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It's Your Money  

5 ways not to get rich

Want to avoid becoming (or staying) rich? Good news! It’s simple!

Just follow these five foolproof rules and you’ll be well on your way to the poorhouse: 

Blindly pay your taxes without a plan 

Good tax planning in your income earning and retirement stages can save considerable amounts of money. Income splitting opportunities exist in both your working and retirement years as well.

If you own a business, tax planning strategies can go even farther to reduce your tax bills and keep more money out of the government’s hands. If you’d rather be poor, simply skip all tax planning strategies and pay whatever the CRA bills show at the end of the year. 

Guarantee a loss for your investments

Skip all forms of tax advantaged investing such as TFSAs, RRSPs and corporate investments and invest any money you do put away in a simple non-registered account.

Make sure any money goes into ultra-safe GICs and term deposits that are paying out only one or two per cent per year. Once you take inflation (averages around two per cent per year) and taxation (could take away 50 per cent of your earnings) into account, this will mean you are guaranteed to lose money.

Earning two per cent per year gross and paying half of that back in tax, you’ll be left with a guaranteed negative net return after inflation.

Wait as long as possible to start saving

Make sure you don’t start putting money away at an early age as compounding will significantly multiply the growth of your savings over time.

For example, if you were to put $200/month away starting at age 20, you’d have $733,804 by the time you reach age 65 (based on a seven per cent average rate of return) 

If you wait until age 45 to start saving and put $500/month away instead, you’ll only have $263,191 to show for it.   

Don’t prepare for emergencies

You don’t need to purchase any disability, life or critical illness insurance as I’m sure nothing unexpected will happen to you or your family. And certainly, don’t worry about putting aside an “emergency fund” with six months of living expenses in case something occurs.

It’s not a big deal that two out of five Canadians are expected to develop cancer during their lifetimes and I highly doubt anyone has ever lost their job or had to take time off work due to a family member’s illness, right? 

Don’t have a financial plan

When it comes right down to it, it’s probably best to have no plans at all.

To ensure that you won’t be financially secure, you should probably avoid planning for your goals, risk tolerance, unexpected events, retirement needs and other financial obligations altogether.

If you just keep paying your monthly minimum bills and spend whatever is left (or better yet borrow money to buy what you can’t currently afford), I’m sure things will work out just fine on their own. 

That’s it! Avoiding becoming rich and losing what you already have is just that easy. Follow these simple steps and you’ll be living on the taxpayer funded government’s handouts, or even back in your parent’s basement in no time. 

Or if you want to be financially secure and retire comfortably, I guess you could just do the opposite of my suggestions too. It really is just as easy to choose either path. But the choice is up to you…   

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About the Author

Designated as a chartered investment manager and certified financial planner, Brett holds life insurance and investment licenses in B.C., Alberta and Ontario.

In addition to being the owner of Kelowna-based SPEIR Wealth Management Inc., Brett also serves as the vice-chair of the Financial Planning Standards Council of Canada’s board of directors. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations for the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FPSC board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected].

For more information or to see a database of previous columns, visit www.speirwealth.com.



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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