Investment solutions

Cash flow investments

Portfolios holding investments that generate cash flow provide many advantages:

• stable, dependable income;
• a portfolio which does not fluctuate as much; and
• less need for market appreciation as cash flow is providing a good return on its own.

Here are some types of investments we recommend:

• Real Estate Investment Trusts (REITs): a pool of real estate properties generating monthly cash flow. The investments can be in apartments, office towers, retail plazas, warehouses, industrial properties, etc. Owning a REIT is like being a landlord without having to do any of the work. Over time, you can reasonably expect the value of the REITs to rise.
   
• High-quality, dividend-paying common shares: We like to own businesses that are stable and profitable and pay an increasing amount of dividends to their shareholders. That means we not only receive income now, but the rising dividend maintains our purchasing power in the future, helping to offset inflation. Examples are banks and utilities.
   
• Preferred shares: Many high-quality companies issue preferred shares. They pay a high dividend and we own them for the income and stability that they provide. They are usually issued by Canadian banks, life insurance companies and pipeline companies.
   
• Oil and gas trusts: Similar in structure to REITs, these provide exposure to oil and gas properties that generate significant cash flow from the sale of these resources. The income is a part of the return on these investments. Strong resource prices and successful drilling can also result in appreciation of the value of these trusts.

Tax strategies

It is not how much money you make that is important, but how much you keep after taxes. Different investments are impacted by taxes in their own way. It is important to know the rules and to take advantage of them. We build our portfolios looking to minimize taxes wherever possible.

• Dividends rather than interest income: Outside of a registered account, interest generated is fully taxable. Dividends from common shares and preferred shares receive highly favourable tax treatment so you get to keep more of the return in your pocket.
   
• Tax deferral: instead of paying tax now, involves paying the tax at a later date. A simple example is buying a quality stock such as a Canadian bank. If you own it and watch it grow for twenty years, you do not pay any tax on the appreciation until you sell it and then only at 50% of the gain.
   
• Income splitting: there may be opportunities to share income among family members which reduces your household income tax. Examples would be to set up:
   
  • an informal trust for your child or grandchild. The capital gains are taxed in their hands.
  • a spousal loan from the wealthier spouse to the other spouse so that the income is taxed at a much lower rate
  • Pension splitting: sharing pension income among spouses to reduce income tax, thereby increasing household disposable income
     
• Tax reduction strategies to offset Old Age Security claw back. Seniors are increasingly having their OAS clawed back. Our clients consider the use of flow through partnerships to reduce their taxable income and to avoid the claw back.

Charitable giving

We are active donors at several charities as are many of our clients. We encourage our clients to incorporate charitable giving into their life and we work with them to help them to “do good and do well”. This means that we can find a variety of ways to help them make significant donations and to save income taxes as well, allowing them to make larger gifts than they thought possible.

Our favourite strategy is for our clients to donate appreciated securities to charity. Not only will they receive a tax receipt for the value of the donated securities but no capital gains tax will be owing on the appreciation of the value of the investments.

Other tax saving strategies are available to our charitable clients including the use of insurance and donor advised funds.

Macquarie Integrated Managed Account (IMA) portfolios

For those who are looking for something beyond a mutual fund but do not want to be involved in the decision making in all or part of their portfolio. Macquarie Private Wealth delivers a professional and consistent investment management process to clients through our Integrated Managed Account (IMA) Platform.

The IMA Platform is a proprietary system that allows me to construct and administer investment portfolios across all product lines. Through it, client portfolios can integrate discretionary, third-party money management functions with more traditional, non-discretionary investment advisor activities.

The resulting open-architecture platform supports separately managed accounts, investment pools, mutual funds, exchange traded funds as well as individual money market, fixed income and equity securities. Consolidated quarterly performance reporting ensures that clients have the information they need to ensure that their investment plans are on track to meet their goals.

By leveraging the power of the IMA Platform, MPW provides the top quality investment advice and service that our clients needs. All the costs of MPW, the third party manager, administration, trading costs, custody, etc. are rolled into one cost effective fee. Clients who own non-registered IMA accounts can deduct the cost of their fee for tax purposes.

Insurance^†

I am fully insurance licensed. Peter Fortune is an Estate Planning Specialist with Macquarie Insurance Services Ltd., a wholly owned subsidiary of Macquarie Private Wealth, and is a consultant and resource to my clients. He brings more than 30 years of experience in the insurance and financial services industry.

Macquarie Insurance Services is available to help me assist you in providing you with insurance solutions. We work with you to develop insurance, tax and estate planning cases to find the solution that works best for you and your family. It may involve using insurance to leave an inheritance, to pay future taxes on investments or to leave money to a charity. We have access to products from all the major insurance companies.