Ep. 27 | Case Study: What Comes After “We’re On Track”?

In this episode of Plain English Finance, Tré Bynoe, CFP®, CIM® walks through a real-life case study (with names changed) to explore what happens when you’ve already “made it” — when your retirement savings are on track, your debt is under control, and your financial plan is stable.

Tré and Sierra unpack the next stage of wealth building: turning a strong foundation into long-term flexibility and opportunity. They discuss how to transition from saving for retirement to managing money for life, including optimizing taxes, separating income from expenses, and building an “opportunity fund” that gives you the freedom to act when life changes.

This episode challenges the idea that financial success means slowing down. It’s about not coasting on autopilot.

Key Topics:

• What to focus on once you’ve already met your retirement goals
• Turning non-deductible debt into deductible debt
• Why a non-registered account creates future options
• Tax-efficient planning for couples in different brackets
• Balancing security with enjoying life and spending intentionally
• How to build an “opportunity fund” for flexibility and freedom

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Transcript

Tre 0:00

Hello, and welcome to the Plain English Finance Podcast, the podcast dedicated to keeping, to keeping, to helping you make smart financial decisions. I'm your host, Tre Bynoe. I'm a financial planner with TCU Wealth Management and Aviso Wealth. For more information or to send in your questions, check out episodes 1 and 2 or my website, trebynoe.ca/podcast. Let's get into the 27th episode. So this episode is a case study. Mm-hmm. So we're gonna kind of go through, well, I'll start off just describing somebody's life, and we will kind of go through

Sierra 0:32

the person's, the person and

Tre 0:33

basic. We, the, the episode after this is actually on an order of operations, so that's what you should do in what order? They're really actually difficult to do because there's kind of,

Sierra 0:45

there's always nuance

Tre 0:46

nuances and there's so many nuances. Crazy. It's like, just tell me what to do. Do all of this unless that yeah, that, that one part that is part of your life now. We can't do everything. Yeah. I changes, I changed everything, so I kind of describe, uh, this, this couple, it's based on a, on a client, but I want, it's very. Changing a bunch of information. So we'll call this couple. Jack and Jill.

Sierra 1:13

Very creative.

Tre 1:14

Very creative. I would say so myself. Okay. Um, these two individuals are professionals, employees though. Okay. So don't own a corporation. Don't have that complication or anything like that you know, very well established, mid-career. Husbands earns good money. Mid six figures. Spouse is approaching six figures, very stable house. They've been investing very diligently, great investors, have been for, for a very long time. Mm-hmm. They're net, like investible, net worth has surpassed a million dollars a while ago.

Sierra 1:54

Oh wow.

Tre 1:55

They are in their. Mid forties.

Sierra 1:59

Oh wow. Right. So they're doing

Tre 2:01

really good. So they're doing great. They, they're on track more than on track to meet their expenses for retirement and their retirement goals maxed out RSPs for him'cause he is in the higher income, bracket. Something that I did earlier on. Uh, so I've worked with these, this, these people for a while, but earlier on in me working with them, I cut her. Off from RSP contributions because she was in that 33% tax bracket and we focused on TFSAs and things like that. Mm-hmm. So TFSAs are now getting maxed out? Um,

Sierra 2:38

for both.

Tre 2:40

For both of them? Yeah. We'll say for both of them. About. Two years ago or so, they started contributing to non-registered accounts. But these, it was just into a savings account. So something that I try to get drills people, is there is always somewhere better for money that is just laying around if you're not gonna spend it within six months or so. So anyway, these, these people decided that, okay, because I'd spoken about getting savings accounts for stuff, right? So they set up a. A contribution, a regular contribution to go into this savings account, to cover their vacations. And they have not used it all for their vacations.

Sierra 3:21

So within six months or like

Tre 3:23

since they've started, say, invest a certain amount that they, that's what they've been doing. That's what we agreed to do for their retirement. They started saving more so. Transferring more out of their bank accounts into a non-registered account. Mm-hmm. That money is supposedly for vacations. Okay. But they have been able to cashflow their vacations Right. Or good chunks of their vacations, so haven't really needed it. Okay. Okay. So based on what we've already discussed in prior episodes, what do you think for me would be something that I'd love to fix?

Sierra 3:58

I already know. You're like, get that cash outta here.

Tre 4:02

But what's the, what's the, what's the principle behind it?

Sierra 4:04

Uh, invest for the timeframe.

Tre 4:06

No, what's that? Okay, sorry. Sorry. Please explain to me,

Sierra 4:12

don't call me out right now.

Tre 4:14

Please explain to me how investing to the right timeframe time. Oh, like, do investing to the right timeframe applies to this situation

Sierra 4:23

because clearly they're not investing to the right timeframe if they have cash sitting around.

Tre 4:28

But they, they finished for, they finished saving for a retirement. They didn't, don't really even need to save anymore for a retirement.

Sierra 4:34

Oh, I don't know then.

Tre 4:36

Yeah, me either. Wait, let me think of one, one of your

Sierra 4:39

random principles, uh, to get rid of the cash. Um. Well, just because it's like losing money. It's like not keeping up with inflation. I don't know. You are gonna say the saying and I'm gonna be like, yeah, that one. Just

Tre 4:52

separate

Sierra 4:54

your income from your expenses.

Tre 4:56

Thank you. Yeah.

Sierra 4:58

Should we get a board and write all the sayings down? Just I could.

Tre 5:02

We can have it in the background or whatever. It's

Sierra 5:04

like the, you know, when like that guy who does the rules of chess. He's like, these are the principles of chess. Yeah. That's what you need. The principles. So the 10

Tre 5:11

principles tre's. 10 principles.

Sierra 5:13

Okay.

Tre 5:14

Okay. Anyway, uh, yes. So that would be, for me, next steps would be a big, a big, a huge win for the, for this couple is to relook at their cashflow management. And it seems like, oh, why would I bother doing it this later on in life, I'm in my mid forties. Um. Because it's the same cashflow management system that you're going to use throughout retirement. Mm-hmm. Right? Is the, you might think, okay, well I've, I've got through life to this point the way that I've been doing it. You, you will have to change that. Come retirement. This is a way for you to change it beforehand for one, but that's not the main thing. Uh, the big thing is that you'll be able to look back on your spending and realize that you made good decisions with it. And when you did spend, and when you did leave money just sitting around you, you have memories and stuff like that to back up where you spent money. Mm-hmm. Basically, because it's just aligning your spending with your values. Really. Yeah. Right. So you But yeah, separate. But yeah, go back that if you want to learn more about the Cashflow management system, I recommend. Listen to other episodes, but yes, so implementing a good proper cashflow management system mm-hmm. Would be one of my big things for this couple to, to be able to improve a a little bit. Not that they have to'cause they're already doing great, but if they do want to get hit that next level. Yeah. The other thing is to get, and to build a non-registered account for two reasons. What do you think those two reasons are?

Sierra 6:49

Well, if they're getting close to maxing out their. You said they're getting close to maxing out the TFSAs and the RRSP because the Jill, the wife, like was in her lower watch, does

Tre 7:02

have RSP room then. Yes.

Sierra 7:05

She's in a lower tax bracket right now. Yeah. So it would make sense if she's starting to earn more to use the non-registered until she needs to use her RSP.

Tre 7:16

Yeah, that's part of it. Um, it's not one of the two that. Reasons. Sorry, what was the

Sierra 7:21

question again?

Tre 7:22

So why would, why do you think I would want them to start building a non-registered account? Um, so one of them obviously is they've maxed out their TFSAs. Yeah. Um, but why is it a really good idea? What other things do you think, sorry, let me go back to them. They have a mortgage still.

Sierra 7:39

Okay.

Tre 7:39

So they have a mortgage. They haven't finished paying it down.

Sierra 7:42

Ah, they listen.

Tre 7:44

They listen to Couldn't

Sierra 7:45

help at all. Sorry.

Tre 7:49

They, they, they looked at numbers. They're comfortable with having a mortgage. Okay. So

Sierra 7:57

I just had to like, I had to mess with you a little bit'cause you're like, yes. See, I'm like that. Almost be none. Okay. Sorry.

Tre 8:06

What? They have a mortgage. You still dunno? I don't. Okay. Two things. Lemme

Sierra 8:11

just think, let me think. Um, so they have a mortgage,

Tre 8:15

but no other debt.

Sierra 8:16

But no other debt. So maybe they're going to use the mortgage to like capitalize, like you leverage, I think is the word. Use that money to put it into the non-G

Tre 8:28

kind of. What is that? I'm glad we're not on

Sierra 8:32

video, right? Why are you getting my thoughts? Just like read my mind and make it sound good.

Tre 8:39

Okay. I dunno if I can do that. Uh, okay. So the, the first thing, the next goal for them because they've met their retirement goals, what they need for retirement. Yeah. So their next goal is to have all their debt. Tax deductible.

Sierra 8:54

Ah, not paid off notice. So there is no

Tre 8:56

problem with them having the mortgage. They can pay the mortgage off. Honestly, the numbers will show they can pay it off whenever they have it for life, but paid it off whenever they feel comfortable paying it off. They don't have to rush to now try to pay it off. That doesn't need to be the next goal at all. But a goal should be to have a big enough non-registered account so that you can make the interest tax deductible. So that means building up, let's say they had a$300,000 mortgage. That means building up a$300,000 ish non-registered account, paying off that mortgage and borrowing it back. Yeah. Then it is technically a leveraged investment. Taxes. Is that the debt, if it's a message correctly, that structured

Sierra 9:40

thing. Yeah, I did. I learned something. I was like, wait a minute. This is the,

Tre 9:46

it's hard to see how things tied together.

Sierra 9:47

It's amazing. Everything's connected, remember? Yeah.

Tre 9:51

Okay. So that, that's a major goal that they should have. Why is that such an important thing keeping in mind? He is in a higher. Relatively high tax bracket.

Sierra 10:04

Yeah, for that reason. Tax optimization,

Tre 10:06

tax efficiency. Yes. Every dollar'cause tre

Sierra 10:09

believes in paying taxes just to be clear, but only the amount that you need to pay don't tip. Don't tip the government

Tre 10:17

hydro said,

Sierra 10:19

right? Is that the correct? Yes. That's, that's what I say

Tre 10:21

to Al. Yes, if they want to tip, they can go ahead and do that, but I, it is not gonna be because of me. Yeah. Enough. Um, so make sure all your tax, all your debt is tax deductible, is the next biggest goal and the biggest benefit that you'll be able to, to bring to yourself, especially if you are separating your income from your expenses, because it'll mean there will just literally be more leftover for you to then invest for your kids, for you, whatever it is, right? Yeah. Like you all have a direct, there'll be a direct amount that you can see. Mm-hmm. There are also other expenses that come up in people's lives. What are some of those

Sierra 10:57

other expenses that come up? Big expenses.

Tre 10:59

Yeah.

Sierra 11:00

Um.

Tre 11:04

Vehicle. I'm thinking of vehicle. Okay.

Sierra 11:05

Well, I was just thinking if they were in their mid forties, they might even be thinking about their parents. Like do they have to help them with funding their housing or whatever? Are they gonna move in with them? Are they gonna go into a home? Blah, blah, blah. Like your kids schooling. Those were the things I was thinking. Vehicle sounds like a much more obvious than clear answer, but

Tre 11:27

that applies to a lot more people. But all, all of those things apply and the question is, these type of expenses that come up, how are you going to pay for them?

Sierra 11:36

Yeah.

Tre 11:37

Building a, an amount that isn't part of your retirement savings and specifically not part of your retirement savings will fund that. That will, it will fund those expenses. Because while, again, depending on what's happening in the world, you might choose to take it from your TFSA. Mm-hmm. But ideally, your TFSA is the last thing you touch because the growth on it can be significant, significant over somebody's lifetime. So, yeah. And that, and that's invested throughout retirement as well. Right. So it's a great. If I need to account the TFSA, but ideally you build up other places that you could take some of this money from. Mm-hmm. Non-registered accounts are the perfect example. Do people

Sierra 12:19

just not like non reg Because you have to pay.

Tre 12:22

Yes. And a lot of people don't even know you can

Sierra 12:25

do that,

Tre 12:26

do them. Hmm. Yeah. It's actually surprising the amount of people that they, I have this conversation often where we've maxed out their retirement accounts, et cetera, or they get like a, a. Like inheritance or something like that, and they're like, what do we do with this? Like, where can we invest this money? I don't have any TFSA room. Yeah. I, I run into that fairly more often than you'd, than you'd think. Mm-hmm. It also opens up a whole host of a whole worm, of can, can of worms, worm of cans, a whole worm of cans. Um, we're

Sierra 12:55

really struggling on this one. Or else maybe it's just more entertaining. I don't know

Tre 13:01

the whole can of worms, investing, non-registered, because then you have to think of investment location, the type of income you're getting. It's so many. There's more to it than,

Sierra 13:11

TFSA

Tre 13:11

than A-T-F-S-A or an RSV where you just in and don't really think about it. But, okay, so tax needs to be tax, sorry. The debt needs to be tax deductible. Make the mortgage tax deductible. Build up a non-registered account for these type of one-off expenses that will come up. Something always comes up. Cashflow management in an ideal world that gets nailed so that any, you know, you've. If any increase in your cost of living is a decision, not just, doesn't just happen. Oh, it it, yeah. Get rid of that.

Sierra 13:48

These people don't sound like that would happen to them though.

Tre 13:50

No, of course it happens. Yeah. If, if there is, if you do not manage your cash flow, it will happen.

Sierra 13:56

Yeah.

Tre 13:57

That it's, I can guarantee you that it will, it will happen to a degree.

Sierra 14:02

Like it'll creep up,

Tre 14:03

but, and you just won't know. It happens. And it, it might be a hundred dollars more on groceries every week or every two weeks or every, like you, you don't know. There's no way for you to actually know, but it will, it will happen. It will definitely happen. It happens to anybody of all income levels because unless you're tracking every dollar, which. Crazy. Um, yeah, there's no way that you're gonna know. So yeah, of course it'll happen. Mm-hmm. Uh, gets comfortable with spending from the investment portfolio. So a lot of people you save for retirement, that's what you've spent and these, this couple of spent years and years saving for retirement, which is why it was kind of a big win. When they told me that they would like to start putting money aside for a, for a vacation, uh, I was really happy.'cause it was like, yes. Like that's, that's the the point. Yes. That is a, a huge milestone for somebody to, to make a huge mental barrier for somebody to go from, I'm just saving for retirement to, okay, no, I can put money into my investment portfolio. For tomorrow, right? For the vacation for the end of this year. I don't have to leave it in a savings account earning 0.001. And yeah, the savings accounts aren't a whole lot better, but there was a point where there it was like. 4% or something. Even now it's two point a half percent in a savings account. Well, that's much better than any savings account you could get on the retail side, but it is a switch in mindset. So I was, I was so proud of them when they, I haven't gotten there yet.

Sierra 15:37

Jack and Jill, can you please give me your tips? I'm like, I'm saving for the vacation in three years in my savings account. I'm sorry, Teresa. Like, I'm so proud of them.

Tre 15:50

I'm done. Yes. Not you, you know better. No, you're But way better than. Yeah. We have systems that help with it, but anyway. Yeah, for sure. Um, okay. Uh, spending from investment. Okay. And those are the, those are the main. Short-term things that I think would add a ton of value, that they can, goals that they can focus on. Another big thing is you're now switching your focus to long-term tax efficiency for this couple similar to how we invest. So until, uh, you no longer earning an income in that way, but how do we manage our investments? Do you remember at all?

Sierra 16:28

How do we manage?

Tre 16:29

Yeah. How do we manage our finances? Do you know where the money and stuff comes from? The bill from the bills comes from,

Sierra 16:35

sorry, reword that.

Tre 16:36

The, so with us, the, uh, you would get paid?

Sierra 16:41

Yep.

Tre 16:41

And I would get paid.

Sierra 16:43

Yep.

Tre 16:43

Where did your paycheck go?

Sierra 16:46

My paycheck. Oh, before it was going into the investments?

Tre 16:50

Yes. Why?

Sierra 16:53

Because it was like a fixed amount. It was,

Tre 16:56

so, it's because you, you ha you were in the lower income bracket than me. So as long as you can prove the connection to, in this case, we, it was the amount comes in that you get paid. We take that exact amount and that got invested into a non-registered account because it would pay tax, but whose hands would it pay tax in

Sierra 17:16

mine?

Tre 17:17

Yeah. So those type of long-term tax strategies. Are huge. Hmm. For, and when you get to this point, when you do have, when you are, do have couples in different tax brackets, massive. It helps a ton because it means that, let's say we do need a vehicle depending on what's going in the going on in the world, and we need to take$30,000 of capital gains, we now have another choice of where we take it from. Do I take it from I adding on$30,000 of capital gains onto my income? Or do we take$30,000 of capital gains and add it onto your income? Or do we take it from tfsa, like we have these choices? Mm-hmm. Well, if we're gonna, if it's gonna be taxed somewhere, we'd much rather, I'd much rather be taxed at a much lower rate in your hands. Right? So this is a way to do that. So for these people, because they've now gotten to the point where they, uh, would be adding to a non-registered account and things like that. It would be her income in her name. Non-registered.

Sierra 18:19

Yep.

Tre 18:19

Okay.

Sierra 18:20

Yep.

Tre 18:21

And that's a for just a long-term tax planning thing. And then we would take my income and what we'd say from my income, we'd go towards maxing out our TFSAs every year and doing any RSP contributions and how it would be RESP contributions, whatever it is. So that we have as much opportunity for the tax to be in your name. Lower taxes means we simply keep more of every dollar.

Sierra 18:44

Love that

Tre 18:46

way better. Okay. Way

Sierra 18:47

better. Yeah. Okay.

Tre 18:48

Mistakes to avoid. What do you think some mistakes to avoid would be?

Sierra 18:53

Um, for these people to not have so much cash on hand. Like,'cause clearly they're not spending it in. The amount of time that they think they're gonna spend it. So it's like, yeah, probably relook at that. Other mistakes. Don't start messing with the tax bracket thing. I guess. Like don't just start throwing stuff into her. R-R-R-S-P. She's in a lower tax bracket still, right? Mm-hmm. He said, yeah, but she could be earning more, or she's probably gonna be earning more. So it's like, don't just start putting money in there because it's a non, or because it's a registered account.

Tre 19:34

Mm-hmm. Like plan for, for that. So for instance, let's, let's say there was that$30,000 we just, we built up our rsp. Uh, sorry. On non-registered accounts, and there's a$30,000 tax hit to take, and let's say right now she's earning$105,000 and the tax bracket shifts at$115,000, okay? Mm-hmm. And we now are increasing our income by, for easy math, I'm gonna say that$30,000. So now her income, which is gonna be

Sierra 20:03

over that threshold.

Tre 20:04

Over that threshold, that means now I would be looking at making an RSP contribution.

Sierra 20:08

Right,

Tre 20:08

right. Okay. U utilizing just for the sake of utilizing her RRSP room, just because in a vacuum, if they, and there is something to be said to the. The, tax deferred growth of it RSP. So if she was to put money into an RSP, that would be tax, that would be time that she would be able to grow more, et cetera. But she would sacrifice flexibility for that. Mm-hmm. And because of how they're invested, they are gonna have plenty in retirement assets come retirement time. Yeah. So. It would be a mistake for her to do things that it would'cause. It would. It would. If you did, if you put this through a financial planning software, you would see that if she was to make the RRSP contributions and invest the tax return, she would have a larger net worth come retirement time. Hmm. You would see that. But in real life there are other things that come up. Yeah. That you need cash for. So with a, with A-T-F-S-A, for instance, if they wanted to buy, purchase a vehicle and they then had to take money outta that TFSA to purchase that vehicle to avoid the debt, which would be the right decision, the planning software is not going to factor that in, right? Those type of, because now you're in a situation where that TFSA is no longer growing, right? Yeah. So those type of decisions, and it would be really tempting. To do that type, make that type of decision. Shouldn't do it. Hmm. Absolutely shouldn't do. It might come a time in the future when it might, that might change, but yeah, definitely not, definitely a wrong thing to do for the, for this, especially with the way that they're investing. Yeah. They'll have plenty of RSP assets, RSPs and pension assets and things like that. Yeah. Okay. Other thing that I would warn somebody like this against is sacrificing too much now. So while people, I think a lot of people that don't really know me think I'm anti spending, um. And, you know, I'm not anti spending. Yeah. I am anti spending money. You don't have,

Sierra 22:23

yeah.

Tre 22:24

You have money and

Sierra 22:26

people just stop at the anti spending.

Tre 22:29

Yeah. They, yeah.

Sierra 22:30

Money you don't have is the important part. It's very

Tre 22:33

important part. Yeah. So for, for this couple, they, they absolutely can afford to do the things that do all the things that they, they want to do. Mm-hmm. And they have gotten to this point by. Sacrificing that it is a sacrifice to, to save and invest. And it is a sacrifice. But they also have a young family. And I would just, my caution, what I would hate to see is them think back in 20 years time and wish they had done things now with their family.

Sierra 23:04

Well, they're little and stuff while

Tre 23:06

they're little because you, I don't think you would regret it while you, I've never heard somebody regret sacrificing things to have a retirement. Right? Mm-hmm. If it was a case of man, I couldn't take my kids on the vacations that I, I wanted to, uh, because I needed to save for retirement, and now that I'm in retirement. I can now afford to feed myself and I'm not a burden on my kids. Yeah. Most people aren't gonna say, oh man, I wish I was a burden on my kids now. Yeah. So that I could have taken them to Disneyland. Yeah. People are, well, the

Sierra 23:36

gift later is better of not burdening your adult children. Yes.

Tre 23:40

That like having a retirement and being self-sufficient in retirement is more important than taking your kids on

Sierra 23:49

a super fancy trip, super

Tre 23:50

fancy trip, or making those memories with your kids. It is.

Sierra 23:52

Yeah. Because there's other ways to also make those memories.

Tre 23:55

Yes. Having excess beyond what you need for retirement, beyond what you need for those, for the, for your, your basics to be covered. Having that and the trade off being, not having that time with your family and not making those memories, I've never seen that be worth it. Right. Does that make sense? Yeah. So sacrificing

Sierra 24:16

the necessity's gotta be taken care of, and then it's like, okay. Prioritize. Like you always say, spend on what you value. Mm-hmm.

Tre 24:24

Like

Sierra 24:24

these people have a young family. You wanna do stuff with your family.

Tre 24:28

Yeah, absolutely. So sacrificing for necessities, it is what it is. You gotta do it. You gotta do it. Yeah. Sacrificing for the excess, not worth it, in my opinion. I think it's much better, much more important that you spend the money. And enjoy the time with the family and enjoy the big things that you're really gonna hold onto on your deathbed. That's what you'll be thinking back to. And like, not to be

Sierra 24:51

doom and gloom again, doom

Tre 24:52

and gloom, but it's like I've worked with so many people that have died and not a single one of them has said to me, Hey, I wish I had worked more and sacrificed more time with my, with my family. That's not. Not really what people say. Yeah. It's like, oh, I wish my

Sierra 25:07

estate was bigger to give them, and I didn't spend time with them so that they could have a little more money. It's like, that's not

Tre 25:14

exactly, yeah, that's not, that's not what people, so that would be a, a sort of something that I would wanna make sure that they're not doing is sacrificing too much. And then the other thing was, now that you're now on, now that you're onto building a accessible portfolio. Is to stay away from types of investments that you can't access individual parts of. Mm-hmm. Portfolio funds, managed funds and things like that, if you're gonna use them, retirement assets that you don't need for 10, 15, 20 years is the place to do that type of thing.

Sierra 25:49

Yeah.

Tre 25:50

When it is money that you are relying on, or you might need or might want to access in the next year, two years, three years, whatever. Is not the place for portfolio funds. Right? Do the extra work or have your advisor do the extra work with that, especially with that accessible money that you're building. Have them do the work to, to reduce the risk, I guess. Not wanting to use the word risk, but reduce the chance of. Something happening in the world and you not having options of where to access funds from Right. Okay. Yeah. And that, that's just, and in, I've throughout, I mean in the last while we've had what three or four drops, major drops in the markets, during every single one of them. Clients have needed funds for so. And every single one of those times I've been able to pull it from somewhere and let everything else recover. Mm-hmm. Put it from somewhere that's not down to let everything else recover every single time. Hmm. And that's just,

Sierra 26:48

and you've seen a lot of Downs Portfolio construction.

Tre 26:50

It's just, it's just portfolio. It was downs every year. But we've, we've had some big ones with, well we

Sierra 26:56

do just big events. I remember thinking like, as you like getting into your career, like I would say you're in the. Early, mid part of your career still. So it's like to have, it's

Tre 27:07

been 10 years or so. Yeah.

Sierra 27:09

Yeah. Like I guess depending on when you decide to retire, maybe it's, we'll see. But anyways, like, uh, you've seen some like big world events, I guess. Yeah, but I didn't,

Tre 27:21

I didn't, I wasn't an advisor through 2008. That's true. And I imagine, like I've read so much about it, et cetera, and I imagine that would've been a really tough time. To because at at that time it was, it was different than, I know. People were like, oh, it's different. All the other ones were like, like, I mean the tech The tech wreck. Yeah. The or the bubble was.com bubble the.com bubble. Yeah, that's what I'm talking about. Was so foreseeable. It was hilarious. It's like, funnily enough, without companies earning anything, and suddenly they're being valued at crazy amounts. It's like there's an obvious reason behind it. 2008 was a little different where it was like. The fabric of society might collapse of the financials, the financial financials of the world, society might collapse and disappear. That would've been really scary to, to invest through and stay invested through for sure. Yeah, totally. But that I, I sidetrack. But even during those time periods, having a portfolio with stuff in it would've helped you get through that timeframe. Mm-hmm. Right. So just to stay away from anything that you can't access individual parts of, not worth it. Not worth a downside. Yeah. Okay. Um, and then the other one was changing the way that you're investing. So what happens to a lot of people is, especially when they're used to investing in a certain way, they might think that when they gather assets or a significant amount of assets, it's now time to dial back on. I put risk in quotes. Um

Sierra 28:57

mm-hmm. Is this because the, the equity fixed income thing?

Tre 29:00

Yeah. Yeah. So they're

Sierra 29:02

like, oh, I, I'll dial back on equity now.

Tre 29:04

Yeah. So I've met certain milestones. I'll now take less risk in the portfolio and hold more of other things, et cetera. And the dollar figures do not matter to the way that you invest. I invest$5 million dollar accounts and relationships the same way in principle that I would invest$200,000 relationships. You assign the timeframe to when you would be needing it by. We have so much data that shows. Reducing your equity. Reducing your equity, just because you are older is the wrong thing to do. Mm-hmm. So just because you are, yeah, just because you're older, if that's the only reason that you're reducing it, we know it is the wrong decision, but reducing it, making sure that you have what you need in the next. Whatever your risk on it says, you know, three years, five years, even if you're very conservative and you wanna say like 8, 9, 10, year, whatever it is. Mm-hmm. Making that decision is different. So as you get closer to retirement, you wanna make sure you have your

Sierra 30:13

cash, cash

Tre 30:14

wedge, right? Like I call it years of safety. You wanna make sure you have your years of safety in accessible low risk. I'm not talking about low risk.'cause the investment says, it says low risk. I'm talking about what it actually is in like high quality bonds, right? High quality, shorter term bonds is, that's the, that's the, the low risk part of your portfolio if you end up trying to pursue fancy type of investing, often is fighting for that low risk space. And what happens is it blows up. And trying to go like low risk investments earn very little because they're low risk.

Sierra 30:57

Right.

Tre 30:58

If

Sierra 30:58

like a, like a bond or something? Yeah,

Tre 31:00

like a low risk bond though. Yeah. Like, you know, if you're looking at, you wanna like

Sierra 31:03

a term,

Tre 31:04

yeah, like a term GIC, those type of things. They earn very little because they are very low risk. If something is now promising you three, 4% more than that, and it's still rated as low risk. It's not low risk. Mm-hmm. Because nobody in their right mind who is low risk would be paying that with for debt, because that's what it is. The bonds are just debt. Yeah. So, and I see it all the time where I'm seeing commercial mortgages and I'm seeing, residential mortgages and things like that yielding, like kicking off like nine to 12% in interest. that could be really, really attractive for somebody that has assets and trying to increase their low risk allocation and what it's earning because they would look at their low risk allocation, look at their equity and say, oh, my equity did 14% last year, and my. Bonds did three. Uh, like I just want more equity, right? Like, why am I even holding it? You're holding it for a reason, but then looking across the isle saying, okay, well this, this is low risk and this did nine, 12%. I'm gonna use that instead. Don't do it. That doesn't sound

Sierra 32:13

low risk as well. I'm telling you

Tre 32:15

it's, it is not, and it, but it will be packaged and it will say low risk on it. Exactly the same thing that happened in 2008 where you took a bunch of high risk stuff. Put it all together, and if you have enough of it, it's suddenly low risk. It's in essence, the same thing. Nobody in their right mind that is a good high quality, uh, lending, like lender or not lender, uh, like recipient of lender funds, borrower, nobody is who is a high quality, high quality borrower is going to be paying 12%. For their loans.

Sierra 32:45

Yeah,

Tre 32:46

for the, for their commercial building to go up. Yeah. And it's not even if they're given the investor 12%, it's because they're charging 15%. Right. Right. So no high quality people are going to be doing that. So that money is therefore a reason. If you want to invest in that type of crap, do it with the high risk stuff, but you're low, you're low risk stuff is low risk for a reason. And yes, markets have been incredible. It doesn't matter. Keep it low risk. Things can change. Things have changed. Things will change at some point. Yeah. Keep it low risk so that it was, yeah, just a warning. A lot of people on the next phase of their life or their wealth creation journey, they get sucked into those type of more complicated investing solutions. Not worth it. Not worth it. Low cost globally diversified index funds for the majority. That's of your portfolio's

Sierra 33:38

going on? It's going on the principles board.

Tre 33:40

Yeah. I, I don't actually like saying index funds'cause that's not actually what I use, which we'll get into, but it's principle applies. Yeah. But anyway, that's, that kind of covers, yeah. That kind of covers that small little smaller case study things that that person. Or if you're in a similar type of situation and you're wondering, what should, what should my next steps be? Yep. That's, that's

Sierra 34:02

some ideas.

Tre 34:03

Yeah. I've actually, I've, uh, started working with few people that are in this type of scenario over the past year or so. A lot of them find themselves in a situation and they find themselves in a situation. Through cash buildup. Like that's the reason that they're, they, they're like a referral from the branch or something like that. From a, from a friend that's a client or something like that. And a lot of it is, yeah, like there'll be like a farmer that has built up a bunch of money in a corporate corporation account or like an engineer, which. Took brought a lot of engineers this year, I was thinking, yeah, most of the world. Um, and yeah, build, build up inside of a corporate account or something like that. Um, so that's another way that you would know if you're in this situation, like you've,'cause you've saved for a time and you've done all that stuff and now you're like, what next?

Sierra 34:53

Yeah, but

Tre 34:55

this is a good place to start. These are good, solid places that you can't, can't really go wrong with, but. Yeah. The big one I would say for these people, which might be seem strange, would just be the RSP stuff. Yeah. Is like if you've, if you finish saving for retirement and deferring that tax build accessible and build an accessible portfolio that you can,

Sierra 35:15

an opportunity fund.

Tre 35:17

Yeah. I was saying opportunity fund.

Sierra 35:19

I is. See you.

Tre 35:20

Yeah, I got a couple of those there. You did. I do. There you go.

Sierra 35:24

I listen, you listen

Tre 35:24

because I, I mean, things like that happen right where you get the opportunity to, I speaking to a client yesterday has the opportunity to buy into a, buy into a firm, right? If things were different for him, if for a lot of people they'd be like, okay, well all my assets are inside of RSPs. How do I get hold of$300,000 to do this? It's like, well, if you've been, if you have an opportunity fund, there's the money, right? Like it's, yeah, you have access to it. Your friend wants to start a business. You want to start a business. Where's the money come from?

Sierra 35:54

The opportunity

Tre 35:55

fund, opportunity fund, like wealthy, like very. We individuals. The wealthier you are, the more this applies to you. The vast majority of their assets are not sitting in retirement type accounts.

Sierra 36:07

Yeah.

Tre 36:07

It's just not, yeah. It's not the way that, it's not accessible enough. It's just not the way that you build businesses and build long term, long term wealth. Wealth that outlives you. Right. Like there's, it's a great way to retire though. But once you've met those goals, things change and the questions are different, but, yep. Anyway, that's it. That's, that's everything. We all 38 minutes. Oh, I thought this was gonna be a shorter one. I was like, this felt shorter. Maybe. Maybe it wasn't 40 minutes, I feel like. Yeah, but it was Okay. Anyway, next one is on the order of operations. So this one is on, similar to what I went through this one, but not quite. This is very basic. Starting from ground one milestones that you want to be hitting in your. Personal finance journey, I guess. Yeah. And we'll, I'll keep it relatively vague. There's so many nuances that I really can't go down all these route. Yeah. But I can give you an idea. I can principles, benchmark, some like

Sierra 37:07

goals to hit, like what do I like where, where do I start kind of thing.

Tre 37:12

Exactly. And I think this would be, I think this would be a, that would be a really good episode for a lot of people if they're just looking. I, yeah. I don't where I should start. I dunno where I'm at, like where do I, what do I do from here? So, mm. Okay. That'll be a good one. Perfect. See you guys in the next one.

37:29

Bye. Bye. Thanks for listening to this episode of the Plain English Finance Podcast. Trey BYO, certified Financial Planner. Chartered Investment Manager is a financial planner with TC Wealth Management and a Visa wealth. You should always consult with your financial, legal, and tax advisors before making changes. This podcast is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell at any securities. The views expressed are those of the individual and are not necessarily those of a Visa Financial Inc. Mutual funds and other securities offered through a Visa wealth, a division of a Visa Financial, Inc.