Published by DLC Marketing team

Enriched Academy was launched back in 2013 after a successful appearance on the TV show Dragons’ Den by co-founders Kevin Cochran and Jay Seabrook. Although they would have loved to appear on the hit TV show MythBusters as well, fact-checking financial advice just didn’t have the mass appeal of learning whether one could survive on a desert island with only a pallet of duct tape.

Undeterred, Kevin and Jay set out to investigate the issue and educate the Canadian public about the most common financial myths out there. After many years on the case, here are their top four.

Myth #1: You need money to make money.
Careful investing is the secret to building wealth and you do need an income to get started, so this myth is not entirely untrue. However, what most people don’t realize is that the amount of money you need to make money can be surprisingly small. Financial guru Dave Ramsey’s research group found in their survey that 70% of millionaires never earned a 6-figure income. Former BC school teacher Andrew Hallam wrote an entire book devoted to how he leveraged a modest teacher’s salary with some basic investing principles to fund an early and very comfortable retirement. Check out his best-selling financial bible the Millionaire Teacher if you are wondering how he did it!

This myth is busted!

Myth #2: Money is too complicated.
Managing your money isn’t complicated, it just that having too little (or too much) leads to a lot of issues that make it seem complicated. Enriched Academy offers plenty of free webinars where you can easily pickup all kinds of financial knowledge with just one-hour of your time. While one short webinar may just get you started, the fact is that mastering a wide variety of money skills doesn’t take as much time or effort as many of the other things we spend time trying to learn. A lot of us spend more time learning how to use some app on our phone or make the perfect pasta sauce than we do learning how to manage our money.

The knowledge required to effectively manage your money is not difficult to learn — this myth is busted!

Myth #3: Investing is too risky.
It might be easy to say this one is true given the abysmal performance of most financial markets in 2022. Investing can be risky, but you can learn how to monitor and adjust your risk to suit your targeted returns, life stage, and other factors affecting your risk tolerance.

Your investing timeline also plays a huge role. Investing for the short-term is always going to be a lot more hit and miss than holding a well diversified portfolio of equities and other financial assets over a number of years. Financial markets have a long history of proven resiliency, and they will recover. Given current inflation and interest rates and the chance they will persist for some time makes investing and even greater priority these days

This myth is busted!

Myth #4: Earning money is more important than saving money.
Careful field research by an endless stream of bankrupt athletes, actors and reality TV has-beens has proven that when it comes to cash, “the more you earn, the more you burn!” The belief that more income is a sure-fire solution to your financial difficulties is busted! Carefully tracking your spending, making wise spending decisions, and adjusting your spending appropriately to “enjoy life more” as your income rises is the golden rule, regardless of how much money you are making.

Money myths can be debilitating and can put all sorts of mental obstacles in your path that just don’t need to be there. Financial literacy will help you separate fact from fiction and give you the right mindset to overcome whatever money beliefs may be holding you back.

Published by DLC marketing team.

Are you dreaming about owning a rental property and making some extra income each month? Before diving into becoming a landlord, there are some things you should know from the advantages and disadvantages to some tips when it comes to buying a rental property.

Advantages of Owning a Rental Property

If you’re looking to purchase a property for rental and become a landlord, you are likely already aware of some of these advantages, but just in case, some benefits to this include:

Earning additional regularly monthly income
Allows you to continue to build home equity in the property(s) that you rent
Ability to deduct certain items from your gross rental income such as mortgage interest, property taxes, insurance, maintenance costs, property management fees and utilities.
Disadvantages of Owning a Rental Property

As with any investment, there are also some disadvantages to owning a rental property, which are important to consider before you make the leap. These can include:

Responsibility of maintaining the rental property and managing your tenant(s)
Rental income is taxable and must be included on your income tax. Depending on the value of the extra income, it may push you into a higher tax bracket.
Unexpected expenses and issues may crop up over time. It is ideal to budget 2% of the purchase price of your property for potential repairs. You’ll also want to keep some money aside should your tenant leave and you need to cover a few months to find a new tenant.
If you choose to sell the rental property in the future, it will be subject to capital gains tax.
What to Know BEFORE You Buy

Before getting started, it is important to calculate the cost of your investment (purchase price and closing costs), as well as consider maintenance amounts (approximately 1% of the property value for the year) and compare to current rental prices to be sure it is a profitable investment before purchasing. In addition, note the following:

The minimum down payment required is 20% of the purchase price, and the funds must come from your own savings; you cannot use a gift from someone else. Another option is to utilize existing equity in your primary residence and refinance for the cash to purchase your rental or investment property. Be sure to factor in funds for closing costs, potential repairs and maintenance in your amount.
Only a portion of the rental income can be used to qualify and determine how much you can afford to borrow. Some lenders will only allow you to use 50% of the income added to yours, while other lenders may allow up to 80% of the rental income and subtract your expenses.
Interest rates usually have a premium when the mortgage is for a rental property versus a mortgage for a home someone intends on living in. The premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.
Final Tips on Becoming a Landlord

If you’ve decided to move forward with getting a rental property and becoming a landlord, here are some tips to consider:

Don’t forget about insurance! Ensure you have proper coverage for a rental situation and to cover any unforeseen events.
Educate yourself on what it means to be a landlord in your province from tenant laws to rental responsibilities.
Do your research on rental rates and locations before you choose to buy so that you are aware of where the market is at when it comes to potential earning power.
Choose the right mortgage for your rental property. Your mortgage broker can help you with this!
If you’re looking to run multiple rental properties, consider hiring a property manager who can be a go-between with you and the tenants.
With the right purchase price and rental costs per month, a rental property can be a great way to supplement income. If you’re looking to purchase an investment property, be sure to reach out to a Dominion Lending Centres mortgage expert to discuss your options and understand what is required

Published by DLC Marketing team.

Despite the effects of the current onslaught from inflation and ever-increasing prices, the basic concept of budgeting hasn’t changed. Dividing up your money into little piles for the various things you need (and want) doesn’t seem like such a difficult process, so why is a budget so hard to put into practice?

The simple answer is that no matter how small those little piles get, they still add up to more than you have! Yes, more money will certainly help, but also make sure it isn’t your budgeting process that is contributing to your failure. Here are eight things that can easily derail any budgeting system.

1) You didn’t start with the right number. 
Your take home pay (AFTER all deductions) is the starting point.

2) You used the wrong time frame. 
Some bills are monthly, but most of us get paid every two weeks. A two-week spending plan is much easier to follow and matches up with your cash inflows.

3) You had no idea how much you were spending when you made your budget. 
Track your expenses for at least two pay periods and create your budget based on actual data, not your best guess. You can always tweak the amounts if it proves to be unrealistic.

4) You forgot to record all of your expenses. 
Whether you use the latest app or a collection of post-it notes to track expenses, it needs to be quick, easy, and you need to make it a habit. Don’t forget expenses which are seemingly invisible but still need to be tracked, interest expense on credit cards or lines of credit for example. Leave your cash in the bank and use a credit or debit card for everything so you can easily view your bank or credit card statement to see exactly where your money went. Many banks now offer some expense tracking capability right in their online banking system.

5) You spend too much. 
Just because you had been spending $400/month on dinners and drinks doesn’t make it a reasonable or sustainable amount for your budget. List up your needs, analyze your wants, and set priorities… force yourself to make choices!

6) You didn’t contribute to a reserve fund. 
Unexpected expenses like birthday presents, car repairs, or a trip to the dentist can all derail your budget if you don’t have an emergency fund to dip into. Makes sure to set aside some sort of contingency cash to give you a little wiggle room.

7) You didn’t ensure your spouse/partner/kids were on board. 
It’s a household commitment with all-hands-on-deck. Take the time to explain to your kids that the actual supermarket cost of the food in a take-out burger & fries is likely around $2, and that by cooking your own burgers & fries you now have $5 more in your jeans (and arguably a much better burger!). Don’t be shy about telling your friends either– declining an invite for a night out you can’t afford is not a crime, and chances are they can’t afford it either.

8) You had no goal and lost your “mojo”. 
Pick a realistic goal your budget will help you achieve and track your progress… paying off a credit card? topping up your RESP/TFSA/RRSP contributions? eliminating your line of credit balance?

Creating and maintaining a budget is a lot harder than it seems. Most of us will have to make some tough choices and rearrange priorities, so make sure you have a good process in place to evaluate those decisions and keep you focused on your goals.

When it comes to getting a mortgage, one of the more overlooked elements is the option to be able to port the loan down the line.

Porting your mortgage is an option within your mortgage agreement, which enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. Thereby allowing you to move or ‘port’ your mortgage over to the new home. Plus, the ability to port also saves you money by avoiding early discharge penalties should you move partway through your term.

Typically, portability options are offered on fixed-rate mortgages. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate. When it comes to variable-rate mortgages, you may not have the same option. However, when breaking a variable-rate mortgage, you would only be faced with a three-month interest penalty charge. While this can range up to $4,000, it is much lower than the average penalty to break a fixed mortgage. In addition, there are cases where you can be reimbursed the fee with your new mortgage.

If you already have the existing option to port your mortgage, or are considering it for your next mortgage cycle, there are a few considerations to keep in mind:

Timeframe: Some portability options require the sale and purchase to occur on the same day. Other lenders offer a week to do this, some a month, and others up to three months.
Terms: Keep in mind, some lenders don’t allow a changed term or might force you into a longer term as part of agreeing to port you mortgage.
Penalty Reimbursements: Some lenders may reimburse your entire penalty, whether you are a fixed or variable borrower, if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand-new term of your choice and start fresh. Keep in mind, there can be cases where it’s better to pay a penalty at the time of selling and get into a new term at a brand-new rate that could save back your penalty over the course of the new term.
To get all the details about mortgage portability and find out if you have this option (or the potential penalties if you don’t), contact me today for expert advice and a helping hand throughout your mortgage journey!