6 Steps to Sound Financial Principles

A key element of any client’s financial planning is to prepare a debt repayment plan, using either the “snowball” or “avalanche” approach.
The snowball approach is applied by paying down your smallest debts first regardless of the interest rate, whereas with the avalanche approach you pay down the debt with the highest interest rate first. Both options are viable, but a study from Harvard University suggests a higher success rate with the snowball approach.

BAIE is an acronym for Budgeting for Annual and Infrequent Expenses. We identified 4 main expense categories that should be accounted for throughout the year to prevent budgeting stresses.
The 4 main expense categories are:

• Housing
• Transportation
• Personal expenses
• Emergency fund/Taxes

Building up an emergency fund that can sustain you and your family for 3 to 6 months can help mitigate the risk of a sudden and unexpected crisis. However, if you have debts and are working to pay them off, it might be hard to build up these savings. One option we suggest is to start by saving $1,000 and then apply for a line of credit in case of an emergency. If you are debt-free, then we recommend opening a high-interest savings account (HISA) with Manulife Bank and setting up automatic deposits that align with receiving your pay.
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While we cannot predict precisely when markets will rebound, history has shown us that ultimately they will, and it often happens fast.
In fact, during nearly every previous market correction, the market has recovered the majority of initial losses within the first 18 months. It is important to remember that if your investment time horizon is long term the storm will pass, and your investments will recover. Succumbing to fear and panic selling will make this recovery far more challenging.

Protecting yourself and your family with insurance is the key to preparing for unforeseen circumstances where your health deteriorates, or you pass away.
Whether you are single, in a relationship or have a family, we offer insurance solutions including life, disability, and critical illness that can save you and your family from financial ruin. There are many types of plans, and most are affordable and can be tailored to match your financial capabilities.

Recessions and market corrections are your best opportunities to invest and grow your wealth. This is the optimal point in which to invest and benefit from the recovery that often occurs within the year following the correction. If your financial situation is suitable, we can discuss leverage loans as a potential investment tool to take advantage of this opportunity.

Your best tool to build wealth is to invest regularly and systematically. If you have not started yet, I suggest starting with an amount that is meaningful to you and increase it as your income grows.
We believe in managed solutions and your portfolios are managed by talented professionals who research and invest in good companies and avoid underperforming ones. Experienced portfolio managers look at recessions as an opportunity to buy companies that are discounted and reap the benefits when the market stabilizes and expands.