True Patriot Love - Do Canadians Really Need $1.7M to Retire？ ft. Tim Cestnick

00:00:00.000 what i tell them is first of all it's not rocket science you know you talk about the wealthy barber

00:00:05.200 it's still great advice today i mean it's so simple but you know i get paying yourself first

00:00:10.720 right take 10 take 10 of your take-home pay and set it aside

00:00:19.280 today on true patriot love i'm lucky enough to have tim sesnick from our family office

00:00:25.200 morning tim how you doing i'm doing great so much so glad to be with you today

00:00:30.000 yeah now tim i'm gonna brag a little bit on your behalf because i know you're a humble guy

00:00:35.200 uh and we worked together years ago at one of the big three firms we worked at deloitte and

00:00:41.280 i gotta tell you um tim is one of the guys that i met early in my career and i knew tim was going

00:00:48.560 to do great things in his career because of the focus this man has so and tim you know i was

00:00:55.360 always uh you know really admired all the focus you had and and right away tim knew from day one

00:01:04.080 at deloitte that he wanted to become involved in tax he wanted to be a part of his career would be

00:01:10.400 a tax practitioner i know he you know he went on to work for another firm he went on to work for

00:01:15.760 some major banks bank of nova scotia um and started uh wall street family offices uh in the middle of

00:01:23.120 his career and did great things and you know tim when i was preparing for the show i was taking a

00:01:28.160 look at you know your resume and everything going on now you know you're an fcpa an fca a cpa a tfp

00:01:36.720 and a tep tep i don't really know what it is but if you could tell me but you know trust in the

00:01:42.320 state practitioner it just means i'm really boring because all i talk about read about is all this

00:01:47.040 financial stuff no no you're not boring that's for sure but you know but i think you know that

00:01:53.520 that's a tribute to you because you kept learning expanding your career and growing and you know

00:02:00.320 one of the for those of you who don't know a lot about accounting in those days when i knew tim

00:02:06.800 it was a very onerous uh set of exams that you had to go through to become a ca you had to do

00:02:13.040 uh school of accountancy and then you had to do four hours four days to write your u fees your

00:02:18.560 uniform final exams um and tim is one of those guys that you just knew he was going to go through it

00:02:24.480 like lickety split get on with it and move on so thanks for taking the time um you know tell

00:02:31.600 us a little bit about what you're doing now because our family office is a uh it's like a

00:02:36.800 one-stop shopping network for family planning is it not yeah so we we a family office the concept

00:02:44.880 of a family office has evolved over time but really what it is we are a wealth advisory firm

00:02:50.720 that works with not very many families about 45 families across the country very successful

00:02:56.560 families we help them make wise decisions about their their money about their wealth and that

00:03:01.680 includes a lot of areas so we are licensed as investment managers we also help with integrated

00:03:07.600 planning which is your tax planning estate planning ownership structuring all of that

00:03:12.800 risk management which is asset protection planning and insurance planning and strategic philanthropy

00:03:18.960 because a lot of families are generous and want to give money back and there's a way to do that

00:03:22.880 more meaningfully but also to save tax at the same time um and then family family continuity is an

00:03:29.200 area of work that we uh we delve into which is really about making sure that if a family has

00:03:34.320 enough money where it could go on for a couple generations that it actually will successfully

00:03:37.840 do that because it's not easy for that to happen um you know a lot of family dynamics can get in

00:03:43.600 the way of that happening so family uh continuity is about family governance it's about education

00:03:49.600 for the next generation leadership mentoring communication coaching it's a bunch of things so

00:03:54.560 we do that and then lastly we do a lot of paper shuffling which is the bill paying and the tax

00:04:00.160 return preparation and the bookkeeping for holding companies and things like that so that that gives

00:04:04.880 you an overview of things we do but it's pretty broad pretty broad yeah yeah no wow that sounds

00:04:10.960 really interesting and a full stop a shop which it sounds up sounds like so tim before the show

00:04:16.480 i was mentioning to you as we were getting ready bmo just put out a survey and 36 of canadians

00:04:24.000 are concerned they're not going to meet their retirement goals now and they they said and this

00:04:30.160 is interesting because i think it might be a little more they said uh most canadians think

00:04:34.960 they need 1.7 million in the bank to retire and now it gets higher you with 1.9 if you live in

00:04:42.400 the gta 2.2 million if you live in bc uh less on the east coast significantly less but you know

00:04:50.000 it's something on everyone's mind and you know i mentioned to you i'm getting up there too so i'm

00:04:54.640 starting to think about it and and my my retirement planning uh goals and whether i met them or not

00:05:01.360 so i sat down and you know before the show i was i was crunching some numbers and i quickly grabbed

00:05:06.080 my old calculator from school and i started crunching some numbers and i i basically took

00:05:11.440 look and i said if if i need 60 000 a year and there's a five percent or let's say a three percent

00:05:19.360 inflation uh and i was going to live till 80 um you know how much money would i need and it came

00:05:26.960 out to 1.6 million dollars i was like wow okay so that did work and you know because there's a lot

00:05:32.960 of arguments around you know how much money you do need to retire and uh whether or not you just

00:05:38.320 have to look at your annual cash flow versus your net worth and all that good stuff. But

00:05:45.120 talk to me a little bit about the stuff and the types of services you would be thinking about

00:05:52.080 when it comes to people planning for retirement right now. So, first of all, I think the numbers

00:05:59.680 you shared are not far off. First of all, I think a lot of people do get concerned that they don't

00:06:04.240 have enough to to live in retirement and that could be for a number of different reasons it

00:06:08.720 could be because the cost of living has gone up so much that's one one reason um it could also be

00:06:14.240 that um maybe they just haven't been diligent enough about saving for the future i mean you

00:06:20.000 look at the biggest store of value for most canadians it's it would be in their real estate

00:06:24.160 in their homes um which you know many of us were fortunate enough to to buy years ago when you could

00:06:29.200 afford to buy a home in canada um so you know but those numbers aren't aren't totally uh inaccurate

00:06:36.160 i i think if you want to look they take a very simplified way of doing the math really simplified

00:06:41.520 it doesn't get simpler than this but you know if you were to take your annual income that you uh

00:06:47.520 will need on day one in retirement let's say you're retiring this year pick your income level

00:06:52.560 that you would need this year to survive multiply by 30. 30 is just uh directionally correct now

00:07:01.120 it it's so at your sixty thousand dollar number multiply by 30 you come up to 1.8 million so

00:07:07.840 it's not actually too far off it to be really accurate uh and a lot of people don't want to

00:07:12.880 be accurate because they're worried about finding out the reality but it makes sense to visit with

00:07:17.280 a financial planner as somebody who can actually do the math more accurately and and figure out

00:07:21.600 based on what you spend and using inflation numbers and making assumptions about inflation

00:07:26.800 and returns what you really need but that's a general ballpark so it's a high number yeah

00:07:32.960 yeah it is a high number and you know here's the thing we do a lot of shows now tim where we're

00:07:37.680 talking about real estate values and declining real estate values in this market so you know

00:07:43.280 and and people who are at the point where you mentioned they're either entering the market

00:07:49.360 at an unsustainable affordable level or quite frankly they're stuck in the market and they're

00:07:54.960 watching their asset value decrease as the market realigns um so you know we do the interesting

00:08:02.180 thing is you know most people who go into retirement look at two main things right it's

00:08:06.560 it's their real estate values and then it's their uh stock values it's their portfolio stocks and

00:08:13.560 bonds right that's right um and and the interesting part that i find when you have the conversation

00:08:18.600 so i'll be at a dinner party and someone will sit down with me and say well you are you know you're

00:08:22.760 a cpa and i say well or a ca as you and i were called um i say well you know i wasn't a very

00:08:28.760 good one i'll be truth with it that's why i got out of it pretty quick and and started other

00:08:33.480 businesses and so but they say yeah but you know you know and i said well you know when it comes

00:08:39.560 to real estate right now unless you bought rental properties you have to be really careful about

00:08:45.160 what you're valuing your existing property at and because because as you see the mark and i went

00:08:51.320 through this in the mortgage meltdown when i was living in florida years ago you know my my more my

00:08:57.080 my real estate values dropped so fast and so radically that i could no longer depend on them

00:09:02.920 on them for my mortgaging of my other business assets so i learned the hard way on that one

00:09:08.680 um so so people really got to be careful now and when you when you talk to your clients about real

00:09:15.320 estate and retirement and investing you know what is your focus right now well i think i think first

00:09:23.920 of all i actually don't like the word retirement i i think that you know if you want to live a long

00:09:30.520 healthy life i think you need a purpose and it doesn't mean you need to work doing what you're

00:09:34.840 doing every day for the rest of your life, but I do believe that there's life beyond, you know,

00:09:39.860 they call it the daily grind of what people are doing today. So whether that's starting a business,

00:09:45.660 whether it's working part-time somewhere else, you know, consulting in the field that you've

00:09:52.420 been working in for most of your career, whatever it looks like. I think for a lot of Canadians,

00:09:57.440 that's something that many people are going to have to look to do because it's, for some people,

00:10:02.440 it's going to be tough to make ends meet. Now, one thing I will say, it's never too late to

00:10:06.740 accelerate how much you're setting aside so that you have your assets working for you,

00:10:12.980 not just your time working for you. And I think a diversified portfolio is pretty critical.

00:10:19.980 When we invest money for families today, we are probably 50 to 65% in what we call

00:10:26.600 non-traditional investments. Now, what does that include? Well, anything other than a publicly

00:10:30.920 traded stock and bond that's not to say stocks and bonds are not that there isn't a place for them

00:10:35.720 there absolutely is but as you get older what you don't want to see is a lot of swings in the value

00:10:41.640 of your assets your value of your portfolio so things that are getting marked to market every

00:10:46.520 day because they're publicly traded you get a lot of volatility there um in certain other things

00:10:52.840 like real estate or you know private businesses or or funds that invest in private equity

00:11:00.360 or private debt private mortgage strategies these things you have to be careful what you're

00:11:05.240 investing in to make sure that the people you're who you're entrusting your money to know what

00:11:09.080 they're doing and that they've got a solid track record and they have a lot of skin in the game

00:11:13.160 themselves they're investing a lot of their own money there's other factors to look at too but

00:11:18.680 when you can find really good managers that do those those things that are a bit off the beaten

00:11:23.240 path that don't get marked to mark to market every day you'll avoid a lot of the ups and the downs

00:11:30.520 and you can enhance your returns at the same time keeping in mind you have to watch for liquidity

00:11:36.360 not everything is liquid but there's there's an increasing number of what i'll call alternative

00:11:41.880 strategies or non-traditional strategies which are monthly liquid or quarterly liquid which

00:11:47.800 you know if you're willing to tie up some of your money for some period of time you should get paid

00:11:52.440 for that and and you can get paid for that if you're choosing your investments carefully this

00:11:57.240 isn't it's not an easy thing to do to pick the right investments and if you're not sure how to

00:12:00.920 do it you want to find somebody who's capable of doing that um and you want to find somebody who's

00:12:05.640 got a pretty big toolbox they're not just investing in stocks and bonds they're investing in other

00:12:10.520 things um so some portion of your money whether it's 40 or 50 whatever it might be is less volatile

00:12:18.280 but still solid returns very good returns yeah no no the great great uh message you know it's

00:12:25.880 interesting when you and i met each other years ago there was a book it was called the wealthy barber

00:12:31.240 and you know we really spent a lot of time you know it was a very popular bestseller and and it

00:12:37.400 really talked about paying yourself first that was the the key thing right so make sure you know

00:12:43.400 every month you have money sweeping to from from your into your retirement account it showed you

00:12:49.720 the power of compounding interest and investing in diversified mutual funds or as you're saying now

00:12:57.000 the world's changed a little you have to be even more careful and diversify even your investment

00:13:02.200 tools so i get that right and then and then importance of insurance right making sure you

00:13:08.280 have insurance and then of course the state planning and wills that was the kind of the whole

00:13:13.400 uh part of the book you know um talk to me a little bit and this is interesting talk to me

00:13:19.000 about insurance for a minute and then i i really want to go into some estate planning before we

00:13:23.800 we jump into a few other things so insurance uh gets a bad rap i think because maybe sometimes

00:13:30.040 because some of the people that sell insurance are the you know they're good sales people and

00:13:34.920 they're persistent right so um and and sometimes um when you're approached by somebody like that

00:13:41.880 you know these are people that can sell ice cubes to an eskimo that's so good they are usually so 0.55

00:13:47.080 so it gets insurance gets a bad rap because it's because the way it's sold quite often no one wakes

00:13:51.240 up in the morning saying hey i want to buy some insurance today you know usually it's someone

00:13:55.320 trying to sell to them um but the reality is it's a pretty powerful tool for a couple reasons number

00:14:00.760 one you can build investments up inside an insurance policy similar to an rsp or a tfsa

00:14:06.840 and it's tax sheltered so that's that's first of all uh one big benefit i'm talking about

00:14:12.360 permanent insurance here not term insurance but permanent insurance which includes whole life

00:14:16.840 insurance or universal life insurance allows you to build up this investment component secondly

00:14:22.120 when you pass away it all pays out tax free so you can have this accumulation over time inside

00:14:27.800 this policy and then you know you'll never face tax on it um it'll pay out when the insured life

00:14:33.160 passes away so the next generation who might be beneficiaries of the policy uh would get all this

00:14:39.480 money on a tax free basis and last the other the other thing about insurance that is really great

00:14:45.640 from a tax perspective is that if you have a corporation that owns this policy maybe you have

00:14:52.920 a holding company maybe you have an active operating business um if your corporation owns

00:14:57.640 the insurance policy when it gets paid out and the corporation is the beneficiary and receives the

00:15:03.880 money it can then it creates something called a capital dividend account inside the company

00:15:09.800 what this is about this is valuable because what it does it allows that amount of money that's in

00:15:13.960 this capital dividend account to come out tax-free so there's all kinds of creative planning we can

00:15:19.000 do especially for those who are business owners or um have corporations to significantly reduce

00:15:26.920 taxes owing at the time of passing away using insurance so sometimes you're paying something

00:15:32.680 for an insurance premium today but the taxes that will be saved when you're gone is an order of

00:15:37.880 magnitude much much bigger than that so anyway um but i will say this if you're going to buy

00:15:44.440 insurance the first thing you need to understand is why what is the purpose you know many people

00:15:51.240 who try to sell insurance will just say hey you should have some insurance but if you really

00:15:55.080 understand why you're buying the insurance that leads to answers around how much the right type

00:16:00.200 of insurance and can really make this idea a good one yeah no great advice tim and you know we i

00:16:08.120 think you hit it right on the nail on the head at the beginning insurance got such a bad rap that i

00:16:13.480 know my generation sort of went away from insurance people say oh i don't want to deal with insurance

00:16:18.040 reps anymore but there are some there is a really great planning strategies inside of insurance so

00:16:24.920 you should take a look at it uh wills so you know i had i had this discussion a few days ago i had

00:16:30.760 a friend of mine uh pass away unfortunately uh last year and his wife has been having a heck of

00:16:38.040 a time um finding assets finding bank accounts finding investments figuring out how to shut them

00:16:45.320 down uh put them into her name you know talk to us about wills and estate planning for a minute i

00:16:51.720 know they're two different things but uh really want to i i keep telling all my friends make sure

00:16:58.040 you have an updated will make sure you know you have a list of all your accounts all your account

00:17:04.440 numbers all your passwords because you know when i'm watching and she's a good friend of ours and

00:17:10.040 she's over you know she comes uh she has a glass of wine she's telling us these stories and i'm like

00:17:15.880 oh my goodness like what you know what a horrific uh challenge for her in a challenging time 0.74

00:17:23.880 yeah you know estate planning and wills um are related to each other for sure estate planning

00:17:30.760 it's very core for the most part is a collection of documents that are properly worded

00:17:36.520 and depending on your personal circumstances one person's documents may look different than

00:17:41.000 somebody else's now there's a bit more to it than that estate planning can also include

00:17:45.000 say making gifts to your kids today while you're alive or transferring ownership of the cottage

00:17:49.640 today while you're alive uh so it can involve doing some things while you're alive to maybe

00:17:54.760 minimize taxes or probate fees when you're gone um but by and large estate planning is a collection

00:18:01.400 of important documents which would include primarily your will is the number one document

00:18:06.440 but also include powers of attorney and there's a couple of those uh that you need to have

00:18:11.720 um there's a power attorney over personal care some provinces call it a health care directive

00:18:17.880 um but it's basically what this document does is is if you are incapacitated you can't make

00:18:23.400 decisions for yourself it gives the authority to somebody else in your life to make decisions about

00:18:28.440 you know your health care whether you get moved into a retirement home or whether you

00:18:32.360 uh where they pull up whether they pull the plug if that's an option if you're in the hospital

00:18:37.000 those kind of things are important so that that's one document it's a health care directive or a

00:18:41.880 power attorney of our personal care the next one is a power attorney over property or your financial

00:18:46.760 affairs and you need to sign that document these these documents these powers of attorney apply

00:18:51.720 while you're alive not not while you're gone but they're important so if you can't make financial

00:18:56.680 decisions for yourself because you're incapacitated or something somebody else steps in and can make

00:19:01.960 those decisions on your behalf and so the person you name as your uh attorney and your power of

00:19:07.160 attorney over property or your money may be someone different than the person you name

00:19:12.840 as power of attorney over your personal care and you know i'm i'm pretty good with finances but

00:19:18.840 i'm not as empathetic as my sister so my parents have named them as the ones that make the healthcare

00:19:24.280 decisions uh i'm just kidding but um you know so that's those are the first talk documents your

00:19:31.240 will of course steps in and and takes over once you're gone it dictates what should happen to

00:19:37.320 what you've left behind that can include your financial assets uh it could include children if

00:19:43.000 you have minor children as well what should be done with the minor children who's who's to be

00:19:46.360 the guardian um and everyone's wills can be a little bit different some can be very simple

00:19:51.880 the simplest wills um if you happen to be married would be to you know when you die leave everything

00:19:57.080 to your spouse um or if your spouse dies first you're supposed to leave everything to you and

00:20:02.280 then on the second spouse's death you leave things you know equally to your kids like that's the most

00:20:07.160 basic most common kind of will we see but your affairs can be a lot more complicated than that

00:20:11.800 if you have a business uh or you own a corporation then you need two wills believe it or not right

00:20:18.760 one one to deal with uh your corporation your business and a separate one to deal with everything

00:20:24.440 else you have and we like to do that because we separate those things into different different

00:20:29.240 wills because what that means is the will that deals with your private company shares or your

00:20:33.960 business that will doesn't actually have to go through the probate process which will save you

00:20:39.400 probate fees the other will which deals with everything else which is all your you know your

00:20:45.400 personal effects and and the residue the rest of your estate um that will go through probate

00:20:51.880 and there will be probate fees depending on your province in ontario for example it's one and a

00:20:56.360 half percent so that number can get big if if uh the probate fees can get big if your state's in

00:21:02.360 the several million range um but you're with so you're willing your powers to train the most

00:21:07.160 important document there's one more important document i want to mention people rarely ever

00:21:10.920 prepare this and that is a letter of wishes so i wrote about this um in the fall in the global mail

00:21:18.200 since i write a weekly personal finance column there but in letter of wishes what it does is

00:21:23.480 it's not a legally binding document like your will but it will uh tell your exactly your heirs

00:21:30.280 they'll give them all kinds of really critical and important information so for example

00:21:34.680 um what about your digital assets you know what are your passwords where do i find them

00:21:41.160 all your your bank accounts your investment accounts what are the account numbers what

00:21:45.080 credit cards do you have what are the account numbers all of that stuff should be captured

00:21:48.360 in a letter of wishes but it's more than just that it's more than just information it can be

00:21:54.600 a place where you express your your uh intentions so for example if you don't leave everything

00:22:02.760 equally to your kids so you've got three children and you're treating one differently than the

00:22:06.440 others but you have a good reason for that you want your family to understand that you know what

00:22:11.800 your wisest thing is to sit down while you're alive and have that conversation with them so

00:22:15.160 they're not surprised when you're gone but you should also spell that out in a letter of wishes

00:22:19.880 so it really explains what you're what you're thinking was and that can lead to uh avoiding

00:22:26.440 um hard feelings and avoiding uh quite frankly estate battles and legal battles after you're gone

00:22:34.200 so a letter of wishes probably has about 10 different things it should also it should include

00:22:38.840 it can also include for example directions to a guardian if you have minor children who

00:22:44.120 you pass away and someone else takes over care of your children maybe you have some wishes for

00:22:49.160 them maybe you have an idea as to what schools the kids should go to what kind of sports and

00:22:53.160 activities they should participate in those things are can be left to that guardian in a letter of

00:22:58.920 wishes or a trustee you're leaving assets in trust for a family member but you want to leave the

00:23:04.360 trustees with a little more guidance and direction and what to do with the assets

00:23:08.440 um that can be spelled in a letter of wishes so it's a really important document you don't you

00:23:12.840 don't need a lawyer to draft it you can do it on your own but you should understand what it should

00:23:17.800 include i'll refer you to the articles i wrote last in the fall um if you look up my name in

00:23:23.160 the globe mail and you look up letter of wishes you'll see two articles on that topic but that

00:23:27.400 there's some free information um or you can research it on your own but i encourage everyone

00:23:31.880 to prepare that kind of document as well oh that's great advice yeah i was actually i'm going to be

00:23:37.800 writing that down because i don't have a letter of wishes so i thank you for for that advice

00:23:42.760 you know let's i'm going to back up a little bit to younger people because you know we talked uh

00:23:47.640 you know we talked a little bit about people and kind of more on from the parent side but let's

00:23:52.840 talk about you know someone of the age when you and i first met each other starting out

00:23:58.040 and i'm starting out and i you know of course most people in their 20s don't think about retirement

00:24:03.960 they're like okay i'm not really into retirement and not even thinking about rsps and you know i

00:24:09.320 i made that mistake i made that mistake in my 20s quite frankly uh i got going uh in my early 30s

00:24:16.200 i started making some decent money after you know i left and i got going uh from becoming a ca and

00:24:22.920 and and really enjoyed life and then i i woke up one morning i said you know i gotta really get

00:24:29.160 serious about this and i called which is funny tim and i worked with uh eddie eddie actually

00:24:35.800 runs an office at dominion securities i called eddie up eddie up and i said eddie i said

00:24:42.440 i'm i'm really sucking right now i said you know i wish i was doing better i said i need your help

00:24:48.200 and so he said well come on and see me so i went down and saw him and i sat down and

00:24:53.560 eddie was always loved loved uh investing and finances in the stock market and everything so

00:25:00.520 i jumped on with him and i said you manage my portfolio going forward i'm going to meet with

00:25:05.400 you and have lunch once a year uh and you and i are going to figure out a direction and a strategy

00:25:12.040 i'm gonna you know i'm gonna bug you a lot uh because i just like talking to you

00:25:16.520 and so he we've been together ever since and it's it's been a good it's been a good marriage of

00:25:22.980 friends because quite frankly we have different skill sets and so important um i think the first

00:25:29.380 advice that i give to people when i'm at dinner parties and they ask me about their kids and

00:25:33.760 retirement number one you know make sure you pay yourself first so make sure you put that money

00:25:40.080 away make sure that money gets swept out of that account gets sent over to your investment advisor

00:25:46.000 And so and that was the kind of the best thing I ever did. I got going with Eddie. And quite frankly, every month that money, I didn't wasn't able to touch it, wasn't able to spend it, wasn't able to do anything. It came in and went out. Right. It was gone. And so because, you know, the power of compounding and you know this, Tim, you're you're a lot smarter than at this than I am. Basically, the power of that compounding investment, the compounding interest on that investment is really the key.

00:26:12.020 And, you know, for those of you do the math, now you can even actually just go to AI and ask AI to tell you the answer, right?

00:26:21.460 It's a little easier now, but go to AI and say, listen, I'm going to put $40 a day for the next 40 years.

00:26:28.940 I'm going to put it away.

00:26:31.480 And I want it to, it'll make what the average stock market investment with dividends has made over the last 20 years, give me the value.

00:26:39.880 and the value is going to come out to four million ish dollars right it's going to come out to a way

00:26:45.860 bigger number than you think um and you're going to be shocked and so you say i i could never be

00:26:51.980 a millionaire so you won't be in that uh situation where you have people now who are saying 36 percent

00:26:58.880 of canadians saying they don't think they're going to meet their retirement objective which is 1.7

00:27:04.100 million a year and it sounds crazy but you know 40 an hour is basically depending on what your

00:27:11.700 average hourly rate is is taking the first hour of your earnings and putting it into an investment

00:27:17.860 every day it's paying yourself first and that really is the psychology you know it's the wealthy

00:27:22.420 barber and and all that but but it does work you know and and the sooner you get on that train the

00:27:28.580 better um but yeah talk i guess tim you know i'm rambling on a little bit i really do believe in

00:27:34.740 the theory i tell my sons to do it i try to get them to do it i've tried to get them involved

00:27:39.620 i've got them an investment advisor i sit down with them when i see them you know when they do

00:27:44.420 come home for dinner i do talk to them so uh you know tell me a little bit you know uh kids what

00:27:51.540 are you telling them right now so i've told my kids you know first of all you don't have to love

00:27:59.220 this stuff you don't have to be the one in the family that that takes a real interest in your

00:28:04.580 personal finances um but somebody in the family needs to somebody doesn't mean you need to be an

00:28:10.420 expert but somebody has to take enough of an interest where if they're not the expert then

00:28:14.740 they're going to work with somebody who is an expert and take responsibility for it

00:28:18.180 so i've told my kids and as it turns out my kids are all financially inclined i got i got a son

00:28:23.300 who's a cpa and and another one's who's going to be a cfa and my daughter did her business degree

00:28:27.860 so they're all you know i didn't i did not encourage them to do this they just kind of

00:28:31.060 fall they just kind of followed this path um but i i what i tell them is first of all it's not

00:28:37.620 rocket science you know you talk about the wealthy barber it's still great advice today i mean it's

00:28:42.660 so simple but you know the idea of paying yourself first right take 10 take 10 percent of your take

00:28:48.820 home pay and set it aside and just invest it for your entire career uh if you start young enough

00:28:54.900 it's going to be a massive number one day more than you're going to need uh if you wait longer

00:28:59.140 it's going to be harder to get there you might have to set aside a little bit more than 10

00:29:02.980 but set aside uh some every month pay yourself first and then it's a matter of uh quite frankly

00:29:09.460 you know and this is the biggest thing that canadians struggle with it's just not spending

00:29:13.700 more than you're bringing in every month and that may sound simple but it may sound obvious

00:29:18.900 but it's amazing how many people don't get it right so you know because if you've got a you've

00:29:24.900 got you know a bucket it's full of water and there's a leak in the bottom which because you're

00:29:29.220 because you know what's going out is exceeding what's coming in every month you're never going

00:29:34.580 to catch up it your debt's going to continue to spiral and that's going to be your uh weight

00:29:40.660 around your neck so bottom line is get your spending under control and then get your then

00:29:44.820 get your your debt under control as well canadians are among the most debt indebted uh individuals

00:29:50.340 globally our um average level of debt today is 103 well household debt is 103 of our gdp

00:29:57.300 more. So I was reading, I think it was reading on the weekend that the national, not the

00:30:05.560 government's debt, the individual debt of Canadians amounts to about $2.5 trillion today,

00:30:11.840 which is massive. And that's basically spending the future, spending income from the future.

00:30:18.600 And when that income is less certain, either because interest rates could be going up or

00:30:23.940 job security could be going down or you you name it inflation's going up when things become tighter

00:30:30.100 that's when debt starts to really uh harm people so again don't spend more than you're bringing in

00:30:35.860 it sounds simple but it's it's not easy it's it's simple but not easy um yeah yeah no no you're you're

00:30:43.540 so right you know people budgeting right and you know you and i i guess when people say to me i i

00:30:50.340 can't find a career i said you know what go be an accountant for a while and you know i always laugh

00:30:56.980 because i wasn't a great accountant i think you knew that it wasn't something when i believe it

00:31:01.540 or not i tell this story all the time and i don't know if i've ever told tim i've told eddie a

00:31:05.220 million times i'm sure he's sick of it but i had another job when i first started deloitte i didn't

00:31:10.420 think i'd last that long so i did keep a job at canada packers loading trucks at night so i used

00:31:15.860 to work during the day and then go load trucks at night and when they actually gave me the summer

00:31:21.620 off to write my eufy yeah i went and i went and framed homes right i never studied for my eufy i

00:31:28.900 actually went and frayed homes because they were paying me to write my eufy and so i used the money

00:31:33.380 and i double dipped in it i never thought i'd be but you know what thank goodness i got through and

00:31:38.820 i took the time and i articled and finished because it was a great training ground to teach me to

00:31:44.260 budget and so now you know i do like i have a family budget you know my i know i drive my wife

00:31:50.580 crazy with it but you know i sit down i budget it out um i'm very good at kind of when i do start a

00:31:57.300 business which you know that's something that i enjoy doing i like new ideas and creating new

00:32:02.740 companies um i do sit down and i create a business plan and that business plan has a number of

00:32:08.500 segments to it including a budget but you know it's it's that training ground that and that

00:32:13.060 discipline that helps you actually you know succeed and be able to invest in different

00:32:17.860 businesses and you you reap the benefit of is when you see it actually come to fruition so

00:32:23.380 i totally agree with you on that hey on the on the real estate side if i'm a young person right now

00:32:29.300 and this is my advice to people right now and i know single you know i've said it to uh my son

00:32:36.180 and uh the one that's at home right now i said listen uh you know you got to start looking

00:32:42.580 at uh rental homes or multi-dwelling homes more so i'm kind of focusing on okay when you get going

00:32:50.660 you might have uh the first floor to yourself but if we build it for you and i love building homes

00:32:56.660 when we build a couple homes you might you might actually live on the first floor rent the top two

00:33:02.660 floors out and then you're gonna from there you'll pay your mortgage off and then you'll buy another

00:33:07.780 one and another one and that's that's where i'll leave you i don't want you to focus on single

00:33:12.420 dwelling homes anymore because i they're unattainable for you right now it's a fantastic

00:33:16.820 idea fantastic so you know i i'm a business owner so i own a business but one of the assets i do

00:33:24.500 own are a couple different multi-unit residential properties i'm a big believer in the use of real

00:33:29.140 estate i know it's expensive today i know that but you know what um i believe that over time

00:33:36.420 young people should aspire still to try to own home the home they live in now that means finding

00:33:42.260 a home that is a duplex or has a basement apartment in it where they can live upstairs or live in one 0.99

00:33:49.060 unit and rent the other one out that's gonna make a lot easier to afford it and over time you're

00:33:53.380 going to build equity uh with every payment you're going to mortgage but you're going to build equity

00:33:57.860 um i still believe that funny that uh when it comes to financial security owning real estate

00:34:04.100 is still one of the best assets you can own um i'm not saying that that's that's all people

00:34:09.060 should own although some families that's that's exactly what they do they load up on real estate

00:34:13.460 because they've done it they know it better than anything else and that and they've done really

00:34:16.500 well by it it's just more difficult today so you got to find those properties and those pockets of

00:34:20.900 narrow neighborhoods where things are a little bit less expensive maybe because the neighborhood is

00:34:25.940 not as nice as the one across town or whatever um buy a property that's the you know you've heard

00:34:32.580 the the the advice by the least expensive property on the street probably because it needs the most

00:34:37.380 work and and put some work into it and and rent out part of it if you have to but i still think

00:34:43.540 building equity so you don't actually rent for the rest of your life is is a very important

00:34:48.580 financial strategy and and i wrote an article about this in the globe mail a couple weeks ago where

00:34:54.260 just i just talked about using the first home savings account i talked about using uh the rsps

00:35:00.100 and combining those two plans together to be able to buy a first home um every every canadian

00:35:07.940 who is 18 or older who doesn't has never owned a home or hasn't owned one in the last

00:35:12.340 you know five years should have a first home savings account uh it's like kind of like an

00:35:17.300 rsp on steroids because you don't pay tax when you take the money out if you buy a home with it

00:35:22.100 uh your rsp you can take money out under the life so on the homebuyers plan you have to repay it

00:35:27.940 over 15 years if you don't want to pay tax on the amount so that's still fine so you can pull

00:35:32.900 out sixty thousand dollars when you buy a home from an rsp your your first home savings account

00:35:38.020 if you're putting in the maximum eight thousand dollars a year will grow nicely over a period of

00:35:43.140 years so even if your goal is not to buy a house for 10 years 12 years maybe even 15 years um

00:35:50.500 start saving now and look for that and don't make your first home your last home this is another

00:35:56.740 thing i see i see some young people say well i have to move to home like the home my parents own

00:36:00.900 like the one i grew up in no you don't you just need to own equity in a piece of real estate

00:36:05.700 that's that's in a good location and that will appreciate over time it doesn't have to be your

00:36:09.780 last home find something you can afford um but i still think it's worthwhile yeah it's interesting

00:36:16.260 you know when i uh after i left and uh went on to my next job after uh you and i worked together

00:36:23.220 uh i bought my first single dwelling home which was interesting and it was a family 17 people

00:36:29.140 lived in it uh and i tell this story because my dad thought i was insane i bought this home

00:36:34.500 i went in and i brought my father and my my dad had been renovating homes most of his life with

00:36:39.300 his brothers you know being italian they all had trades and so we went in and he says what the

00:36:44.820 heck did you buy this for and i said to your point i said it's it the bones are good location so so

00:36:51.780 and i said i think i can gut this thing and get it back on its feet and get it out and i can live

00:36:57.060 in it for a while yeah because it wasn't too close it wasn't too far away from where i was working

00:37:02.980 and i said so it's convenient and he said this is a mess and so i did it and from there i learned

00:37:09.780 you know and i i now when i deal with uh young people who come onto sites when i'm building a

00:37:14.980 home now or homes i i say to them you know you have so you have much uh more information at

00:37:22.500 your fingertips than i did because i had to watch people in the trades to learn the trade

00:37:27.220 now you can be a youtube trades person with skilled trades you can learn all these extra

00:37:31.860 things just watching shows and youtube and everything and you can become you know a pretty

00:37:37.860 adept at any trade you want to become at just by just by watching whereas i used to have to stand

00:37:43.140 beside a trades person and ask them questions half the times they didn't want to talk to me

00:37:48.100 and then you had to kind of apprentice a little bit to learn now you don't have that so i always

00:37:52.900 tell my sons you know do the same thing you know make sure you uh learn as much as you can to fix

00:37:59.460 up your own homes absolutely great advice yeah smart so rsp time i just want to hit on this

00:38:07.140 because they you know as we go so you know we're through it uh tax time's coming to an end right

00:38:13.620 thank goodness it's always a relief after tax time finishes for everyone and then i guess you're you're

00:38:18.900 into corporate tax time next but uh for the most part but yeah but um you know any any advice on

00:38:26.820 rsps before we wrap up that you know i always tell people you know don't wait uh start now

00:38:33.860 especially younger people uh and any anything that you can provide on that front sure a couple

00:38:41.860 things i'll say first of all if you can contribute to both a tax-free savings account a tfsa and your

00:38:47.540 rsp that's that's the best thing to do if you don't have the resources to do both then when

00:38:53.460 you're younger you may actually be better off contributing to your tfsa than your rsp and the

00:38:59.460 reason as you get as you get older and maybe your income grows not only can you put more into an

00:39:04.180 rsp at that point in time but the tax deduction you get for your rsp contribution that's worth

00:39:10.260 more when you're making more income okay so if you can contribute to both great um if you are

00:39:18.020 contributing to an rsp which is which is good if you can um take a look and ask yourself the question

00:39:24.100 is my income this year lower than it's gonna be next year will i have significantly higher income

00:39:28.500 next year maybe because i'm i'll expect to have a new job or whatever if that's the case you might

00:39:33.060 want to save your rsp deduction until next year you know you can put the money in today you're

00:39:37.780 entitled to the tax deduction for the year but you can defer that deduction to any year in the future

00:39:43.060 i wouldn't push it off for two three four five six years but to push it off for you know maybe

00:39:48.660 maybe a couple years one year for sure if you're going to be higher next year not a bad idea to do

00:39:55.060 that um the rsp can be used for buying a home as we talked about the homeless buyer home buyers

00:40:00.420 plan can also be used to go back to school if you want to upgrade your education uh the lifelong

00:40:05.300 learning plan in other words you can tap into the assets inside your plan for those purposes and not

00:40:10.180 pay tax on the money as long as you repay the money back to your rsp over time so there's some

00:40:16.420 flexibility with your rsp there but between a tfsa and an rsp they're actually equivalent

00:40:21.620 um in terms of how effective they are at saving for the future the rsp comes with a little bit

00:40:27.540 of a psychological advantage in the sense that if you put money into an rsp you're not as likely to

00:40:32.900 pull it out because you pay tax when you pull it out but the tfs tfsa it's pretty easy to

00:40:38.500 put money in and then pull it out again because there's no tax implications to it so if you're

00:40:43.620 not disciplined the rsp still might be a better approach but the bottom line is you should be

00:40:49.460 saving for the future in one way or another and those are the two primary vehicles tfsa rsp and

00:40:55.620 then don't forget the first home savings account if you haven't owned a home in the last five years

00:41:00.500 oh awesome well thanks tim i really appreciate it and you know thanks for taking the time today i

00:41:04.900 know you're i know you're busy and and you got lots going on right now and i really appreciate

00:41:09.540 it and you know in the future uh you know i always read your articles uh you know in the globe and

00:41:15.620 i see on tv all the time so you know which uh i'm very uh proud and happy that you know you're doing

00:41:21.940 so well and and uh as you can tell from everyone who's watching the show today tim knows his stuff

00:41:27.620 so which is great and uh thank you and for those of you uh we hope tim will come back and join us

00:41:34.580 on more shows and as as we roll out the year and i'm sure more uh uh financial issues uh come about

00:41:42.580 in these crazy times. So thank you, everyone. Thank you, Tim.

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True Patriot Love - April 30, 2026

Do Canadians Really Need $1.7M to Retire？ ft. Tim Cestnick

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