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CIFPs

CIFPs. The Smith Manoeuvre as a New Business Prospecting Tool for Financial Planners. THE SMITH MANOEUVRE. Is your mortgage tax deductible?. Tonight you will learn how to:. Get FREE tax refunds from the CRA Pay off your mortgage faster Build an investment portfolio.

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CIFPs

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  1. CIFPs The Smith Manoeuvre as a New Business Prospecting Tool for Financial Planners

  2. THE SMITH MANOEUVRE Is your mortgage tax deductible?

  3. Tonight you will learn how to: • Get FREE tax refunds from the CRA • Pay off your mortgage faster • Build an investment portfolio

  4. Tonight you will learn how to: • Get FREE tax refunds from the CRA • Pay off your mortgage faster • Build an investment portfolio SIMULTANEOUSLY

  5. The problem

  6. The solution

  7. History of The Smith Manoeuvre

  8. What is The Smith Manoeuvre?

  9. The Smith Manoeuvre is a financial strategy designed to convert the non-deductible interest debt of a house mortgage to the deductible-interest debt of an investment loan, which simultaneously ensures the building of a free and clear investment portfolio.

  10. A picture’s worth a thousand words

  11. Ten thousand words…

  12. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value The left bar chart will represent the fate of the bad debt, the middle chart will show good prevailing over evil, and the right chart will confirm that debt does not increase.

  13. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value You win $30,000 in the lottery and having read the book, you use it to pay down your mortgage by the same amount, so your total debt drops by the same amount.

  14. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value Having increased your equity in your house by $30,000 you are immediately able to borrow back $30,000 to purchase investments of your choice. Good debt rises by $30,000 such that your total debt is back to $150,000.

  15. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value Let’s say you inherit $20,000 a few months later. You repeat the process again. You have paid down a total of $50,000 of bad debt, but you have immediately borrowed it back to invest it. Total debt is still $150,000.

  16. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value You pay down and immediately reborrow and invest another $20,000.

  17. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value We are winning.

  18. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value

  19. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value

  20. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value The end is in sight.

  21. THE SMITH MANOEUVRE Is your mortgage tax deductible? Appraised Value 75% Lending Value The conversion is complete. The original bad debt is now all good debt. All of the interest is now deductible. Why not leave the loan in place for another 50 years and claim a tax deduction of $10,500 every year for the rest of our life?

  22. I. Another thousand words…

  23. Tidbit – how much do you have to earn to pay off a $200,000 loan?

  24. Read it and weep… Summary $700,402 - you need to earn this much 40% - at this tax bracket $280,161 - to pay this much income tax $420,241 - to have this much left $220,241 - to pay this much bank interest $200,000 - to pay back the original loan $700,402 !!!!!!

  25. Is this legal?

  26. During the past 20 years, The Smith Manoeuvre has not been challenged by any tax authority, by any lawyer, by any accountant, by any financial planner or by any financial guru as regards the theory, the strategy, the mechanics, the arithmetic or the projected outcomes

  27. Quantify the value of The Smith Manoeuvre for the Blacks

  28. The Blacks • $200,000 at 7% for 25 years • Both work, $100,000 per year • 40% tax bracket • $50,000 rainy day fund • Adding $500 per month • 40 years of age, 2 kids and a dog

  29. Future value for the Black’s current investment program?

  30. $1,205,152

  31. What if they did The Smith Manoeuvre?

  32. $1,962,770

  33. Smith Manoeuvre way: 1,962,770 The Black’s way: 1,205,152 The difference: 757,618

  34. For the Black’s, this is a decision worth three quarters of a million dollars.

  35. The Smithman Calculator Go to page 35 of your book

  36. Who is doing the financing?

  37. Who’s paying for this?

  38. Let’s summarize

  39. Your next step

  40. Procrastination is the enemy of your financial success.

  41. Thank you for your friendly welcome, and thank you to Bick Financial Security for hosting me tonight.

  42. BICK FINANCIAL Toll free - 1 888 777-2425 www.bickfinancial.com

  43. NEW BUSINESS IS THE LIFEBLOOD OF ANY BUSINESS, INCLUDING YOUR OWN

  44. Where do planners go for their new business?

  45. Wealthy people

  46. 10%

  47. Who’s looking after the not-wealthy people?

  48. How many not–wealthy families are there in Canada?

  49. Approximately:32.0 million Canadians10.5 million families 3.5 million in rented homes 3.5 million in mortgaged homes 3.5 million in free and clear homes

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