Exclusive Interview with Certified Financial Advisor | Scott Mazzotta

So you're looking into the prospects of investing your hard-earned money but do not know where to start or who to properly consult? In this video, we're bringing you an exclusive interview with a financial advisor with Innovative Financial Group, a local firm here in the Ottawa area. Welcome back to the channel. My name is Norton Ngo. I'm a real estate agent here in the city of Ottawa. If you find this video valuable or learn anything new, all I ask is you hit that Thumbs Up Button and subscribe to this channel. If you have any questions on the market, you can also book a call directly with me through the first link in the description. Let's get into it.

So Scott is a licensed financial advisor with Innovative Financial Group here in Ottawa, a former CIS soccer player with Carleton University, and a graduate with distinction from Carleton University's Finance program. Impressive resume. Welcome to the channel, Scott.

Thanks, Nan. Yeah, it's been a long time coming, but good to be here. So we'll get into a couple questions. We, uh, we surveyed a few friends and family as well as, uh, people that we know in the industry as well, just to kind of get a framework for some of the questions. And then, uh, we also, you know, we we try to try to have it as more of an open conversation. So looking forward to getting into it.

Sounds good. Perfect. So in in terms of your background, you you have, uh, you know, background academics, but more so, uh, that competitive athlete element as well, right? So can you tell me a little bit about your journey, uh, from an academic perspective related to finance, uh, and what steps were taken to kind of get you to the stage you are today?

Yeah, for sure. So I, uh, I want to go back. You mentioned CIS, that was a little bit before my time. Uh, it switched over to U Sports like the year before I joined. Uh, so CIS was like the Canadian, whatever, Institute of of, I actually don't even know what it is, but U Sports is like the official title of what it was now. Yeah, that's a strike on me. My, uh, yeah. Uh, but, um, so, yeah, academically, I mean, it started back in high school. So I went to St. FX here in Ottawa and, um, you know, just got in, uh, interested in in the topic of business, not necessarily finance, um, but, you know, you get your intro to accounting, uh, a general business course, and then you have to make a decision, right? Uh, what do you want to do in university? Um, my family has a financial office, so it was kind of intuitive to go into a Commerce program. Uh, I did that here in in, uh, in Ottawa at Carleton University. Uh, again, you know, right when you're starting out your Commerce degree, you're doing all the general courses, your psych, your sociology, um, your accounting, uh, to get a feel, right? And then by year two or three, you have to make a decision if you're going to, uh, you have to choose your concentration at that point. Uh, again, I wasn't 100% sure that I wanted to do finance, but, you know, it was in the cards for me, so that's what I ended up choosing. Uh, I'm very happy that I ended up choosing it. Uh, it's worked out really well so far. So I finished up my degree, uh, in finance. I also did a minor in stats, uh, in December of 2020, 21. And then, um, by that time, um, I had been working in my family's office. I started working there again in early 2021, just to get the practical. Obviously, it's great to get the academic, but once you're putting what you're learning to use, it's, it, you know, it ends up becoming a a passion and a job. Um, but I wasn't, uh, quite ready to start, um, you know, uh, doing the job yet because you had to become licensed. So for anyone that's aware, here in Canada, all of the securities are governed by, uh, CIRO. So CIRO, uh, previously was IIROC. Basically, the regulatory organization of Canada that regulates all the securities here in Canada. Um, and that took me about 10 months. It's, uh, it's three different courses they have to do. It's the Canadian Securities Course number one and two, and then you have to do your Conduct and Practices Handbook. And this is turning into a long-winded answer, but it can, you can see that, uh, you know, uh, when you're becoming a licensed person here in Canada, to to become an advisor, it's not just a a turnaround in a two-month course. You you have to dedicate a lot of time and energy into into what you're doing. So I, I finished up my courses and then applied for my licensing through CIRO and got approved in January of 2023. And up until now, I've been practicing at my, uh, my dad's firm.

Perfect. And you kind of touched on that a little bit as well, but, uh, I understand Innovative Financial Group, it's a family-run business, right? Can you provide some context to our listeners in terms of the process of working with you? And I understand you work collaboratively with your, you know, your father in the business as well, right? So, uh, can you tell us a little bit about the process of working with your team from kind of start to finish?

For sure. Yeah. So Innovative Financial Group, uh, okay, so maybe I'll preface here with a disclosure of my own. So anything that is said here, uh, is not to be taken as financial advice or misconstrued. And obviously, nothing that I'm going to say here, uh, is any recommendation to buy any financial product. But if you are looking for something like that, that's more on a personal basis, and I'm sure you'll leave contact details in the description or something like that for sure. But, uh, yeah, so in general, um, working with our team, start to finish, as you mentioned, our company's name is Innovative Financial Group. When you're a licensed individual here in Canada, or or a licensed office here in Canada, you have to work with an investment dealer, okay? And an investment dealer is just, uh, your partner who regulates all of your trades, makes sure that you're staying compliant, all your licensing is up to date, etcetera, etcetera. Um, and our dealer is Aligned Capital Partners. Even though I work at Innovative Financial Group office, I'm technically an employee of Aligned Capital. And our trade name, the one that we have to use, uh, is Innovative Investment Strategies. Again, gets pretty complicated, but in general, Aligned Capital is the name that we use since that's our dealer that we we work with. Working with us is pretty simple. There's no minimums, like, uh, you know, if you walk into a bank or whatever, um, you know, there's going to be a minimum before you can, you know, speak with a financial advisor, open an account there to get consistent advice. Um, we've never had a minimum, we never will have a a minimum. Um, so it's up to the client, right? We we allow our clients to move at their own pace. But in general, if you want to, if you do want to open an account, um, you know, it could be a 20-minute phone call or meeting where you're sitting down with a client, taking down important information, collecting, like a valid ID, uh, connecting, you know, your void check to our institution so that you have money movement. Um, and that whole process, like I said, takes like about 20 minutes. Um, and just gives you, obviously, the advisor the information that they need, such as risk tolerance or time horizon, so that when the account is open, you can actually recommend things that are suitable for the client.

This kind of ties into our next question that we had. Uh, I often get this question in day-to-day work, but I also, uh, for my own reasons, I'm genuinely curious as well. Uh, you know, why use a financial advisor? Can you elaborate, maybe for listeners, in terms of how in our industry, whether it's a realtor or like a brokerage professional, uh, if you could provide some, uh, context for listeners of how you add value to your clients, perhaps costs they should be cognizant of or be aware of, um, and how an advisor can distinguish themselves? And it's, it's a very competitive industry as well, right? So, uh, in terms of how you add value, costs they should know, as well as, uh, how you kind of distinguish yourself.

So I'll try and get to a couple of those, but you may have to ask the parts of the question again. So first thing is, uh, how do you distinguish yourself, right? From what I, uh, am able to gather from, you know, speaking with my dad and another, I work with another advisor in there named David Ireland. He's been working with my dad for about 25 years. Um, from what I can gather, advisors in the past were used, I'm talking like maybe 15, 20 years ago, advisors of the past were used primarily for investment return. And I think it comes down simply because there weren't that many avenues to invest in the past. But I mean, as you mentioned, now it's super competitive. Like you have all the self-directed apps, you can go to a bank, you can go to a private institution, so there's lots of avenues to get into the market now. Um, so your, your advisor now, nowadays, has to find value in other ways. Obviously, return is still a huge component. Um, and I don't think you survive in this industry if you don't have the return to back up, back it up. But, uh, you know, ways that you can add value to your clients, I think the first thing, the pl, first place that you would go is service, right? And it seems counterintuitive, but picking up the phone is a huge deal nowadays, right? If you can make yourself available to your clients for a quick chat on a Sunday, like, you know, it, if you can make yourself available for a quick chat on a Sunday, goes a long way, right? And if you pick up and you don't have to go through seven different press two, type in the, you know, it's, it's, it, it really adds a good component to clients that they're looking for. You want to be able to pick up the phone, call it, and your guy is going to pick up and answer your question or whatever it's going to be. So service, I think, is is a big thing nowadays. Um, product, for sure. So since we're private, I'll speak specifically to, um, our, our, uh, what's available to us. Um, you know, being licensed under CIRO, we have access to everything. It doesn't matter if it's a stock, a bond, ETF, mutual fund, alternate product, which are, uh, pretty good nowadays. Um, it doesn't matter to us, we get paid the exact same, right? Most advisors nowadays will charge 1% annually on the amount. And we can get into this a little bit later, but, uh, it, it's not like commission is the thing of the past. Um, so it doesn't matter if we sell you a stock or a bond or whatever it is, uh, we're just trying to do our fiduciary duty in taking the best interest and recommending the best product for the client, 'cause selling one more version of a mutual fund doesn't get us to Mexico, right? It's, it's all about the client, and it always will be about the client.

That's awesome. Uh, I think there are some other parts of the question.

No, no, that's adding value and the cost as well. So that's, that's perfectly, uh, you dove into that a little bit as well. Um, and this is, you know, it's a, it's a common question in terms of like, actually, I want to add a, a couple more to that.

So, uh, one that's, uh, specific to our office, um, is, you know, a way that you can add value that's specific to our office is having all your financials under one roof. Obviously, we have an investment division, um, I'm an advisor in there, but we're also able to offer life insurance and critical illness. And then more recently, my oldest brother, Justin, is in there as an accountant. We offer, uh, estate planning, tax advice. So if you have your insurance guy knowing what your investment guy is doing, and if your accountant is aware of the holdings in those portfolios, uh, then he can offer you better tax advice, right? So having all of your financials under one roof, um, is a huge benefit, right? And and something that a lot of people are looking for because, um, it might be a misconception, but it's just what I feel, a lot of people don't look at their all of their assets as their portfolio. They only look at their, you know, their, their portfolio of in the market as their portfolio. But I think you should take a step back and look at, like, okay, how much money do I have in the bank? How much money do I have in the market? How much money do I have in real estate? How much do I have in insurance, right? And all of that together should be part of your portfolio. So again, if, if you're, like I said, insurance, investment guy, accountant are all wrapped up together and know what's happening, you're going to get the best bang for your buck and and the best service.

Yeah, for sure. It's kind of that, uh, one-stop shop approach, right? Everything, everything's, uh, you know, within one organization, if you will, right? So, uh, I find personally, in my experience as well, in talking with friends and and, uh, colleagues in the industry, I find financial products and services, uh, are often a topic that consumers are sometimes anxious to talk about, right? Or talking about money is is a touchy subject, depending who you ask, right? Uh, and gaining trust is still paramount, right? How do you go about overcoming these challenges that, uh, some clients may propose, and how do you truly make them feel at ease in working with your team?

So I'll just start by saying trust is your number one thing that you should be looking for in your advisor. We're supposed to be your teacher. We're supposed to make complicated things simple, easy to understand. Uh, so if you're in a meeting, you're interviewing advisors to try and find the right person for you, and they're just speaking, and, you know, sometimes our language gets really jargony, I don't know if that's a word, but it's what I'll use, uh, and it's not being translated to English for you, right? Stuff is going over your head, and they're not taking the time to slow down and make sure and read your body language and understand and make sure that you understand what is what you're saying, or at least get a grasp, right? Uh, I don't think that that, uh, is probably the advisor for you. So ways in which you can build trust, I mean, everybody knows it. If you go out for a coffee or, uh, a meal and you know, find a common topic outside of the investment, so, you know, when you're speaking with each other, "Oh, I saw so-and-so at hockey," or "I saw so-and-so at soccer. What's going on there? How's that doing?" Right? And it's not all business all the time. That, uh, that's a good way to do it. Um, another, this might be specific to me, but when I'm working with my clients, I am fully transparent. I like to show them my holdings, my financial circumstance, where I'm going, right? Um, what my plans are, 'cause they're doing the same thing with me, right? It's, it's, it's just an exchange to make sure that, um, you're on the same page. And I heard this quote somewhere, but, you know, if someone's hesitant to talk about their finances with you, they're probably not the right business partner. Because I mean, you know, I don't want to get too political, but likely all of your information is out there anyways. So, uh, being able to share that with someone personally can can form a pretty good connection that way.

Um, in terms of more on the investment side, would you say that, uh, any services or products that, uh, your team specializes in? I know you mentioned, for example, you know, mutual funds, or you also mentioned the, uh, the other vertical you guys have in the accounting division. Yeah. Uh, are there any other services, or could you elaborate on the services and products that your team, uh, specialize in?

Yeah, okay. So, um, I mean, I'll have to mention this because this is where it all started. My dad's super specialized in life insurance and critical illness. Uh, life insurance is basically a policy that pays out when you die, goes to your beneficiary. Critical illness is, uh, and obviously, I'm not insurance licensed, I'm just giving a, a background here, but critical illness is a policy that pays out to you. Uh, so if you were to get one of your, uh, one of the 26 or something most deadly critical illnesses out there and you happen to survive 30 days, pays out as a, pays for the premium that you signed up for. Um, so we're very specialized in those. Uh, life insurance has a couple more factors, but I'm not super aware of them. Obviously, on the accounting side, we do personal taxes, we do taxes for corporations, tax and estate planning. Um, and then specifically on the finance side, um, so, yeah, as I mentioned, we're pretty specialized in mutual funds. Um, and I'll speak to maybe some of the misconceptions about them after this thought, but we were MFDA, so Mutual Fund Dealers Association. That's a different type of regulation than CIRO, right? So we're CIRO, the Canadian Investment Regulatory Organization, and that's separate. So we were MFDA only, meaning you could only sell mutual funds from 2019. Before that, right? We switched over to to CIRO in 2020, meaning that we can now sell anything: stock, bond, mutual fund, ETF. Um, so because of that, and because it's, you know, only five years recent, four years recent, um, we're still pretty specialized in mutual funds. I would say 50 to 70% of what we do is mutual funds. We do a little bit of stocks, uh, for people who want it, but, and then the last, I'd say 25 to 30%, we're doing alternate products. And alternate products are, uh, I would say relatively new nowadays, but will become pretty big in the future. Alternate products refer to, um, products that allow you to invest in private equity or private real estate or private debt, right? These are products that, uh, a lot of people don't have access to just coming off the street. So if you're working with an advisor, that's another value add right there. You have access to any type of product. Um, so I'll speak a little bit to maybe some misconceptions about about mutual funds out there. Um, you know, I'm not, I'm not oblivious. Like I watch the Super Bowl, there, there's a commercial on there that speaks about fees on mutual funds, and if you have the certain amount of fees for a certain amount of time, it could cost you a lot of money. That is true. What is not true about it is the performance that comes along with it. So I would say, like, you know, there are tens of thousands of mutual funds out there, and like anything, uh, you know, there's a normal distribution, stats guy, and there's going to be good, there's going to be average, and there's going to be bad, right? It's, it's your advisor's job to find the good. And there are good mutual funds out there that are worth the fee. You know, there are few of them, and, you know, being in business for 25 years, my dad and David have been able to do their due diligence and find the right ones and find very good ones for our clients. But that takes a long time and it takes experience. And, um, in doing that, I think you build a reputable, uh, you know, you build your reputation within the city.

In terms of, uh, kind of the cost side, you mentioned, like say, uh, say a client is onboarded, you know, they're looking to work with your team. We touched on this very briefly, but what are other, kind of, it's usually a very common question, what are costs to be incurred by a client? Yeah, whether that's, uh, me, so management expense, like, or what are other costs that a client should be aware of when working with any financial?

Yeah, so I will make it as clear as I possibly can. Just like any bank account, you're going to have usually an account, uh, fee. So this is an annual fee, usually paid out quarterly, and depending on the account size, it's either $50 a year or $200 a year, something in between. So that's just standard, and that's not money that we make. It's just that's charged to our dealer to have the account open and make sure that all the money movement happens, blah, blah, blah. So you have an annual account fee, that's standard. Then you have two, two, uh, separate fees usually when you're working with products. So if you buy a mutual fund, there's going to be the MER portion, like you mentioned, the management expense ratio. And then there's going to be the advisory portion, which is that's our, our portion. The advisory portion stays the same. No matter what, we obviously have the ability to reduce it if we want, but, but most advisors, private advisors, advisors at the bank will charge 1% annually on the amount of money. So if you have $100 invested, it's going to be a dollar a year to manage the money. And that includes everything: that includes the account opening, the trades, the calls, the reviews, the recommendations, the products, all of that. And then the, the third portion, which is the MER portion, the management expense ratio, that's, that's tied directly to the mutual fund, and that's where the mutual fund fees come in, right? So mutual funds are managed by portfolio managers, and obviously, they don't work for free. They have to get paid. But much of the time, the the MER portion is negligible because they're producing returns that are net of the fee. You know, and if you're producing a return that's suitable for your client, it doesn't matter if you are paying 0.05 basis points or 50 basis points or 200 basis points. It's, it's all about the, the net return at the end of the day, which is what everything is reported in. So you have the advisory portion, the MER, and then the account fee.

Gotcha. Okay, that's, uh, that's very clear. For, because again, it's usually a very common question. We get in real estate, what do you charge? Right? It's, it's a very valid question. So that's clear. That's awesome.

Uh, actually, going back, I'll maybe I'll touch on the, the other thing that you can do, right? So, uh, you obviously have these fees that are associated with working with an advisor. Your other option is to do self-directed, right? Through all these apps that are available right now. Self-directed, you save the 1%, right? That, that's your big difference working with an advisor, 1% annually to manage the money, obviously get all the advice that comes along with it. If you want to do self-directed, you're saving the 1%. If you buy a mutual fund on your own, you're still going to pay the MER, and you're still likely going to have an account fee if you do it at a bank or something like that. So the point I'm trying to get across here is that maybe using an advisor, as your circumstance becomes more complicated, or becomes, you know, you have less time in your hands to manage your own money, that's when an advisor really becomes valuable. Also, when your circumstance becomes a little bit more complicated, let's just say you had a kid, right? And you want to take advantage of RESPs, registered education savings plans, and you want to get all the grants that are available to you. You know, when you have a kid, you know, my oldest brother has two young ones at home right now, I know how busy he is. So when all of your time is taken up on family and work and etcetera, it's better to have an advisor that you can just call and say, "Yeah, we're taking care of this. Don't worry." Right? Someone that you trust.

I'll allude back to that. So, um, okay, back to, um, in terms of kind of your team's performance, you would say, is there a certain kind of, uh, investment philosophy or kind of core principles that your team sticks to? And then you, you know, with, uh, we always say reputation speaks for itself, right? So would you say there's a certain, uh, philosophy or core principles that you guys stick to, and how would you say your team's performances, generally speaking, of course, within relative to the market as a whole?

So, I mean, that's kind of what I was touching on when, you know, I was giving the normal distribution answer about mutual funds, right? There are ones that underperform, there are ones that are in line with what the market does, and there are ones that are outperforming the market. Um, it's our job to find them. And, but in general, I think everybody, and this is not just specific to the finance industry, I know you guys can relate to this, we're living in a world of now. People want results now, right? And and that's not the investing game at all whatsoever. You have to think long-term investing. It doesn't mean that, uh, you shouldn't expect good performance in the short term. It just means that you're trying to average a return over a long period of time. If you look at, like, any 10-year period within the market, there's one or two years in there where the market was down. You just need to, uh, those are the moments where you need to refrain from making a poor, uninformed decision when the market is down and pulling your money out, right? And again, that's another value add right there. If the market's down and you're feeling worried, naturally, human behavior, you know, you're seeing your account go down and you want to pull out, but you don't have all the information to make a decision about it. That's where you can call your advisor and say, "What is going on here?" Right? And 99% of the time, they'll say, "Don't worry, it's just something in the news this week or something's happening overseas. Don't worry." Right? And that's just enough to give you the calming of the nerves that you need to not make a poor decision like pulling your money out when it's down, right?

Okay. Um, and I find communication and being, whether the industry be finances or real estate, uh, you know, construction, what have you, communication's so key, uh, and being proactive with our clients in terms of updates is, I would call it, absolutely paramount, right? So how do you update your clients in terms of their investment performances, uh, and keeping them up to speed in terms of, you know, ever-changing market dynamics? So how does your team, uh, systematize this process?

So in general, I mean, at a bare minimum, it's part of our compliance to do one review with our clients per year. Most of the time, we're talking to them twice a year, if not much more than that. I also put together a quarterly, um, report that I just send out to all clients by email. It's a one-pager, um, touches on important things that David and I think are important, uh, for our clients to know about the market. We don't get into the nitty-gritty about it. Um, and then clients are free to call us as many times as they want throughout the year, right? It's, it's an ongoing conversation. People's financial circumstances change all the time. So during those regular reviews, something we will ask, "Has your income changed? Have you moved? Did you change jobs?" Stuff like that where you have to update your KYC, you know, your client information. But in general, yeah, clients are, we're available to our clients 24/7. We're watching, uh, all of our holdings 24/7. So if something comes up that we are uncomfortable with, we're picking up the phone and calling our clients.

Gotcha. Yeah, exactly. That speaks on on the element of being proactive as well, right? So, uh, that's awesome. Um, you know, the next, uh, next couple topics, we really want to dive into are more first-time home buyer related. Uh, right? So, uh, you know, being a real estate myself, we, we come across these topics quite often. Here in Canada, if history is, you know, any indication of what we're going to see in the future, it'd be safe to presume that Canadians prefer and and ultimately desire to, uh, eventually own their home, if possible, right? So, uh, can you elaborate for our clients in terms of programs that are available, uh, from a financial perspective, um, that they can take advantage of and really start to, uh, you know, whether that's next year or five years down the line, what are programs out there that they should be, uh, cognizant of?

So, I mean, just off the top of my head, uh, again, ask your accountant, but I'm pretty sure you will qualify immediately for the First-Time Home Buyer Tax Credit. I think I'm getting that right. Um, I believe it's around $1,500. And this is something similar to, like, if you make an RRSP contribution, you have an RRSP tax credit. So it's a tax credit that you have to file when you go and buy your home. And this is, I think, used to help with costs such as, like, lawyer costs or, um, home inspection costs. Pretty much everyone nowadays, I mean, with housing prices, is going to qualify for the full $4,000 of, uh, land transfer tax. So just a note, because this is relevant to my circumstance, if you're buying with a partner or a spouse, you do not both qualify to get the $4,000 tax credit. It's only one of you, right? So it's $4,000 max. Um, and and also a point I'll make there is for $4,000, probably won't cover the full amount of transfer tax if you're buying a house, you know, above 5, 600 grand nowadays, which is normal within the market. Yeah. Um, a third thing that I will mention, uh, just off the top of my head, uh, if you have the capital available, you know, you can put down 20% on your house and avoid CMHC or, uh, mortgage insurance, in other words, right? So if you have the money available, um, try to put 20% down. That'll save you another couple thousand dollars, right? And then, uh, you know, FHSA is First Home Savings Accounts. Is that something you'd recommend?

Oh, yeah, absolutely. That's, I mean, we, we were doing a mad dash from October till the end of December, just last year, because, uh, FHSA, so First Home Savings Account, new account, just got created in April of last year. And it's not, uh, it's not exactly the same as a TFSA, so a Tax-Free Savings Account, or an RRSP, so Retirement Savings Plan. And maybe I'll, uh, I'll touch on all three of those. But your FHSA, First Home Savings Account, uh, only starts to accumulate contribution room when you open it. So our mad dash was reaching out to all our clients, reaching out to my my friends who are looking to buy a house, get this account open before the end of 2023, and you will capture all of 2023's room, which is $8,000 a year, and you can carry it forward. You don't necessarily need to invest, but you can carry forward that room into 2024. Now you have $166,000 of room available to you, uh, which will provide you with a huge tax credit, right? If you are, so, so yeah, I'll touch on actually what a tax credit is. The benefit of this FHSA is that you can put money into it, receive a tax credit, same thing like you would do with an RRSP, file that with your taxes. And I'll describe it two ways. The first way is you put $1,000 in, you get a tax credit for $1,000, and it will reduce your, your taxable income by $1,000. So you make $50,000, now you're paying tax on $49,000. Or in other words, you put $1,000 in, and they will pay you the tax back that you paid on that $1,000. So let's just say you pay, I don't know, tax at 30% or something, you make a contribution of $1,000, you're getting $300 back, right? And it can get pretty significant. The max contribution room per year in the FHSA is $8,000. $8,000 at 30%, you're saving between two and three grand. Um, so that's basically your FHSA. All the money in there is going to grow tax-free. And then when you're ready to make a qualifying withdrawal, so when you've, have accepted a deal on a home, you have the address, you can fill out an RC 725 and, uh, you can make that qualifying withdrawal and they'll let you have all the money tax-free. Um, so hugely beneficial account. That's, that's really your first account that I would recommend to most first-time home buyers. Um, and RRSP also has a Home Buyers Plan attached to it. So Retirement Savings Plan, Home Buyers Plan, RRSP HBP. And these acronyms, like, as you can tell, get pretty crazy. But, uh, your RRSP Home Buyers Plan was was the government program that existed before the FHSA, and it gives you that same tax credit. Put $1,000 in, get your $300 back, whatever it is. However, when you take the money out, comes out tax-free, ready for your house. However, there's a 15-year repayment period. So let's just say you took out $15,000 for your house from your RRSP, you get that money tax-free. However, over the next 15 years, you'll have to pay back $1,000 a year to replenish that $15,000 that you withdrew tax-free.

I see. Okay. So that's, uh, that's a great summary of kind of the savings vehicles, uh, that are available for first-time home buyers. Let's touch on down payments, right? Like that's such a, a bit of a buzzword, if you will, down payment, right? But from a financial advisor's perspective, right? How would you advise a consumer out there who's looking to purchase their first home, say in the next five years, even, right? So how would you, uh, advise a client, you know, they sit down for a consultation, and they're looking at the prospects' timeline about five years, you know, what are some of the vehicles or, uh, advice that you provide to a consumer like that?

So I think five years is is a great, uh, timing period for planning. And the reason is, as simple as, you can take full advantage of your FHSA. The maximum amount of contribution is $40,000, and you get $8,000 per year. You max out the FHSA up to its max, and hopefully, by that time, you know, you've made some returns, you've also gotten the tax credits for contributing the $40,000, and, uh, you know, you're coming out thousands, if not tens of thousands of dollars ahead of where you would have been if you just kept it in, you know, your regular checking or savings account. Um, so investing is a really important portion of saving towards a home. It's not, we are not in a time of the past where you can, uh, just, you know, decide to buy a home. You have to plan for it nowadays. And the best way to do that is, you know, maybe working with an advisor or speaking with friends that have worked with advisors and coming up with a plan to put away X amount per month, right? And not compromising. I I see people do it all the time. They, they have a plan that they're going to do. They have a regular payment that they pay into their investments, but they'll go to dinner and they'll say, "Ah, I can't afford to invest this month." That, that is something you should put that on the bottom of your list of compromises. If you're going to make a plan to invest for a financial, uh, a big financial event in the future, stick to that plan. First, compromise other things before that. Um, so, yeah, your five-year plan, I mean, let's just do some quick math on it. You've got $40,000 of FHSA available. You've also got up to $35,000 of RRSPs available. So right away, $75,000 is available where you'll get tax credits on. Or in other words, you, you don't have to pay tax on those $75, $77,500 over the next five years. If, if all of those dollars that you're putting away are taxed at 25, 30%, you know, you're saving like, in between, like $15 and $20,000 simply on tax. Right? If you're reinvesting that money at the same time, as well as your money that you're actually putting in is invested, you, you will have a house, no problem, right? But you have to be disciplined. You have to come up with a plan and stick to the plan.

Maybe I'll just give some tips about ways to save or tips for people that are just starting out investing. So, uh, I like to think about it in two different ways. The first way is, you go to work, you have a salary. Let's say your salary is, I don't know, $75,000. If you are in a tax bracket where you're paying somewhere between 25 and 30% to the government, I would hope that you could at least pay or save the same amount that you'd be paying in tax, right? So a good amount to put away would be somewhere in between 25 or 30% of your salary. Another way that I would look at it is, and again, we get asked all the time, like, how much is a good amount to start with? If you are able to put all of your income and assets on a spreadsheet, subtract all of your expenses, so whether it's car, phone, uh, you know, food, rent, etcetera, you'll, you'll come out with a number at the end, and this is the number that is basically like dollars that you have free will to do with. If you can do somewhere between 25 to 50% of that number, that's amazing, right? So I don't know, just in an example, let's say you bring in, I don't know, $4,000 a month, your expenses are somewhere in between $2,500 and $3,000, so you're coming home with $1,100 at the end of the month. Try and put away $500 of it, right? And like I said, do not compromise from that $500. That just, and that, and that means that you have another $500 available to you to do whatever you want with. Spend it, go to the casino, don't go to the casino, but, um, you know, go out with friends. And then there's no guilt around spending that money because you know you've taken care of every other portion that needs to be taken care of.

That's that's super useful as well. Um, kind of building off the question that we asked previously, can you tell some success stories within general, uh, general reigns of kind of other young professionals looking to buy their house? What are perhaps, uh, common poor fundamentals that they stuck to that you're, you're seeing as well?

So, I mean, I'll, I'll just speak about me and my girlfriend's, um, uh, experience right now. You know, we're, we're freshly finished university. We did our summer jobs throughout university. We didn't have a crazy amount of money, but we would take some of it and invest it. And when we both finished up and got, uh, into some work, had a bit more income at our disposal, we could start putting away more, right? We both finished roughly in 2021, so we've been working and saving to buy our first home since since that time, and even earlier, a little bit. But we're coming up on making a decision, right? We now have, we've went through the plan, used our FHSA, our TFSAs, we've stuck to our plan, and now we actually have the income available to us, the capital available to us to put something down on a house right now. It's now it's getting in contact with people like you, real estate agents, working with mortgage brokers, and that's a, you know, being an advisor myself, I'm happy to take the, the back seat here and let you guys do what you do best, right? I'll relate it to, you know, your car mechanic. You pull up, you're going to get your tires changed or oil change or whatever. You don't know the half about it, but you understand. You understand that when you're getting your tires changed, the bolts need to come off, the car needs to be lifted, put the other tire on. You don't necessarily need to know exactly the process, but you have an idea. And that's what I was talking about earlier, when your advisor is giving you information, you should be able to get a general grasp of what's what's being done. Maybe you don't need to know the nitty-gritty about it, right?

I think that's super key because I think that's often a thing we come across, right? There's jack of all trades, master of none, or there's people that are truly niche down in their industry that do. You know, mortgage brokers do their thing, financial advisors do their part, talks and accountant, accountant specialist. You're not asking a real estate agent on tax questions, right? So my dad says it all the time, he says, uh, "If you ask me to build, if you ask me to build you a fence, I am not your guy. But if you have tax questions or estate questions, come to me first." That's it, right? Everybody has everybody has their role, right? And it's, I think that it's so, so important to niche down on what you truly specialize in, right? So that's awesome. Um, you know, in terms of enclosing here, like what are you kind of seeing day-to-day as a financial advisor? You come across a lot of young professionals as well, maybe what type of questions are you seeing from prospective first-time buyers, whether that's one to five years, or even greater than that? And perhaps elaborating on that, like what are, say, three tips that you'd have for, uh, prospective first-time home buyers out there?

First things first, I get this question all the time. "I have X amount saved. I have this amount saved. I don't think it's a lot of money. Should I even invest? Is it worth it?" Yes, of course. Just like me and my girlfriend did, you start. It's, investing is not a one-time thing. It's not like you get a sum of money, you invest it, I'm done for all eternity. It's a, your financial circumstance changes all the time, and it's something that you add to, and hopefully not so often, but you take from, right? When, when you need to, right? It's an ongoing thing. So first things first, get started. Just like anything in life, just get started. Open the account. Uh, maybe even do a little bit yourself, right? You, you learn the best when you do it yourself. You buy a certain product, it goes down. Okay, maybe I need some help here. Um, so in terms of tips, uh, maybe that's a good one to start. Do a little bit yourself. Use one of these apps. Do a little self-directed. Do a little bit of research yourself. See if it's for you. See if you have the time to do it. If you don't, and you don't care to do it, look out for an advisor. Again, look for an advisor. Ask some of your friends if they've worked with anyone. Uh, interview your advisor, right? This is supposed to be a long-term commitment, so make sure that you're making a good decision. And, um, maybe a third tip that I could do, and I'll, I'll just reiterate it because I, I mentioned it before, but don't compromise your plan. Compromise other things first. Compromise the dinner, compromise the going out on the weekend. Those things shouldn't come in the way of your future version of yourself and where you see yourself. If it's going to be a house in five years, and this is the plan, stick to the plan. Even better, add more to the plan, right?

That's a good way to put it. I love that. That's "stick to your plan." That's something we really, really reiterate as well. Like, just 'cause your friend bought a house doesn't mean you have to buy a house, right? Like everybody has their certain time and where. Just 'cause your friend is self-directed investing through, you know, these platforms like, doesn't mean that that template is right for you as well, right? So that's awesome. That's super helpful. Uh, just kind of enclosing, is there anything else you'd want to leave with their clients out there in terms of tips or how they can get in touch with you as well?

Uh, yeah, for sure. Sure. I mean, I'm, uh, I'm young, uh, hungry in this industry, and love talking about it. Uh, I'm sure you'll leave the details in the description, so you can give me a call, text, email anytime. Uh, even if you have general questions, I'm not running a meter, so, uh, give me a shout. Um, and, uh, yeah, I'd love to speak to whoever wants to speak about it.

Perfect. Thanks so much.

Yeah, cheers.