Just to recap, over the last few weeks I have discussed controlling your finances—from tips to control your spending, keeping control of our currency, to controlling your borrowing. What about controlling how we build our wealth? Building our wealth is good but I don’t want you to take my word for it, take it from one of the most respected minds of the 20th century, Albert Einstein, when he said that the most powerful force in the universe is Compound Interest.
Before I talk about controlling your wealth, I have to define three terms; Saving, Investing and Gambling. Saving is putting away money where it grows over time without the risk of loss. The most common examples of this are savings accounts and GIC’s. The issue with saving within these vehicles is that the interest paid rarely keeps up with inflation and the interest is fully taxable.
Investing is taking calculated risks of loss to achieve more favorable rates of returns, and possibly favorable tax treatment. This is where stocks, bonds, mutual funds, etc. come into play. Over longer periods of time the financial markets have always gone up, but there have been many times where the markets have lost value quickly and took time to recover. Investing can have more favorable tax treatment as capital gains and dividend income both have preferred tax treatment by the CRA.
Gambling is taking large risks of loss with the intent on large gains. In the financial markets, investing in startup companies or high-risk ventures such as in the mining sector come into play. Considering that these large gains are usually in the form of capital gains, the gains are only taxed at 50%. Alternatively, there are also Casinos across this province where gambling is permitted and the proceeds are not taxed, but I do not recommend using these as a wealth building strategy. 😊
As mentioned, with the difference in rates of return and tax treatment, the CRA and our financial institutions have programmed us not to save, but to invest and gamble instead. Luckily there are other saving options available to us, including the Untaxable Wealth System. This is a way to save money, get a return that approaches that of investing without the risk of loss, growth is untaxable, and you can use your money while it is still growing with the most powerful force in the universe!
For more information on the Untaxable Wealth System, and Compound Interest, book a complementary 10 minute consultation at https://calendly.com/mjhfinancial/10-minute-phone-call.