For years I’ve wrestled with the taxing decision of whether to pay ourselves dividends or salary (or some combination of the two). For background, my wife and I co-own and operate our corporation, which includes our financial planning business, this blog, and some freelance writing work.

We’ve always paid ourselves an equal amount of dividends from the corporation to fund our personal spending and saving needs. It was easy (no payroll), it kept our personal tax rate fairly low and predictable (dividends are taxed at a lower rate than salary), and we just invested whatever was leftover inside our corporate investment account.

But as our business has grown in revenue and our corporate investment account balance swelled, it was clear that a change might be needed to avoid potential tax traps in the future.

First, any income earned up to the small business deduction limit is taxed at a friendly 11%, but income earned above that limit jumps to 23%. That wasn’t an issue for many years, but it’s going to be this year and into the foreseeable future.

Second, if a corporation earns more than $50,000 in passive income (say, from VEQT distributions), the small business deduction limit is reduced by $5 for every dollar of passive income above that threshold.

That’s not an issue right now with a corporate investing balance of $500,000 earning perhaps $10,000 of passive income. But if we continue aggressively adding to our corporate investments for another 5-10 years this could easily spell trouble with a portfolio of $2M or more. 

The problem with dividends is that, while easy and less taxing personally, they’re not deductible from our corporate income so we’ll end up paying more corporate tax (especially once revenue exceeds the small business deduction limit).

Salary is deducted from corporate income and, while taxed higher personally, also creates RRSP contribution room and allows us to pay into CPP.

Speaking of RRSP room, one more reason I’ve hesitated to switch to salary is that both of our RRSPs are fully maxed out. Paying salary creates RRSP room – but not until the next tax year.

So what did we decide? Starting May 1st we’ll each pay ourselves a salary of $9,000 per month ($72k for this year) and have set up the appropriate payroll deductions for taxes and CPP contributions. We’ll also continue to distribute dividends that will top-up our income to meet our personal spending and saving needs.

The $144,000 in salary can be deducted from our corporate income to keep our corporate taxes low. We’ll pay ourselves enough to keep up with our TFSA snowball approach (catching up on unused room over the next few years), and the trade-off for this change will be fewer dollars contributed to our corporate investments.

We’ll each generate $12,960 in RRSP contribution room for 2026, and that will give us more flexibility to increase our salary and resume RRSP contributions for the first time in six years.

I’m happy with this new mix of salary and dividends as it relates to our overall financial plan and goals.

I’m also grateful to Ben Felix and Dr. Mark Soth for creating the incredibly valuable Money Scope podcast for Canadian business owners, as well as to my friend Aravind Sithamparapillai for helping me think through this taxing decision.

This Week’s Recap:

Markets rallied this week with global equities surging ahead by 6%. I’m sure that was a welcome reprieve for investors who undoubtedly were shaken after their portfolios fell sharply the week prior. 

It’s yet another reminder that stock returns are random and unpredictable, and the best advice is to stay the course with a sensible low cost, globally diversified portfolio.

I said as much in my last edition of Weekend Reading – is “stay the course” helpful advice?

Promo of the Week:

This week I’m highlighting an often forgotten rewards credit card pair, the Marriott Bonvoy American Express Card and the Marriott Bonvoy Business American Express Card.

These cards have been staples in our wallets for many years. Why?

Unlike most rewards credit cards, which I will happily churn (apply, collect the welcome bonus, and then cancel before the card anniversary and annual fee kick-in), the Bonvoy American Express Cards come with an annual free night certificate with a room redemption rate worth up to 35,000 points.

The personal Bonvoy card comes with an annual fee of $120, but the free night redemption alone can easily be worth $350 depending on when and where you redeem it.

The business Bonvoy card comes with an annual fee of $150, but again the free night certificate more than offsets the fee.

That’s not all. New applicants can sign-up for the Marriott Bonvoy American Express card and earn 55,000 points after charging $3,000 to their card in the first three months.

New applicants for the Marriott Bonvoy Business American Express Card can earn 60,000 points after charging $5,000 to their card in the first three months.

As mentioned, my wife and I each have a personal AND a business card (as the primary holders, none of this supplementary card nonsense), and so we each get two free night certificates to use at Marriott’s worldwide.

These come in handy when booking travel. For instance, if we have an early flight departing from Calgary we’ll use a free night certificate to stay at the in-terminal Marriott the night before and then just roll our bags out the door to international departures the next morning.

We’ll also use a free night this summer in Glasgow, where we’re staying overnight and then taking a train to London before our return flight home.

We’ve also used free night certificates for a weekend away in Calgary or Vancouver.

It’s not often a rewards credit card carries value from year-to-year once the welcome bonus disappears, but with these two Bonvoy American Express cards you can easily extract value from the annual free night certificates. They’re worth a look!

Weekend Reading:

Steadyhand’s Tom Bradley echoes my sentiments exactly by saying the best advice for investors right now is to do nothing. Really.

The late Peter Bernstein said it best: “In calmer moments, investors recognize their inability to know what the future holds. In moments of extreme panic or enthusiasm, however, they become remarkably bold in their predictions.”

Heather Boneparth shares an excellent piece – how does your partner cope when the sky is falling?

Many Canadians are confused about how capital gains work. Jason Heath explains how to reduce capital gains with RRSP contributions (a good reminder to those who plan to sell rental properties in the future).

Mark McGrath and David Chilton looked at the TFSA vs. RRSP debate with an insightful 15 minute discussion:

Why market volatility feels different this time – but it probably isn’t.

Finally, one interesting development taking shape since the U.S. launched a global trade war is the soaring loonie – which has now climbed above 72 cents USD. Unfortunately for our travel plans, the loonie is not holding up that well against the Euro or Pound sterling.

Have a great weekend, everyone!

Global stocks fell sharply on Thursday and Friday after US President Donald Trump’s so-called Liberation Day tariffs went into effect.

Whether the President is being deliberately obtuse about the economic upheaval these tariffs will cause, or if he’s playing chess while the rest of the world is playing checkers is anyone’s guess.

What investors want to know is whether they should do something with their own portfolios.

Once again I find my inbox and DMs flooded with messages from anxious investors:

“I am a bit confused and concerned with the US tariffs if it is still a good plan to leave the money in those ETFs (VGRO/VBAL) long-term? I just wanted to check in with you in case a change of plans might be advisable?”

and:

“Hi Robb, hope all is well amidst this madness! Any ETF tweaking needed?”

and:

“Robb, my investments are plummeting. Should I do something about this, and if so, what?”

Interestingly, a few brave investors wondered about buying the dip:

“Would this be a good time to buy some ETF’s at low prices for my non-registered account?”

and:

“With the recent market declines, do you think it makes sense to take $20-$25k from my emergency fund, put in the market now and pay myself (emergency fund) back over the next few months?”

I probably sound like a broken record when I say you shouldn’t change your investment strategy based on current market conditions (tempering those greedy or fearful emotions).

Telling my clients to stay the course while my own portfolio fell $60,000 in one day

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— Robb Engen (@boomerandecho.bsky.social) 4 April 2025 at 07:13

Yes, it sucks to see your investments fall by 10% in two days. It’s tempting to do something, anything, to stop the bleeding and get to safety. 

Yet we also know that while markets don’t go up in a straight line, their general trajectory is up-and-to-the-right over time. Staying invested in a properly diversified portfolio ensures that you capture those good long-term returns.

The alternative is jumping in and out of the market every time we’re faced with a scary headline. Indeed, there’s always going to be a reason to sell:

So, while “stay the course” is the correct advice, it can also seem maddeningly unhelpful. What do you mean, do nothing? Surely there’s something to do besides standing there and getting punched in the face?

First, we need to remind ourselves that our investment plan does not (or should not) expect positive double-digit returns every year. Stocks are risky if your timeframe is one day, one week, one month, one year, or even 3-5 years. 

Also remind yourself that market returns in 2023 and 2024 were extraordinary. When prices are high today, we should expect future returns to be lower (and vice-versa).

If you were happy with your global equity portfolio value on August 12, 2024 – well, that’s exactly where we are today.

Finally, if you don’t know your risk tolerance, this is how you find out. Can you steel your nerves through a period of market declines? Or are you perhaps holding more equity exposure than you can stomach?

Want to hear how two of the best advisors in the business are communicating with their clients to keep them from panicking and making poor financial decisions amidst this market volatility? Listen to this excellent conversation between Michael Kitces and Carl Richards.

In the meantime, repeat after me:

I am an emotionless robot when it comes to investing.

I have a well diversified investment plan.

I will not change that plan based on current market conditions.

I will keep investing regularly according to my plan.

I’m going to put down my phone now and move on with my life.

This Week’s Recap:

My last weekend reading update reminded us why we diversify.

We filed our personal tax returns for 2024 and ended up with a refund of 20 cents. Now that’s tax optimization!

We are less than two weeks away from a trip to Italy over the Easter break. Last year I found a terrific deal on a business class flight from Calgary to Frankfurt to Florence for April 2025 so we’ve been looking forward to this trip for a while. 

We’re staying in Florence for the long weekend and then taking a train to Cortona, picking up a rental car, and driving to a Tuscan villa to stay for a week. Fingers crossed for good weather, as there is an outdoor (heated) pool and a lovely patio area to relax and enjoy the Tuscan views.

We had an unfortunate change of plans for the return journey. We initially planned to return via the same route that got us there (Florence to Frankfurt to Calgary) but about a month ago we received a change notification that the Florence to Frankfurt flight got removed from the schedule.

So now we’re returning our rental car and taking the train south to Rome, staying one extra night, and flying home directly from Rome to Calgary. Not the end of the world to spend a night in the Eternal City.

Weekend Reading:

Introducing the Time of Your Life app – a calculator that will help you visualize how you will spend the rest of your life.

The 2025 paper Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice suggests that investors should hold globally diversified 100% stock portfolios for their entire lives. It has been met with intense criticism:

I’ve also written about this a few months ago in my VEQT and Chill weekend reading update.

Millionaire Teacher Andrew Hallam answers the question, should you take higher risks if you are late to investing?

“People starting late are at greatest risk of chasing past performance. They want to make up ground.  But instead, they should diversify with global stocks and bonds. You never know what market is going to end up winning, so it’s best to own them all.”

A Wealth of Common Sense blogger Ben Carlson shares a short history of tariffs.

Using something called “effective number of stocks”, PWL Capital’s Justin Bender explains why XEQT is actually more diversified than VEQT:

Finally, after a college basketball star made $2M in endorsements, the internet hotly debated whether the 23-year-old was already set for life.

Have a great weekend, everyone!

My inbox has been flooded lately with worried investors who feel anxious about the current market environment. It seems once again we find ourselves in unprecedented times. 

While the future is always uncertain, the stock market is a forward-looking machine and is constantly gathering new information to assess the outlook of individual companies and the broader economy.

If you’re worried about the impact of tariffs, you can rest assured that millions of other investors share the same sentiment and that angst is reflected in the current price of stocks. Indeed, we’ve been hearing about tariffs for six months, and they have been in place (to some degree) for several weeks.

It’s easy to see why some investors might be spooked.

Tesla stock is down 34.43% YTD.

NVIDIA stock is down 14.90% YTD.

IBIT (Bitcoin Trust ETF) is down 13.85% YTD.

What about popular index funds?

XQQ (NASDAQ) is down 6% YTD

VFV (S&P 500) is down 3.51% YTD.

Worrisome, sure. But certainly not a March 2020 calamity, or a 2022 sell-off. Heck, at this point you can’t even say it has been a standard run-of-the-mill correction.

Instead it’s a stark reminder that markets don’t go up in a straight line, and that riskier assets that may have delivered outsized returns in 2023 and 2024 are not immune to corrections or crashes.

It’s also a reminder of why we diversify. Buy the entire haystack, as they say, rather than looking for needles.

Diversification means always having to say you’re sorry. When you own everything, you’re sorry that you hold the worst performing assets.

You’re sorry that you hold bonds when stocks are soaring.

You’re sorry that you hold international and emerging market stocks when US stocks have outperformed everything. 

You might have even been sorry that you hold the S&P 500 when the more tech-heavy NASDAQ has been on fire.

It’s easy to have FOMO when risky assets are going to the moon. Your globally diversified portfolio probably feels too conservative – like you’ve invested in a bunch of boring GICs. Chasing winners feels good.

But when those riskier assets drop like a stone, a globally diversified portfolio acts as a parachute to slow things down and spread out the risk over thousands of stocks and dozens of countries.

Instead of feeling sorry that you own everything, you’re thankful to not be concentrated in the worst performing stocks, sectors, or regions.

Back to my inbox. When I’ve received frantic messages about the market I pull up a chart of VEQT (14,000 global stocks) and see that it’s up 0.44% on the year. VGRO (80% stocks and 20% bonds) is up 0.43%, not including dividends. VBAL is up 0.75%, not including dividends.

Hmm, that’s strange. What turmoil?

And it’s not like these globally diversified baskets have been stuck in the mud. Take a look at the returns in 2024 and 2023:

Not too bad.

Could it be the case that news headlines have been scarier than usual lately (take this ominously titled G&M article)? That’s possible.

Could it also be true that some investors got in over their heads chasing past performance and are actually seeing a sharper decline in their portfolios due to that concentration in riskier assets? Also possible.

I get it. You feel like a novice when your properly diversified portfolio is lagging behind the highest performing investments of the moment. It probably feels like reckless investors are getting rewarded while you patiently wait for diversification to “pay off”.

Well, here we are. That’s why you diversify. Maybe now it’s our time to shine. 

This Week’s Recap:

It was truly an honour to get to chat with The Wealthy Barber David Chilton about navigating retirement and advice-only planning.

Thank you to everyone who reached out with kind words about the podcast. And to all of the new prospective client inquiries – please bear with us while we get through a backlog of messages and try to book discovery calls. 

In my last article I wrote about when to be selfish and when to be generous in retirement.

Promo of the Week:

We had a wonderful time in Cancun last month, perfectly timing the escape of -30C weather in southern Alberta and then arriving back to positive temperatures a week later.

Now we’re busy firming up our Easter trip to Italy and our summer travel plans in the UK.

My wife and I each hold an American Express Platinum card and carry them with us when we travel. That came in handy at the busy Cancun airport when we can each get ourselves and a guest into the airport lounge for a few hours before our flight. Lounge visits can cost upwards of $50 USD per person these days.

If the Platinum card isn’t in your budget, consider the American Express Gold Rewards Card, where you’ll earn 5,000 Membership Rewards points per month that you charge $1,000 to the card (up to 60,000 MR points over 12 months). You’ll also get a $100 annual travel credit, plus 4 complimentary airport lounge visits each year.

Use my Platinum referral link, scroll to the bottom to “Explore Other Cards” and click the American Express Gold Rewards card for the unique referral offer for that card.

Weekend Reading:

Here’s Of Dollars and Data blogger Nick Maggiulli on how not to invest.

A Wealth of Common Sense blogger Ben Carlson looks at if international diversification is finally working.

Millionaire Teacher Andrew Hallam aks the question on everyone’s mind, should you shift your investments because of Donald Trump?

Jason Heath says tax and other pitfalls await when you inherit real estate:

“Unless you plan to use the property, ask yourself whether you would buy it with an equivalent amount of cash.”

Heather Boneparth answers a reader question: I’ve tried everything to get my spouse more involved with our finances. How can I get them to the table?

PWL Capital’s Braden Warwick looks at the characteristics of an optimal financial plan.

Here’s Andrew Hallam again on why saving money matters more than your investment choices.

Ben Felix explains why sequence of returns risk should be reframed as sequence of withdrawals risk:

If retiring cold turkey isn’t for you, consider a phased retirement that lets you scale back at work and ease into retirement before eventually stepping away completely.

For Globe & Mail subscribers – the singles tax of going it alone on saving for retirement.

Aravind Sithamparapillai explains what you need to know about RESPs when you’re about to have a baby.

Finally, Jason Zweig writes about the shocking last decision of Daniel Kahneman, the world’s leading thinker on decisions (WSJ subs).

Have a great weekend, everyone!