Loading...
The Citizen, 1999-02-10, Page 25THE CITIZEN, WEDNESDAY, FEBRUARY 10,1999. PAGE 25. Info on diversification and its limits (NC)—Every book or article you read about investing stresses the importance of diversification. “Don't put all your eggs in one basket,” you’re told again and again. “Spread your money around.” All very true to a point. For example, some people who are just starting out with their RSPs are so concerned with the idea of diversification they often hold too many funds. They feel they must own a wide range of mutual funds, put a few hundred dollars in each and think they have done the right thing. Often they end up with a mix of funds that doesn’t complement one another and as a result the investor’s objective for portfolio growth may not be met. Here are some guidelines you can use to ensure you have the right degree of diversification in your RSP, so that it will perform to the maximum efficiency. If the portfolio is between $10,000 and $15,000, put it all into a balanced fund. This gives you the broad diversification through a mix of stocks, cash and bonds, and the fund managers will adjust the proportions of each according to market conditions. As your RSP grows, expand beyond the balanced fund with securities that broaden your investment base. For example, you might wish to add a U.S. or inter­ national equity fund to your mix to take advantage of the $20% foreign content allowance. GICs also play an important role in diversifying your portfolio and should be part of your investment mix. As the value of the RSP continues to build, you can add more funds to the plan. A portfolio consisting of 6 to 9 funds at any time should be ample to provide excellent diversification across all asset classes. - News Canada RRSP Decisions, RRIF Decisions. Isn't it about time to seek out professional advice? Call me at 887-9964 or 1-800-869-8922 for a FREE consultation about your finances. Helen M. Hetherington, CFP Certified Financial Planner R.R. #3, Brussels, Ont. NOG 1H0 AIT Strategies in a market downturn (NC)—Varying speculation with analysts over whether we’re in a market correction, or in a bear market downturn hasn’t made investment assessment any easier. Ideally, everyone would like sound investment solutions during a downturn, but with a portfolio that is poised to flourish when the bull returns. Key ingredients to that solution are as follows: •• diversify by investing in different industries, countries and asset classes. • look for a fund that has a low correlation with traditional equity or bond markets. • consider segregated funds - those linked to a range of international markets. • safeguard your capital with Bond Funds which are an excellent alternative to hard-hit equity funds. • play it safe with Dividend Funds which offer performance reliability due to its high percentage of preferred shares and generate consistent dividend income when equity markets are choppy. • seek guarantees on your principal; settle for no less than 75% with an option for 100%. • opt for Dollar Cost Averaging - a technique put in place by the investor to automatically purchase more units when markets are low to take advantage of real growth potential. While looking at these options however, it’s important not to lose Computers help minimize risk with RRIF (NC)—Professional advice on investments is now complimented by the computer - and nowhere else in fact is this far-reaching technology more welcome than with the retirement capital of our Registered Retirement Income Funds. The more money we make over the long term of course the better. Now we have software programs like Asset Decision Maker that analyze investment goals, our time horizons, our personal attitudes and risk factors, and then with its tentacles out in all the options, the computer suggests a tailor-made portfolio mix to meet your requirements exactly. When choosing an RRIF product, say the consultants at NN Financial, you should demand the following: • professional advice • a wide choice of investment options • the highest possible risk- adjusted rates of return • downside protection, at least 100% guarantee on death or maturity • flexibility on the pay-out amount, frequency, and the source of payment - News Canada Look at retirement plan Continued from page 24 the workforce - most often because they needed the money. This RRSP season, why not take a look at your retirement plan and be sure you’re working toward the comfortable retirement you deserve. - News Canada sight of the big picture. Remember that on average studies have shown bull markets outlive bear markets by a ratio of 3:1. That means more gains than losses over a full market cycle. Wise investors keep their long-term objectives in perspective as opposed to unwarranted anxiety during shorter market downturns. For more information call 1-800- 663-6880 or access the web at: http://www.ingfin.com - News Canada INCOME $ TAX $ SERVICE • farm, business, or personal • complete year-round service including tax audit representation • E-File available Over 17 years experience Quality work at reasonable rates "FREE CONSULTATION" Stephen Thompson R. R. #2, Clinton 482-7551 You may also drop off or pick up your tax information at Stitches by MJ, Queen St., Blyth When it comes to planning for business success, we've got what it takes... Today, business is more complex than ever. That's why it’s important to find the right business advisor - one that’s well-equipped to help you make those decisions that affect your future. At BDO, we are just that; business advisors with many years experience working with companies just like yours. We offer a complete range of services including: accounting and auditing, corporate and personal taxes, computer consulting, business valuations, litigation support, management advisory and insolvency. Call us today, and we’ll help you succeed. BDO Dunwoody llp Chartered AccountantsI IBDO Wingham Walkerton Hanover Mount Forest Port Elgin Kincardine 323-2351 832-2049 396-3425 Owen Sound Branch: 1209-16th St E., Owen Sound, Ont. N4K 1Z4 Tel.: (519) 376-7216 Associated Financial Planners limited THE GRANDPARENTS WHO WANT JUNIOR TO BE A MILLIONAIRE (NC) - The financial joke amongst salesmen at the office tells about the grandparents who were all excited, and called from their home 200 miles away, asking the mutual fund salesman to visit them, as they wished to invest enough money to make their newly-born grandchild a millionaire at age 65. And...the salesperson went, driving the 200 miles, without first doing some simple mathematics. He didn't figure out how much would have to be invested at birth, to make a newly-born child worth $1 million 65 years later. You see, Grandpa had been a mutual fund client for many, many years, and he knew that good mutual funds have averaged some 15% per year, given 15-year or more timespans. Past performance has proven it, and the statistics on all mutual funds in Canada are published monthly in the Globe and Mail and Financial Post. The salesman lost a lot of money because he didn't do a simple calculation. To achieve $1 million at age 65, assuming a 15% average rate of return, all Grandpa would have to invest for that infant grandchild, would be $113.41. The salesperson drove 200 miles to get an investment of $113.41, and probably earned a commission of less than $3.50. Would you? (At 12% return, the single investment amount required would be $632.16). But, did Grandpa really want the child to have $1 million, or did he want the child to have the purchasing power of $1 million today, 65 years ft REGAL CAPITAL 7ML PLANNERS LTD. Maitland Valley Financial Consultants Ltd. 453 Turnberry St., Brussels, ON NOG 1H0 IT'S YOUR MONEY By Paul J. Rockel Chairman, Regal Capital Planners Ltd. from now? And, that's a different story. Many of the top experts are telling us that inflation will again reach double digit figures (over 10%) in the not too distant future. Some are forecasting inflation "averages" over the next many decades that will be somewhere between 5% and 6% averages per year. (Past 34 years inflation averaged 5%). Taking the idea that Grandpa wanted Junior to have the spending power of $1 million when he reaches age 65, assuming an inflation rate of 5% means that Junior will need over $23 million at that time, just to match the equivalent of $1 million today. If inflation were to average 8%, Junior would need $148 Million at age 65, to have the same purchasing power as $1 Million today. Shocking, isn't it! To achieve $148 Million 65 years from now, at 15% rate of return, Grandpa would have to invest $16,784. For that the salesperson might want to drive 200 miles. Have you taken inflation into your future plans? If your total pension benefits are $20,000 yearly now, at 5% inflation you will need $48,000 yearly 18 years from now, just to match the purchasing power of $20,000 today. Think about it! "Rate of return is used only for the purpose of illustrating the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund." Murray Siddall, CLU Susan Carter, C.I.M. Bus. (519) 887-2662 SOME OF OUR PRODUCTS AND SERVICES Top Paying GICs, Tax Saving Strategies, Mutual Funds, Life & Disability Insurance, RRSPs, RRIFs, RESPsfThe above list represents only a few of the many financial services available through your Regal Financial Centre.) This is No. 1222 in a series of articles that have been appeanng in newspapers and magazines across Canada for more than 15 years. For Paul J. Rocket's book “WHY INVEST IN MUTUAL FUNDS" contact your local book store or Regal Capital Planners Ltd., telephone 887-2662.