René Cournoyer leads two careers in parallel. In parallel bars, rings and other gymnastic apparatus, for the first. The second with her university studies in physiotherapy. He hopes to land both of them safely.
The situation
Aged 25, René Cournoyer devotes all his time to training, competitions and his studies, without being able to hold a part-time job.
“My annual spending budget looks like approximately $1,500 per competition, plus $5,000 in club fees and $1,500 in equipment fees,” he lists.
To reduce his expenses, he lives with his parents in Repentigny and drives to university.
With groceries, clothes, gas, textbooks, activities, workouts, and travel, he estimates he accumulates $15,000 in relatively unchanging expenses and $2,000 to $5,000 in variable expenses, for a total which generally exceeds $20,000 per year.
His income
For several years now, he has held a card from Sport Canada’s Athlete Assistance Program, which grants him tax-free financial support of $1,765 per month, or $21,180 per year.
This patent also pays for his university tuition.
He is also entitled to the refundable tax credit of $4,000 granted by the Quebec government to high-level athletes identified by their sports federation.
“I should also receive a $1,500 scholarship from the City of Repentigny. Four or five times a year, I judge certain competitions for which I am paid approximately $200. »
He is preparing for the qualifications held next October which will give him his ticket to the Paris Olympics in 2024.
“But I aspire to do a cycle of four more years,” he says. This goal leads him to the Los Angeles Games in 2028, when he will have reached 31 years old.
Five and a half years more…
A career in hand
The athlete will complete his bachelor’s degree in physiotherapy this year and then begin his master’s degree.
“I will graduate in the fall of 2024, around November,” he predicts.
He then plans to work part-time for three and a half years, until after the 2028 Olympics.
“The average annual starting salary in physio is around $69,000. I risk making about 50 to 75% of this amount by practicing my sport”, he specifies.
savings
In addition to his gymnastic acrobatics, the student-athlete has managed the feat of accumulating savings.
“I’m not someone who spends a lot at the base,” he explains. All that I managed to accumulate, I put it in investment from the start. It’s been 10 years since I got my patent, so it’s accumulated a little bit. »
Testifying openly, he does not wish to publicly reveal this amount.
Budget concerns
Unfortunately, he injured his knee last summer, a few days before his first major competition of the year.
Having been unable to register results in 2022, his national patent for 2023 is at stake. He is awaiting the decision of the Canadian committee to know whether or not he will obtain it this year.
With a shortfall of $21,000 in 2023, how would he balance his budget? Without a formal job, can he obtain a line of credit? Should he dip into his savings?
leave the nest
At the same time, the gymnast would soon like to live in his own home.
Under what conditions could this project be carried out?
“Because I don’t have a stable income, because the patent is renewable each year and is not taxable, it’s as if I had zero income in the eyes of the banks. So to buy a duplex or a condo is practically unthinkable. »
Would the savings he managed to accumulate still weigh in the balance?
If so, how much of his savings should he devote to a down payment? How much to save for retirement?
Failing that, can he afford to rent a home without cutting into his savings too much?
The horizontal bar is high.
Numbers
Income:
Canadian patent: $21,000
Quebec refundable tax credit for elite athletes: $4,000
City of Repentigny scholarship: $1,500
Gymnastics Judge: $1000
Saving
René Cournoyer testifying openly, the amount is taken into account in the planner’s analysis, but is not disclosed here.
Analysis
René Cournoyer wants to prepare his exit.
To help her, financial planner David Paré, investment advisor and portfolio manager at Desjardins Wealth Management, teamed up with Alice Beaubien Leblanc, mortgage representative at Desjardins.
PHOTO PROVIDED BY DESJARDINS SECURITIES, LA PRESSE ARCHIVES
David Paré, Investment Advisor and Portfolio Manager at Desjardins Wealth Management
“I went to the rhythm of his concerns,” begins the planner.
The most immediate: what if René does not obtain his patent in 2023?
David Paré and Alice Beaubien Leblanc saw three possibilities to make up for the shortfall of some $21,000.
“The first is to consider a student loan,” he says.
René will have no interest to pay during the studies. “We shovel a little forward, in the sense that it saves him from withdrawing investments today. »
At the end of his studies, René will have another six months of grace before beginning to repay his loan. “He can start paying it off in the spring of 2025, or if interest rates are still as high as they are today, he can use his capital to pay it off. »
The student loan will not be enough to fully cover the budget deficit. In a second option, the difference could be replenished with the savings he took care to accumulate.
“It serves a little for that, to cover the hard knocks and the shortfalls”, indicates David Paré.
The third possibility, which the two advisers rule out right away, is that of a line of credit. “I wouldn’t go beyond the student loan,” advises the planner. I wouldn’t finance his cost of living with a loan, which is never a good idea, especially with current rates. Even if he put one of his investments as collateral, the rates would still be quite high, around 6%. It is not worth it. »
Fly away
Under what circumstances could René leave the family nest? Our advisers divide the question into two chapters: a flight before or after the end of his studies.
“Is it possible to do it before 2024, that is to say before he starts working part-time? In our view, the answer is no,” says David Paré.
At present, its income is almost entirely sucked up by its expenses.
In an apartment, he would likely add $12,000 to $15,000 to his budget. “It may not be the right option to rent an apartment in a context where he is trying to avoid touching his capital. »
The exit door opens wider after 2024. By adding income from part-time work to his current income, it will be entirely possible for him to rent an apartment.
René seems more inclined to buy his future home – condo or small duplex.
Impossible before 2024, however, decide our two advisers.
His current income will not be considered because of their precariousness, explains David Paré.
“Even if he puts in a large down payment, René will have additional expenses – common expenses, taxes, maintenance, subsistence – which will be added to his current cost of living. And since he has no other income, he will necessarily have to draw on his assets. »
The question arises differently after the end of his studies, when he begins to work part-time.
His total earnings could be around $60,000. “It can give him options for renting an apartment,” says David Paré. However, “funding is still an issue,” he adds. “First because part of his income would not be considered, or very little. »
However, a generous down payment could offset slightly lower or uncertain income. René could also consider a co-borrower. “We often think of the parents, in a case like that”, evokes our adviser.
But whether or not it is guaranteed by a co-borrower, a down payment, no matter how large, will in no way reduce collateral expenses.
René will have to pose the problem again at the end of his studies, when he will be certain of the content of his income.
But the young man is already worried: would the down payment jeopardize his retirement? How much of his savings should he devote to each?
“I’m not worried about his retirement, observes David Paré first. To see the way he manages his income and expenses, we maintain these good habits for a long time. »
If René invests 30 to 35% of his current savings and adds $5,000 to $6,000 a year when he starts working, “he’s already ensured an attractive retirement,” he calculates.
“Time is his ally. The compound effect of income and returns means that the savings effort will be much less than if he started from zero or if, like many, he started saving at age 35 or 38, or even later. . »
In short, the gymnast has every chance of a successful landing.
“The discipline he put into his training, we can see that he also put it into his finances. He started well, things are going very well for him, in our opinion. »
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