Your Financial Security – May 2012


The following is a reprint of the email newsletter I send out to my address book of clients and contacts as part of my day job as a Financial Security Advisor/ Small Business Specialist. 

Participating whole-life policies offer attractive returns – On April 7, columnist John Archer published a great article on participating whole-life insurance in the Montreal Gazette.  If you’ve ever wondered how to get consistent, better than average returns on your investment with little to no risk maybe you should consider including a Participating Whole-Life insurance policy in your portfolio, this article is a great primer on a great product.  Call me for more details;

 Click Here to Read Article

Staying out of the market puts financial goals at risk

 If you’ve decided you’re better off staying out of the markets, you’re not alone. Many investors still feel uncertain with the after-effects of the economic downturn, and they’re concerned about their savings being diminished. It’s a valid concern, especially when headlines today continually remind us how risky investing can be.

However, staying out of the market creates its own risks.  Many investors still have money in either cash or cashable short-term investments like money market funds, guaranteed investment certificates (GICs), and low-interest rate bank accounts.

These investors are staying out of the market to protect their capital from market volatility. This strategy can have long-term consequences to their financial security. By limiting the growth potential equity markets can provide, low or no interest rate investments mean individuals aren’t keeping up with inflation. This could create a scenario where they may not have enough money to meet their goals.

During periods of market volatility, it’s important to have investment funds with some component of equities, if appropriate, as part of your overall portfolio. By including sound investment principles into your financial security plan, and staying invested for the long term, you’re more likely to meet your goals.

Maintaining a long-term view and being properly diversified are two key principles for managing volatility. A portfolio with a variety of investments – like bonds and equities from various sectors around the globe – that match your risk tolerance is called asset allocation. It’s something your financial security advisor and investment representative can help you put in place.

Having a wide range of investments and a long-term outlook works well with the investment strategy called asset allocation. Asset allocation is a relatively simple concept to explain and a much more difficult one to implement. Done effectively, the result is an investment portfolio designed to create the best return based on a client’s comfort level with risk.

Implementing this model is no easy matter.  You have to select the right mix of investments, including diversifying among asset classes, geography, investment management styles and sectors.

Asset allocation funds are portfolios containing individual funds. These portfolios are strategically constructed using sophisticated investment management methodology. They’re designed to help you participate in market upswings while helping to protect capital during downturns.  The goal is to deliver stable returns that take risk tolerance into consideration. In addition, the funds are automatically rebalanced so they always match your comfort level with risk. You pick the fund best suited to your needs and participate in equity markets, to your desired amount, without ever getting overexposed.

Asset allocation funds take the emotion out of investing. This can help keep you focused on the long term – even when markets become volatile.

Call me anytime and ask how asset allocation funds could help you achieve your investment goals.

Point to PonderSomeone with $100,000 invested in a GIC for five years would have $110,408 before taxes, assuming a compounded rate of two per cent. Is this the kind of return you’re looking for?

 Take into account inflation and it’s even less. In terms of purchasing power, assuming a modest 2.5 per cent inflation rate over that same five years, the $100,000 would have a relative worth of only $97,525.

Ontario Probate Changes Pending (reprinted from Advocis; The Financial Advisors Association of Canada, monthly update for April 2012)

Changes to the Ontario Estate Administration Tax Act will take effect on January 1, 2013.

The changes add new penalties for false or misleading filings, and will permit the Ministry of Revenue to audit and reassess probate applications for four years after an application for probate is filed.

Regulations are expected to specify the information that will be required to be filed with an application for probate.

The amendments may have been prompted by concerns on the part of the government that applicants failing to accurately declare the value of estate assets has led to declining revenues.

Concern has been expressed that the changes could impose liability on an estate administrator if there is a re-assessment after the estate is distributed. As well, recent changes in the common law regarding the presumptions of advancement and resulting trust could lead the Ministry to take the position in a re-assessment that some jointly held assets should have been included in the estate.

Advocis is monitoring developments and expects to participate in consultations when the government publishes the draft regulations. I will keep you posted!

Thanks for reading. 

 Call me any time if you have any questions or concerns about the information presented here. 

 Don’t’ keep me a secret!  Feel free to forward this email to all of your friends and colleagues; I’m never too busy for your referrals!

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