Here's an interesting article on the differences between Permanent and Term life insurance. Talk with you financial advisor to see which type of coverage makes the most sense for your situation. Click the link below for the full article.
Term or Permanent Life Insurance - MSN Money
Showing posts with label Algoma Financial. Show all posts
Showing posts with label Algoma Financial. Show all posts
Tuesday, February 21, 2012
Thursday, June 30, 2011
Have The Discussion
A recent article I came a across was somewhat timely, as I had just met with a young woman who had recently lost her husband, and his premature death was coupled with the reality that he was severely under life insured.
The situation was compounded with the fact that they had a child, and the income potential for the new widow was not going to be adequate enough to meet their needs.
It is stories and situations like that, that makes a financial advisor realize the importance and impact they can have with the recommendations they make for their clients.
Although life insurance involves having a discussion that is around the death of a loved one, I would encourage you to have it. Having it in place will make for peace of mind, and many less worries in the event something should happen.
Please read it, have the discussion, and put a plan in place.
Couples avoiding insurance talk
When it comes to communication skills, women are often considered innately advantaged. Except when the subject of discussion is life insurance.
According to a TD Insurance poll, it’s men who are driving the conversation about insurance on the rare occasions that it is broached.
Aptly titled Look Who’s Talking, the poll revealed discussing life insurance is still considered a taboo for Canadian couples. Thirty-one per cent of Canadian couples have never discussed life insurance with their partners, many of whom have children; among those who did, men led the conversation 57% of the time, as opposed to 43% women.
“It doesn’t matter who’s driving the conversation, the important thing is to talk about it,” says Dave Minor, vice-president, TD Insurance. “Considering how integral finances are to a family’s well-being, it was surprising and concerning to find that some couples aren’t talking about life insurance at all.”
The situation was compounded with the fact that they had a child, and the income potential for the new widow was not going to be adequate enough to meet their needs.
It is stories and situations like that, that makes a financial advisor realize the importance and impact they can have with the recommendations they make for their clients.
Although life insurance involves having a discussion that is around the death of a loved one, I would encourage you to have it. Having it in place will make for peace of mind, and many less worries in the event something should happen.
Please read it, have the discussion, and put a plan in place.
Couples avoiding insurance talk
When it comes to communication skills, women are often considered innately advantaged. Except when the subject of discussion is life insurance.
According to a TD Insurance poll, it’s men who are driving the conversation about insurance on the rare occasions that it is broached.
Aptly titled Look Who’s Talking, the poll revealed discussing life insurance is still considered a taboo for Canadian couples. Thirty-one per cent of Canadian couples have never discussed life insurance with their partners, many of whom have children; among those who did, men led the conversation 57% of the time, as opposed to 43% women.
“It doesn’t matter who’s driving the conversation, the important thing is to talk about it,” says Dave Minor, vice-president, TD Insurance. “Considering how integral finances are to a family’s well-being, it was surprising and concerning to find that some couples aren’t talking about life insurance at all.”
Wednesday, June 1, 2011
Are your plans lagging?
Many Canadians plan for many things. We plan to escape our crazy northern winters, we plan weddings, we plan birthday parties, we plan homes or even decks for our homes.
The reality is we don’t plan for a time that in some cases may be a third of our life; retirement. Or if there was a sudden unexpected death/disability of an income provider in the family, are we or our loved ones taken care of financially with our current insurance coverage?
These issues and others require investigation of current circumstances, design of a plan, and implementation and review. Check out this article showing that Canadians need to address their financial plans...
Canadians Lag in Financial Planning
http://www.advisor.ca/news/canadians-lag-in-financial-planning-49372
… should this article motivate to you review your current plans, don’t hesitate to give us a call.
The reality is we don’t plan for a time that in some cases may be a third of our life; retirement. Or if there was a sudden unexpected death/disability of an income provider in the family, are we or our loved ones taken care of financially with our current insurance coverage?
These issues and others require investigation of current circumstances, design of a plan, and implementation and review. Check out this article showing that Canadians need to address their financial plans...
Canadians Lag in Financial Planning
http://www.advisor.ca/news/canadians-lag-in-financial-planning-49372
… should this article motivate to you review your current plans, don’t hesitate to give us a call.
Friday, May 13, 2011
It's been awhile but we're back!
Over the last few months, we have been working on reorganizing the flow of our office and revitalizing the services that we offer our clientele. In the midst of all of that, some of our client communications were put to the back burner while we endeavored to ensure that our message remained clear and consistent.
Now that that much of the hard work is behind us, we felt that our first new message here should be directed at what we believe our core value is to you, our valued clients.
Yes, it is true that Algoma Financial offers one of the largest selections of financial products in Northern Ontario, from nearly every available financial institution. But it is not financial products selection that make us different than our competition, it is the fact that our focus is to understand your unique financial needs, and to put together personal recommendations that will help you achieve your financial goals. The products that we recommend are nothing more than a solution to your financial planning needs.
To give you some examples of how we can help you, please read the article linked below. It demonstrates how a financial advisor can help simply and streamline your financial life and how we can help you stay focused on your long-term goals.
http://dl.dropbox.com/u/29129394/ws_nolookingback_e%5B1%5D.pdf
If you haven't reviewed you financial plan in while, or would like a second opinion on things you already have in place, please don't hesitate to call and make an appointment to speak with us. We always look forward to seeing you and listening to your needs.
**Debt Management Luncheons Spring/Summer 2011**
Many people these days are interested in getting their debt and mortgage payments under control. And with the threat of potentially higher interest rates in the the future, this is becoming a growing concern among Canadians. If you find yourself in this situation and would like to learn more about some unique tools that we have to help you save on interest payments, consolidate debt and help you get out of debt sooner, please consider coming to our Debt Management Luncheons schedule through out the Spring and Summer, held here at the comfortable confines of the Algoma Financial Group boardroom. There is no charge for these luncheons and we offers a great menu from Panna Bar & Grill. All luncheon take place from Noon to 1pm so you can get back to work on time.
Our luncheons on Debt Management are scheduled for:
May 17th
May 31st
June 14th
July 12th
August 18th
If you are interested in attending, please RSVP with Clare Weatherby here at Algoma Financial. Our phone number is (705) 949-1316 or by email at cweatherby@algomafinancial.com
We are excited to be back and writing for you once again; and you can look forward to more exciting changes coming from Algoma Financial and Manulife Securities in the coming months. In the meantime, please consider follwing us on Facebook and Twitter.
Cheers,
Kevin & Ellen
Now that that much of the hard work is behind us, we felt that our first new message here should be directed at what we believe our core value is to you, our valued clients.
Yes, it is true that Algoma Financial offers one of the largest selections of financial products in Northern Ontario, from nearly every available financial institution. But it is not financial products selection that make us different than our competition, it is the fact that our focus is to understand your unique financial needs, and to put together personal recommendations that will help you achieve your financial goals. The products that we recommend are nothing more than a solution to your financial planning needs.
To give you some examples of how we can help you, please read the article linked below. It demonstrates how a financial advisor can help simply and streamline your financial life and how we can help you stay focused on your long-term goals.
http://dl.dropbox.com/u/29129394/ws_nolookingback_e%5B1%5D.pdf
If you haven't reviewed you financial plan in while, or would like a second opinion on things you already have in place, please don't hesitate to call and make an appointment to speak with us. We always look forward to seeing you and listening to your needs.
**Debt Management Luncheons Spring/Summer 2011**
Many people these days are interested in getting their debt and mortgage payments under control. And with the threat of potentially higher interest rates in the the future, this is becoming a growing concern among Canadians. If you find yourself in this situation and would like to learn more about some unique tools that we have to help you save on interest payments, consolidate debt and help you get out of debt sooner, please consider coming to our Debt Management Luncheons schedule through out the Spring and Summer, held here at the comfortable confines of the Algoma Financial Group boardroom. There is no charge for these luncheons and we offers a great menu from Panna Bar & Grill. All luncheon take place from Noon to 1pm so you can get back to work on time.
Our luncheons on Debt Management are scheduled for:
May 17th
May 31st
June 14th
July 12th
August 18th
If you are interested in attending, please RSVP with Clare Weatherby here at Algoma Financial. Our phone number is (705) 949-1316 or by email at cweatherby@algomafinancial.com
We are excited to be back and writing for you once again; and you can look forward to more exciting changes coming from Algoma Financial and Manulife Securities in the coming months. In the meantime, please consider follwing us on Facebook and Twitter.
Cheers,
Kevin & Ellen
Tuesday, July 7, 2009
Protect Yourself from Investment Fraud
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.
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.
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
Monday, September 29, 2008
6 Principals to Help You Through The Economic Storm
Many of our clients have questions about the recent news regarding the U.S economy and the volatility in the world’s stock markets. These are very confusing and sometimes scary times, as financial institutions around the world are reacting to the biggest economic crisis in 80 years. There are not a lot of answers to be found about the short-term strength of the Canadian economy.
What we do know is that Canada’s lending practices are more regulated than those in the U.S. and because of this our economy and our financial institutions are doing significantly better than those in the US for the time being.
We also know that know that our economy is still growing (thanks mainly to our oil and gas exports), but may economists predict that Canada may experience a significant slow-down in the coming months should the U.S. enter a long recession.
Let’s always remember that the economy operates in a cycle, and periods of growth and recession are natural market forces.
In good times and in bad times, my golden rule when it comes to financial planning is not to let your emotions guide you in making important decisions about money. History shows us time and time again that fear and greed are the two biggest enemies to your financial health. It may be that a recovery for the stock markets are just around the corner and you will benefit from staying invested. But either way, it should be understood that those adhere to a disciplined process to handling their finances will come out ahead in the long-term.
These basic principals to proper financial planning have not changed in since Mankind began thinking about money. These principals will help you be successful in bullish and bearish times of our economy.
Here are 6 actions you can take today to make the most of your money:
1. Build a budget, reduce your debt & live beneath your means.
We’ve all heard of the importance of knowing how much money you have and what your expenses are. The basic fundamental of financial planning is to spend less than you make. When times are tough, it’s even more important to know where you are spending your money and making sure you make the most of every dollar you have.
This is also not the time to take on more debt. In fact, it may be a good idea to reduce your debt load as much as possible. Canada’s economy is usually 12-18 months behind the US., so take this time to reduce the amount of debt you are being charged interest on. With the inflation rate creeping up in Canada, it is likely that interest rates will follow.
Here at Algoma Financial and Manulife Securities we have some of the most sophisticated debt management tools and products available in Canada to help you reduce the cost of your debt.
2. Review your savings goal and stick to your savings and retirement plan.
Having an emergency fund is an important tool to any financial plan. One never knows when we might find ourselves in need of cash. Saving 3-6 months of income can help you, your family or your business weather troubled times. We can help you achieve such a fund using our Advantage Account with Manulife Bank. The account has no service fees, pays 2.9% interest, and it CDIC protected up to $100,000.
When it comes to your investments, our process will help you build a long-term investment plan. This program will help you set your investment goals, create a plan to achieve it, and help you keep track of your progress.
To ensure that you're saving enough money to achieve your investment goal, you need to check that your plan is on track at least once a year. We are committed to meet with our clients regularly to review your investment needs.
3. Assess your risk tolerance and your time horizon for your investments.
Once you know what you need to save, choose investments that match your risk tolerance and time horizon. Our Investment Needs Analysis will help you assess not only your tolerance for losing money, but your tolerance for not making enough money as well.
If your investment needs are long-term (over ten years before a child’s education, retirement etc.) you should not be overly concerned about the short-term volatility in your investment portfolio’s value. Our economy has weathered many financial storms in the past and the markets have always rewarded those who have the time-horizon and the discipline to stay committed to an investment plan.
4. Diversify, diversify, diversify.
With a mix of stock, bond and money market funds. Over the long term, almost all investments grow. But over the short term, a specific investment will go up and down depending on market conditions. All investments don't move the same way all the time. Some may go up while others lose money over the short term. By diversifying and choosing different types of investments, you can take advantage of the long term growth potential while reducing the short term volatility. Our process helps you determine the optimum asset allocation of investments to provide a diversified mix for each investment style.
5. Don't try to time the market.
Selling stock funds when a market is depressed means you are selling at a loss. Moving back into stock funds when the market begins to climb means you will likely miss out on the recovery. If you carefully chose your equities based on your risk tolerance, stick with them. They will not let you down in the long term.
6. Maintain the saving habit.
When you invest a specific sum at regular intervals, you benefit from the magic of compounding. And you reap the rewards of dollar cost averaging. When markets are down, the unit value of investments decreases. That means you can by more units for the same amount of money. When the markets start going up, as they inevitably do following a major decline, so will the value of your units.
If you have any concerns about your current financial situation or your investment plan, please don’t hesitate to contact us. With a review of your needs and current situation, and a commitment to these six basic principals of money management, we can help that you stay on course no matter what the economic conditions.
What we do know is that Canada’s lending practices are more regulated than those in the U.S. and because of this our economy and our financial institutions are doing significantly better than those in the US for the time being.
We also know that know that our economy is still growing (thanks mainly to our oil and gas exports), but may economists predict that Canada may experience a significant slow-down in the coming months should the U.S. enter a long recession.
Let’s always remember that the economy operates in a cycle, and periods of growth and recession are natural market forces.
In good times and in bad times, my golden rule when it comes to financial planning is not to let your emotions guide you in making important decisions about money. History shows us time and time again that fear and greed are the two biggest enemies to your financial health. It may be that a recovery for the stock markets are just around the corner and you will benefit from staying invested. But either way, it should be understood that those adhere to a disciplined process to handling their finances will come out ahead in the long-term.
These basic principals to proper financial planning have not changed in since Mankind began thinking about money. These principals will help you be successful in bullish and bearish times of our economy.
Here are 6 actions you can take today to make the most of your money:
1. Build a budget, reduce your debt & live beneath your means.
We’ve all heard of the importance of knowing how much money you have and what your expenses are. The basic fundamental of financial planning is to spend less than you make. When times are tough, it’s even more important to know where you are spending your money and making sure you make the most of every dollar you have.
This is also not the time to take on more debt. In fact, it may be a good idea to reduce your debt load as much as possible. Canada’s economy is usually 12-18 months behind the US., so take this time to reduce the amount of debt you are being charged interest on. With the inflation rate creeping up in Canada, it is likely that interest rates will follow.
Here at Algoma Financial and Manulife Securities we have some of the most sophisticated debt management tools and products available in Canada to help you reduce the cost of your debt.
2. Review your savings goal and stick to your savings and retirement plan.
Having an emergency fund is an important tool to any financial plan. One never knows when we might find ourselves in need of cash. Saving 3-6 months of income can help you, your family or your business weather troubled times. We can help you achieve such a fund using our Advantage Account with Manulife Bank. The account has no service fees, pays 2.9% interest, and it CDIC protected up to $100,000.
When it comes to your investments, our process will help you build a long-term investment plan. This program will help you set your investment goals, create a plan to achieve it, and help you keep track of your progress.
To ensure that you're saving enough money to achieve your investment goal, you need to check that your plan is on track at least once a year. We are committed to meet with our clients regularly to review your investment needs.
3. Assess your risk tolerance and your time horizon for your investments.
Once you know what you need to save, choose investments that match your risk tolerance and time horizon. Our Investment Needs Analysis will help you assess not only your tolerance for losing money, but your tolerance for not making enough money as well.
If your investment needs are long-term (over ten years before a child’s education, retirement etc.) you should not be overly concerned about the short-term volatility in your investment portfolio’s value. Our economy has weathered many financial storms in the past and the markets have always rewarded those who have the time-horizon and the discipline to stay committed to an investment plan.
4. Diversify, diversify, diversify.
With a mix of stock, bond and money market funds. Over the long term, almost all investments grow. But over the short term, a specific investment will go up and down depending on market conditions. All investments don't move the same way all the time. Some may go up while others lose money over the short term. By diversifying and choosing different types of investments, you can take advantage of the long term growth potential while reducing the short term volatility. Our process helps you determine the optimum asset allocation of investments to provide a diversified mix for each investment style.
5. Don't try to time the market.
Selling stock funds when a market is depressed means you are selling at a loss. Moving back into stock funds when the market begins to climb means you will likely miss out on the recovery. If you carefully chose your equities based on your risk tolerance, stick with them. They will not let you down in the long term.
6. Maintain the saving habit.
When you invest a specific sum at regular intervals, you benefit from the magic of compounding. And you reap the rewards of dollar cost averaging. When markets are down, the unit value of investments decreases. That means you can by more units for the same amount of money. When the markets start going up, as they inevitably do following a major decline, so will the value of your units.
If you have any concerns about your current financial situation or your investment plan, please don’t hesitate to contact us. With a review of your needs and current situation, and a commitment to these six basic principals of money management, we can help that you stay on course no matter what the economic conditions.
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
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