STYLUS Asset Management Welcomes You To Our  Richard Rizzo, Bateman MacKay  Brennan Carson, STYLUS Asset Management

Agenda

Making Plans

Financial Planning Current Financial Picture Snapshot

What are your assets? (Net of Liabilities) Cash Taxable investments Registered investments Real Estate Insurance policies Personal Balance Sheet: Assets

1.What is their purpose: growth, income, lifestyle, estate? 2.What is the expected appreciation of those assets? 3.What are the tax implications of those assets: Ownership Cost of liquidating Personal Balance Sheet: Asset Analysis

Personal Income Statement Expenses: Annual & Capital All Sources of Income Not all income is taxed the same!

Investment Planning

At STYLUS we incorporate two important factors into your investment plan: TIME HORIZON PERSONALITY Investment Planning

Immediate Needs (Next 12 months) Medium Time Horizon (3-5 Years) Longest Time Horizon (5+ Years) Shortest Time Horizon (1-3 Years) Investment Planning: Investment Time Horizons The Buckets Approach

Tolerance for Volatility (aka ‘personality‘) Time Horizon Investment Planning: STYLUS Funds Growth Momentum Value with Income U.S. Blended Equity Wealth Protection

Cash Flow Optimization

Investible Assets Cash Flow Optimization Required cash flow Holdco CashRRSPTFSA

DECISION #1: Contributions  How much to contribute?  When to stop contributing? Tax Deferred Investment Accounts: RRSP & RRIF Cash Flow Optimization Plan Ahead!

Read your STYLUS newsletters! Cash Flow Optimization

Tax Deferred Investment Accounts: RRSP & RRIF DECISION #2: Timing of Withdrawals  When will you pull money from RRSP/RRIF?  How much will you need? Timing and amount determines investment planning

RRSPs are most efficient when your tax rate at withdrawal is lower than when you contributed. Cash Flow Optimization RRSP Rule of Thumb

Setting up a Bucket-ed investment plan Cash Flow Optimization Preparing For RRSP Withdrawals

“I don’t need any money from my RRSP for 10+ years” 50% FUND ALLOCATIONS RRSP Case Study: Client #1 Cash Flow Optimization: STYLUS Funds Tolerance for Volatility Time Horizon U.S. Blended Equity Wealth Protection Momentum Value with Income Growth

“I don’t need any money from my RRSP for 10 years and prefer a lower volatility profile” RRSP Case Study: Client #2 Cash Flow Optimization: STYLUS Funds Tolerance for Volatility Time Horizon U.S. Blended Equity Wealth Protection Momentum Value with Income Growth 25% 50% FUND ALLOCATIONS 25%

“I will start drawing from my RRSP in 3 years at 5% per year” RRSP Case Study: Client #3 Cash Flow Optimization: STYLUS Funds Tolerance for Volatility Time Horizon U.S. Blended Equity Wealth Protection Momentum Value with Income Growth 25% 30% FUND ALLOCATIONS 25% 20%

“I will start drawing from my RRSP next year at 5% per year” RRSP Case Study: Client #4 Cash Flow Optimization: STYLUS Funds Tolerance for Volatility Time Horizon U.S. Blended Equity Wealth Protection Momentum Value with Income Growth 20% 30% FUND ALLOCATIONS 20% 10%

 Between ages  Partial RRIF conversion from RRSP  $2,000 per year withdrawn tax-free via Pension Income Tax Credit  SUGGESTION: Roll that money into a TFSA ( i.e. move from taxable to non-taxable )  Benefit to estate planning Tax Savings Opportunity! RRI F TFS A

Cash Flow Optimization Tax Deferred Investment Accounts: RRSP & RRIF DECISION #3: Structure of Withdrawals  How do I start withdrawing money to support my cash flow requirements? You need to know how much cash flow you require

How do I maximize my cash flow on an after-tax basis? Cash Flow Optimization

Case Study: Tax Optimization Profile of Mr. and Mrs. Smith Age 65 Newly Retired Investible Assets: $2 million Annual cash flow requirements: $120,000 Profile of Mr. and Mrs. Jones Age 65 Newly Retired Investible Assets: $2 million Annual cash flow requirements: $120,000 Cookie Cutter Investments Inc.

Case Study: Tax Optimization SMITH $1.2 million TFSA RRSP JOINT ACCOUNT JONES $125,000 $675,000 (ACB: $550,000) $1.9 million $100,000 $0 Account Allocations

Case Study: Tax Optimization SMITHJONES Withdrawals $45,000 each $0 $30,000 $60,000 each $0 TFSA RRSP JOINT ACCOUNT

Case Study: Tax Optimization SMITHJONES Taxes $10,868 each $0 $2,778 $17,790 each $0 $24,513 $35,580 TFSA RRSP JOINT ACCOUNT Tax Payable

Where are you going to get $100,000 if you need it immediately? Planning Trap Total net worth: $4 million

Tax Planning

Generating the most tax efficient cash flow Tax Planning Strategies Capital Gains vs Dividends vs Interest Income

 Should be a function not just of tax implications, but also TIME HORIZON  Interest Income (i.e. Bonds) serves a purpose – lower volatility for shorter-term cash flow needs, BUT taxed at higher level  Cash has no volatility & no tax! Tax Planning Strategies Capital Gains vs Dividends vs Interest Income

 Capital gains distributions  Lower interest & dividend income  5 year comparison: net of taxes vs “generic” funds Tax Planning Strategies STYLUS Value with Income & Wealth Protection Funds FUND Pre-Tax Performance STYLUS Value with Income10% STYLUS Wealth Protection4.2% FUND (median of Canadian mutual funds) Pre-Tax Performance Dividend Income Fund4% Balanced Fund3%

Tax Profile

After Tax Return: STYLUS Funds vs “Generic” Funds

Wealth Transfer

 Moving existing non-registered accounts into Trust  STYLUS can manage Trusts  Income sharing with family  Creating an investment plan – understanding the time horizon & objectives Trusts

 Gifting: Contribute to a child’s RRSP / TFSA, non-registered account, grandchild RESP  Put the tax in the hands of the children  Education: STYLUS presentations, personal financial & investment plan, educating them on your plan  Account minimum for children of existing clients: $100,000 Wealth Transfer Strategies Are there other ways to transfer wealth and help my children?

Estate Planning

Joint Accounts Consolidating individual investment accounts into Joint account Move accounts at Book Cost – i.e. no tax triggered Estate Planning Strategies How Do I Lower My Probate Taxes?

Summary

Have you agreed on your objectives with your spouse? Do your children / beneficiaries know your objectives? Do your “affiliated professionals” know your objectives? Setting & Communicating Objectives

Your life will change. Your PLAN needs to be dynamic and be monitored. STYLUS will help monitor your plan to ensure that you stay on target. Your Plan… REVIEW MY PLAN? JVX

We hope you enjoyed our presentation! Rick, Brennan, Julianna, Matteo, Maciek, Mario & Fiona