13 closing remarks by Don Ferguson

13 - Closing Remarks _________________

13 - CLOSING REMARKS _____________________________________________________________

Some people look at an extra $100 income per month and think “That’s nice. But, it’s not a big deal.” I look at it differently. I look at an extra $100, $500 or $1,000 per month and think about how much money we would need in a savings account to earn that much interest. Or, how much money would we have to put into the stock market to earn that return?

$1,000 per month ($12,000 per year) represents the income from $150,000 at 8%, $200,000 at 6% or $400,000 at 3%.

_____________________________________________________________ Profitable Planning & Management Inc. Page 129

Closing Remarks

$100 per month ($1,200 per year) represents the income from $15,000 at 8%, $20,000 at 6% or $40,000 at 3%.

13 - Closing Remarks _________________

How long would it take us to save those amounts of money to put into a savings account or the stock market? What’s the likelihood of earning 8% 85 over a term of several years or a few decades? In Canada, the Toronto Stock Exchange Composite Index has declined by 15% or more 7 times and declined by 25% or more 4 times in the last 20 years86 . Eleven major declines in 20 years! How many of us want to ride on that roller coaster? I think there are more comfortable ways to increase our wealth such as setting up a small, home-based business that pays us a passive income. In this book, we’ve looked at how to use a Line of Credit to keep our out-of-pocket costs down while we’re getting our new business established.

Closing Remarks

We’ve discussed: • how to reduce our income taxes and use the money saved to make more money, • how inflation affects our buying power and our retirement planning, • how to set up a plan to provide the funds we need for our retirement, • how to set up education funds for our children, grandchildren, nieces, nephews, etc., • how to set up endowment funds for our favourite church or charity, • how to pay off a mortgage several years early and save thousands of dollars to put into our own pockets. We’ve also looked at a comparison of the normal corporate business model vs the network marketing model and seen that they are both legitimate ways of doing business.

See Appendix A The Blue Chip Report, January 2013,Tony Demarin, MBA, CFA, CIM, FCSI - www.bcvassetmanagement.com (Monday, 18 March 2013) _____________________________________________________________ Profitable Planning & Management Inc. Page 130 86

13 - Closing Remarks _________________

If you decide to participate in a network marketing type of business, two of the best resources you’ll find are the web sites set up by Tim Sales and Eric Tippets. They are two industry leaders you should definitely be following. Their training packages can help everyone in your business group. _____________________________________________________________

B UILD YOUR BUSINESS _____________________________________________________________ This book can be used by home-based business owners to build their businesses. The book describes why everyone should have a home-based business so they can maximize the income tax benefits and increase their personal income. You don’t have to do any “selling” or convincing - let the book convince them they should have a home-based business. I'll be happy to work with you to grow your business. Don’t worry about me “stealing” your leads for my business - I’d be a really dumb fool to do that.

_____________________________________________________________

F REE CONSULTING _____________________________________________________________ Give me a call for free consulting – you will never be asked to pay. How can I afford to do that? Very simple. I get paid commissions from the sale of products to some customers found through a Cooperative Marketing Program provided by a multinational corporation. Perhaps 3% of the people who read this book _____________________________________________________________ Profitable Planning & Management Inc. Page 131

Closing Remarks

If you and I and this book can’t convince someone to join you in your business, you probably won’t ever get them into your business. If they decide to join my business, I’ll register both you and them in my business so you earn commissions from everything they do in the future. That’s a win-win-win situation we all benefit from!

13 - Closing Remarks _________________

and/or consult with me will decide to work with me in a Cooperative Marketing Program. I’ll earn commissions from the sale of products to the customers they help the corporation find. With regard to the people who decide not to work in a Cooperative Marketing Program with me, I get the personal satisfaction of helping them with their financial planning. As you may have guessed from reading this book, I enjoy crunching numbers and helping people. _____________________________________________________________

C OMMUNICATION _____________________________________________________________ I communicate by phone, the internet and Join.Me87 to share information with you anywhere in the world. If you live within an 8 hour drive from Winnipeg, Manitoba, I’ll be happy to meet with you at your home, workplace or favourite coffee shop so you can “look me in the eye” and decide if you trust me to help you gain financial security. _____________________________________________________________

P UBLIC SPEAKING _____________________________________________________________ Closing Remarks

I’ll be happy to speak to any group at any facility at any time about the benefits of having a home-based business and why everyone should have one. I neither expect nor accept payment for speaking engagements (except for travel expenses for long trips). If you belong to a group such as the Kinsmen, Lions, Rotary Clubs, Chambers of Commerce or host educational classes for clients, I’d be honoured to be a speaker at your event. If you are a network marketer, I’d be pleased to speak to your group of independent business owners and guests. 87 https://join.me _____________________________________________________________ Profitable Planning & Management Inc. Page 132

13 - Closing Remarks _________________ _____________________________________________________________

Closing Remarks

R ECOMMENDED READING _____________________________________________________________

_____________________________________________________________ Profitable Planning & Management Inc. Page 133

13 - Closing Remarks _________________ _____________________________________________________________

T O YOUR SUCCESS _____________________________________________________________ Whatever plans you develop to increase your wealth, I hope the information in this book has been helpful. I wish you well as you take the mystery out of creating wealth and use the information to your greatest benefit. I look forward to hearing about your success.

Don Ferguson

Closing Remarks

www.DonFerg.com DonFerg@DonFerg.com Twitter: @DonFerg Facebook.com/don.ferguson.98031

_____________________________________________________________ Profitable Planning & Management Inc. Page 134

Notes _____________________________________________________________

_____________________________________________________________

________ 135

If all the economists were laid end to end, theyâ&#x20AC;&#x2122;d never reach a conclusion. â&#x20AC;&#x201C; George Bernard Shaw

________ 136

About The Author _______________

ABOUT THE AUTHOR _____________________________________________________________

D ON FERGUSON _____________________________________________________________ Background

_____________________________________________________________

1967 - 1994: Royal Canadian Air Force88 - Pilot 89, Air Navigator, Air Weapons Controller. 1994 - 97: Information Systems Coordinator - rural credit union. 1997 - 99: Franchise owner - Snap-on Tools. 1999 - present: Self-employed90. _____________________________________________________________

Education

_____________________________________________________________

First-year B.A.Sc. (Engineering - Civil) at the University of Waterloo 91. Over many years, I’ve completed courses at college and university such as Business Law, Administration Procedures, Business Mathematics, Business Organization and Management, Investing in Real Estate, and Investments.

Other courses include Personal Income Tax Preparation and Computerized Personal Income Tax Preparation through the Jack’s

http://www.rcaf-arc.forces.gc.ca/v2/index-eng.asp http://www.donferg.com/pages/aircraft 90 http://www.donferg.com 91 http://uwaterloo.ca 92 http://www.cifp.ca _____________________________________________________________ Profitable Planning & Management Inc. Page 137 89

About The Author

I’ve also taken the Ontario Real Estate Course qualifying for a licence to sell real estate and courses in Personal Financial Planning through The Canadian Institute of Financial Planning92.

About The Author _______________

Institute, now known as the Knowledge Bureau93, Winnipeg, Manitoba. _____________________________________________________________

Entrepreneur

_____________________________________________________________

I founded Profitable Planning & Management Inc. in 1998 when my Snap-on94 Tools franchise became profitable. After selling the Snapon franchise, my accountant95 hired me to manage the start-up and development of his Jani-King®96 franchise. Since then, I’ve worked with owners of small businesses as a Management and Administration Consultant97. _____________________________________________________________

Mission

_____________________________________________________________

Now, my mission is helping people keep more of their family’s income and create additional revenue streams to increase their personal wealth and financial security. _____________________________________________________________

Why

_____________________________________________________________

I served in the Royal Canadian Air Force for 27 years. Because I lost my aircrew medical status, I could no longer work as a Pilot so had to leave the military at the age of 48 vs the normal age limit of 55.

About The Author

http://www.knowledgebureau.com http://www1.snapon.com/franchise 95 http://www.talbotcga.ca/jean-guy.html 96 http://www.janiking.com/franchise/ 97 http://www.EarthwormGardeningSoil.com & http://MrCentralVac.com _____________________________________________________________ Profitable Planning & Management Inc. Page 138 94

About The Author _______________

That meant I was eligible for a pension equal to only 75% of what I would have received at age 55. So, at age 48, my gross income suddenly dropped by half. Over the 7 lost years of flying career and 30 years of retirement, my lost income could be $750,000 or more. There are three lessons in the above paragraphs: • we might not be employable as long as we had planned; • our pension income might not be as large as we thought it would be; • our lost income can be significant. While investing our money into a pension plan at work is a valuable part of any financial security plan, I think having a small, part-time, home-based business should also be part of our plan.

About The Author

Since my early 20s, I’ve been putting money aside for retirement in addition to the pension that was part of my employment pay. I’ve put money into financial investments, RRSPs, mutual funds, and small businesses. Nothing has worked as well for me as the Cooperative Marketing Program. I wish I had found out about it many years ago.

_____________________________________________________________ Profitable Planning & Management Inc. Page 139

About The Author _______________ _____________________________________________________________

Military Career

_____________________________________________________________

Joined the RCAF in 1967. Graduated top of class from Air Navigation School in Winnipeg in 1968. Two years as an Airborne Intercept Navigator in CF-101 Voodoo at CFB Bagotville.

Attended pilot training 1971/72; top of class in academic studies.

Joined 409 Squadron at CFB Comox; flew T-33 and CF-101 Voodoo aircraft.

About The Author _____________________________________________________________ Profitable Planning & Management Inc. Page 140

About The Author _______________

In 1977, trained as an Air Weapons Controller, worked at 22 NORAD Region Control Centre and Headquarters at CFB North Bay. During 1980, reinstated as a Pilot; flew Falcon-20 aircraft with 414 Squadron at CFB North Bay.

Completed Staff School and Recruiting Skills Course in 1984. Military Career Counsellor at Canadian Forces Recruiting Centre in London, Ontario for five years; supervised unit for last two years. 1989-92, Aircrew Consultant at Defence and Civil Institute of Environmental Medicine at CFB Toronto.

Staff officer in Winnipeg at Air Command Headquarters Jan-Jul 93; then at Central Flying School as Administration Officer until 15 Sep 1994 (retirement date). _____________________________________________________________ Profitable Planning & Management Inc. Page 141

About The Author

Multi-Engine Instructor Pilot (BE-90 King Air) at 3 CFFTS, Portage La Prairie in 1992.

Like it or not, there is a thing that can be called The Millionaire Mentality. There is a frame of mind which puts an individual a long way ahead on the road to success. â&#x20AC;&#x201C; J. Paul Getty

Trevor Blake, Three Simple Steps, (Dallas TX, BenBella Books, Inc., 2012), 29 ________ 142

ACKNOWLEDGEMENTS _____________________________________________________________

Special thanks go out to Kevin Brooks for suggesting I write a book to provide the information I’ve been thinking about and gathering over many years. His self-published book, Arrive In Winnipeg, proved he knew what he was talking about. His editing skills greatly improved the readability of this book. I value his sales experience and advice. Learn more about Kevin at www.ThePropertyCoach.ca. Russ Loewen has been kind enough to review the draft material several times and provide layout, editing and printing advice. His encouragement to complete this book is much appreciated. I like Russ’ style of salesmanship. His sales methods encourage me to continue helping people get what they want. Jean-Guy Talbot CGA made suggestions that greatly improved the relevance of the material to his clients. Now, the flow of the information makes much more sense and the book is relevant to a wider audience. As well, Jean-Guy has assured me that my suggestions with regard to Income Tax laws are valid. I value JeanGuy’s tax and business advice. For more information about JeanGuy and his business, please visit www.TalbotCGA.ca. Ron Morton is not a “numbers guy”; his suggestions pushed me to improve the “non-numbers” presentation of the information so other non-numbers readers might better understand my messages. _____________________________________________________________

In spite of the efforts and advice provided by the people listed above, there may still be errors, flaws and omissions in this book - those are entirely mine.

Don Ferguson _____________________________________________________________ Profitable Planning & Management Inc. Page 143

Acknowledgements

Acknowledgements ________________

My best choices come when meditating. â&#x20AC;&#x201C; Daniel Loeb, a teenage surfer turned investor and now worth more that $4 billion

Trevor Blake, Three Simple Steps, (Dallas TX, BenBella Books, Inc., 2012), 131 ________ 144

Disclaimer _________

DISCLAIMER _____________________________________________________________

Financial and tax planning strategies and techniques depend on an individualâ&#x20AC;&#x2122;s facts and circumstances; accordingly, the information presented in this book and by this organization must be correlated with the individualâ&#x20AC;&#x2122;s situation to establish applicability. Moreover, because of the complexity of tax laws in any jurisdiction, the constant changes resulting from new developments and the necessity of determining appropriateness to a particular taxpayer, it is important that appropriate professional advice be sought before implementing the financial and tax planning ideas suggested in this book. Any and all information contained within this book should not be construed as financial, tax, legal, or investment advice. Such information is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding any federal, provincial or state taxes. Nothing contained in this communication constitutes a solicitation, recommendation, promotion, endorsement or offer of any particular security, transaction, or investment.

_____________________________________________________________ Profitable Planning & Management Inc. Page 145

Disclaimer

Neither Profitable Planning & Management Inc. nor its officers, personnel, representatives, agents or independent contractors are, in such capacities, licensed financial advisers or licensed tax advisers.

Imagination is a preview of life’s coming attractions. – Albert Einstein

100

Trevor Blake, Three Simple Steps, (Dallas TX, BenBella Books, Inc., 2012), 194 ________ 146

100

Note To Reader _____________

NOTE TO READER _____________________________________________________________

The ideas and opinions expressed in this book are solely those of the author and do not necessarily represent the opinions of people, sponsors or firms affiliated with the author. The author may or may not have a position in any company referenced in this book. Any action that you take as a result of information, analysis, or

The information contained in this book is provided for informational purposes only and does not constitute an offer to buy or sell products or services nor is it intended as investment and/or financial advice on any subject matter. Every effort has been made to ensure the accuracy of the content of this book but no guarantee of accuracy is offered or implied. The interpretation and application of this information shall be the reader’s sole responsibility.

_____________________________________________________________

GUARANTEE _____________________________________________________________

“. . . in this world nothing can be said to be certain, except death and taxes.” —Benjamin Franklin, in a letter to Jean-Baptiste Leroy, 1789 101

101

http://en.wikipedia.org/wiki/Death_%26_Taxes (Saturday 24 August 2013) _____________________________________________________________ Profitable Planning & Management Inc. Page 147

Note To Reader

advertisement in this book is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

“The safest way to double your money is to fold it over and put it in your pocket.” – Kin Hubbard

________ 148

Appendix A __________

APPENDIX A _____________________________________________________________

I_____________________________________________________________ NVESTING IN THE STOCK MARKET For a great description of why we get results that are less than we hope for when we invest in the stock market, read “Incredibly Interesting Math”102 in “The Wealthy Barber Returns”103 by David Chilton. Here’s a few excerpts:

The vast majority of us go with the latter. We weren't raised to settle for average. We all want to be above average. All of us. Above average. But that's a problem. A mathematical impossibility. On average we have to be, well, average. In other words, the aggregate return of investors trying to beat the market must match the market's return. Please trust me here — no matter how boring that statement seems (and it seems pretty darn boring), it's absolutely key 102

David Barr Chilton, The Wealthy Barber Returns (Kitchener, Financial Awareness Corp., 2011), 147 103 http://www.amazon.ca/Wealthy-Barber-Returns-David-Chilton/dp/ 0968394744 _____________________________________________________________ Profitable Planning & Management Inc. Page 149

Appendix A

When you invest in the stock market, you have two choices: (1) You can buy an index fund or exchange-traded fund (ETF) that matches the market's returns (boring); or (2) You can try to beat the market's returns (exciting).

Appendix A __________

that you grasp it. In fact, it's so important that I'm going to repeat it: The aggregate return of investors trying to beat the market must match the market's return. _____________________________________________________________

Fees Affect Return On Investment

_____________________________________________________________

We have to pay a fee to invest in the stock market. In his book, “The Wealthy Barber Returns”, David Chilton says those fees are: • 0.5% a year (a typical index-fund expense ratio); • 2.3% a year (a typical non-index-fund expense ratio). 104

Appendix A

As I indicated in Chapter 1, a globally diversified portfolio of stocks grew in value by an average of 8.5% per year between 1900 and 2011 105. After paying the fees mentioned above, the best long-term return we can hope for on our investments is 8.0% with an index fund or 6.2% for a managed fund. However, consider this information from The Third Rail: Canada’s top ten government-sponsored plans have accumulated more than $700 billion in assets. From 1996 to 2011, public sector funds in Canada generated annual investment returns of 7%, compared with 5 per cent in private sector funds.106 Typically, large funds pay lower management fees107 than we do on our much smaller funds 104

David Barr Chilton, The Wealthy Barber Returns (Kitchener, Financial Awareness Corp., 2011), 152 105 The Blue Chip Report, January 2013,Tony Demarin, MBA, CFA, CIM, FCSI - www.bcvassetmanagement.com (Monday, 18 March 2013) 106 Jim Leech & Jacquie McNish, The Third Rail (Toronto: McClelland & Stewart, 2013), 29 107 Jim Leech & Jacquie McNish, The Third Rail (Toronto: McClelland & Stewart, 2013), 18 _____________________________________________________________ Profitable Planning & Management Inc. Page 150

Appendix A __________

(investments, RRSPs, etc.). If the large government-sponsored plans are generating annual investment returns of 7% and 5%, we’re more likely to see returns of 6%, 4% or lower. That’s why I’ve used 8%, 6% and 3% in my examples of savings or investments required to produce the monthly incomes mentioned in the examples throughout this book. For our planning purposes, I’d recommend assuming the lower rates of return on our retirement savings so we don’t run out of money before we die.

_____________________________________________________________ Profitable Planning & Management Inc. Page 151

“I just filled out my income tax forms. Who says you can’t get killed by a blank?” – Milton Berle

________ 152

Appendix B __________

APPENDIX B _____________________________________________________________

C ANADIAN INCOME TAX RATES _____________________________________________________________

Appendix B

Canadian Income Tax Rates are set by both Federal and Provincial/ Territorial governments with each entity setting their own Taxable Income Brackets & Tax Rates as shown on the spreadsheet below. 108

108

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html#federal (Wednesday 17 April 2013) _____________________________________________________________ Profitable Planning & Management Inc. Page 153

Appendix B __________

Rather than doing calculations for each province/territory, I’ve created an “average” set of rates using the numbers highlighted at the bottom of the spreadsheet on the previous page. Throughout this book, in a very arbitrary manner, I’ve used the following tax brackets and rates as “averages” for the entire country: • 23.48% on the first $40,577 of taxable income, + • 33.77% on the next $42,319 of taxable income (on the portion of taxable income over $40,577 up to $82,896), + • 39.42% on the next $55,875 of taxable income (on the portion of taxable income over $82,896 up to $138,771), + • 44.80% of taxable income over $138,771. Income Tax Savings - Home Based Business (assume business startup expenses = $20,000)

Taxable Income

Tax Refund

Appendix B

Year

Month

Less than $40,577.

$20,000 x 23.48%

$4,696

$391

More than $60,577 but less than $82,896.

$20,000 x 33.77%

$6,754

$563

More than $102,896 but less than $138,771.

$20,000 x 39.42%

$7,884

$657

More than $158,771.

$20,000 x 44.80%

$8,960

$747

If the $20,000 business expense overlaps the Taxable Income brackets, the refund will be somewhere between the values shown above or less than the lowest number ($4,696). Please note that I’m a “numbers cruncher”, not a tax expert. Although I’m comfortable with the numbers above, I strongly urge you to talk to an income tax expert. Feel free to show this information to them.

_____________________________________________________________ Profitable Planning & Management Inc. Page 154

Notes _____________________________________________________________

_____________________________________________________________

________ 155

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” – Will Smith

________ 156

Appendix C __________

APPENDIX C _____________________________________________________________

M ORTGAGES _____________________________________________________________ The spreadsheets displayed on these two pages were developed using amortization numbers from the Loan $hark app 109 on my iPhone.

Appendix C

There are slight differences in the numbers shown on these two spreadsheets and the numbers in Chapter 7 due to rounding. The numbers in these spreadsheets are more accurate.

109 www.FoggyNoggin.com (Monday 05 August 2013) _____________________________________________________________ Profitable Planning & Management Inc. Page 157

Appendix C __________

Appendix C _____________________________________________________________ Profitable Planning & Management Inc. Page 158

Notes _____________________________________________________________

_____________________________________________________________

________ 159

________ 160

This book is a work in progress. I plan to continually update the information in response to readersâ&#x20AC;&#x2122; questions, suggestions and critiques. Thus, hard copies will be produced in limited quantities. Digital copies available at www.PaySmartIncomeTax.com will be updated at each printing date for the hard copies. _____________________________________________________________

Printing Dates 25 April 2013 02 July 2013 30 August 2013 22 October 2013 15 November 2013 27 December 2013 24 February 2014

____________________________________________________________ Profitable Planning & Management Inc. Page 161

Canada: $23.81 + Tax Order online at www.PaySmartIncomeTax.com Profits from the sale of books, both digital and hard-copy, are donated to the Manitoba Chapter110 of Osteoporosis Canada. Feel free to call them at (204) 772-3498 to learn more about how bone health can affect you and your loved ones.

110

http://www.osteoporosis.ca/osteoporosis-and-you/osteoporosis-canadachapters/manitoba/

Many people rely totally on income earned from employment and investments to accumulate wealth for retirement. I’m a true believer that you can increase your wealth far more quickly if you have a side business to earn extra income while paying little or no tax on such income; then, invest this extra cash either in your business or any kind of profitable investment. This side business can be very simple. Capitalize on what you enjoy doing or what you’re naturally good at - which are often the same. Jean-Guy Talbot, CGA Talbot & Associates 3553 Pembina Hwy, Winnipeg, MB R3V 1A5 Tel. (204) 269-7460 / Fax (204) 269-7096 www.talbotcga.ca / jg.talbot@talbotcga.ca

When I showed the first version of this book to Jean-Guy, he surprised me by being excited about the book and said it's the book he's wanted to write for a few years. He likes the fact the book isn't written by an accountant so those of us who don’t speak “accountant talk” can better understand the information. Jean-Guy thinks all accountants should be sharing this book with their clients so they can learn why they need a home-based business to increase their income and wealth. Don Ferguson, Author

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