sure, but I've heard from several medicine residents that they're planning on moving to the US after training.
I hope they don't, but it should be obvious that the doctor shortage could get worse.
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@TKopelman
Appreciate it Thomas.
My uncle is in his late 80s, a decamillionaire, and he's still out there developing real estate for this reason - it's who he is.
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RRSP returns are tax-free, just like a TFSA.
You heard me.
I said tax-free, not tax-deferred.
And for most, the returns are even better than tax-free.
Don't believe me?
Allow me to explain.
👇
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Many Canadians can't afford for real estate prices to go up.
The rest can't afford for them to go down.
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Once you back out all the expenses that will disappear in retirement:
* mortgage
* savings
* kids expenses
* higher tax rates
* CPP contributions
You realize you might need less retirement income than you think.
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Investment recommendations based on portfolio size:
$100K:
- low-cost, global index funds
$1M:
- low-cost, global index funds
$10M:
- low-cost, global index funds
$100M:
- low-cost, global index funds
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If someone tells you RRSPs are a scam -
You can safely ignore any financial advice that follows from that person.
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In the past 36 hours, I have received messages from literally hundreds of people.
Many are at a difficult crossroads themselves or are sharing stories about loved ones struggling with retirement and purpose.
I don't have answers, but want you to know that you're not alone.
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My 1-year-old daughter took her first steps today.
When I told my 6-year-old son, he started crying.
"Why are you crying son?"
"It's just amazing, I'm so proud of her"
And my heart grew 3 sizes today
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Baby McGrath coming tomorrow!
For the next few weeks I'm going to be reposting some of my older content instead of writing new threads.
Back to new programming once life settles down.
❤️❤️❤️
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If I sell you a permanent insurance policy with a $100k per year premium, I make around $150k in commission.
Just thought you should know that.
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I'm not an economist so honest question.
Does a higher consumption tax like GST not largely solve the "tax the rich" problem?
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I can't believe I have to explain this, but.
When you write options, the premium you receive is NOT equal to your investment returns.
It's only half the trade.
There are a ton of amateur traders on this platform who have stumbled upon some extremely well-known strategies and
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@HennigarRd
Thanks Deane.
I find this to be an issue with physicians in particular.
They dedicate their lives to learning and helping people, and then have to give it all up at some point.
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Just received a DM.
This person is in their mid-20s and running a successful business.
They were hard-pitched a whole life insurance policy with $250k/year premiums.
Zero financial planning done for them first.
THIS is why I get mad about the insurance industry.
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Some people have a hard time understanding that business owners pay tax on their salaries and dividends.
They aren't just magically converting their salaries into capital gains.
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Just saw a portfolio with 71 mutual funds per account.
4 accounts, so 284 total mutual fund positions
I'm traumatized and don't know if I'll ever recover
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Money may not buy happiness, but it's a pretty good hedge against worry.
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Most people don't need:
- leverage
- fancy insurance policies
- exotic investment strategies
- tax schemes
They need to:
- increase savings rates
- invest appropriately
- use TFSAs and RRSPs
- pay down debt
- buy cheap term insurance
Do that and you're 90% of the way there.
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Ideally you should use your TFSA as a retirement account.
Yet a BMO study found:
- Only 63% have a TFSA
- 56% hold some cash in their TFSA.
- Nearly 1/3 say cash is over 75% of their TFSA holdings
- Only half even know a TFSA can hold non-cash assets
What's in your TFSA?
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Canadians:
"CPP is trash! I'm better with money than them, let me manage it myself!"
Also Canadians:
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Walgreens raised its dividend for 47 years in a row.
They just cut it by 50%.
No longer a dividend aristocrat.
One of the reasons I would never let dividends dictate my retirement spending.
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1% compounded weekly is nearly 68% annualized.
You'd turn $100k into over $17M in 10 years.
Please don't listen to these kinds of claims.
$100,000 sitting in a brokerage account can make you 1% per week selling options.
Why do people hate on it so much?
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Convo yesterday:
- single, mid-40s, no kids
- 100% of her investments, including RRSPs & TFSAs, are in segregated funds
- MERs are 3.5%
- has a whole life insurance policy despite having arguably no need for insurance at all
There's so much work to do in this country.
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If I was just getting started learning about personal finance, or if I wanted to go the DIY route, here are the resources I would devour first.
And in this order.
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Most people don't need:
- leverage
- fancy insurance policies
- exotic investment strategies
- tax schemes
They need to:
- increase savings rates
- invest appropriately
- use TFSAs and RRSPs
- pay down debt
- buy cheap term insurance
Do that and you're 90% of the way there.
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@DavidPOLeary
You're gonna love this - he was a hot sauce connoisseur.
Like a whole cabinet dedicated to hot sauce.
And come to think of it, I don't think I ever saw him use Tabasco 😂
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Update:
Both properties now sold!
Huge weight off.
I'm a landlord.
At one time I thought I would build a portfolio of rentals.
I absolutely cannot stand it and can't wait to sell and never do it again.
No liquidity, high fees, and lots of headaches.
Some people are cut out for it.
I am absolutely not.
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I sold my rentals last year.
I was expecting a big tax bill due to the capital gains.
But I ended up with a $4,500 refund.
How?
Partially because of the +1 in the calculation of the principal residence exemption (PRE):
👇
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My wife and I each have $2M of term life insurance.
Why $2M?
Because that's how much it would take for us to ensure the survivor is financially independent for life.
Want to know how much life insurance you you need?
Well, let me tell you.
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Most people I've met that own a rental or two have no idea what their net annualized returns have been.
They believe it's the pathway to wealth, and it can be, but they haven't measured their performance against other investments.
Most of the time, it's a buy and hope strategy.
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I feel compelled to explain that there is no $250k capital gains exemption for gains incurred inside a corporation.
The $250k is only for individuals.
The number of people telling me I'm wrong because they didn't know of this is making my head hurt.
Incorporated professionals got hit hard in yesterday's budget.
The biggest impact for many will be the increase in the capital gains inclusion rate for every dollar of capital gains in their corporation.
Let's look at the math to see how bad it is.
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People love defined benefit pensions but hate annuities.
It's the same thing folks.
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Woke up to 13,000 followers today.
To the 264 of you that aren't bots, I appreciate you 🙏♥️
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Tonight, as the clock strikes 12:00 and announces the very first moments of 2024, while you're celebrating and embracing your loved ones -
I will max out my TFSA
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