“Proficiency at billiards is evidence of a misspent youth” is an old thought that seems not to have been written by anyone. It is taken as a given and while it may be true, I suspect it is overstated.
In my case, billiards should be replaced by pool, and snooker. I cannot claim proficiency, but I think I learned a way of thinking that carries over to real life.
“It’s not what you make, it’s what you leave.”
It doesn’t matter much how much you make, but it does matter how much you have left over to build your, life, provide security, and grow your children, your community, your business and any associated with it.
That means your take home pay. The remnant left when the government has taken what they want. It could also mean what’s left after taxes from investment income. You make a mistake if you manage income instead of what you keep.
Always think optimizing after tax income. No skilled tax practitioner attempts to minimize tax unless it increases after tax value.
If taxes were easy to avoid, everyone would do it and then what? Nonetheless every little bit helps. Employment income is very difficult to reduce or to change the rate applied. Business and investment income are more fruitful areas of study.
In business, with just a few exceptions, you may write-off expenses incurred to earn income. Similarly, some expenses relating to investments are deductible. The careful keepers of their income use those. For example, some people organize their affairs to make mortgage interest paid deductible while others miss the opportunity.
Some forms of income are less taxable per dollar received. In Canada capital gains create income for taxes equal to one half the gain. Some people find there are ways to earn income as a capital gain rather than as a more taxable form. Dividends attract less tax because the corporations involved paid some of the tax before you get your share of the income.
Some tax sheltered income structures are available. The most common are Registered Retirement Savings Plan – RRSP, Tax free savings account – TFSA, and Registered Education Savings Plan – RESP. Each has advantages and disadvantages. Each is a container for investments with tax and other advantages. You should know why you chose to invest the way you did. Especially true if you choose not to use any of them.
The idea of tax planning is found in four possible planning tools.
It’s easy to miss obvious opportunities. Talk to people who know how. Understand the purpose of tax planning. It is not minimizing tax. It is optimizing after tax value. In most cases simple arithmetic.
In this case what you leave matters.
Estate planning has two time spaces to think about.
Distribution is the more common form of planning. People focus on it and often overlook easy ways to make the distribution larger. What you do before death matters. Paying taxes too soon is one variant. Failing to transfer unneeded wealth while living another.
Money is too hard to come by to waste because you don’t know how to avoid the waste.
Learn what you can, or find someone who can help you. If you don’t have know-how, you need know-who.
Learn to leave more than money. Character, wisdom, and experience are good choices.
I help people have more retirement income and larger, more liquid estates.
Call in Canada 705-927-4770, or email firstname.lastname@example.org