February 2012
Spring ....has sprung!





With RSP Season behind us for this year, Spring is a wonderful time in the city.  While out for a walk or to take in a lunch somewhere, it is wonderful to have some of you drop in for a visit.  Many are new homebuyers while some have great interest in the TFSA we now offer - both of these have brought on great discussion on how we can assist and continue to work with you.


Financial planning is such a great legacy and to see generations of our clients come in as they actively manage their finances; encourages us to actively address all your needs. 


Watch for some insight on the Home Buyer's Program and the Tax Free Savings acccounts at your next discussion - you will find it interesting to see if it is of benefit to you and how we can make it happen for you.



Thank you for letting us be of service,
Peter, Richard, Claudio and Joanna

Personal finance: How to invest your money

by Anne Bokma Online only -Canadianliving.com


The pros and cons of seven personal finance strategies, including tax-free savings accounts, RRSPs, RESPs, equities and bonds.


Investments in a registered retirement savings plan (RRSP) have two major advantages: contributions are tax-deductible, and the growth of your money is sheltered from tax. Plus, depending on your contribution, you may get a hefty tax refund.

Downside: RRSPs can still be risky to your personal finance situation, and it depends on how you invest your funds. "And if you're in a lower tax bracket, your returns will be low too," says Laurie Stephenson, a financial planner with Stephenson Daigle Financial in Halifax. "It may be better to save your RRSP room for higher-income-earning years and consider using the tax-free savings account tax shelter instead."

For every dollar you put into a registered education savings plan (RESP), the government will add a 20 per cent matching grant of up to $500 annually, or $7,200 over the life of the plan.

Downside: If your kids don't end up going on to postsecondary education, you'll lose the grant money.

A tax-free savings account (TFSA) allows you to set aside $5,000 a year tax-free throughout your life.

Downside: Unlike an RRSP, there's no upfront tax deduction.

GICs and bonds
They offer peace of mind because they're government secured.

Downside: Their low rates of return won't make a huge difference in your personal finance.

Equities have the potential to reap high returns, and over the long haul they usually perform well.

They can test your risk tolerance. "Everyone says they think long term when investing in equities, but when the market goes wonky, they want to pull out," says financial planner Diane McCurdy, president of McCurdy Financial in Vancouver. "When the market falls, you have to stay the course." A good rule of thumb for determining what percentage of your personal finance portfolio to invest in equities is 100 minus your age, she says. 


"Our grandmothers knew what they were talking about," says McCurdy. "You don't want to put all your eggs in one basket. Having a mix of funds protects your investments."

Downside: You can diversify too much - too many funds, stocks or bonds may be hard to keep track of. McCurdy says to aim for eight to 10 funds.


Maximize your foreign content
International investing provides geographic diversification, which helps manage the ups and downs of the market over the long haul and offers potentially higher returns. 
Too much foreign content exposes you to potentially volatile foreign currencies.

How's your financial health?

by Gabrielle Bauer Online only -Canadianliving.com


Want your kids to develop fiscal responsibility in a consumer culture? Start by taking your own financial pulse with this short quiz, adapted from the Financial Habits Checkup in Nathan Dungan's book Prodigal Sons and Material Girls (Wiley & Sons, 2003).


1. Do you currently carry a balance on a credit card?

2. In the past year, have you ever paid only the minimum due on a credit card?
3. Is your mortgage payment more than 30 per cent of your annual household income?

4. Are you currently behind in paying any of your bills?

5. Do you own or lease vehicles whose total sticker price exceeds 50 per cent of your annual income?

6. In the last year, has money caused tension in your relationships?

7. Have you adequately protected yourself with disability and life insurance?

8. Do you follow some kind of a budget?

9. Do you save ahead for large expenses, like a vacation or home upgrade?

10. Do you have specific financial goals?



For questions 1 to 6, give yourself one point for each "no" answer.
For questions 7 to 10, give yourself one point for each "yes" answer.

If your points total less than 8, you probably need to make some changes to improve your financial health.

Saving for your child's education
Allan Britnell Moneysense.ca Nov 2005


Even though Noor Mirza Rashid is barely a year old and still mastering walking and talking, her parents are already thinking about paying for her university education. "I'm very worried. I understand that you have to start saving early," says her mom, Sabah Mirza, a 31-year-old lawyer in Toronto.


The numbers are scary, with some experts forecasting that the cost of a university education, including tuition and lodging, will run upwards of $100,000 by the time Noor graduates high school. Luckily for Noor, her parents are already investigating options, the most popular of which are Registered Education Savings Plans (RESPs).


RESPs are a good deal for the simple reason that "the government gives you money, and that doesn't happen too often," says Linda Knight, vice-president of BMO Mutual Funds in Toronto. In most cases, if you contribute $2,000 a year to an RESP, the federal government chips in an added $400.


There are two basic types of RESPs: self-directed and group, or "pooled," plans. Group plans are popular for their simplicity - you make your regular monthly payments and the company takes care of the rest. But in the past these plans have drawn criticism from regulators for questionable marketing tactics. Some also enforce restrictive policies. For example, a few only allow for just one payout per school year.


Self-directed RESPs, which can be set up at most Canadian financial institutions, tend to be more flexible and transparent. child is $400 for most middle-class families. (You can contribute up to $4,000 a year to a child's RESP, to a lifetime maximum of $42,000.)


Lower-income families get an even better deal. Recent changes have increased the grant to 40 cents on the first $500 invested by families that earn less than $35,595, to a maximum $500 a year in CESG contributions, and 30 cents on the first $500 for families earning between $35,595 and $71,190, to a maximum of $450 a year. Lower-income families may also be eligible for the Canada Learning Bond, a $500 one-time RESP grant, which is supplemented by an additional $100 a year until the child is 15.


You don't get a tax break for money you put into an RESP. But the funds grow tax-free and the withdrawals are taxed in the student's hands. In most cases, then, the withdrawals are effectively tax-free since any amount owing is offset by the student's education credit and personal tax credit.


The funds can be used at any qualifying college or university, and even some apprenticeship and correspondence programs. If your child decides not to pursue further education, you get your principal returned and any returns on that money can usually be rolled into RRSPs to avoid taxes; all the grant money, however, goes back to government coffers.


Some families prefer to invest outside of RESPs - in informal trusts, by purchasing stocks or bonds in the child's name, or simply by opening a savings account. The drawback with these options is that they don't qualify for the CESG. Thus, it only makes sense to use them once you've received the maximum grant.


If the task of paying for your little one's university education seems daunting, remember that it's not solely your responsibility. "I would like to have enough put aside so Noor doesn't graduate $100,000 in debt," says Sabah Mirza. But "I also expect her to work and contribute towards her own education."

Issue: 14
Financial Markets
In This Issue
Personal finance: How to invest your money
How's your financial health?
Saving for your child's education
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Peter Bailey
Worldsource Financial Management
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1