Finance

Riding Market Waves : A Surfer’s Guide to Investing

/ Jesse Ogloff

Investing is like surfing. You don’t control the waves, but you can position yourself to catch them. Patience, preparation, and staying calm in turbulent waters are essential. It’s also about understanding that waves come in cycles, and missing one doesn’t mean you’ve missed your chance entirely. The key is to stay in the water and ride the wave when the opportunity arises.

What characteristic does a surfer need more than anything else? If you said adaptability, you’d be right. Surfing is about responding to the environment—reading the waves, positioning yourself, and timing your movements. Investing is remarkably similar.

When you paddle out into the ocean, you’re placing yourself in a vast, unpredictable environment. There will be periods of calm where nothing seems to happen, times of turbulence when waves crash relentlessly, and moments of exhilaration when you finally catch the perfect wave. Successful surfers don’t leave the water just because conditions aren’t ideal—they wait, they prepare, and they adapt. The same principles apply to investing.

Preparation: Choosing the Right Spot and Equipment

Before a surfer ever catches a wave, there’s preparation: selecting the right beach, the right board, and understanding the tide and weather conditions. Similarly, before you invest, you need to know your goals, assess your risk tolerance, and choose the right financial tools. Are you aiming for steady, small gains (the equivalent of riding gentle waves on a longboard), or are you comfortable chasing bigger, riskier opportunities (the bigger, thrilling waves that require a shortboard)?

Just as every beach and wave is different, every investor’s journey is unique. This is where a financial advisor acts as a guide—helping you identify the “surf spot” that matches your financial aspirations. An advisor ensures you have the right tools and strategies in place before you paddle out into the financial waters.

The Waiting Game: Patience is Key

The ocean doesn’t deliver perfect waves on demand, and the market doesn’t deliver constant returns. Surfers spend a lot of time floating, watching, and waiting for the right wave to come along. It requires patience and trust in the process.

Investors, too, must resist the urge to act impulsively. It’s tempting to chase every market trend or head to the beach when the conditions aren’t working. However, those who wait patiently and stick to their plan are better positioned to catch the next big wave of opportunity.

Timing: Don’t Chase the Wave—Position Yourself for It

Catching a wave requires positioning, timing, and confidence. Paddle too early, and you’ll tire yourself out. Paddle too late, and the wave will pass you by. The same goes for investing. Trying to “time the market” perfectly is nearly impossible. Instead, focus on positioning yourself with a long-term strategy so you’re ready to benefit from the market’s natural momentum.

One of the biggest mistakes surfers make is paddling frantically toward every wave they see. The same goes for investors who try to chase every hot stock or trend. It’s exhausting and rarely effective. Instead, surfers watch and anticipate, recognizing that the ocean will always offer another wave. Likewise, investors must understand that markets move in cycles, and missing one opportunity doesn’t mean they’ve missed their chance entirely.

Staying Calm in the Swell: Navigating Market Volatility

When you’re out in the ocean, not every wave is rideable. Some are too big, too small, or don’t have the right form. Surfers learn to navigate the swell, staying calm even when waves crash over them. Investing also has its share of volatility. Markets rise and fall, sometimes dramatically. The key is to stay calm, keep your eyes on the horizon, and avoid rash decisions.

For example, when a wave crashes unexpectedly, an inexperienced surfer might panic and paddle back to shore. Similarly, investors often sell their holdings during a market downturn, locking in losses and missing out on the recovery. Experienced surfers know that poor waves—like negative markets—are temporary. The best approach is to stay in the water and focus on the next opportunity.

The Big Picture: Riding the Wave to Success

When a surfer catches the perfect wave, it’s the result of preparation, patience, and resilience. It’s not just about the ride; it’s about all the effort that went into being in the right place at the right time. Investing is no different. Long-term success comes from sticking to a well-thought-out plan, staying disciplined during turbulent periods, and positioning yourself to take advantage of the market’s natural upward momentum.

The Bottom Line

Surfing and investing share a fundamental truth: you can’t control the waves, but you can control how you respond to them. With patience, preparation, and a steady hand, you’ll be ready to ride the wave when the opportunity arises. So, stay in the water, trust your plan, and keep your eyes on the horizon—the next big wave might be closer than you think.

Email me at info@financerx.ca.

Raising Financially Literate Children: A Lifelong Journey

/ Jesse Ogloff

As parents, one of our most impactful roles is preparing our children for the realities of adulthood, and financial literacy is a cornerstone of that preparation. Understanding how to manage money is a skill that can help children achieve their goals, avoid financial pitfalls, and develop independence. However, teaching these concepts often raises questions about how much to share—and when.

Here’s a roadmap to help you introduce financial lessons at different stages of your child’s life, from simple early concepts to adult responsibilities, ensuring they are ready to manage their own financial futures.

Early Childhood: Building Blocks of Money Awareness

When children are young, the goal is to familiarize them with basic financial concepts in ways they can easily understand and relate to their daily lives.

  • Where Does Money Come From? : Explain the concept of earning money by working. For instance, share what you do for a living in simple terms, emphasizing how work provides the resources to pay for food, clothes, and activities. Use play to reinforce this—children’s chores or pretend shops can be excellent teaching tools.
  • The Value of Choices : Engage them in simple decision-making. For example, let them choose between two snacks at the store or pick a family activity within a small budget. This helps them grasp that money is finite and choices are necessary.
  • Saving for Something Special : Introduce saving by using a clear jar or piggy bank. If your child wants a toy, help them save birthday money or small earnings to buy it themselves. This makes the reward more meaningful and connects effort to results.
  • Generosity Counts : Introduce the idea of helping others. If your family donates to a cause or participates in charitable activities, involve your child. Even contributing a small portion of their allowance can help them understand the importance of giving back.

Pre-Teens: Exploring Financial Responsibility

As children grow, their understanding of money matures, and they often compare themselves to their peers. This is an ideal time to teach values and begin involving them in family financial decisions.

  • Allowances and Earning Power : Transition from a fixed allowance to an earned system. Assign age-appropriate tasks and reward completed work. This builds the connection between effort and reward and introduces the responsibility of managing their earnings.
  • Spending and Saving Goals : Help them balance saving, spending, and giving. For example, encourage saving for a larger purchase, like a gadget or a camp fee. They’ll learn to prioritize and delay gratification.
  • Discuss Priorities : Be open about why your family spends money in certain ways. For example, if you prioritize experiences like vacations over material items, explain that choice and its benefits. This sets the stage for understanding financial trade-offs.
  • Introduce Budgeting Games : Use fun methods, like board games or apps, to teach basic budgeting and investing concepts. These tools can make learning about money enjoyable and interactive.

Teenagers: Preparing for Independence

Teenage years bring more financial autonomy, making it a pivotal time to introduce practical skills and financial planning for the future.

  • Managing Bank Accounts : Open a bank account for your teenager and teach them how to use it. Guide them through using a debit card, monitoring their balance, and understanding bank fees.
  • Planning for College or Career Goals : Begin discussing how education or career plans will be financed. Be honest about what the family can contribute and encourage them to explore scholarships, grants, or part-time work. This clarity helps them set realistic expectations.
  • Real-Life Budgeting Practice : If they have a job, involve them in budgeting their income. Teach them to allocate funds for spending, saving, and long-term goals like buying a car or funding extracurricular activities.
  • Basic Investing Concepts : Introduce the idea of investing early, explaining how compound interest works. Even if they’re not ready to invest, understanding the potential benefits can inspire long-term thinking.

Young Adults: Becoming Financially Independent

As your children step into adulthood, the financial lessons become more nuanced and directly applicable to their lives.

  • Understanding Credit and Debt : Explain how credit works, emphasizing the importance of maintaining a good credit score. Discuss the dangers of high-interest debt and share strategies for using credit cards responsibly.
  • Involving Them in Family Financial Discussions : Share general insights about household expenses, savings strategies, and long-term financial planning. This prepares them to manage their own households one day and fosters transparency.
  • Retirement and Future Planning : Encourage them to start thinking about their financial futures. Help them open an account for retirement savings, such as a TFSA or RRSP or FHSA, and explain the value of starting early.

Adult Children: Transparency and Legacy Planning

When your children are grown, financial conversations shift to estate planning and long-term family goals.

  • Share Your Financial Plan : Be open about your estate plan, life insurance, and retirement savings. Let them know how you’ve prepared for the future and any role they may play.
  • Teach Collaborative Financial Management : If your children will be involved in managing your estate or caregiving, make sure they understand the steps they might need to take. Provide access to essential documents and contacts, like financial advisors or estate attorneys.
  • Encourage Financial Growth : Even as adults, your children can benefit from ongoing financial advice. Recommend books, podcasts, or professional financial planners to deepen their knowledge and help them refine their own financial strategies.

Financial literacy is a gift that evolves over a lifetime. By tailoring lessons to your child’s developmental stage and gradually introducing more complex concepts, you equip them to make informed decisions and thrive financially. These conversations not only prepare your children for the future but also foster trust and strengthen family bonds.

With patience and the right approach, you can instill lifelong financial confidence in your children—ensuring they’re ready for any financial challenge that comes their way.

Email me at info@financerx.ca.

Exploring Alternatives to Income Tax : Paths to a More Modern, Balanced, and Equitable Tax System in Canada

/ Jesse Ogloff

Income Tax has become a staple of modern society, with the proceeds helping to fund essential services and infrastructure. Its roots stretch back centuries but, in Canada’s case, it was only implemented in 1917 as a temporary wartime initiative.

Before the introduction of income tax, the bulk of Canada’s revenue came from taxes on imported goods, sales taxes, and excise duties. When Canada entered World War I in 1914, this prior method proved insufficient to cover the mounting costs of wartime operations. As the war dragged on, the government needed a more reliable and substantial revenue source to sustain its military commitments and address domestic economic strains. It was intended as a temporary solution to generate revenue, based on an individual’s income level, during the war.

The Income War Tax Act marked the birth of Canada’s federal income tax and was introduced by then-Finance Minister Sir Thomas White in 1917. The initial rates started at 4% on taxable income above $2,000 for individuals and peaking at 25% for high earners. In 2024 dollars, this would mean that income tax starts for individuals with a taxable income above $53,700. The government assured Canadians that this tax was a temporary emergency measure, promising its repeal once the war’s financial demands were met.

Despite the end of World War I in 1918, the income tax system persisted. Canada was left with massive war debts and growing peacetime expenditures, which resulted in income tax becoming a permanent fixture by 1920 as the primary tool for funding federal government programs and services.

The outbreak of World War II in 1939 led to another major expansion of the income tax system in Canada. As in World War I, the government needed vast amounts of revenue to support the war effort. During this period, the tax base widened significantly, with more Canadians become subject to income tax. By 1948, income tax rates were much higher, and many more individuals were required to file returns, making it a truly national tax system.

After World War II, income tax become essential for financing Canada’s growing welfare state. The government used income tax revenues to fund key social programs, such as healthcare, education, unemployment insurance, and infrastructure. The progressive nature of income tax – where higher earners pay a larger share – allowed it to support these broad social initiatives while also reducing economic inequality.

By the 1970s and 1980s, Canada’s tax system had evolved to include a more structured rate system, numerous tax deductions, credits, and exemptions. The Canada Revenue Agency (CRA) established as a formal entity, played a crucial role in standardizing and managing tax collection across the country.

Income tax remains the cornerstone of Canadian public finance, accounting for a significant portion of the federal government’s revenue. It helps fund a wide range of public services, including healthcare, education, defence, infrastructure, and social welfare programs like the Canadian Pension Plan and Employment Insurance.

The tax system has seen numerous reforms over the past few decades, with efforts aimed at simplifying the process, reducing tax evasion, and making the tax system more equitable. Notable changes include the introduction of the Goods and Services Tax (GST) in 1991, new tax credits like the Canadian Child Benefit, and measures aimed at supporting low-and middle-income families. Recent debates focus on the balance between tax rates, fairness, and competitiveness, especially with neighboring countries like the U.S..

Several potential alternatives to income tax exist, each with unique benefits and drawbacks. Here are some of the main alternatives that countries have considered or implemented to varying extents:

Consumption Tax (Sales Tax or Value-Added Tax [VAT])

    How It Works : Consumption taxes are levied on goods and services at the point of sale. The VAT, a common form, is applied at each stage of productions and distribution, with the tax ultimately being passed on to the consumer.

    Pros : Encourages savings and investments, as only spending is taxed. It’s relatively straightforward to implement and can be a stable revenue source.

    Cons : It tends to be regressive, as lower-income individuals spend a larger proportion of their income on consumption, potentially increasing inequality without exemptions or rebates for essential items.

    Flat Tax

    How It Works : A flat tax system applies the same tax rate to all taxpayers, regardless of income level. This could either be applied to income, consumption, or both.

    Pros : Simple to administer, transparent, and can increase tax compliance due to its straightforward structure. It reduces complexity, potentially lowering government administrative costs.

    Cons : Flat taxes are often seen as less fair, as they don’t account for individuals’ varying abilities to pay. Without additional policies, it could disproportionally impact lower-income earners.

    Land Value Tax

    How It Works : A land value tax is levied on the value of land itself, excluding buildings or other improvements. This idea, promoted by economist Henry George, aims to tax the unearned value increases that arise from location, infrastructure, and community development.

    Pros : Encourages efficient land use and discourages land speculation. It’s seen as a fairer way to tax wealth, as land value often reflects public investments and community desirability rather than individual productivity.

    Cons : Landowners might resist, as it can reduce the profitability of holding unused land. It also required regular and accurate land valuations, which can be administratively complex.

    Wealth Tax

    How It Works : A wealth tax is levied on individuals’ total net worth, including assets like property, stocks, and other investments. It taxes wealth accumulation rather than income.

    Pros : Helps address wealth inequality and can generate significant revenue from the wealthiest of individuals. It can reduce the need to tax income, potentially encourage economic growth.

    Cons : Difficult to administer due to valuation challenges, especially for assets like private businesses and non-liquid holdings. Some argue it discourages wealth accumulation, potentially impacting investments.

    Carbon Tax or Environmental Taxes

    How It Works : Carbon taxes and other environmental taxes are levied on activities or products that harm the environment, such as carbon emissions, plastic usage, or resource depletion.

    Pros : Encourages environmentally friendly behavior, supports sustainability goals, and can generate revenue that could offset the need for income tax.

    Cons : Revenue from environmental taxes can be volatile, depending on consumption patters and regulatory changes. These taxes also don’t provide a broad base unless coupled with other forms of taxation.

    Financial Transaction Tax (FTT)

    How It Works : An FTT is applied to transactions in financial markets, such as stock, bond, and derivatives trades.

    Pros : Raises revenue from the financial sector, which often has high transaction volumes. It may discourage excessive speculative trading, potentially stabilizing financial markets.

    Cons : Could reduce liquidity in financial markets and impact investment behavior. The tax base can be narrow, required high rates to generate substantial revenue.

    Inheritance or Estate Tax

    How It Works : Inheritance or estate taxes are levied on the transfer of wealth upon death, taxing large inheritances or estates over a certain threshold.

    Pros : Helps address intergenerational wealth inequality, preventing the concentration of wealth across generations. The tax impacts only those receives large inheritances, potentially reducing the need for taxing income.

    Cons : Inheritance taxes can be unpopular and administratively complex. They can encourage tax avoidance strategies and may impact family-owned businesses and farms unless structured with exemptions.

    User Fees and Charges

    How It Works : Governments impose fees for the direct use of certain services, such as road tolls, water usage fees, or national park entry fees. These taxes are targeted, with users paying for the services they consume.

    Pros : Fairly straightforward and aligns costs with usage. It can relieve the burden on general tax revenue and focus taxes on specific areas of need.

    Cons : Limited revenue potential, as fees are only applicable to specific services. It can be regressive and may discourage people from using essential public services if fees are high.

    Payroll Tax

    How It Works : Payroll taxes are levied on wages and salaries, often split between employers and employees, and typically go toward specific funds like OAS or health care.

    Pros : Payroll taxes are stable and predictable. They can fund specific social programs, aligning costs with the benefits people receive.

    Cons : It still impacts workers’ income and can reduce employment opportunities if employers bear significant costs. It also doesn’t address other forms of wealth or income, like capital gains.

    Universal Basic Income with a Negative Income Tax

      How It Works : This approach involves providing all citizens with a basic income or cash transfer, with taxes applied on higher earners to recapture some of these payments. A negative income tax specifically supports low earners, essentially giving cash payments to those below a certain income level.

      Pros : Promotes income equality and reduces poverty, with targeted support for low-income individuals. Simplifies the tax system by replacing various benefits with a single, unconditional payment.

      Cons : Requires significant funding, which likely require other taxes or reallocation of funds. Implementation and determining fair levels of payment can be challenging.

      Tariffs and Import Taxes

        How It Works : Tariffs and import taxes are fees imposed on imported goods, either as a percentage of their value or as a fixed rate. They’re used to raise government revenue and protect domestic industries by making imported goods more expensive.  

        Pros : Tariffs can bring in significant revenue, particularly in economies with high import volumes. By raising the cost of foreign goods, tariffs support domestic industries, preserving jobs and bolstering local production. These types of taxes are easier to manage compared to complex income tax systems.  

        Cons : Increased import costs are often passed to consumers, disproportionately affecting lower-income households. Heavy tariff reliance can provoke trade wars, impacting exports and the broader economy. Tariffs alone can’t typically fund all government operations, especially in economies reliance on diverse imports. Modern industries relying on imported materials may face higher costs, reducing competitiveness.

        While income tax has been essential for funding Canada’s public services and social programs, exploring alternatives offers the potential to reduce reliance on it. All of the alternatives discussed each provide unique benefits, and a thoughtful combination could lessen the overall income tax burden. By diversifying the tax base with these alternatives, Canada could maintain necessary revenue while promoting economic fairness and resilience. A balanced approach may allow the country to adapt to modern financial needs, potentially easing income tax rates and creating a more flexible, equitable tax system.

        Email me at info@financerx.ca.

        Turning Dreams into Reality

        / Jesse Ogloff

        From buying a vacation home to retiring abroad, your dreams start with the creation of a solid plan. A well-crafted financial plan not only sets clear goals but also creates actionable savings, investment, and tax strategies to help you reach them. As life evolves and new milestones are reached, your goals may change, which is why your plan must be flexible and adaptable.

        Here are six key elements every effective financial plan should include:

        Cash flow planning for short-term goals

        Life is full of surprises—whether it’s an unexpected expense or a sudden opportunity. That’s why maintaining liquidity is crucial to cover ongoing needs and respond to short-term demands. A robust cash flow strategy ensures you’re ready for whatever comes your way without compromising your longer-term objectives.

        Investment strategies for medium and long-term goals

        A well-thought-out investment strategy is essential to keep your long-term goals on track without leaving funds idle. Whether you’re planning to buy a second property, explore new business ventures, or create lasting family memories through travel, your investments should align with your time horizon and risk tolerance, tailored to each of your objectives.

        Retirement planning

        Retirement planning isn’t just about saving—it’s about creating a sustainable income for your future. We’ll work together to optimize your contributions, design personalized investment strategies, and ensure your savings are effectively transformed into income when you’re ready to retire. Pre- and post-retirement planning are key to building a comfortable and secure future.

        Business succession planning

        What’s the future of your business when you’re ready to step back? Whether you envision staying involved, selling your stake, or passing it on to the next generation, succession planning is crucial. We’ll address potential inflows or outflows to ensure your business transition aligns with your personal financial goals.

        Wealth transfer to the next generation

        Wealth transfer doesn’t have to wait until the end of life. Whether through gifts, trusts, or other strategies, transferring wealth during your lifetime can be a powerful tool for supporting your family and managing taxes. We’ll explore the best options to align your wealth transfer plans with your overall financial strategy.

        Legacy and estate planning

        Legacy and estate planning are about preserving your values and ensuring your wishes are honored. From structuring wealth transfers to your loved ones to supporting your favorite charities, we’ll develop a comprehensive strategy that includes estate protection and insurance needs, tailored to your unique goals.

        Partnering for success

        A comprehensive financial plan is your roadmap to achieving your personal goals. Together, we’ll create tailored strategies to adapt to your evolving priorities, ensuring your wealth planning remains proactive and intentional. I can help you design customized investment, tax, and savings solutions that align with your vision.

        Email me at info@financerx.ca.