TFSA vs RRSP, Investing vs Mortgage & Other Money Debates

In this episode of the Canadian Money Roadmap podcast, Evan and Sam play a game of "This or That," debating personal finance preferences across six topics: TFSA vs. RRSP, paying down your mortgage vs. investing, stocks-only vs. including bonds in your portfolio, lump sum vs. dollar cost averaging, buying vs. renting a vacation property, and leaving an inheritance vs. giving money while alive.

📱 Book an intro call - Cedar Point Pathway retirement planning service

📝Financial Foundations Scorecard - See how you score in the areas of cashflow & spending,  saving & investing, debt & risk protection, and retirement readiness. Instant feedback and recommendations on how to improve your finances.

💰Get your money organized - Full Financial Picture Spreadsheet

Transcript

SPEAKER_00 0:00

When it comes to your money and investing, there are so many decisions to make. There's preferences, there's optimizations, all sorts of different things. So today, Sam is gonna put me on the hot seat a little bit, and we're gonna do a little game of this or that. We've never done this before, but we're hoping it'll be a little bit of fun. Maybe we'll even disagree on a couple of things. So I hope you will enjoy this episode of the Canadian Money Road Man Podcast. Alright, Sam, let's get right into it. This is our latest and greatest idea here. We're gonna do a little game of this or that. Sam does not quite believe me that this is our latest and greatest.

SPEAKER_01 0:34

Well, I mean, you know, it's I'm sure that no one else in the world has ever come up with this concept.

SPEAKER_00 0:40

Well, latest. I didn't say I didn't say unique. I didn't say unique, but uh, you know, this this will hopefully be a little bit different than our general format here on the podcast, anyway. So I'll set you up and uh yeah, hit me with your first one.

SPEAKER_01 0:55

Yeah, quick little maybe uh caveat before we get into it is we're gonna be talking about either-or situations, and we know that in lots of cases, people's financial situations, probably a blend of different strategies works. We're kind of gonna talk in generalities a little bit today, but try and make it a little bit of fun, give Evan a this or that suggestion or a question, and then see where the discussion takes us. So the first one is a hot button one all the time in Canadian finance, is TFSA or RRSP.

SPEAKER_00 1:22

Okay, so uh again, the I'm gonna do my best to not be a it depends guy here, because that's that's the whole point of the format here. But between those two, I would probably pick a TFSA. The reason I would do TFSA is it provides so much flexibility with your money, meaning, and what I mean by flexible means you can take the money out and you get that room back to still benefit from the plan. So the like the tax-free growth, if you have the capacity to do so in the future, you could fill that back up from your cash flow, sale of other assets, something like that. So you have the flexibility to use it and then use it again. The tax-free growth component, so for people that have 10, 20 years of growth, even pre-retirement, plus hopefully many decades post-retirement, for this thing to keep growing, the tax-free growth is substantial. The value of that is unbelievable. Yes, with the RSP, if you're investing in refunds or you get a true pre-tax contribution to your RSP, you can have a similar outcome that way in terms of net after tax value. However, this is kind of like the last thing I really like about the TFSA, that's a bit different. Even if the after-tax value in terms of RSP versus TFSA might even be the same, the TFSA withdrawals do not hit your tax return. Whereas in RSP, even though you might have the money, like the similar amounts of like investment assets, even on an after-tax basis, because it goes on your tax return, it impacts other things that are income tested. So things like your old age security, your age amount tax credits federally and whatever province you live in, maybe some uh some other things, depending on your province. There are a number of different income tested benefits that typically show up after age 65. And so, you know, if you need to make a significant withdrawal from your RSP or then a RIF, probably later on in life, even if it's a similar tax bracket or something like that, you might still have a reduction of other benefits that have now shown up at that time. Is that always the worst thing? No, not necessarily, but it's simple and it's flexible. And what most people struggle with, whether they know it or not, is the complexity that we have in our Canadian system financial system, and especially taxes. It's pretty complicated. And so many things um work together. Whereas the TFSA, once you've paid taxes on your income, if you've made your contributions, it kind of sits outside of that world a little bit. And so it's really simple, it's really flexible, and the benefit is really high. I like the TFSA.

SPEAKER_01 4:05

Yeah, I think I I mean I would agree with you on this particular one, and I'll just maybe reinforce that statement about the flexibility. And I know that a lot of the plans we put together for people, we're often seeing a strategy where we're maybe withdrawing from RSPs to get things into the TFSA during retirement. So then, as you're saying, if there's a major purchase or uh, you know, something that comes up in retirement, it won't hit your tax bill in a major way. So it just gives, as you're saying, gives that flexibility going forward. And yeah, I like the piece, the piece you're saying about the simplicity of it and you know, to get the full benefit of the RSP, you want the contribution to happen kind of before the tax is taken off. So often that's done at the employer level, and lots of companies do that and do it very well. But if you've already paid tax on your income and then you're deciding where to put your money, you lose a bit of the RSP benefit when it's already been taxed, and that's where the TFSA is really great because you've already had paid tax on that money, and then it's tax-free coming out of that account ultimately after you've seen that growth over many years.

SPEAKER_00 5:07

Yeah. I I have some colleagues that disagree with me on the uh the complexity of the RSP. It's a hill that I'm gonna die on, though, that it's like most people get their paycheck and taxes withheld from it, and you have to contribute to your RSP then with after tax dollars. You wait until tax time comes around. Maybe you do it in the first 60 days, and it's only a month or two after that, but it's still a thing. You have to wait for your tax return to be filed, and then you get your refund, and then you got to do something with the refund. So even then, even if you spend it, yeah, it's still technically like a pre-tax contribution there, but the value that you have invested for the long term isn't necessarily pre-tax. The the waters just get really muddy, and there's like, yeah, you can file, I forget what the the tax form is, but you can have like withholding taxes, uh, elective withholding taxes reduced at source, but you have to file this every year with CRA, and in many cases it can take months for them to approve it. It's like, who's doing this? There's there's probably 10 people in the country that are doing this. It's I'm I'm being facetious, but like the average person is not doing that. And even so, a lot of administrative lag with doing that. And so to get the pure benefit of the TFSA, it's just easier. Yes, you can definitely come out ahead with an RSP in many circumstances for sure. Uh, there's also state benefits too with TFSA. You can um bypass everything like you by by naming a beneficiary. So if even if you don't have a spouse, you can name a beneficiary, it could be your kids, it could be your friends, and they get money that's tax-free. Um, with an RSP, you can name a beneficiary if you're to pass away. If you don't have a spouse, it can bypass your estate as well. However, your estate is still left with a tax bill as if all that money was included in your taxable income in the year of death. It gets complicated. TFSA, super simple. I like simple.

SPEAKER_01 7:03

Yeah, and I guess one thing I'm just thinking about as as you're speaking, but um it's interesting because I think, you know, obviously with the T FSA being introduced, what was that, 2009 it was introduced? So initially, you know, you're just getting say six, sixty five hundred dollars a year of room, and so you need you needed more, uh like the RSP was already established, so you needed maybe to balance out investments into both of those. But now, I mean, we're getting over a hundred thousand dollars of TFSA room just at face value, and then you obviously get all your investment returns in there that increases your your limit and all that kind of stuff. That'll be an that's an interesting change just as these these for people starting to invest, right? You have a ton of room that you're working with after you hit 18. So yeah, I'm thinking I guess we have some clients that are well, like people that are about my age that have got almost the benefit of all that room. It's like, oh, there's still quite a bit of money to be invested in there, and I don't need to worry quite as much about balancing it out in the RSP at least for a few more years.

SPEAKER_00 8:02

Yeah, things get kind of interesting. So for people that were well over the age of 18 in 2009, um, because if if you contributed to RSPs, that's great. But that was pretty much the only game in town. It was that or non-registered investment. So some people had pretty sizable non-registered investment portfolios that had increased in value. And in some cases, it doesn't make sense to trigger those capital gains and and pay taxes on it to get money out, put it in your TFSA. In many cases, it probably does. But to do it all in one lump sum, that's where things get a little bit dicey, especially if you have other sources of income and things like that. And so accumulation now you do have a little bit of that complexity of like, where do you go? And that's all dependent on your situation. So do you go RSP, do you do TFSA, do you do both? That's very situational. But anyways, we're kind of deviating from the the this or that here a little bit. But if I were to just pick what I like best across the board, I'm going TFSA.

SPEAKER_01 9:00

Perfect. Well, let's move on to the next this or that question paying down your mortgage or investing more for the future. Oh man.

SPEAKER_00 9:09

So I I've probably gone back and forth on this, and it it probably changes during different seasons of life, depending how I'm feeling about things or you know, maybe other debts that might have accrued or something like that. But personally, I would probably lean towards investing more. The reason for me that I feel comfortable saying that for me is that I'm comfortable taking on probably more risk than the average person, meaning like a full equity portfolio and holding that for the long term and just being kind of engrossed in the in the markets, not engrossed, but like uh just paying attention every day and just being familiar with it, walking through different market conditions with hundreds of different people over the last decade, it doesn't have the same emotional impact necessarily as someone that isn't as involved in the industry. So for me, I'm comfortable taking enough risk where my expected returns on it would pretty significantly exceed my return on paying down the debt. Now, at some point, though, depending on investment balances and things like that, if I get close to an amount where my contributions to my investments don't really move the needle nearly as much as the market can provide in a given year, paying down debt has a really nice emotional or like psychological benefit. You know, the just the idea that you don't have a significant payment tied to the four walls of where you live. That has a ton of value too, beyond just the the dollars on the page. So uh again, if we're if we're just picking one, I would probably say investing for the long term. And that's probably just my personal circumstance. But at some point, it's again, probably before my retirement years, I'm probably gonna flip that and start paying down my mortgage pretty aggressively.

SPEAKER_01 11:04

So kind of in the middle there again. Yeah, this is tough. It's tough. It's tough not to. Well, I will say that I um I probably reside somewhere in the middle as well. However, since starting at Cedar Point Wealth in January, I think that my perspective on this has changed, uh, has flipped because I bought a house a year and a half ago, and I was it was on my mind kind of from you know, you make that first or you purchase the mortgage and then you see the first payment, and I was already like, all right, you know, we've got some extra cash here, we can put that towards mortgage, put this lump sum, you can do that once a year, and it'll bring it down. You know, you can reduce your payment time by a year from 25 to 24, just with one big lump sum payment. And then since starting and doing a bit more research and learning a bit more about the expected returns, but also just kind of some of the most recent research on this stuff, I've been more compelled and more interested to actually get some of that money into the market. So again, I think uh yeah, a good one to be flexible on, but I but I think it really matters how you feel about having that debt and kind of sticking around. Because initially, when when we my wife and I had bought our house, I was like 25 years of these payments, that sounds horrible. Uh, and it seems so daunting at the start of it. And then now that we're about a year and a half into those payments, it's like, okay, this is just part of my financial life at the moment, and I I don't feel that pull to to pay that debt off quicker and having and I'm more focused on getting more invested in the market for the longer term.

SPEAKER_00 12:34

For sure. I think employment circumstance also matters probably a lot too. Like when I first got my mortgage, it was so we on our first home, so we're in our second home now, uh, since we've had a couple more kids. But before we had kids, we bought, I guess, what you would maybe call a starter home, just a smaller two-story garage out the back in the lane. And we closed on that house on a Monday, but the previous Friday was when we signed the paperwork for our purchase agreement to purchase the business for my former partner, Frank. And so it was like, oh, what are we doing like everything just by chance kind of happened to align at that certain point? And so at that point for sure, especially because about eight or nine months later, COVID hit, I was very debt-centric. We're like, we got to make sure that we are okay on making these payments and making sure that we can stay here and things like that. And, you know, that that's been a number of years now, and and uh, you know, the business has grown meaningfully. And so there's a little bit less apprehension about employment circumstance and ability to make payments and all those kind of things. That can ebb and flow too. But if somebody is like, say, a commissioned salesperson or you know, something like that where it's a little bit feast or famine every day, month, year, I can understand how someone would probably want to take care of uh some of the big things first in terms of making sure that their housing need is met by paying down that mortgage. So I I think that can change things a little bit too how comfortable you are in your employment circumstance.

SPEAKER_01 14:14

Yeah, and I I guess it's worth it's probably worth mentioning as well. The we had had this conversation on a podcast in the last few months about the rule of 30 and kind of how we might allocate or how people should maybe allocate their money at different points in time as they approach retirement. But we're saying invest more. The assumption being made, there's already a certain amount of investing happening and the mortgage is already being paid. So it's kind of like with that extra bit of capital, for sure. Uh, what do you do? Because, you know, changes the scenario if if the consideration is let's pay more off the mortgage, or alternatively, don't invest at all, right? Pay off the mortgage and then not invest at all. Like need to have both happening, and then this would be like an extra, extra bit of cash that could go to either one.

SPEAKER_00 14:57

Right. Yeah, we are talking about the uh, you know, that that position of having some extra kicking around for something else. So in in those circumstances, that's uh that's how I would think about it.

SPEAKER_01 15:09

But it sounds like we're both on the side of uh invest more, which is perhaps not surprising because we are doing this every day. So one that follows from that, we'll maybe move to our next this or that. But we will say, kind of as people are approaching retirement or maybe just getting into retirement, investing in 100% stocks or including bonds.

SPEAKER_00 15:31

I would probably recommend looping in some bonds. Again, the reason for that is because what I've observed is that people's comfortability with investment risk changes over time depending on your circumstance. So if you have employment income, it's like, eh, the market will do what it what it's gonna do. But when your income is coming from that portfolio, people can start to feel very differently about it. And you know, the the big picture doesn't feel so big anymore because you're you're living it live, right? Yeah, you're living off of the investment approach that you're taking and things like that. We have many clients who are very comfortable taking investment risk, and there's some pretty decent evidence to suggest that that leads to better outcomes over time if you're willing to stay in your seat, and that's that's not a a fault of people or like something that people should feel bad about. It's just emotions and investing are there always. It's just how do we manage those and looping in some lower volatility assets when you're living off the portfolio in some cases, so bonds and cash, like using a cash wedge, I've seen that have a massive psychological impact. And so people can just stay in their seat with the the more volatile parts of the portfolio because they know that there's something there, a little bit of an airbag for sure, especially these are people that don't have pensions or things like that, and when you're you're living off the portfolio. Yeah, obviously there's there's exceptions to every rule, but I would probably lean towards recommending that people start looping in a little bit of bonds, a little bit of extra cash uh into the portfolio once you're living off it. No, it is not to increase your expected returns, but it's to make sure that you can sleep comfortably at night. And uh, you know, that piece that we always talk about is retiring with confidence. And confidence means not worrying about stuff every single day.

SPEAKER_01 17:27

Yeah. Yeah, this is when one where I maybe we'll talk about myself personally, because it's uh, you know, every situation is a little bit different. But I I was very compelled by the Scott Sederberg and his colleagues, their research about the outcomes of staying in 100% globally diversified equities over a longer period of time. And we talked about this on a podcast recently, but that there's all these different um studies they did and all these different areas and kind of parameters they put on these studies, but basically globally diversified stocks, as far as expected returns, outperform portfolios that include bonds in most cases, but this is obviously over the longer period of time. And as you're saying, Evan, it still has that increased volatility through those shorter periods of time. So as a result, you know, if if people are relying on their portfolio for income, it does come with some of those risks of pulling out when the market's down a bit and things like that. But I was quite compelled by that research that is at least causing advisors and people in the industry to start rethinking some of these allocations that were kind of taken as the common advice to start looping in bonds somewhere, someplace around retirement. So I'm yeah, I'm just very compelled by that in general. But I certainly agree with you that if you are going to rely on the income, having some kind of cash wedge or something like that to allow for some short-term spending while not taking on the complete ups and downs of the market is probably wise.

SPEAKER_00 18:54

Yeah, like I said, this isn't a a blanket recommendation. It's just knowing that humans are human. And so I think as part of the conversation, I'm I I'll say that I'm more comfortable including it in the general conversation about how we allocate clients' money once we kind of get to that stage. You know, the research that Scott Sederberg put out is uh was pretty interesting. The you know, the the concept of of equity as being a great long-term asset, you know, uh Jeremy Siegel's book, Stocks for the Long Run, that's been around for decades. You know, he's professor at where is he at MIT, if you've ever heard of it. And so that little unknown call. That little shop on the on the East Coast there. But uh, you know, this so there there's plenty of research that would suggest this, but research and reality are are always two different things uh when it comes to making recommendations for others. So it's one thing to make the decision for yourself, um, but we're we're in the business of giving advice to to other people. We need to be careful not to put our our own biases too much into those conversations, and I think we do a pretty decent job of that and make sure the clients are heard and the emotional and psychological side of investing is considered for them too.

SPEAKER_01 20:02

Yeah, for sure. And I mean it that's something we're always trying to do is marrying kind of this the evidence that is being published about investing with real world situations, and that's where things can get very challenging, but also very interesting, right? Because that's like where everyone's personalized situation comes into the planning process, and that's one of the most engaging aspects of of the work that we're doing here. So uh so let's move on to our fourth topic, and this would be lump sum investing versus dollar cost averaging. So maybe give people a quick refresher on what those are and uh give us your thoughts on that.

SPEAKER_00 20:41

Okay. Dollar cost averaging often gets misconstrued or kind of um inaccurately put alongside periodic investing. So like if you get paid every two weeks and you invest every two weeks, it's not really dollar cost averaging. The idea with dollar cost averaging versus lump sum is that you have some sort of windfall. You sell a property, you get an inheritance, a gift, something like that. You got 100 grand. What do you do with it? Lump sum investing suggests you put everything in all at once. Dollar cost averaging says you should put it in over a period of time, you know, just in case you get the timing exactly wrong with a sizable chunk of your money. Personally, I would lean more towards lump sum investing. The evidence on this, I think there's a pretty strong case to be made for it, but it's not 100%, right? So historically, some of the data that I've seen says in the realm of about 65% of the time, lump sum investing, you you come out ahead. It's better than a coin toss. And so if we're just saying, oh, this or that, and and and one is just suggesting it's like, ah, maybe it is a bit of a coin toss, it's like, okay, well, historically speaking, lump sum investing has done a little bit better. And that makes sense, right? Because you have a positive expected return for the markets. That means that it's going to be up more often than not over short and extended, more extended periods. Of time, you're likely to do a little bit better. Again, the longer you go out, the smaller the difference becomes. I guess depending on the extreme cases of when you might actually get that timing right. But the problem with dollar cost averaging is then it just starts to introduce more questions, like more, you know, opportunities to be skeptical on what happens next. And so, just from a behavioral standpoint, if we believe in positive expected returns from the investment markets and we don't know what the future holds ever, to me, lump sum investing favors those notions. Dollar cost averaging could probably buy into the like we don't know what the future holds. And so because it could go down at any point, we're just gonna keep buying. But like, do you do it every month? Do you do it every two weeks? How long do you do it? Why do it over three years? Like, why stop at six months? You know, you know, there's all these different things, and then halfway through, like, oh no, the market's going down. Oh no, or the market's going up, we should get in. Like, and then it just introduces these different variables that can make you feel a different way that is suboptimal with the rest of your money. It's like, why don't you take all of your money out and then put it back in in a piecemeal way? It's like, well, we wouldn't do that either, right? So personally, I like the the lump sum approach for a variety of reasons. It decreases the variables and historically it has you know outperformed dollar cost averaging over a long enough period of time.

SPEAKER_01 23:29

That's really interesting because I wouldn't on the face of it, I wouldn't have necessarily thought that. Like I would have thought that maybe just kind of spacing it out and hedging against the ups and the downs, but if that makes perfect sense that if you know there's there's always this positive expected return, you're more likely slightly to miss that upswing over time the longer you do that dollar cost averaging. So that's interesting. And the other thing that's occurring to me is that you know, in the case of maybe getting a big inheritance or a lump sum that you have to do something with, you know, if it doesn't go into investments as a lump sum, even though you're intending it to go there, maybe someone is, it creates more time and uh possibility for money sitting there to maybe go to another purpose. That's uh uh, you know, the longer it sits in an account, I'm sure, the more tempting it is to spend, as many of us have uh, I'm sure experienced.

SPEAKER_00 24:19

So yeah, I've seen that before, yeah, for sure, where we've like lined up a dollar cost averaging strategy because the client feels better about that, and it's like, that's fine. Like, that's okay. But by the time we get to the the end of the period where we're automatically withdrawing it from their account and investing it, there's been a couple of times where it's like, actually, can we cut off those payments a little bit earlier? We had some other things come up. It's like, yeah, like that's fine. In in many of these cases, it is fine because that worked within their plan, and this is, you know, uh supplementary investments, like above and beyond what they actually need to make their plan work, and it wasn't something they planned for. You know, these are also variables that are worth considering in those cases if you're trying to decide between lump sum and dollar cost averaging. What your timeline is matters a lot. How much other investment you already have, your comfortability with investments uh in the first place. If this is the first money you've ever invested, lump sum probably isn't the move, honestly. It's like if if you've never done it before and you've never experienced seeing your account values go down, you know, that that might be a little bit more difficult in those circumstances. But generally speaking, my recommendation is often towards lump sum. But I've I've had many uh circumstances where dollar cost averaging is something that I'm comfortable with. It's not so extreme that one way is right, one way is wrong, necessarily trade-offs with everything for sure.

SPEAKER_01 25:38

Yeah. But the preference, the preference, as we're doing in this episode, we're gonna start. Yeah, yeah. I'm taking a hard stance. Yeah, hard stance is a good thing. Hard stances and then I backtrack it.

SPEAKER_00 25:47

Then I'll back it out, give you the framework, and then and then lean back into what I originally say.

SPEAKER_01 25:52

Okay, well, maybe a couple more. I'm having fun, so let's keep going. This one may be a lighter topic, but um an interesting one, I think. So would you lean towards buying a vacation property or renting when you travel?

SPEAKER_00 26:06

I had an opinion about this like two months ago that I've already changed my mind on. It's like at this stage of life, even if I had the money, I think I would be renting, buying a vacation property at some point. Like here in Saskatchewan, we've lots of beautiful lakes just north of where we live here in Saskatoon. So a lot of people here have cabins up in lake country. Um, I know that's not unique for our part of the world, but it's or our our part of Canada. Um so some people might be able to relate to that. Um, but we also know people because our winters are so cold that go down to to Phoenix and go down to Palm Springs and have have places down there too. I think that's a little bit different. So I'm I'm thinking more of like the the cabin in the woods kind of idea. The big thing that I'm thinking about right now is maintenance, because at home we have a lovely yard, totally usable and everything like that. But it's not a huge. But every year, and we we had it professionally landscaped, it's a new area, like all sorts of things. Like this isn't where we've got hundred-year-old oak trees like poking roots through copper pipes, you know what I mean? Like all sorts of stuff, really normal stuff. You just don't even have that many weekends to get out and do all the little things that need to be done. And if you have a cabin or another vacation property or something like that, those things double in some cases, right? Even if you don't have a lawn demo, it's like, nah, now you got a well to to maintain, or like w uh, my folks had a cabin uh when I was a kid growing up. One time we came in there and a squirrel came in through the the wood stove, like down through the chimney, and he had just wreaked havoc in in the in the cabin and got into a whole bunch of stuff and it's like, oh man, like uh talked to somebody recently who have the beautiful log cabin and they had to sand it and stain it. You gotta do it every 15 years, but it was nearly a six-figure bill, the large cabin. Uh, but it's uh, you know, it's additional cost, it's additional time, it's remote, so it's not as easy to coordinate service providers and things like that. So you kind of have to do some things yourself. You've got young kids. Every weekend there's a birthday party. It's like, oh man. So right now, I love the idea of permanence and having a place where you know what to expect when you go there. So like renting an Airbnb all the time isn't really ideal, like the the permanent side of things where you can have another home base where you can just go and relax, and you don't have to, you know, you can maybe leave a you know couple pairs of sweats up there and you can just go up and relax for a little bit. To me, that sounds awesome. But for right now, at my stage with where our kids are at and where things are with our other property, like our primary residence, I don't know if I'd have the time or energy to be able to maintain it. So I'm gonna say renting. This is not a financial answer. I like the idea of owning from that standpoint too, because we have a trailer that is rapidly depreciating, and I spend time and money on maintaining this silly thing. A cabin predominantly should increase in value from what we've seen here, is just general real estate usually does, um, again, over a long enough period of time. And so I I kind of like that idea. If I'm gonna put time and effort into something, I kinda like owning it. But right now, it's uh I I'm gonna call that a luxury that that we don't have. So when if if we vacation, we're either using our trailer that we already have, um, or we'd rent somewhere. And yeah, for where I am right now, happy to do it.

SPEAKER_01 29:38

I think we could argue that your trailer is a vacation property.

SPEAKER_00 29:42

Yeah.

SPEAKER_01 29:42

You are vacationing in it and it is your property.

SPEAKER_00 29:45

Non-permanent. It is uh which which makes it a little bit different yet. Towing your house around the highway, yeah, not my favorite. Not my favorite thing.

SPEAKER_01 29:54

Well, but the memories have been priceless.

SPEAKER_00 29:56

For sure. Girls love it. Once we get there, it's great. Yeah. I would say lots of variables there.

SPEAKER_01 30:02

Yeah, yeah. I would say, and this is kind of a scenario in which either of these options is available. I think a lot of it is preference, and there's many people that like to have that permanence. As you're saying, I want to return to the same place, have that consistency. And I am the exact opposite. I like something new. I don't have a uh huge desire to continue to go back to the same place. So as a result, I'm a rent when you travel guy. Something pretty drastic would have to change uh for that to change. But that's where I think it's an interesting preference, and it's it's very personal. Like some people kind of always want to be exploring new places, and uh there's but there is something very nice about the permanence and just having all your stuff set up. I've got some friends and you know their families have vacation properties in you know, Palm Springs or those kind of places, and they can just get on the plane and they've got a car down there and they've got every you know, everything closed, etc. etc. And super convenient, right? It's not this big production to have to go and get everything sorted out.

SPEAKER_00 31:05

Yeah. Lots of pros and cons to both sides of things for sure. I think nostalgia plays into this one a lot, right? Like if you grew up a certain way, like with certain experiences, and if your family had a go-to place and you just remember how how much you enjoyed that, or the opposite. It's like, eh, I hated going to this place. We always had to be raking leaves and the or whatever it was. I think a nostalgia has a a lot of play in in that. Like we did have a cabin, but it was pretty short-lived. But we also, you know, did road trips out to the coast and across the prairies here for sure, and didn't doing all sorts of stuff. Uh so we had a variety of different experiences growing up. My my grandparents had a place in Palm Springs, they had a small condo down there, so we went and visited them. And so it was the same thing every time. We kind of got some familiarity there, but we weren't the ones that had to pay for it or maintain it, or you know, all those kind of things. It was like how we went there for grandma's home cooking. Like it was, it felt very familiar, and I still have a bit of that nostalgia pull that way, even uh, even though that uh that circumstance is in the rearview mirror for us. But anyways, I think how you grew up can have a pretty significant pull in that direction, too.

SPEAKER_01 32:19

Yeah, for sure. And I think I mean it's it's interesting with how the real estate market is. I mean, Arnik of the Woods and across Canada, you know, things are much more expensive. So a few generations ago, it seemed, I think, a lot more attainable to have both of these properties going. And I know there's yeah, lots of people, friends, acquaintances, and things like that that have that nostalgia as you're describing and ideally have the property. But again, that's another challenge. But not that's again uh getting a bit outside of this uh specific scenario as we try to give rapid fire answers.

SPEAKER_00 32:53

This is this is the least rapid, the lowest. This is like smolder more than rapid fire.

SPEAKER_01 33:00

What do you think? You up for one more? Hit me with one more.

SPEAKER_00 33:03

Hit me with one more.

SPEAKER_01 33:04

All right, this is a good one, maybe to end on. So would you recommend, or what would be your kind of your advice in this situation? Leave an inheritance or give money while you are alive?

SPEAKER_00 33:16

I think I'd rather give while alive. Again, this is a little bit loaded because we're kind of in that demographic of the typical recipients of such gifts to older generations down to us. And so I I don't want to insinuate anything there or expectations or anything like that. But just the complexities that come with a state management after one is gone, that can be really messy. Here in Canada versus the United States, and I I'm not a U.S. tax expert here, but this is uh a difference between our two countries, is that we don't have a gift tax. And so if you have after tax money sitting in your bank account and you want to give it to your kids, grandkids, whatever, there's no tax on receiving that. But leave in the US there's dollar value limits before it becomes taxable. I'm sure it's sizable, tens of thousands kind of thing. But here in Canada, we don't have that. Um, so you can as long as you're the one paying the taxes to get it to an after, like a taxes-paid state, you can give cash. Now, you can't give properties, you know. Some people are like, oh, my my grandma's gonna give me the cabin for a dollar. Like, we're not gonna get into that here, but that is a potential for a double taxation thing by trying to avoid any sort of payment. You don't want to do that. That doesn't work in the states. There's some different rules in that regard. And so tax kind of comes into play here a little bit, but as far as ease of administering an estate, that's one. Being able to see your family use it and benefit from it right away, I think is great. You know, I've I've seen a number of people in my life make large charitable donations while they're alive so that they can, you know, be involved with that organization and see them thrive, as opposed to just waiting for them to eventually pass away. There's all sorts of different ways of doing that. I'm not coming down on anybody for doing it any one way or another, but it's like, yeah, it's pretty cool to be able to see that happen. Here in Saskatoon, there's a number of like very charitable families that have have done a lot of good work for our city in doing that same kind of approach as opposed to waiting until they've they've passed on. You know, there's there is a risk of let's call it greed, just kind of sticking around and just like holding on to the purse strings because some money that you have from a third party's perspective, you're never going to be able to spend it even if you wanted to. But there's like the what-ifs, although, oh, what if this happens? What if this happens? It's like, you're covered. You're covered in these circumstances. Now what? You know, and so then in those cases, it can start to get a little bit more complicated. It can kind of make your estate a little bit more complex. And, you know, years down the road, maybe your beneficiaries don't necessarily need that money as much anymore, and it doesn't go as far. I know most charitable organizations, if you're giving that way, they're they're rarely in such a circumstance where they're they're going to turn away a donation by any means. But yeah, I don't I don't know. Like there's a few issues with kind of just hanging on to money if if you have surplus for your whole life and just saying, ah, they can get it when I'm gone. It's like, I don't know. There might be some additional benefit. There might be, you know, like a generosity thing that that could feel really good and could really help people sooner. I don't know. Worth things worth considering. So I I probably lean towards an evaluation of where one is at and being generous while you're you're still here and you can make that choice.

SPEAKER_01 36:44

Yeah, I agree with that as well. And I think it's a good point. You got to make sure that you're secure and confident that you can just sustain yourself, because that's that can be an awkward situation if you kind of give early and then for whatever reason you have to ask for support later. But outside of that, when you have that plan in place and everything looks good, yeah, if I was projecting out in my life, I would love to get to a place to be able to do that, and then you can actually kind of yeah, see some of the fruits of your labor uh with your loved ones and uh help them out maybe a bit sooner. That's that's a pretty neat idea. And we'll just say that there's it doesn't have to be necessarily giving cash or giving you know lump sums. It can be just using some of that on experiences and giving in that way or things like that, right? So there's other ways to um to use some of that surplus money. Yeah.

SPEAKER_00 37:32

Oh, big questions to think about.

unknown 37:34

Yeah.

SPEAKER_01 37:34

So we hope you found the discussion today interesting, engaging, and hopefully had a little bit of fun yourselves kind of thinking through some of these scenarios. So we will see you next week on the Canadian Money Roadmap. Take care.

SPEAKER_00 37:47

The contents of this podcast do not constitute an offer or solicitation for residents in the United States or any other jurisdiction where Evan Newfeld, Cedar Point Wealth, or Sterling Mutuals is not registered or permitted to conduct business. Mutual funds are provided through Sterling Mutuals Inc. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus carefully before investing. Mutual funds are not guaranteed, their values fluctuate frequently, and past performance may not be repeated. Financial planning services are provided by Evan Newfeld through Cedar Point Wealth and are not the business of or monitored by Sterling Mutuals Inc.