Arrows Advisory Ltd.

Retirement Investment Mistakes to Avoid (Part 2 of 3):
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4. Taking too much risk: While you remain a working individual, you have the ability to recoup losses over time by continuing to earn from employment. From the day we stop working and enter retirement, that ability to earn employment income diminishes and our investment approach becomes more conservative. You now have a pot worth $X that has to be invested and last you until death (not taking into account anything we would like to leave to those left behind). Invest wisely, spread the risk with diversification in various companies, asset classes and if possible, geography.
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2. Timing the market: Trying to time the market perfectly is on par with trying to find the Fountain of Youth. The equity market is a very fluid vehicle with sometimes drastic market corrections and other times, slow and sneaky bear markets (what we are in now). It's impossible to avoid every negative market movement and act on every possible upswing.
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3. Mismanaging retirement withdrawals: As mentioned above, your retirement fund is worth $X and hopefully designed to last the rest of your life. Furthermore, we are living longer now than ever before and have to plan accordingly. If you withdraw too much too early, you could run out of funds. If you withdraw too little, you could be missing out on opportunities to enjoy life. Whilst rules of thumb do not take into account anyone's unique situation, it is said that most people should plan to withdraw no more than 5% each year.

Planning for retirement is essential, but be aware of common mistakes (part 1 of 3):
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1. Overpaying Fees + Commissions: Do your homework to find investments and/or advisors that offer low-cost management fees, diversified portfolios and a good track record of performance. High fees cost you in 2 ways: (1) by actual out-of-pocket expenses and charges; and (2) the opportunity cost of that same money not working for you and earning a return.
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2. Being too Conservative: Many retirees believe they need to make the safest investments with the least amount of volatility and result in being too cautious. With investment, return is directly correlated to risk. So that means the safer the invest (lowest risk), the lowest likely return, often times not acting as enough of a hedge against inflation. This could lead to a depletion of retirement funds while you still need them. Overall, a diverse portfolio protects you from volatility while offering a greater balance between risk and return.
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3. Ignoring Inflation: Inflation erodes the value of money over time. What you can buy with $100 today, will not buy the same basket of goods with $100 tomorrow (figuratively). Inflation rates have just hit 8.6% in the USA, a record high for 40 years.
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The best time to start planning for retirement is yesterday. The next best time is now.

"When you invest, you are buying a day that you don't have to work." - Aya Laraya
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It's been a busy few months and hence my absence on social media but I'm making an effort to keep some educational content coming on this page!
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I've had the humble honour of working with a broad range of clients, all with unique financial challenges and admirable goals. We have tackled debt crisis, debt mediation and management plans, restructuring life insurance policies to be more applicable to the family unit, new investments, restructured investments, small business corporate restructuring, pension planning and withdrawal options - to name a few. It has been immensely motivating to see the number of Barbadians coming forward wanting to take the reigns on their personal finances and now is as important a time as ever given the increasing inflation environment we are living in. The best way to curb the impact of inflation is to invest wisely and generate a return - whether that's in the form of passive income or capital gains. Investing is crucial and possible at all income levels. If you haven't yet started, start now; it is never too late.

How to File my Personal Income Tax in Barbados?
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If you are an employed individual with a normal compensation structure, filing your own taxes should be relatively easy using the TAMIS system.
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If you have a side hustle or generate income outside of regular employment, or have deductions which you are uncertain of how to upload, seek the guidance from a certified tax professional to ensure your returns are filed correctly.
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Source: Barbados Revenue Authority

Barbados Personal Tax Filing: Penalties for late filing and late payment.
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Remember our post on the benefits of compounding on investments a few months back? The same principle applies to costs and penalties. The interest penalty of 1% per month equates to an effective annual rate of 12.6825%.
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There are 11 days left to file your taxes.

How to register on TAMIS and get your TIN?
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The first step to filing personal income tax in Barbados is to register on TAMIS and receive your TIN (Tax Identification Number). TAMIS (Tax Administration Management Information System) is BRA's online integrated tax platform that makes tax filing much more efficient, accurate and user-friendly.
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The process is all online and likely easier than you think. It generally only takes a few business days to receive your TIN.
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Register now and start filing to avoid penalties!
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Source: bra.gov.bb

Let’s talk about Barbados’ personal income tax rates, allowances and deductions.

All residents are to file a tax return based on their income from January 1 to December 31 of the prior year. Filings are to be made by April 30.

First off – what is Income? Income is all moneys earned from employment (basic salary, bonus, commissions and benefits in kind) as well as all other sources of income – investment income in the form of dividends, interest income, royalties and rental income from residential properties.

Tax Brackets: Barbados currently has two income tax brackets. The first is for taxable income up to $50,000 annually and taxed at 12.5%. The higher tax bracket applies to all taxable income over $50,000 annually and taxed at 28.5%.

At present, there is no capital gains tax in Barbados. This makes long-term investments with all gains automatically reinvested that much more attractive for building wealth.

Dividends and interest income earned incur a 15% withholding tax. This means the income is taxed at the source and deducted before you receive it. It is therefore not further taxed by the above mentioned personal tax rates. Rental income from residential properties is also taxed at 15%.

Allowances: all individuals are entitled to a personal tax allowance. For most individuals, this is $25,000 annually. This means that the first $25,000 of annual income is tax-free. For pensioners over 60 years old, the personal allowance is $40,000 annually. If you have a dependent spouse with no income and fully supported or lived with the spouse, the annual spousal allowance is $3,000.

Deductions: The Government allows for certain deductions, in addition to the personal allowances, to ease the tax burden in certain areas. Residents can receive deductions for medical expenses, renewable energy retrofits and charitable donations, subject to certain conditions.

Remember the due date of April 30th!

Disclaimer: the above is based on common queries regarding Barbados’ personal income tax system. For further queries or details, please reach out to me, a certified tax professional or visit the bra.gov.bb website.

It's tax season! For the remainder of this month, we will be focusing on all things tax. ​​​​​​​​
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For now, it's important to note the following:​​​​​​​​
- Personal tax filings are due by April 30, 2022​​​​​​​​
- Those who need to file their personal income tax are:​​​​​​​​
--self-employed individuals​​​​​​​​
--employees earning >$25,000 annually​​​​​​​​
--contributory pensioners earning > $40,000 annually​​​​​​​​
- Personal tax filings are based on prior year's income. Therefore, your 2022 personal tax filing will be based on income earned in 2021.​​​​​​​​
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Other topics we will discuss this month:​​​​​​​​
- how to file your taxes using TAMIS and how to get a TAMIS number if you don't have one yet​​​​​​​​
- personal tax rates, allowances and deductions​​​​​​​​
- the importance of filing your personal income taxes and associated penalties for not doing so​​​​​​​​
- for self-employed individuals, the importance and benefits of registering your business as an incorporated entity and therefore benefiting from the lower corporate tax rate​​​​​​​​
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Stay tuned!

I've been told it's time for a reintroduction and what better a time than the day I have been certified as an AFCPE® Accredited Financial Counsellor Canada® (AFCC). It's a day I have worked so hard for and loved every second along the way.

So here I am, Lisa. A Wife, a Mother, a Daughter, a Sister, a Friend, a Financial Counsellor/Coach, a Woman. My first passion is my family; my second is helping others and I love numbers so combine the two and a Financial Coach was born.

So what is an AFCC®? AFCC® certification marks the highest standards of excellence in the field of financial counselling and education. Its programs train professionals to guide clients through a holistic counselling framework of life cycle financial education allowing the professional to provide a high-level, tailored approach based on the needs of each client to effectively analyze and create lasting financial behavior change.

Why did I choose this degree over any other financial planning degree? Two reasons. First, its Code of Ethics deeply resonates with my personal work ethic and values. It is something I am proud to adhere and continuously commit to. Second, its strategic focus on the psychology of financial behaviour. The behaviours, attitudes, values and actions of individuals, whether conscious or subconscious, drive our financial decision making. Identifying and understanding those triggers is key to making better decisions going forward.

To the clients who have come forward already - I thank you. I value each and every relationship and honour the trust you've placed in me. As I have said to all of you, I am your biggest financial cheerleader. My greatest motivation is to see you excel financially and make the right financial decisions for yourself, your family and your businesses.

To the clients to come, I welcome you with open arms and look forward to seeing what we can do together.

One by one, we can all improve our financial position and in turn, give the economy of this most magical island a little boost. We can play a role and I encourage it with every fibre of my being.

I'm here to empower you to make wealth-building decisions.

Knowing your current financial position is the first step in financial planning. Understanding your cash flows in and cash flows out is the second. ​​​​​​​​
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Successful businesses have to keep proper financial records to know their position and their cash flows. After all, the aim is to have greater cash flows coming in than going out. ​​​​​​​​
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Do the same for your personal financial position. How much do you earn after all deductions (NIS, taxes, dues, insurance, etc.) and how much are you spending every week or every month? How can you make that gap wider?

What is Inflation?
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We talk a lot about inflation on this page and understanding it is essential to understanding the value of your money, whether that be in the form of cash savings, investments, or a combination of the two.
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Inflation is the general rise in prices of goods and services. It generally results from too much demand chasing too few goods or limited resources which then causes prices to rise. We have all felt the impact of rising prices and that is the impact of inflation.
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Over the last four years in Barbados, inflation has ranged from a low of 3.0% in 2020 to a high of 4.4% in 2017. Inflation for 2021 stood at 3.1%. [Source: Central Bank of Barbados]. This means that the value of the cash sitting in a savings account, earning a savings rate of 0.0000%, lost 3.1% of its value in 2021. It's expected that inflation will continue to rise as a result of the global supply chain challenges caused by the pandemic as well as global food and energy supplies disruptions due to Russia's invasion of Ukraine.
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How can you protect yourself from inflation? Invest. Having some degree of investment is necessary to at least keep up with inflation, otherwise, you're losing money.
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There are many options of investments, all with varying degrees of risk and return. For the highly conservative investor, there are term deposits which are typically very low return and very low risk. For the more aggressive investor wanting to generate a return that surpasses inflation, there are mutual funds, equity investments, private lending, etc. that carry a greater risk profile and greater return potential. For example, some mutual funds in Barbados have averaged a return of 7.1% over the past 5 years.
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Unless your savings rate and/or investment return exceeds the rate of inflation, you are losing money.

Women + Investing: The Stats
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The below stats are based on a study conducted in the US in 2021. I think it's fair to say the related statistics to Barbadian women would be far worse off.
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1. Only 1/3 of women see themselves as investors. This is largely due to women lacking confidence around their personal finances and investments.
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2. The average woman keeps 68% of their portfolio in cash. Women are more conservative. We prefer to see our savings account balance grow instead of invest and risk a loss. Here is a reminder that the savings rates offered by the commercial banks in Barbados is 0.0000%. This means that any cash we have sitting in a bank account loses its purchasing power at the rate of inflation. Investing is a must to at least keep up with inflation.
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3. 34% of women say their finances keep them up at night. Money is scary and discussing finances is taboo. Let’s open the conversation, learn how we can make better financial decisions and reduce the stress burden associated with personal finances.
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4. 70% of women say they wish they invested earlier. Remember our post on compounding a few months back? Go read it again. The earlier we invest, the more time our investments have to grow.
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5. Women earn 80 cents on the dollar to men. Less income means less money available to be invested. Furthermore, women are more likely to take time off of work to care for their families, further reducing income and widening the gender pay gap.

I personally understand all of the above fears. I’ve had them. Some I have overcome and some I continue to work on. I am a conservative investor with my primary goal being capital preservation (not losing money), then I seek growth strategically through investments that suit my goals and risk appetite. I can help you do the same.
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It's important for women to understand and have the ability to manage their finances in the event of death, divorce or illness of their partner. If you're not sure where to start, let's have a chat.
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Sources: Fidelity Investments Women + Investing Study 2021; and, Fool.com, Gender Pay Gap Statistics.