Well, the quick (and somewhat cliché) answer is because it’s the right thing to do. While that should be enough, let’s look at a little bit deeper and consider a longer and more pragmatic answer: Financial planning is a long distance marathon. We each will go through a variety of stages in life, each require a somewhat different financial solution. I’m licensed and trained to help you with your financial plan from start to finish. My desire is to work with you, your friends and family for many years to come, helping you build, maintain and adjust your financial plan as you move through the various stages of life. Apart from it being the right thing to do, you can’t build the trust needed to be a personal’s financial planner for decades to come if you short change them today. I’ve positioned myself and my business so that I have the tools needed to help most people with their financial plans for the long haul. Being honest and upfront is necessary to serve my clients well and ultimately to make sure my business is here for the long haul too. In addition to honestly and straight-forwardness being the right thing to do, consider this: It’s more cost effective for me to keep clients (and gain referrals) by doing a good honest job for them, than to make a quick buck today but always be having to be searching for new clients. Some financial service business can survive on the “churning through clients model”. Mine isn’t one of them, nor would I wish it to be one of them.
Of course this would depend on a number of circumstances including your current & future income; your current & future tax bracket, risk tolerance and purpose of the investment. But generally speaking, TFSA’s can be very useful for short term investments that you’ll use before retirement. You get your TFSA room back if you withdraw funds so you can reuse if over and over again. RRSPs are useful for saving for retirement if you’re not going to touch the money until then. Your tax owing today will be reduced, but you will have to pay the tax later (in retirement). So should you be paying more tax today than you expect to pay in retirement; RRSPs can be very useful. Folks that are self-employed don’t always benefit a whole lot from RRSP’s, so there are some other investment strategies to consider in that situation.
Probably Not: Debt can be very dangerous, especially personal debt. The logic to leveraged investing is this: borrowing money to buy an asset that is going to generate income. In theory as long as that asset is able to generate more income than the cost of interest then you’re further ahead than if you didn’t borrow money to invest. However I don’t generally recommend leveraged investments because of the high degree of risk. When the market drops you could easily find yourself owing more money that what your investments are worth. This could drastically affect the rest of your financial planning in a very harmful way. I’ve spoken to investors who’ve been feed the story that using someone else’s money to make money is the way to go, only to hear about how badly it’s hurt them financially. Most people most of the time should not use leverage in their portfolio. However, that being said I do have a very small number of clients who do use leverage in their portfolio. They are fully aware of the risk and have both the assets, the income, and the financial literacy to support the risk and mitigate the certainty of eventual poor market conditions.