CIFPs CONFERENCE Niagara Falls, Ontario June 22, 2005 The Smith Manoeuvre Fraser Smith www.smithman.net

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CIFPs CONFERENCENiagara Falls, OntarioJune 22,
2005The Smith ManoeuvreFraser
Smithwww.smithman.net
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The 500 Billion Opportunity

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The 500 Billion Opportunity

• 10.5 million families in Canada
• 3.5 million rent
• 3.5 million own, with mortgage
• 3.5 million own, free and clear

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The Wealth Pyramid
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The 500 Billion Opportunity

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Today you will learn how to

• Get FREE tax refunds from the CRA
• Pay off your mortgage faster
• Build an investment portfolio

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SIMULTANEOUSLY
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The Wealth Pyramid
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The Problems
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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The Solution
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History of THE SMITH MANOEUVRE
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What is THE SMITH MANOEUVRE
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• THE SMITH MANOEUVRE is a financial strategy
  designed to convert the non-deductible interest
  debt of a house mortgage to the
  deductible-interest debt of an investment loan,
  which simultaneously ensures the building of a
  free and clear investment portfolio.

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A picture is worth a thousand words
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
GOOD DEBT
BAD DEBT
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
GOOD DEBT
BAD DEBT
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Another 1000 words
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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tidbit How much do you have to earn to pay off
a 200,000 loan?
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Read it and weep
You need to earn this much
700,402
You pay this much income tax
280,161
420,241
You have this much left
You pay this much bank interest
220,241
Pay back the original loan
200,000
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700,402 !!!
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Is this legal?
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• During the past 20 years, THE SMITH
  MANOEUVREhas not been challenged by any tax
  authority, by any lawyer, by any accountant, by
  any financial planner or by any financial guru as
  regards the theory, the strategy, the mechanics,
  the arithmetic or the projected outcomes.

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The Four Steps

• Plain Jane Smith Manoeuvre
• Re-borrow and invest any paydowns on your first
  mortgage.
• Apply tax refunds against your first mortgage
  then immediately re-borrow and invest the same
  amount.

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The Four Steps

• Enhanced Plain Jane
• 3. Cash in and apply current paid up assets
  against the first mortgage in the morning,
  re-borrow and invest the same amount in the
  afternoon.
• 4. Divert any monthly savings or investment
  programs against the first mortgage, and
  immediately re-borrow and invest the same amount.

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case history Quantify the value of THE SMITH
MANOEUVRE for the Blacks.
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The Blacks

• 200,000 at 7 for 25 years
• Both work, 100,000 per year
• 40 tax bracket
• 50,000 rainy day fund
• Adding 500 per month
• 40 years of age, 2 kids and a dog

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Future value for the Blacks current investment
program?
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• FV of 50,000 for 25 yrs 541,735
• FV of 500/mth for 25 yrs 663,417
• 
  _______
• Total Future Value 1,205,152

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1,205,152
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What if they did THE SMITH MANOEUVRE?
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Results of the Four Steps

• Plain Jane
• Step I 214,207 214,207
• Step II 95,675 309,882
• Enhanced
• Step III 899,827 1,209,709
• Step IV 753,061 1,962,770
• ________
• Total 1,962,770

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1,962,770
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• THE SMITH MANOEUVRE way1,962,770

The Blacks way1,205,152
The difference757,618
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For the Blacks, this is a decision worth 3/4
of a million dollars!
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The Smithman Calculator

• .

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ACCELERATORS

1. Debt Swapping Step III
2. Cash Flow Diversion Step IV
3. Cash Flow Dam I for business
4. Cash Flow Dam II for rental homes
5. Investment Category Switch
6. Leverage

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The Cash Flow Dam
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The Cash Flow Dam

• (Rental unit at 1,000 / month)
• The Blacks
• Plain Jane results 309,882
• The Cash Flow Dam 303,315
• __________
  
• Total Improvement 613,197

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Investment Category Switch

• Capital gains to income

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LEVERAGE
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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THE SMITH MANOEUVREIs your mortgage tax
deductible?
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Whos doing the financing?
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Lets summarize
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Today you learned how to

• Get FREE tax refunds from the CRA
• Pay off your mortgage faster
• Build an investment portfolio
• SIMULTANEOUSLY!!!

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Your next step
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Procrastination is the enemy of your financial
success F. Smith
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