Asset management | Savings: A quick guide to the mistakes to avoid

Lack of knowledge of legal and tax rules, poor choice of investment vehicles or poorly structured planning. These errors are among those most often observed among savers and investors in the management of their wealth. Two experts go there for their advice to avoid pitfalls.

Stephane Champagne
Special collaboration

Michaël Roy, financial planner, investment advisor and financial security advisor at Assante Wealth Management in Saint-Hyacinthe, believes that taxation is to be considered when saving for your old age.

Taxable interest

“Those who have money in non-registered accounts,” he says, “don’t think about the compound effect of taxation. GICs [certificats de placement garanti] or bonds are heavily taxed types of investments. Instead, I suggest my clients invest their money in stocks or corporate class funds. You get capital gains or dividends, which is more advantageous from a tax point of view. ”

Another observation: people save and forget to think about the next steps, continues Michaël Roy. “Too often people are in accumulation mode for decades, but don’t take the time to set goals. Do they want an intergenerational transfer or bequeath their assets to charity? ”

He cites as an example a client who, at age 60, has accumulated $ 1 million. “However, she only needs $ 40,000 a year to live well,” explains Roy. His heirs may receive less if the investment vehicles are poorly adapted. This is where the financial planner comes in. For example, taking the surplus and investing it in a participatory whole life insurance can create wealth and provide his heirs with a substantial amount safe from the loss. ‘tax. ”

Long term

Marc Bachand, full professor at the University of Quebec at Trois-Rivières (UQTR) and director of the accounting science department, observes a “misunderstanding of the role of time in the patrimonial equation”.

“People, he believes, behave in the short term, while the heritage game takes place over the long term. Everyone wants to make a return quickly. However, that is not how it works. Someone who starts saving early will have better results, and at a lower cost, than someone who starts saving at age 40. ”

According to Marc Bachand, savers have a “silo approach” in building their wealth. “There is a misconception about communicating vessels in the creation of financial heritage. People find it difficult to assess the best possible financial choices when wealth is made up of assets and liabilities, ”he said in essence.

Finally, Professor Bachand notes that many savers have little or no knowledge of the legal and fiscal rules in the event of transmission or sharing of financial assets, what he calls “the unknown consequences of divorce, departure and death. “.

Quebec family law is such that spouses may be at a disadvantage if, for example, they are in a common-law relationship and a separation occurs or no will has been drawn up regarding the distribution of assets in the event of a death.

Personal finances and wealth management are among the subjects most covered in the media, notes Marc Bachand. He and his colleague Nicolas Boivin, from UQTR, make all their courses, work and publications available to the general public free of charge.

“We are paid by the state. For us, it is normal to share our knowledge ”, affirms this follower of the free educational resources movement (OER or“ OER ”in English for Open Educational Resources).