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    Home»Finance»6 key lessons in building and enjoying your wealth
    Finance

    6 key lessons in building and enjoying your wealth

    FintechFetchBy FintechFetchMarch 27, 2025No Comments10 Mins Read
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    1. Personal Finance

    By consistently investing smartly and putting savings away and in the right place, you will build up real wealth over time

    Published Mar 26, 2025  •  Last updated 10 hours ago  •  6 minute read

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    Follow these tips and the bigger world and its craziness will likely have less of an impact on you today and in the future, writes Ted Rechtshaffen. Photo by GaudiLab/Getty Images/Postmedia files

    Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

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    I have been in the wealth management industry for more than 30 years, but my firm is celebrating its 20th anniversary, which, given the many client discussions that have taken place in that time, inspired me to share six key lessons that may be particularly valuable in the volatile times that we find ourselves in today.

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    Do not panic; markets recover

    As long as there is growth in global populations and improving technology, there will be growth in stock markets over time. The S&P 500 has risen in 72 per cent of the past almost 100 years. Put another way, the ratio of up years to down years is 2.6 to 1.

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    We don’t know ahead of time if the upcoming year will be up or down, but history says your money will grow in more than 70 per cent of years if you are invested. I like those odds.

    This is helpful to remember in down years when things look very bleak and you think there’s no reason for things to go up. Clients have said that to me this year, and they said it in 2020 and they definitely said it in 2008.

    Every down time has a unique reason that has never been seen before, but through wars, depressions, dictators and pandemics, the market somehow still goes up in 72 per cent of the years.

    Take advantage of government offerings

    Understanding personal and small-business taxes along with financial and estate planning can give you a big leg up over time. That can mean being thoughtful about where to save first when you are younger and growing your wealth.

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    Today, you can put savings in a registered retirement savings plan (RRSP), tax-free savings account (TFSA), registered education savings plan, first home savings account or sometimes a registered disability savings plan.

    By consistently putting savings away and in the right place, you will build up real wealth over time.

    The flip side is that in the years prior to retirement and in retirement, you need to consider how to best draw down the funds you need.

    Should you draw down RRSP funds and delay taking your Old Age Security and Canada Pension Plan benefits? How do you make sure that you are splitting income in the best way to lower overall tax? What about drawing corporate funds as opposed to leaving them in the company?

    Sometimes, it is about doing small, smart things for many years. In some cases, the government really is here to help … well, sort of.

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    Have taxable investments? Be very mindful of the tax

    There are investments available today that will pay you 10 per cent interest. They can be held in your TFSA and you will earn 10 per cent after tax. You can hold it in a taxable account, and if you are in a high tax bracket, you will earn five per cent after tax. Holding investments in the right place can save you a lot of money over time.

    Sometimes, it isn’t only where you hold the investment, but also owning a tax-smart investment. For example, owning a growth stock without a dividend can be a very tax-efficient investment. Every year you hold it, you don’t pay tax on it. If it grows in value and you eventually sell it, you only pay capital gains tax. If it falls in value and you eventually sell it, you will have a capital loss that can lower your taxes.

    There are a number of other investments that can be structured to either not spin off income or, if they do, they are mostly considered return of capital and will only eventually impact a capital gain.

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    Once you have enough wealth to have taxable investments (in a non-registered account or a corporate account), investing tax efficiently over time will meaningfully increase your wealth.

    There are still big tax-planning opportunities around

    If your income comfortably puts you in the top tax bracket, you should be using flow-through shares to lower your taxes. If you are not using them, you are missing the boat.

    If you have a corporation and you are drawing significant amounts in a year ($500,000 plus), you should also be using flow-through shares.

    If you have a corporation with more than $1 million and you don’t see yourself likely drawing those funds down, you should be talking to someone about life insurance (on you, your spouse or maybe your children). This can be one of the biggest tax-saving decisions you will ever make.

    Building wealth is more meaningful when you help others

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    They say you can’t take it with you. I am pretty sure that is still the case. Because of that, wealth planning is sometimes about making an impact on others.

    For many, this means helping out children or other family members. Can you afford to do so? How much can you afford to help? Even if you can, do you want to? These are all important questions and are part of the planning process of potentially making a meaningful difference in the lives of your children and grandchildren.

    For some, this means helping out charities in a meaningful way. This can involve annual gifts of cash or gifting shares with a big capital gain. Maybe it is a one-time gift,or maybe it is a gift through your will or life insurance.

    All are valid, but if gifting to charity is an important part of your plan, it is worth thinking it through strategically to ensure the best impact for you on a personal level and a financial level.

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    Live life while you can

    Some people are savers and some are spenders. As you might imagine, the savers often have more money in retirement than the spenders.

    Part of being a saver is that you just never know about the future and you want to be covered in case things go wrong. This can be a very admirable quality, but the risk of things going wrong becomes smaller and smaller as you age and your wealth builds. If you remain a saver forever, it just means your saved money will go to others and will be underspent by you.

    Part of our discussions with clients (especially those who are savers) focuses on what they might want to do in their remaining years and what is stopping them from doing it. Often, there is a travel bucket list. If there is a couple involved, it likely means both people need to be in good enough health to travel.

    One might end up in great shape through age 90, but it is very rare for both people to be in that position. Unfortunately, for a 65-year-old couple, that might mean that they have a five-, 10- or 15-year window to travel. If you can afford to do it, don’t wait. Don’t put it off. Do it soon.

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    One final word. You will notice I have not mentioned our southern friend yet. The reason is that while Donald Trump may dominate today’s headlines, he has very little impact on any of the six lessons above.

    If they can all be summed up into one lesson, it is to keep focusing on doing the right things for you and your world. Do those things right, and the bigger world and its craziness will likely have less of an impact on you today and in the future.

    Ted Rechtshaffen, MBA, CFP, CIM, is president, portfolio manager and financial planner at TriDelta Private Wealth, a boutique wealth management firm focusing on investment counselling and high-net-worth financial planning. You can reach TriDelta at www.tridelta.ca.

    Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

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