Another financial milestone

[Meadbh]

My professional corporation is now worth over $600K. This represents six years of tax advantaged savings for ER. Obviously I am not as far ahead as I had hoped to be given that the 1 year return was -7%. However, this is a growth portfolio for the long term and its 5 year return has been 8%. I do not expect to start withdrawing from it till at least 10 years into ER. One of my goals is to get this portfolio to $1m before retiring. If I continue my current work pattern and there is no prolonged bear, that should be possible within 5 years.

 

[Rich_by_the_Bay]

Good work, Meadbh. It's always motivating to see the numbers rise.

 

[DblDoc]

Meadbh - I'm curious. What is your "professional corporation" and how does it work as a retirement vehicle. I have a sister who is in FP in BC and it may be usefull for her to know.

Thanks

Oh and congrats!

DD

 

[Bestwifeever]

Sweet--that is an awesome chunk of change. Congratulations!

 

[Meadbh]

Meadbh - I'm curious. What is your "professional corporation" and how does it work as a retirement vehicle. I have a sister who is in FP in BC and it may be usefull for her to know.

Thanks

Oh and congrats!

DD

Your sister should DEFINITELY consider incorporation of her practice. Incorporation has been legal in BC for years and years.

Basically, it enables the MD who can LBYM to save clinical earnings in a tax advantaged way within the medical corporation (which is a separate entity and has its own licence to practice).

https://www.cpsbc.ca/cps/physician_resources/incorporations

There are also opportunities for the corporation to employ family members for support functions such as bookkeeping, thereby reducing the family tax bill. And you can set up a personal health plan, which means that noninsured health expenses of corporate employees (including the MD) can be expensed to the corporation. The downsides are (1) if the MD isn't saving money, there is no financial benefit; (2) the MD is still professionally liable; (3) there are some administration costs.

Tons of information on the MD Management website:

MD Financial Solutions

To quote:

The advantages and disadvantages of an incorporated medical practice

Incorporating your medical practice generally allows you to take advantage of the federal small business deduction on up to $400,000 of active business income earned in the corporation. Depending on the small business rate in your province and your personal marginal tax rate, retaining income in your professional corporation and deferring personal tax at a shareholder level could allow you to defer up to 30% of tax. As a result, your professional corporation may have a greater ability to save or to repay business debt.
Additionally, in all provinces except Alberta, certain non-physician family members can be shareholders of your professional corporation. Paying dividends to adult family members in a lower marginal tax bracket than you could reduce your family’s overall tax payable.
However, incorporation involves setup and ongoing administration and compliance costs. In addition, the benefits of incorporation may be limited for certain medical practice arrangements. If you think incorporation might be for you, you’ll want to discuss the feasibility and costs with your tax and legal advisors before proceeding.

 

[DblDoc]

Thanks Meadbh. I'll make sure she is aware. She hasn't been much of a LBYM type but now with retirement not in the distant future she may be thinking about it more.

DD

 

[Meadbh]

Thanks Meadbh. I'll make sure she is aware. She hasn't been much of a LBYM type but now with retirement not in the distant future she may be thinking about it more.

DD

Well, BC does stand for "Bring Cash"!

 

[Darryl]

Nice job! Keep it rolling and wrap it up in under 5

 

[torres9]

Congratulations!
t9

 

[ikubak]

Good work, Meadbh. It's always motivating to see the numbers rise.

It is motivating to see the numbers rise. However, it has been five or six months since I have experienced that. I just keep buying and it is keeping me within throwing distance of my high hit in October 07. Stay the course! Maybe we should add, Keep her afloat too!

 

[kcowan]

Congratulations. you are getting there by LBYM and thinking future.

When we retired in 2002, we could not afford to stay retired and buy a place in PV. Through judicious investing and tax avoidance, we were able to buy by Jan 2007. We actually bought in Nov 2007.

Isn't it great when a plan comes together?