So you are one of the faithful few – the contribution to your RSP comes off the top of the pay cheque before you take home. You have been doing this for years and believe it is a big key to the successful achievement of your retirement goals. How is that coming along? The surprising fact that the majority of you answered – I don’t know – is not the the shocking part. It is that even with a company matching program – you are not ahead of where you were 10 years ago today.
The System Is Broken
Just last week – I had a run in with another statistic. “John” was a 25 year employee of a major private utility company with retirement staring him in the face. As he sat across from me with a coffee in his hand and look of frustration on his face – he explained that his company matched RSP was worth 550K back in 2006. Today it is sitting at 545K. Three financial planners later and just under a decade has passed and he is having trouble treading water. My friends – the system is broken. After taking money off of each pay cheque, having your employer match it, and the end result is you are still unable to keep up with basic 2% inflation – this is Einstein’s definition of crazy! We are trying to get different results using the same thinking and methods.
Paradigm Breaking Financial Freedom
Here is a novel concept – take control of your money. Not your company HR representative – not your financial planner – not the media – but YOU! A surprising amount of Canadians that have just taken the simple step of self directing their registered funds and invested in low risk fixed income products have come out ahead of the fee heavy financial planner route. At the very least they have not been subject to the downside of having their retirement fund being exposed to the counter party risk that exists in the global financial markets. And the potential upside will make a hard working Canadian smile.
Great Returns Outside Of The Box
There are so many options to increasing your return on investment when you begin to look outside of the norm’s excepted realm of possibilities. Here are a couple of areas that my investors have had great success:
1) Direct Purchase of Cashflowing Real Estate – the returns here are project dependent however 20-30% annually is not uncommon with the assistance of a great team of professionals and taking the time to learn your regional market.
2) Syndicated Mortgage Investment – this is where you will receive regular investment income of 8% annually (paid monthly or quarterly). Another feature here is that typically there is a deferred lender’s bonus on the exit of the project that depending on the success of the project can provide a potential additional return of 6-18%.
3) Investing in Private Mortgages – the typical returns are 5-15% annually and are dependent on the individual borrower’s situation and lender’s criteria.
Here Is The Best Part
I am so very excited to explain this to you! As an investor – it is my prerogative to ensure that you never pay a penny in fees or cost to me!!! That is right. I have worked with investors for many years and they have yet to pay me anything (upfront, set up, management, trailer fees). The reason is primarily the fact that I do not believe that as someone who is lending out your hard earned money that you should be penalized for this – you should be REWARDED!
Here is the bottom line on my involvement – I make money when my investors make money. That is it. Period. It is not uncommon for a typical investor to earn 15% net annual return. If you factor in the rule of 72 (how often your money doubles based on the rate of return) – this means that your 550K becomes 1.1M in just under five years. Now that is how we retire in comfort.
So do you feel you should be rewarded or penalized for your faithfulness in making regular contributions to your RSP? It is a scary feeling when you receive that quarterly investment statement not knowing what to expect (except fees of course)? When you are sick of that feeling – the uncertainty of the next market drop – and the certainty that the cream is being scooped off of the top – let’s connect.
