Monthly Archives: November 2011

Odette Morin

10 ways to stay broke – forever

10 ways to stay broke forever.  I could not have said it better.  Click on the link below for the full story.

  1. Finance everything
  2. Pay the minimum on what you owe
  3. Spend it all and save nothing
  4. Buy a huge house
  5. Buy a new car – every few years
  6. Take vacations on credit
  7. Pay full price on everything
  8. Shop everyday
  9. Buy more toys
  10. Eat out everyday

Terry Broaders

Weekly Update November 25 2011

“Everything We Do From This Day Forward is About Doing Better” -Wally Buono

A Down Week for the Market

The Toronto stock market closed lower at the end of a losing week as the European debt crisis continued. The S&P/TSX composite index lost 23.26 points to 11,462.06 while the TSX Venture change edged 7.96 points lower to 1,505.14.  Worries about Europe carved 430 points or 3.61% from the main Toronto index this past week.  “This week has been all about Europe and we’re down because of Europe,” said Gareth Watson, vice-president investment management and research at Richardson GMP Ltd. The Canadian dollar was down 0.23 of a cent to 95.29 cents US. New York markets closed lower with the Dow Jones industrial index down 25.77 points to 11,231.78, adding up to a loss of 564 points or 4.78% this past week. U.S. markets had earlier found support from a positive start to Black Friday, the kickoff of the retail holiday shopping season in the U.S.  “It would appear at least the Black Friday sales are hopefully going to be meeting the expectations of what the street is looking for this year,” added Watson.  But worries about Europe trumped that early enthusiasm going into the weekend.

Markets have been in a deep funk for weeks over the failure of eurozone leaders to come up with a comprehensive fix for the debt crisis, which threatens a fragile global recovery, the region’s financial system and the euro itself.  There have been calls for the European Central Bank to deal with the debt crisis by declaring itself lender of last resort and printing money to buy the bonds of debt-laden eurozone countries. But both the ECB and the German government are loath to do that, warning that it lets the more profligate countries off the hook for their bad practices.  European bourses had closed higher as London’s FTSE 100 index was up 0.72%, Frankfurt’s DAX advanced 1.19% and the Paris CAC 40 gained 1.23%.

The TSX closed at 11462, down -430 points or -3.62% over the past week. YTD the TSX is down -14.74%.
The DOW closed at 11232, down -564 points or -4.78% over the past week.YTD the DOW is down -2.99%.
The S&P closed at 1159, down -57 points or -4.69% over the past week.YTD the S&P is down -7.87%.
The Nasdaq closed at 2442, down -131 points or -5.09% over the past week.YTD the Nasdaq is down -7.95%.
Gold closed at 1686, down -40.00 points or -2.32% over the past week.YTD gold is up 18.65%.
Oil closed at 96.77, down -0.68 points or -0.70% over the past week.YTD oil is up 5.52%.
The CAD/USD closed at 0.9535, down -0.0198 points or -2.03% over the past week.YTD the CAD/USD is down -4.90%.


Souces: Bloomberg, Investment Executive, Advisor Analysis

Terry Broaders

Weekly Update November 18 2011

“November Always Seemed To Me The Norway of The Year” -Emily Dickinson

The Value of Advice

The Investment Funds Institute of Canada Wednesday released is second report on the value of advice. IFIC says the 2011 report provides additional evidence supporting the value of advice and what a relationship with an advisor can mean for investors.  The research samples studied have shown that investors who work with financial advisors have more wealth and investible assets on average than those who do not.  In the 2011 Canadian Financial Monitor database, the sample of advised investors had an average net worth of $555,447 in 2011 compared to $191,743 for non-advised investors, nearly three times greater. In the same study, investible assets of advised investors were found to be four times greater than investible assets of non-advised investors

The report answers the question of whether investors accumulated wealth before they sought out advice. The research shows that the use of advice is not limited only to wealthy individuals, and that most investors first seek advice in order to start investing and grow their assets.  According to the report, most investors first begin to work with an advisor with only modest amounts to invest; 37% of mutual fund investors had less than $10,000 in total household savings and investments when they first started using a financial advisor, and 57% had less than $25,000.  “The mutual fund industry provides Canadians’ access to capital markets with even small amounts of investable assets,” says Joanne De Laurentiis, IFIC president and CEO.  “With the valuable assistance of an advisor, those small amounts compounded over time can grow into a substantial investment portfolio.”
One of the enduring values of the investor-advisor relationship is that it raises the financial literacy of the client through a continuing sequence of what the federal Task Force on Financial Literacy has termed “teachable moments”. In the words of the Task Force: “Those ‘teachable moments’ include decision points such as joining a pension plan or workplace retirement savings scheme, seeking financial advice or considering the purchase of a financial product, or determining one’s eligibility for benefits from a government  program.  Investing with advice yields higher returns than investing without advice because advisors provide asset mixes that are right for the long-term needs of their clients and encourage their participation in registered plans. When combined, these factors provide net return advantages that exceed the additional cost for advice that is contained within the mutual funds or other financial products used by the investor.

The TSX closed at 11892, down -385 points or -3.14% over the past week. YTD the TSX is down -11.54%.
The DOW closed at 11796, down -358 points or -2.95% over the past week.YTD the DOW is up 1.88%.
The S&P closed at 1216, down -48 points or -3.80% over the past week.YTD the S&P is down -3.34%.
The Nasdaq closed at 2573, down -106 points or -3.96% over the past week.YTD the Nasdaq is down -3.02%.
Gold closed at 1726, down -47.00 points or -2.65% over the past week.YTD gold is up 21.46%.
Oil closed at 97.45, down -1.89 points or -1.90% over the past week.YTD oil is up 6.26%.
The CAD/USD closed at 0.9733, down -0.0083 points or -0.85% over the past week.YTD the CAD/USD is down -2.92%.


The New PRPP Introduced Today

How Much Debt Can You Carry Comfortably ?

Doom & Gloom…….And Record Earnings?


Sources: Bloomberg, IFIC, Investment Executive

Odette Morin

The new PRPP introduced today

The Harper Government introduced today the much-anticipated Pooled Registered Pension Plans (PRPP) Act to address concerns over declining pension coverage for Canadians. The new plan is primarily intended to provide an efficient, effective and low cost retirement savings vehicle for the many Canadians without employer pension programs.

Minister of State for Finance Ted Menzies officially announced the PRPPs in Toronto, saying they will give small firms and their workers the opportunity to access a large privately administered pension plan for the first time. The PRPPs, however, are voluntary and will allow workers to opt out, and do not require firms to contribute.

While many Canadian workers do not have employer-sponsored pensions they do have access to tax assisted savings programs such as registered retirement savings plans (RRSPs) and Tax Free Savings Accounts (TFSA) through local financial institutions. Many taxpayers do not take full of advantage of these existing programs therefore it is questionable whether the PRPP will foster more saving.

“Today marks a major milestone in our efforts to ensure the ongoing strength of Canada’s retirement income system by providing a pension option for the many workers, who currently do not participate in a company pension plan,” said Ted Menzies, Minister of State (Finance). “Incredibly, just over 60% of Canadians do not have a workplace pension plan. Canadians work hard to realize their retirement dreams, and PRPPs will offer them a new, low-cost and accessible pension option to help meet their goals.” – Benefits Canada

PRPPs are the outcome of several years of co-operation, research and consultations by federal and provincial finance ministers on the best ways to ensure the long-term strength of Canada’s retirement income system.

“If you invest in a PRPP you will benefit from lower investment management costs associated with the large scale of these funds,” Menzies said. “Essentially, you will be buying in bulk. This will leave you with more cash in your pocket when you retire.”

This provides an attractive option to small business owners and their employees, who will not only have access to a low-cost pension plan with lower administrative costs, but will also have professional administrators working to ensure that funds are invested in the best interests of plan members. These features will remove barriers that have kept many employers from offering pension plans to their employees and that, therefore, prevented employees from participating in large-scale pension plans.

We will tell you more on these plans in weeks to come.

Odette Morin

How much debt can you carry comfortably?

The Liquidity Ratio formula will establish what is reasonable. Total of cash and short-term savings divided by your short-term debts should be about 1 or 2. This means that you should have at least 100% or 200% the amount of liquid cash as you have debts due soon. This is for short term debt. If we include long-term debt like your mortgage, financial planners would like to see no more than 25% total debts ratio i.e. total debt divided by total assets. Banks use 40% but we feel it is too much and would not have the extra funds needed for a decent lifestyle and contingencies. Best to be prudent and keep debts down and cash flow high.


Odette Morin

Doom and gloom… and record earnings? How can this be?

Here is a link to a blog post from Where does  all my money go which is worth reading.  Please make sure to go the link to view the graph which I am not permitted to reproduce on our blog.

Posted: 07 Nov 2011 09:10 PM PST

It seems like it’s been nothing but bad news on the stock markets for the last while. So it might come as a surprise to learn that corporate America is earning more money than it ever has. 2011 Q2 earnings per share for the S&P 500 was $24.86 (projection based on 99% report rate). Q3 is projected to be even higher at $25.42 (projection based on 88.1% report rate).”