Navigating, and preparing, for financial uncertainty is no easy feat, especially in today’s unpredictable economic climate. Whether it’s rising interest rates or new government regulations, the need for careful planning has never been more critical. In my latest video in our Muskoka chair series, I welcome back Robin Dube, my wife and fellow investor, to dive into “planning for downturns” and share strategies to help you weather these financial storms. It’s all about making sure you’re not just reacting to challenges but actively preparing for them. I invite you to join me as we explore how to safeguard your investments and find opportunities even when the skies are gray.
Video Transcript: Weather tax and financial storms – planning for downturns – Part 3
Robin – When you’re a business owner, how can you be ready for any weather? What that means is you’re sitting on the dock by that in those Muskoka chairs enjoying life and the storm clouds roll in. What do you do? How do you know that you’re ready for that?
George – I’m George Dube, saving the world from tax, one bow tie at a time®.
George – I don’t know if we’re ever completely ready for it, but we can certainly put some steps into place to make us be able to, or help us absorb some of that. So we’re kind of dealing with realities of the new world and that focus on cashflow is king. I think few people should doubt that at this point in the game.
Robin – Absolutely. I mean, interest rates, refinancing difficulties, et cetera. They’ve really highlighted the importance of that financial management and those cash flow reserves, having access to funds, having those reserves, and still having a war chest for those opportunities because there’s always opportunities, even in what seems like not a great situation sometimes those are when the best opportunities happen, you know, and for the real estate investors, there’s provincial landlord tribunal problems, there’s government regulations around housing and rentals that we’ve really had to navigate and made things more difficult in the last years. It’s only gotten worse since the pandemic, but these are things that you have to be prepared for in order to deal with them.
George – Yeah. And again, with those bullet points there, with the exception of the last point, I mean, these are equally applicable whether we’re a real estate investor, business owner, healthcare professional, they’re applicable. And I’ve been getting into more with clients and friends of the firm and non-clients for that matter too. It’s, this isn’t the first time we’ve had higher interest rates and they’ve been enormous amount higher before.
Robin – Yeah. I mean, how many stories do we have from our parents’ generation where they’re talking about, you know, 20% interest rate on a mortgage, 18% interest rate on a mortgage. So,
George – And we were alive then. I mean, our first mortgage in terms of its interest rate today, it would be unheard of what we paid and we were thinking it’s below 10%. This is wonderful.
Robin – Absolutely. Absolutely.
George – And so, and we can go on like in the sense of we’ve seen a lot of bankruptcies before, they’re gonna get a lot worse. There’s no question we’ve seen before, extremely poor financial management from our governments. We’re gonna see more of that. This isn’t the first time people have needed clean, safe places to live from a real estate perspective. And whether it’s also first-time home buyers, the, the real estate investor that’s trying to help and provide housing, or we’re looking for housing maybe for our parents, or elderly family members
Robin – For our kids,
George – Or, yes. And again, going back to one of the opportunities that I perceive is out there, I think a lot of people can agree that with the increased number of people needing housing, the government’s getting more involved with housing, like do we actually think the government’s gonna skillfully provide housing solutions in an effectively economic manner? I mean, personally, I have complete utter faith in the lack of ability of our governments and it’s unshakeable and that means opportunity with some unpredictable results, admittedly. But there, there’s opportunity for investors, whether we’re talking real estate investors, again, liquid portfolio type of investors or business owners, healthcare professionals that are looking to invest money beyond just what that typical stock market bond scenario may look like. Although that may be a very, very important part of the investment strategy. Let’s start to take a look at the whole picture with the investment advisors that are available here.
Robin – Absolutely. So really cash is still king. I know you’ve said that. I think it’s worth repeating, especially in the current environment, but you wanna talk maybe a little bit more about that?
George – Yeah, and part of that too, we start weaving, if you will, with not only federal budget, not only current economic situations and what’s happening from an investment perspective, but not that long ago. You and I were sitting down with a mutual friend and, and they were talking about some of the development projects that they were working on from the construction standpoint and indicating, and, and these were not what I’ll call Mickey Mouse budgets, budget forecasting and projects. These were big time investments that were being put up and in stark contrast, where in some of those cases they had to stop the construction part because the planning wasn’t being done properly or something went haywire and all of a sudden people aren’t getting paid to do the work. Needless to say, there’s a limited scope for that to be acceptable.
And now all of a sudden there’s gonna be a lot of stranded investors, something went off the rails, if you will. And in other cases not a problem. So I’m hearing people having trouble getting some of the skilled trades out and whatnot. I’m thinking, well, wait a minute. There’s fewer and fewer projects available. A lot of this is more on the planning side, I would suggest, or getting the financing in place. And it’s a lot tougher now, this, I’m not trying to slam people, but going back to those that are investing in these projects is making sure that the people you’re investing with, you’ve done some due diligence as we’re harping on and bringing parts of our Muskoka chair moments over to different parts. Here they are interrelated and with the higher interest rates, and I appreciate they’re coming down, but we’ve seen some impact to that. It’s not going to be complete for a period of time here. There’s still more mortgages coming up for renewal from everyone in the country. I shouldn’t say everyone, but that percentage is gonna be spread out across the country for a couple more years. And those interest payments with the principal repayments won’t look nearly as pretty as they were a few years ago. Yeah. And so again, let’s just make sure we’re spending the time to go back to some budgeting. Go back, go back to some planning to retirement planning, estate planning, the due diligence. Just kidding. We used to hear that a lot more, I think. And there was kind of almost an…. Yeah, I’ll call it an absence of that. Or at least I wasn’t hearing that focus so much for a few years. And now all of a sudden, of course it’s mainstream because it never went away. It was just, it was being ignored, I think a little bit.
Robin – Yeah, well, a lot of very, extremely low interest rates for a long time papered over a lot of issues. Yes. So those issues, they were always there, but they now are important, more and more important because you can’t hide behind low interest rates. You can’t hide behind some of these other things.
So if we look at the actions that people should be taking, I think this one’s fairly obviously you need to look at, you know,
- your strategy,
- your tax analysis,
- your budgeting,
- your planning
Basically go back to basics and make sure that you have put in those plans to navigate those stormy weathers. If you don’t plan for it, you’re not gonna be able to deal with it.
Robin – “If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.” A great quote to end us off here. ’cause that’s really what we’ve been talking about, how to save money, how to make money, how to save taxes from that Muskoka chair. But really it’s about commanding our wealth, like controlling what we want our lives to be and how that is impacted by our financial decisions.
George – It is, and admittedly, I didn’t recognize the quote of the author when, when you first brought this up, and it’s perfect I think. But I think now this is an opportunity for us, right? To be able, whether this is the summer or we’re talking about Christmas holidays, or again, I’m a little bit disturbed that you showed some reluctance to this concept of kind of taking a week off and thinking about how do I make things better for my accountant? And
Robin – We can talk after. We can talk after.
George – Okay. Anyway, so a little bit shocking, but whatever. I think trying to mix the why are we doing things, the spiritual aspects of things, and the financial component here is what we’re trying to deliver as a message. We’ve got time to think, take the time and again, to us, it seemed like that perfect vision was sitting in that Muskoka chair and, and looking over whatever it may be in terms of your backyard, some water or mountain or this or that or the other thing. But ultimately it’s taking the time to reflect so that ultimately we can help you Do wonderful things®.
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-End transcript-
Resources
For additional resources related to the tax savings or planning for downturns, see:
- Work with the right people – Do your due diligence – Part 3
- Save taxes with a summer tax tune-up – Part 2
- Save taxes, make money: 4 summer projects – Part 1
- Real estate investors: Tax planning, wealth building
- Medical professionals: Tax and wealth solutions
More questions?
Still have questions about planning for downturns? I want to help you Do Wonderful Things®, so please contact me today.
Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.
