The Rural Voice, 1998-01, Page 31There's a lack of understanding
1 about the role of insurance, Whalen
says. Life insurance is a financial tool
just like a guaranteed interest
certificate or mutual fund investment,
but it has certain characteristics that
make it unique.
Traditionally, life insurance has
been thought of as a way to
protect a surviving spouse and
children in the event of
untimely death, but now the
biggest policies he sells, Whalen
says, are to people in their 60s and
70s. That's because insurance can be
used as the easiest and (east costly
way of creating tax advantaged funds
for the estate.
For instance, a farmer can be a
millionaire on paper but short on
cash. Insurance can create cash. If it
will require a Targe amount of money
to settle the claims on the estate of
the three children, the parents can
buy an insurance policy for that
amount so that the money will be
available without touching the farm
and destroying the ability of the child
still on the farm to carry on.
"For pennies on the dollar you can
create cash," Whalen says.
But this kind of planning can be
very sophisticated, Whalen says, and
requires a fair bit of discussion.
That's why an accountant, a financial
planner and a lawyer may all need to
be involved. "The decisions you
make are going to affect, 10 years
down the road, your ability to retire."
For younger farmers, there are
other solutions that involve creative
use of insurance. Cunningham spoke
of one program that is designed to
provide both short-term protection
and Tong -term financial security. A
minimum payment is required and
above that, all the money goes into
the investment component of the
plan.
There is resistance to investing off
the farm, Cunningham says. "Some
farmers say I'd rather see my money
in the farm. They're seeing this
There are only two ways
to make money
IT'S
YOUR
MONEY
By Paul J. Rockel
Chairman, Regal Capital Planners Ltd.
(NC) — Did you realize there are only
two ways for you to receive income? And
do you know what those two ways are'
In asking hundreds of people those
questions, I've received many different
answers. What is really surprising is that
the vast majority of Canadians don't know
there are only two ways to receive (earn)
income. And...too many of us employ
only one of the two ways, until it is too
late to get that second income.
'Person at work'
The first method of receiving income is
called 'person at work.' In all probability,
this income started when Mom or Dad
said 'if you will make your bed_ or wash
the dishes...or take out the garbage, etc
I will pay you...' Therefore, at an early
age most of us began to utilize one of the
ways to earn income. Later in life, we will
get full-time employment, and earn an
appropriate income in relation to our skills
and work effort.
But that 'second' source of income is
often neglected. Many people go through
life until they reach middle age or older
and never think about establishing a
"second" income. Many don't realize that
the only other source of income is
MONEY AT WORK.
Many a time I have suggested there
are three ways of 'earning' income, by
saying such things as 'robbing banks'
might be an illegal way of producing
income, until someone reminded me that
REGAL
itCAPITAL
PLANNERS
LTD.
406 Wallace Ave. N
Listowel, ON N4W 1 L3
even that illegal activity was actually
'person at work''
The people who achieve real wealth
are those who start building that 'second
income' (money at work) at an early age
I've stated over and over again in these
columns that a young person who would
start saving just $100 per month at age
21, assuming a 12% rate of return. will
end up at age 65 being worth over 1 6
million. That $1.6 million, even taking
only a 10% income from it, would
produce a retirement income of $160,000
per year. That's what I call a real
'second income.'
If you wait until age 30 to start building
that second income, by saving $100
monthly, you end up with a value of
$580,000 which would, at 10%, give you
an annual income of $58,000 per year
Quite a difference from the person who
started nine years earlier, at age 21, who
would have a 'second income' of
$160,000 per year.
We all started that first income when
we started 'Working ' We all look forward
to the day when we can live exclusively
on the second income.
It's called retirement.
Start building your second income
today
For a FREE chart comparing GICs
with two mutual funds over the past 29
years, ask for "It's your Money."
Bus. (519) 291-1353
1-800-291-1355
Res. (519) 347-2569
Susan Carter
Financial Consultant
SOME OF OUR PRODUCTS AND SERVICES
Professional Money Management, Tax Saving Strategies, Mutual
Funds, Labour Sponsored Mutual Funds, RRSPs, RRIFs and Annuities
(The above bst represents only a few of the many financ,al services available
through your Regal Financial Centre.)
This is No. 1159 in a series of articles that have been appearing in newspapers and
magazines across Canada for the past 15 years. For Paul J. Rockers book -WHY I
INVEST IN MUTUAL FUNDS" contact your local bookstore or Regal Capital Planners
Ltd., telephone 885-1980
JANUARY 1998 27