A simple concept yet very powerful, if you understand this it can definitely change someone's financial future. In this world, there are 2 things that can greatly reduce our wealth and take it away. The first one is inflation, an easy example is if you just simply go to the grocery store shopping for food or anything for your family, you will notice that the same food or item's price won't be the same the next time you go. Every year it just seems to be a bit more expensive at a time. This is what inflation does, it reduces the buying power every year from your own money and you won't even notice it. The next part I want to focus on taxes, if you have lived in Canada for a long time you know we are one of the highest-taxed countries in the world. We got gas tax, utility tax, school tax, etc. Essential we can kinda say that from January to April we are just working for the government. It's important to understand the tax strategies we have and how to take advantage of it. What I suggest taking a read on is the differences between Tax Now, Tax Later, and Tax Never.
3 Questions for you to take home and think about:
- Do I have a strategy in place where I am maximizing my growth and structuring my money so I can pay less in taxes if anything were to happen to us?
- Do I have enough wealth if I lose my job tomorrow or get disabled, my family would be okay without me for at least 6 months
- Do I know how to receive compound interest or am I paying compound interest
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