A few weeks ago, just after my twins were born, we met with our financial planner about adding our new additions to our life insurance policy.
While we were talking, we discussed how much it costs to raise a child in today’s world. He quoted an article published by the Globe and Mail that is titled “How Much Does It Cost to Raise Kids“. The big number -$13,366 annually which includes maternity leave, life insurance, contributions to a registered education savings plan and daycare costs aside from living expenses. Now you multiply that by 3 and add inflation to the mix and start to see that yes, it is costly.
We then talked about getting RESPs for our children – and the government incentive to do so. They will match your contribution by 20% – so if we decided to invest $5000 for our children, the government would add $1000 to their account. Sounds good right? Well I beg to defer – the whole idea of RESPs, RRSPs and TFSAs is simply a way for the banks to benefit mostly- plus all that money would have to be reinvested into mostly stock market investments – I’d much rather stick to real estate which I have full control over.
Buy each kid one property – let the mortgage get paid down over the course of 25ish years and bam – a fund for them to do whatever they want. Go to university, start a business or invest in any other form of learning or self development.
I know that everyone talks about cashflow when they discuss real estate, and I have discussed this many times in my blogs and videos – but the real money in real estate is made through mortgage paydown (in my previous Articles – I talk about the Main Course in a 3 Course Meal).
Yes we look for self sustaining cash flow positive properties so we aren’t losing money or having to support the properties monthly through our income, but we don’t rely on the money made to live. We look at it more like a forced savings plan, an education fund, a way to build wealth over time.
And time is the key thing – you need to buy your assets and let time do the rest of the work.
So with that in mind – let’s talk about 2019!
That is the most exciting part of the holiday season for many people, the idea that a new year is upon us. This means a fresh slate, a new start and a chance to make the next year even bigger and better than the last.
At the start of 2018 we set big goals for ourselves – even with the life changing fact that we were having not one but two new babies!
I have talked about 10X goal setting in my blog post, but to summarize:
The 10X Rule says that:
1) you should set targets for yourself that are 10X greater than what you believe you can achieve and
2) you should take actions that are 10X greater than what you believe are necessary to achieve your goals.
I am proud to say that we achieved and surpassed our goals for the year. Even with market shifts, mortgage rules changes, and lots of talk of doom and gloom – our business thrived.
When the wind changes direction, you adjust your sails. We were able to focus more on our residential redevelopment projects and create beautiful products from otherwise distressed properties. We hope to focus more on this in the new year with some exciting new projects in the pipeline.
So it’s time to start thinking about 2019 and where you want to be, and how you can strategically get there. Remember that a goal without a plan is just a wish! I believe that real estate in some form, whether active or passive, can be the solution to grow your wealth.
So until next time, happy Ontario Real Estate Investing.
Jose Jafferji, REIA