In the news, both in Canada and internationally, there have been many high-profile cases of investment fraud that have grabbed the headlines causing the average investor to consider if they have been misled in the advice and products they have purchased in hopes of achieving their investment goals.
The good news for investors in Ontario is that we have one most rigorously tested financial industry in the world and the vast majority of money invested in the province is with legitimate sources.
If you invest with our firm, either though the purchase of investment funds (both Mutual and Segregated Funds), GIC’s or other financial products, you can rest assured that you are dealing with qualified, licensed investment advisors with a process for selecting the best investment vehicles for our clients that is based on strict financial planning guidelines.
Our recommendations and trades on your behalf are approved by a branch manager who ensures that your stated risk tolerance is suitable for the investments chosen and our practice is enabled by a reputable, nationally registered mutual fund dealer in Manulife Securities, who approves the acceptable investments available for our clients’ consideration.
All of this activity is overseen by the Ontario Securities Commission who administers and enforces securities legislation in the province of Ontario. The OSC’s mandate ‘is to provide protection to investors from unfair, improper or fraudulent practices; and to foster fair and efficient capital markets and confidence in capital markets’.
However, we continue to hear about investors who have been duped by rogue advisors, internet scams, mortgage fraud and other untoward activity. If you have investments elsewhere and you are concerned that you may have received unscrupulous advice, or, if you or a loved-one have been approached to invest in what you are concerned might be a scam, it’s important to recognize the signs of investment fraud.
According to the OSC’s website (www.osc.gov.on.ca) you should ask yourself the following questions before you investment.
1.Are you dealing with a registered advisor?
Anyone selling securities or offering investment advice in Ontario must be registered with the Ontario Securities Commission (OSC), unless they are exempt from this requirement. To check whether someone is registered, call the OSC Contact Centre at 1-877-785-1555
2.Can you verify the investment with a credible source?
If you receive an unsolicited investment opportunity, get a second opinion from your registered financial advisor, lawyer or accountant, or call the OSC Contact Centre for assistance.
3.If you are promised a guaranteed return, is the guarantee given by a reputable financial institution?
Ask for proof of the guarantee in writing (it should be included in the prospectus or offering sheet) and remember, a guarantee is only as good as the person or company offering it.
4.Is the risk you are taking reasonable for the expected return?
In general, returns on low-risk investments are in the range of current GIC rates. If the expected return is higher than these rates, you are taking a greater risk with you money. Make sure you understand and can afford the amount of risk you are taking on.
5.Is the investment opportunity based on facts?
The sources of ‘hot tips’ or ‘insider news’ often have ulterior motives.
6.Do you understand how the investment works?
If you don’t understand how the investment works and the seller cannot explain it to your satisfaction, this should be a warning not to invest.
7.Have you had enough time to make a decision?
Don’t give in to high-pressure sales tactics like limited time offers. Take your time making investment decisions and never sign documents you have no read carefully.
All investors should be engaged with their advisors in developing their investment plan. They should take the time to understand the details in the information folder or prospectus that must be given to the client before they invest. As most client/advisor relationships are based on trust, it can be easy to want to just ‘take their word for it’ but this approach can lead being taken advantage of.
And most importantly, all investment advisors must work though a bank, credit union or investment dealer. When a client purchases an investment all cheques will be made out either directly to their advisors employer or firm or to the investment company.
Never write a cheque to your advisor directly or to his or her operating company. This is the most common way for clients to be taken advantage of.
If you would like a second opinion on any investments or other financial product that you current own, please don’t hesitate to call and arrange a meeting.
Tuesday, July 7, 2009
Friday, June 19, 2009
Historically Low Interested Rates - Now Is The Time To Save
Another important consideration that we want to share with many of our clients concerns debt management. With many Canadians worried about their jobs, and other financial insecurities, I believe that all my clients who have debt should take advantage of the historical low rates right now to consolidate and reduce the principal of their borrowings. Based on comments earlier this year from the Bank of Canada, I am confident that rates will stay low for at least the next year before they start rising again. The next 12 months represents a once-in-a-lifetime opportunity to save on interest payments and put yourself in better financial shape for the future.
We believe that the The Manulife One Flexible Mortgage from Manulife Bank is the best solutions to help you achieve this goal. If you are not familiar with this product please check out the website at www.manulifeone.ca. It should be noted that you don't have to wait until your mortgage renews to take advantage of Manulife One. Our banking consultant, Karen Clancy, can help you decide if it is in your best interest to pay a penalty to break out of your more expensive mortgage now and start saving interest payments immediately, or even consider opening a Manulife One account in a second position until your current mortgage renews.
For more information on Debt Managment Solutions, please visit www.manulifeone.ca
We believe that the The Manulife One Flexible Mortgage from Manulife Bank is the best solutions to help you achieve this goal. If you are not familiar with this product please check out the website at www.manulifeone.ca. It should be noted that you don't have to wait until your mortgage renews to take advantage of Manulife One. Our banking consultant, Karen Clancy, can help you decide if it is in your best interest to pay a penalty to break out of your more expensive mortgage now and start saving interest payments immediately, or even consider opening a Manulife One account in a second position until your current mortgage renews.
For more information on Debt Managment Solutions, please visit www.manulifeone.ca
Friday, April 3, 2009
A Painless Way To Cut Back On Expenses
With the current economic uncertainty, many people are looking for ways to reduce expenses. A relatively painless way to reduce your monthly expenses is to have a second look at the way you’re managing your debt.
Over time, most of us take out a variety of loans for different purposes. These can include things like credit card debt, car loans, home renovation loans and, of course, the mortgage. And if you have more than one loan, you’re most likely paying a different interest rate on each loan. One of the easiest ways to reduce your monthly interest costs is to consolidate your debt at the lowest rate. Typically, your lowest-rate debt will be a loan that is secured by an asset, such as your home.
If you have sufficient equity built up in your home, consider switching to a product that allows you to access your equity, such as a home-equity line-of-credit. Then, use this line of credit to repay your higher-interest loans. In this way, you’ll be bringing all of your debts together into a single account, at a single rate. Some line-of-credit products even allow you to track debts separately within the account so you can continue to keep track of interest costs and repayment separately. Not only will debt-consolidation save you interest but it will make it easier for you to keep track of what you owe and how you’re progressing in paying it down.
Reducing your monthly expenses is one way to deal with economic uncertainty – and it doesn’t have to be painful. By borrowing smarter you can reduce your interest costs and increase your cash flow each month.
For specific ideas on how this concept would apply to you, give us a call at Algoma Financial & Manulife Securities.
Until next time.
Over time, most of us take out a variety of loans for different purposes. These can include things like credit card debt, car loans, home renovation loans and, of course, the mortgage. And if you have more than one loan, you’re most likely paying a different interest rate on each loan. One of the easiest ways to reduce your monthly interest costs is to consolidate your debt at the lowest rate. Typically, your lowest-rate debt will be a loan that is secured by an asset, such as your home.
If you have sufficient equity built up in your home, consider switching to a product that allows you to access your equity, such as a home-equity line-of-credit. Then, use this line of credit to repay your higher-interest loans. In this way, you’ll be bringing all of your debts together into a single account, at a single rate. Some line-of-credit products even allow you to track debts separately within the account so you can continue to keep track of interest costs and repayment separately. Not only will debt-consolidation save you interest but it will make it easier for you to keep track of what you owe and how you’re progressing in paying it down.
Reducing your monthly expenses is one way to deal with economic uncertainty – and it doesn’t have to be painful. By borrowing smarter you can reduce your interest costs and increase your cash flow each month.
For specific ideas on how this concept would apply to you, give us a call at Algoma Financial & Manulife Securities.
Until next time.
Tuesday, February 3, 2009
To RRSP or TFSA… that is the question?
In our last column we outlined the “facts” on the highly advertised Tax Free Savings Account (TFSA) that are now widely available.
So now the question during this time of year might be, should I contribute to my RRSP or the new TFSA?
Ideally RRSP’s are savings vehicles designed to contribute to when you are in a higher tax bracket than when you want to withdraw them. RRSP’s of course allow you a tax deduction when you contribute to them and tax deferral on growth that you have within the plan. What that means is you do not have to pay taxes on any interest, dividends or capital gains that are generated on those investments as they grow within the plan. Similar to the TFSA. You can generate a higher rate of return within an RRSP when the effective tax rate at withdrawal is lower than the effective tax rate at time of the contribution.
For example, if you contribute $1000 to an RRSP when you are in a 20% tax bracket, your net cost after savings is $800. If you are in the same bracket when you make the withdrawal of $1000, your net withdrawal will be equal to your net cost after paying taxes ($800). However if you are in a 40% tax bracket when you make your withdrawal, then your net withdrawal will be $600.
Possible Strategies….
A TFSA can be an ideal savings vehicle if you are in a lower income tax bracket. RRSP’s may not always be well suited to low income Canadians. The RRSP tax savings may be insignificant for you now, and you may be in a higher tax bracket when you make withdrawals. Also keep in mind that TFSA withdrawals do not impact income tested benefits and credits such as child tax credits, Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).
If you currently find yourself in a middle income bracket, with expectations of being in a higher one down the road, you could save in a TFSA now and contribute to RRSP when you are in the higher bracket.
High income individuals may want to maximize both your RRSP and TFSA contributions. In fact tax savings or a refund generated from an RRSP contribution could be used to fund the TFSA.
Another point that I find has not been well explained about TFSA’s is they DON’T have to only be invested in traditional savings accounts. In fact you can hold stocks, bonds, mutual funds within provided you have opened the appropriate kind of account. This is a topic itself for another column.
There are many strategies that can be implemented depending on your individual situation and goals. The TFSA is a wonderful vehicle that can be great addition to your overall financial planning strategies, and as always review these with your financial advisor to find the ones that are best suited to you.
So now the question during this time of year might be, should I contribute to my RRSP or the new TFSA?
Ideally RRSP’s are savings vehicles designed to contribute to when you are in a higher tax bracket than when you want to withdraw them. RRSP’s of course allow you a tax deduction when you contribute to them and tax deferral on growth that you have within the plan. What that means is you do not have to pay taxes on any interest, dividends or capital gains that are generated on those investments as they grow within the plan. Similar to the TFSA. You can generate a higher rate of return within an RRSP when the effective tax rate at withdrawal is lower than the effective tax rate at time of the contribution.
For example, if you contribute $1000 to an RRSP when you are in a 20% tax bracket, your net cost after savings is $800. If you are in the same bracket when you make the withdrawal of $1000, your net withdrawal will be equal to your net cost after paying taxes ($800). However if you are in a 40% tax bracket when you make your withdrawal, then your net withdrawal will be $600.
Possible Strategies….
A TFSA can be an ideal savings vehicle if you are in a lower income tax bracket. RRSP’s may not always be well suited to low income Canadians. The RRSP tax savings may be insignificant for you now, and you may be in a higher tax bracket when you make withdrawals. Also keep in mind that TFSA withdrawals do not impact income tested benefits and credits such as child tax credits, Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).
If you currently find yourself in a middle income bracket, with expectations of being in a higher one down the road, you could save in a TFSA now and contribute to RRSP when you are in the higher bracket.
High income individuals may want to maximize both your RRSP and TFSA contributions. In fact tax savings or a refund generated from an RRSP contribution could be used to fund the TFSA.
Another point that I find has not been well explained about TFSA’s is they DON’T have to only be invested in traditional savings accounts. In fact you can hold stocks, bonds, mutual funds within provided you have opened the appropriate kind of account. This is a topic itself for another column.
There are many strategies that can be implemented depending on your individual situation and goals. The TFSA is a wonderful vehicle that can be great addition to your overall financial planning strategies, and as always review these with your financial advisor to find the ones that are best suited to you.
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