You can now find our continuing commentary on financial planning in Soonews.ca under the blog section. Visit www.soonews.ca for more info.
Our content to Soonews.ca will compliment the articles that we post here. We are very excited for this new avenue to bring timely financial advice to Saultites and would like to thank Karen Johns, Craig Huckerby and all of the hard working staff at Soonews.ca for the opportunity.
Wednesday, January 23, 2008
Monday, January 21, 2008
Don't Sell Quality - Article from The Globe and Mail
No doubt you are aware of the recent stock market declines. We came across a great article today in the Globe and Mail that we would like to share with you. It sums up nicely our position on long term investing through a 'Bear Market'.
The most important aspect of any investment plan is to ensure that your investment choices meet your time horizon and risk tolerance. If you would like a review of your current investment portfolio, please don't hesitate to call and make an appointment.
This is no time to sell quality
Rob Carrick
Monday, January 21, 2008
Beware the one-two punch of plunging stock markets.
Not only do they decimate your portfolio, but they also lure you into making bad investing decisions that help ease your short-term anxiety but then hurt you in the long term. That's how it is that investors sell perfectly good stocks and mutual funds, buy principal-protected investments and make other mistakes with lasting repercussions.
Selling quality right now is probably the worst error you can get fooled into making by a plunging stock market. The rationale here of protecting your money against further losses makes sense, especially because it's hard to imagine there aren't more bad days ahead for the market.
But what comes after that? If you sell today you'll have your money languishing in money market funds, where returns are on the decline because of falling interest rates. You'll eventually get an itch to find something with a higher return and, quite likely, you'll end up in the stock market again. By then, stocks will have jumped from their lows and you'll be buying at elevated prices.
Some people, amateur and professional, get lucky timing their moves in and out of the market. The masses get it wrong and thus end up in a cycle of selling low and buying high that robs of them of returns and extracts unnecessary fees and commissions.
Another mistake is to give up on the risks of the stock market and instead buy guaranteed investments like principal-protected notes or segregated funds. The appeal of these investments is obvious – you get exposure to stocks with no risk of losing money in down markets like we're seeing today. The problem is with the cost of the guarantee – it cuts into returns so deeply that it's simply not a good value.
Buying guaranteed investments at times like now make less sense than usual because the stock markets have already lost a lot of ground. They may fall further, but savvy investors know that the current decline is setting up the next move up for the markets. Sellers of guaranteed products will make out like bandits when stocks rebound. Investors, not so much.
With registered retirement savings plan season just about here, gun-shy investors are poised to make yet another mistake, which is failing to make an RRSP contribution. If a plunging stock market is freaking you out, invest your RRSP money in a high-interest savings account until the dust settles and then move into a long-term investment when you can.
The best move would be to take your RRSP money and put it into the highest quality, most beaten down stocks or funds you can find. But one step at a time.
© The Globe and Mail
The most important aspect of any investment plan is to ensure that your investment choices meet your time horizon and risk tolerance. If you would like a review of your current investment portfolio, please don't hesitate to call and make an appointment.
This is no time to sell quality
Rob Carrick
Monday, January 21, 2008
Beware the one-two punch of plunging stock markets.
Not only do they decimate your portfolio, but they also lure you into making bad investing decisions that help ease your short-term anxiety but then hurt you in the long term. That's how it is that investors sell perfectly good stocks and mutual funds, buy principal-protected investments and make other mistakes with lasting repercussions.
Selling quality right now is probably the worst error you can get fooled into making by a plunging stock market. The rationale here of protecting your money against further losses makes sense, especially because it's hard to imagine there aren't more bad days ahead for the market.
But what comes after that? If you sell today you'll have your money languishing in money market funds, where returns are on the decline because of falling interest rates. You'll eventually get an itch to find something with a higher return and, quite likely, you'll end up in the stock market again. By then, stocks will have jumped from their lows and you'll be buying at elevated prices.
Some people, amateur and professional, get lucky timing their moves in and out of the market. The masses get it wrong and thus end up in a cycle of selling low and buying high that robs of them of returns and extracts unnecessary fees and commissions.
Another mistake is to give up on the risks of the stock market and instead buy guaranteed investments like principal-protected notes or segregated funds. The appeal of these investments is obvious – you get exposure to stocks with no risk of losing money in down markets like we're seeing today. The problem is with the cost of the guarantee – it cuts into returns so deeply that it's simply not a good value.
Buying guaranteed investments at times like now make less sense than usual because the stock markets have already lost a lot of ground. They may fall further, but savvy investors know that the current decline is setting up the next move up for the markets. Sellers of guaranteed products will make out like bandits when stocks rebound. Investors, not so much.
With registered retirement savings plan season just about here, gun-shy investors are poised to make yet another mistake, which is failing to make an RRSP contribution. If a plunging stock market is freaking you out, invest your RRSP money in a high-interest savings account until the dust settles and then move into a long-term investment when you can.
The best move would be to take your RRSP money and put it into the highest quality, most beaten down stocks or funds you can find. But one step at a time.
© The Globe and Mail
Wednesday, January 16, 2008
Staying Focused
With the recent volatility in the markets, it can be easy to lose sight of your long-term financial goals. That's why we encourage all of our clients to meet with us on a regular basis to review the financial plans we have made together. Goals and needs can change quickly and it is important that your plan remains focused and adaptable.
It's important to also understand what's happening in the markets and how these changes can affect your plan Our most important goal when working with together is to make sure your time-horizon (the amount of time your investments can stay invested before your need to make withdraws),your risk-tolerance and portfolio diversification strategies are kept up to date.
While we take the time this time of year to contemplate our future financial goals (like your RRSP contribution for this year for example), we would like to leave you with a short presentation on investing through the natural cycles of the financial markets and how to separate our emotions from guiding us toward the wrong investment decisions.
We look forward to meeting with each of you in the near future to ensure that your financial plans stay on track. Please don't hesitate to call and book a meeting.
Kevin Lamour & Ellen MacDougall
It's important to also understand what's happening in the markets and how these changes can affect your plan Our most important goal when working with together is to make sure your time-horizon (the amount of time your investments can stay invested before your need to make withdraws),your risk-tolerance and portfolio diversification strategies are kept up to date.
While we take the time this time of year to contemplate our future financial goals (like your RRSP contribution for this year for example), we would like to leave you with a short presentation on investing through the natural cycles of the financial markets and how to separate our emotions from guiding us toward the wrong investment decisions.
We look forward to meeting with each of you in the near future to ensure that your financial plans stay on track. Please don't hesitate to call and book a meeting.
Kevin Lamour & Ellen MacDougall
2007 in Review
As we begin a New Year, we would like to thank you for choosing us as your financial planning firm. We appreciate your trust and the business that comes with it. This time of year is a good opportunity to look back and put things into context. Here's a quick review of the more important financial events that occurred in 2007:
The Markets
At the beginning of 2007, the S&P/TSX Composite Index was sitting at around 12,923 points. For the first seven months of the year, the index was, for the most part, climbing and even broke the 14,000 barrier for the first time on Friday, May 11.
The strong performance was halted at the end of July, when the credit crisis first began to make itself known. Soon America's sub-prime woes, coupled with asset-backed commercial paper problems, sent markets around the world into turmoil. By August 8, just two weeks after the TSX dropped below 14,000 for the first time in weeks, it had lost nearly 600 points.
Since then, the index has been extremely volatile, dropping below 13,000 in mid-August, climbing back up to almost 14,600 at the end of October and landing at 13,467 on November 23. How the index — and world markets for that matter — will fare in the next month and through next year is anyone's guess, but investors can expect a bumpy ride to say the least.
Budget 2007
In March, the Conservative government presented its 2007 budget. For the most part, Finance Minister Jim Flaherty introduced a number of tax savings for families, including removing the Registered Education Savings Plan's annual contribution limit and introducing a new Registered Disability Savings Plan.
The government also implemented a child tax credit of $2,000 per child under 18, and the spousal penalty was phased out.
While there were a number of other tax savings in March, the government revealed even more tax relief in an October mini-budget, including a further 1% GST cut to come into effect January 1, 2008. As well, the government upped the basic personal amount to $9,600, effective January 1, and the lowest personal income tax rate was reduced from 15.5% to 15%.
Should you have any questions about how these or other recent events might affect you, I'd be happy to schedule a time to either speak with you on the telephone or sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them. A referral is a wonderful present, and I'd like to thank everyone who gave me one over the past twelve months.
Best wishes for health, happiness and continued financial success in the New Year!
Kevin Lamour & Ellen MacDougall
The Markets
At the beginning of 2007, the S&P/TSX Composite Index was sitting at around 12,923 points. For the first seven months of the year, the index was, for the most part, climbing and even broke the 14,000 barrier for the first time on Friday, May 11.
The strong performance was halted at the end of July, when the credit crisis first began to make itself known. Soon America's sub-prime woes, coupled with asset-backed commercial paper problems, sent markets around the world into turmoil. By August 8, just two weeks after the TSX dropped below 14,000 for the first time in weeks, it had lost nearly 600 points.
Since then, the index has been extremely volatile, dropping below 13,000 in mid-August, climbing back up to almost 14,600 at the end of October and landing at 13,467 on November 23. How the index — and world markets for that matter — will fare in the next month and through next year is anyone's guess, but investors can expect a bumpy ride to say the least.
Budget 2007
In March, the Conservative government presented its 2007 budget. For the most part, Finance Minister Jim Flaherty introduced a number of tax savings for families, including removing the Registered Education Savings Plan's annual contribution limit and introducing a new Registered Disability Savings Plan.
The government also implemented a child tax credit of $2,000 per child under 18, and the spousal penalty was phased out.
While there were a number of other tax savings in March, the government revealed even more tax relief in an October mini-budget, including a further 1% GST cut to come into effect January 1, 2008. As well, the government upped the basic personal amount to $9,600, effective January 1, and the lowest personal income tax rate was reduced from 15.5% to 15%.
Should you have any questions about how these or other recent events might affect you, I'd be happy to schedule a time to either speak with you on the telephone or sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them. A referral is a wonderful present, and I'd like to thank everyone who gave me one over the past twelve months.
Best wishes for health, happiness and continued financial success in the New Year!
Kevin Lamour & Ellen MacDougall
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