May 2013
Watching the fruits of your labour grow.




It has been a long winter, and nothing is as satisfying as the beginnings of a blooming garden. We have been tending to your portfolios in much the same way, and we hope to continue helping you cultivate your finances.


With the tax season now over, many of us will be expecting some sort of tax refund. Now would be the perfect time to give us a call to discuss how we can make that grow.


Be well.



Peter, Richard, Claudio and Joanna

The Bold & The Beautiful

by The Perspective - Spring 2013


Soap operas can trace their ancestry back to the 1930's, when the manufacturers of soap products such as Proctor & Gamble first produced affairs of love and drama for the radio. By the early 1950's, soap operas transitioned to television, and daytime TV changed forever. Propelled by captivating story lines, compelling characters, conflict, volatility and the occasional reemergence of long lost personalities their longevity and popularity in the entertainment industry continues to persist.


Much like a good "Soap", financial markets continue to provide us with both intrigue and drama. With a host of familiar characters to both root for and against, market makers have provided us with the ultimate love/hate relationship to follow over the past five years.


Over this period it is debatable whether the most entertainment has been endowed upon us by policymakers from the U.S. or from Europe.  Regardless of the outcome of this debate, policymakers on either side of the Atlantic continue to bicker, feud and resolve important issues at the last possible opportunity. In the U.S. it was the Sequester a massive series of federal budget cuts enacted by the Budget Control Act of 2011 and initially set to begin on January 1 of this year. However, this date was pushed back two months as a result of the year-end deal making inspired by that daytime drama known as the "Fiscal Cliff". The Sequester did go into effect on March 1 and will result in spending reductions of approximately $85 billion during 2013, with similar cuts to be seen through 2021. Thus far the impact of the Sequester has yet to be felt by most Americans and has not resulted in the warnings of delayed Social Security cheques and the closing of a vast array of government offices and services. 


As the World Turned ........ their attention to Italy in February to watch the results of the Italian general election, the classic "Soap" script unfolded and found a onetime communist, a former comedian and a licentious billionaire vying for power. The results of the election created even more drama as essentially a deadlock between the billionaire Silvio Berlusconi's center-right party, the former communists, Pier Luigi Bersani's center-left party and the Five Star Movement led by one time comedian Beppe Grillo was created. More than a month later, the script remains the same with neither a coalition nor an elected government.


The worry across Europe, and financial markets as a whole, is that Italy's enthusiasm for reform and austerity may wane resulting in a deterioration of Italy's debt situation. Meanwhile another Euro member had their own debt crisis in March as Cyprus became the fifth euro-zone country to receive a bail-out after Greece, Ireland, Spain and Portugal. However, the Cyprus bailout package came with a twist in that it also required aid from bank depositors, many of whom are Russian investors. Although it is one of the smallest Euro zone members, the Cyprus saga still caused its share of market volatility as investors fretted over the details, scope and impact of the bailout.


Any daytime drama worth its salt provides for the unexpected return of a long lost central character and in the world of financial markets the first quarter marked the return of Japan.  After essentially being lost for 20 years due to a combination of deflation and yen appreciation Japan's Nikkei Index returned in the first quarter of 2013 with a local currency increase of nearly 19%. Largely due to new Prime Minister Shinzo Abe's focus on business and economic growth, Japan has introduced aggressive monetary easing (leading to a weaker Yen), increased public spending and introduced an inflation target of 2%. Like the return of many long lost "Soap" characters questions how about how long Japan will remain part of the storyline continue to linger.


Despite this drama, the first quarter of 2013 was a positive experience for viewers of financial markets. The MSCI World Index returned 10%, while the S&P 500 regained and surpassed its previous highs of 2007 in gaining 12.9%.  In comparison, Canada's S&P/TSX Composite Index struggled to a +3.3% return. Although our Consumer Discretionary, Health Care, Industrials and Technology sectors produced doubled-digits results, the negative returns of the Materials sector weighed on the index overall.  Also noteworthy in Canada, was the March 21 Federal Budget which focused most of its attention on balancing federal spending with revenues by 2015.


And these, of course, are "The Days of our Lives"! 

How Much Of Your Income Should You Save?

by Robb Engen - May 2013,


One of the biggest challenges many of us face is how to save for retirement when so many other things are competing for our hard earned dollars.  How much of your income should you save for retirement?


Wealthy Barber author David Chilton suggests you should save 10% of your gross income for retirement.  Any other savings, like for a down payment on a home or for a dream vacation, should be made on top of your core 10% retirement fund.


Saving 10% of your income for retirement is a good rule of thumb.  Unfortunately that's become tougher to do these days when the high cost of housing eats up a good chunk of our take home pay and wages aren't rising at the same rate as inflation.


In 1990, the average family saved $8,000 per year, which was about 13% of their gross income.  By 2010, household savings had dropped to $2,500 per year - just 4.2% of gross income.


Today's 20-and-30-somethings likely aren't too concerned about saving for retirement when they're saddled with huge mortgages or massive student loan debt.


That's why the majority of us neglect our retirement savings - it always gets put off until after we've paid off our consumer debt, our student loans and our mortgage.  Sometimes it gets put off forever because we'll never run out of financial priorities to look after.


You'll have kids and then you'll want a bigger car and a bigger house (or a renovation).  Then you'll need to take a big family vacation every year because you deserve to get away.


The problem is that the longer you put off saving for retirement, the more you'll need to save later on.  That's fine, you say, because once your mortgage is paid off then you'll ramp up your savings and take advantage of all your unused RRSP contribution room.


That's a great idea in theory, but it doesn't always work out in practice.  Just because you've paid off your mortgage early doesn't mean you'll direct all your extra cash flow to retirement savings.


The psychology of money is fascinating.  Much like the people who spend their tax refund instead of saving it, many people who've paid off their mortgage early just end up spending the extra cash.


So there's no guarantee you'll have the time (or the will) to save more for retirement down the road.


You'll need to start saving early, but how much of your income should you save?  That depends on your age and stage of life, but you'll want to start with something - even if it's just 3 or 4 percent of your gross income.


The key is to make it automatic - have the money come directly off your paycheque and into your RRSP or TFSA.  Save what you can afford and increase your contributions every year whenever you get a raise or a bonus.

Once you've reached a financial milestone, such as paying off a loan or saving for a car, it's important to continue saving that amount toward another goal - like your retirement.


When I started tracking my finances in 2010, I was still in the midst of paying off student loans and a line of credit.  Most of our extra cash flow was earmarked toward paying off those debts quickly.


I was barely saving any money outside of my work pension.  Once those debts were paid off, however, our goals shifted from debt reduction to saving for the future.


Take a look at the chart below, which outlines how much of our income we've devoted to saving.

Extra mortgage paymentsn/a1.47%8.67%10.61%
Student loan/HELOC13.98%12.45%n/an/a

As you can see, we've always tried to direct a quarter of our income toward saving or making extra payments toward our debt.


Our focus for the past two years has been to pay off our mortgage faster and to increase our RRSP contributions.


This year we're on track to save over 35% of our income.  We'll save more than 18% of our gross income for retirement, while another 10% will go toward extra mortgage payments so we can be mortgage free faster.


We're having trouble saving for both our RRSP and TFSA so we've decided to focus more on RRSP contributions to reduce our taxable income.  There's only so much money to go around so you'll need to prioritize your goals.


How much of your gross income do you save, and what percentage do you allocate toward retirement versus other financial priorities?


View original article here.

When did you last review your finances?

by Brighter Life - May 2013,



View original image here.

Issue: 29
Financial Markets
In This Issue
The Bold & The Beautiful
How Much Of Your Income Should You Save?
When did you last review your finances?
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Peter Bailey
Wealth Advisor
Worldsource Financial Management Inc.
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1 

The information provided is for general information purposes only and is based on the perspectives and opinions of the owners and writers. The information is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting, or professional advice. Readers should consult their own subject matter experts for advice on the specific circumstances before taking any action. Some of the information provided has been obtained from sources, which we believe to be reliable, however,  we cannot guarantee its accuracy or completeness. Worldsource Financial Management Inc. does not assume any liability for any inaccuracies in the information provided.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual Funds and Segregated Funds provided by the Fund Companies are offered through Worldsource Financial Management Inc. Other products and services are offered through Peter Bailey.