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I received this email from Warren Blatt, one of my financial advisors. It was helpful and yes does pertain to Canada HOWEVER please note that many countries work on the same premise that to receive tax benefits for that year (2010) you must have them in place by December 31, 2010 (or specified time).

The information provided comes from
Doug Carroll JD, LLM (Tax), CFP, TEP
Vice President, Tax and Estate Planning

Tax & Estate matters
Last 10 tax tips for 2010

This has been slightly adapted: year-end tax planning checklist to give plenty of lead-time. These tips can be time-sensitive matters that must be addressed before the end of the calendar year, and in many cases needs to be set in motion well in advance of that final stroke of midnight.

1. Capital gains/loss selling – For realization of capital gain or losses on mutual funds, allow the trade date plus three business days to settle by December 31, 2010, which means no later than December 24th and sometimes as early as December 22nd. In 2010, the last trade date is Friday, December 24th.

2. Charitable donations – In order to benefit from the donation tax credit in 2010, the donation needs to be made prior to calendar year-end: Dec. 31st. For transfers of listed securities (such as mutual funds) to a registered charity or private foundation, tax on any capital gain otherwise arising from such disposition will effectively be eliminated. While the value of the gift is determined at the date of transfer, it is the date of the settlement (see #1) that determines the year in which the donation has occurred.

3. TFSA withdrawals – The formula for calculating TFSA contribution room includes withdrawals made in the previous calendar year (i.e. withdrawal in 2009 for 2010). Therefore, if you are considering a withdrawal for the first quarter of 2011, you may want to consider making that withdrawal before the end of 2010. Therefore, in this way the contribution room credit will allow for re-contribution during 2011 (assuming that cash is available for the purpose) rather than having to wait until 2012. For more information on the tax rules and other consideration, contact your advisor. One is the provider of this information: Invesco Trimark Tax & Estate info Service – 1800- 874-6275 or advisor.invescotrimark.com

4. Spousal RRSP contributions – Income attribution to a contributor spouse will apply if the receiving spouse makes a withdrawal before the end of the second calendar year following contribution. The rule works on a last-in/first-out basis counting from the actual date of contribution, not from the tax -filing year for which the related deduction may have been claimed. For example, a contribution in January 2011 entitles the contributor to a deduction against 2010 income, but will be subject to attribution if withdrawn on or before December 31st, 2013; if that same contribution had been made in December 2010, attribution would apply only if the withdrawal is made on or before December 31, 2012.

5. Final RRSP contributions for person age 71 – A person may make a final RRSP contribution by December 31st of the calendar year that he/she turns 71. Take special note that the usual rule allowing contributions in the first 60 days of the year following the calendar year is not available. (i.e. 2011)

6. Final spousal RRSP contribution where spouse in under 72 yrs. – Despite the preceding rule, a person over age 71 may use carried-forward contribution room to contribute to a spousal RRSP so long as the spouse is under 72. Similar to that preceding rule, contributions must be made by December 31st of the calendar year the spouse turns 71.

7. RRSP/RRIF rollover on death – The plan’s value at the end of the exempt period (i.e. the period ending on December 31st of the year following the year of death) is used to determine the amount of RRSP/RRIF proceeds that qualified beneficiaries (generally spouses, related dependent minor children and dependent disabled children) can transfer into their own RRSP/RRIF/annuity a tax-deferred basis. If a death occurred in 2009, the exempt period runs out at the end of 2010.

8. TFSA rollover on death to successor holder (spouse) – The exempt period entitling a spouse to contribute to characterize received funds as a TFSA runs from death to December 31st of the year following the year of the death. For a death occurring in 2009 for which there was no valid successor account holder designation in place, an election will have to be made by the deceased’s estate and the receiving spouse before the end of 2010.

9. Spousal prescribed rate loans – This one is really a year-end-plus-30 days reminder, being the date by which interest must be paid by a borrower spouse to a lender spouse in order to escape the spousal income attribution rules. Be careful not to mistake the deadline as simply being the end of January, which would be 31 days. This error could be especially disappointing for spouses who may have taken advantage of this year’s historic low 1% prescribed rate, as such loans are forever offside from the date an interest deadline is missed.

10. Execute a Will – while the execution of a Will may not be a year-end tax-planning task in itself – the estate planning process will often highlight issues that have year-end implications. In turn, the Will can be drafted to facilitate more effective estate management through the inclusions of necessary trust powers, such as the ability to make appropriate income Tax Act (Canada) elections.

** The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Readers should consult their own accountants and/or lawyers for advice on the specific circumstances before taking action. Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Contact:
Invesco Trimark
5140 Younger Street, Suite 900
Toronto, Ontario M2N 6X7

Telephone: 416.590.9855 or 1.800.874.6275
Facsimile: 416.590.9868 or 1.800.631.7008

inquiries@invescotrimark.com
www.invescotrimark.com
advisor.invescotrimark.com

Tags: capital gains, capital losses, charitable donations, estate planning, rrif, rrsp, spousal support, tax tips 2010

This is good news for those that want to find ways to save for their future without the concern of future/deferred taxes. Please see what Jay Llave from Creative Planning Financial Group has to say on this matter. This information does pertain to Canada. For those outside of Canada you need to find out what changes in financial policy are happening that can positively impact you!

Come 2011, you will be eligible to contribute an additional $5,000 to a
Tax-Free Savings Account (TFSA), bringing your cumulative total to $15,000 since the account was introduced. That $15,000 is a substantial amount of contribution room, which will still grow each year. This creates an opportunity for you to use your TFSA for multiple and substantial goals – no longer just for an emergency fund. Here are three possible alternative uses for your TFSA:

Goal 1: Saving for a specific goal or event with a known date. These goals
could include, for example, paying for a child’s post-secondary education or planning a once-in-a-lifetime trip. Your savings could be invested in bonds or Guaranteed Investment Certificates that come due as the occasion
approaches. Withdrawal is tax-free.

Goal 2: Saving for retirement with dividends. The Dividend Tax Credit is
wasted within a Registered Retirement Savings Plan (RRSP) or Registered
Retirement Income Fund (RRIF), since all income will be taxed at your
marginal rate when you withdraw it. However, dividend-earning stocks and
dividend mutual funds held within your TFSA will provide completely tax-free income in retirement to complement your RRIF. In addition, you can reinvest dividends on a tax-free basis along the way.

Goal 3: Generating a substantial capital gain. Higher-risk investments have
the potential to generate large capital gains, which will be tax-free within
your TFSA However, remember that there’s no capital loss deduction either.

These are just some of the many ways you might use your TFSA as contribution room grows. We can help you ensure that you’re maximizing the use of this excellent savings vehicle to reach your goals.

Best regards,

Jay F. Llave
“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317
Our BLOG

Tags: 2011 financial policy changes, How to save in Canada, Tax Free Savings Account

To make effective decisions for your future you need to be aware of changes that are taking in industries that may impact you. Insurance is our safe guard so that if something happens we are personally covered or perhaps for our loved ones.

For those in Ontario, Canada – I want you to be aware of changes to permanent insurance pricing:

Important news concerning upcoming insurance pricing

There are changes with permanent life insurance pricing coming in the next
few months. One Major carrier has given us advance notice that there is to
be approximately a 10% average increase in rates for all permanent life
insurance.

Also the same carrier will be implementing a 0.5% reduction to the
contractual guaranteed interest rates offered within tax sheltered policies.
(The guarantee is contractual for life).

In the past few years, there has been an expectation that insurance rates
would be increasing, as a large assumption in pricing these policies is the
interest rate environment.

With historically low interest rates, the insurance industry has been
waiting for some movement.

Other carriers will follow suit, with increases to their own permanent
insurance rates, and subsequent decreases in guaranteed interest rates.

What does this mean for you?

The 10% increase is self-explanatory – it will cost more for the same
insurance.

If you or someone you know is going to buy insurance within the next 2 years think about doing it now or at least consider the annual savings as the reason to check it off your to-do list.

The rate reduction for guaranteed accounts has a far greater impact.
i.e. For a client investing $10,000/year in the tax-sheltered accumulation
fund – and choosing the guaranteed investment option (above the cost of
insurance):

Assuming the current rate is 3.5%, a 0.5% decrease in annual credited
interest rates to 3.0% actually means they would see:

§ after 10 years, 2.75% less accumulated value

§ after 20 years, 5.44% less accumulated value

§ after 40 years, 11.25% less accumulated value

This means that quick pay scenarios will see a far greater increase than
10%.

If you have maxed out your Group plan, RRSP, TFSA, and RESP (if applicable)
this high rate of guaranteed return could mean a few more years of
retirement income that is guaranteed interest rates offered within tax
sheltered policies.

Current pricing is still available until December 4, 2010 (needless to say,
current rates are lower than they should be). Current contractual
guarantees are still available to be locked in for life on policies secured
before March 2011.

Feel free to contact us with any questions or concerns you may have with
your current insurance policies.

Best regards,

Jay F. Llave

“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317

About me

Our BLOG

Tags: changes, insurance pricing, permanent insurance rates

This topic has come up lately. I know men that are challenging what they pay because the circumstances have changed – their spouse has recently got married and/or began to work. In other cases women are being paid by their spouse for a certain number of years as they were the primary care giver. It is important that you find out the laws pertaining to your country. The information below pertains to Canada. Nonetheless it will give you some idea of questions you can ask:

DID YOU KNOW THAT NOT LIKE THE FORMAL GUIDELINES WE HAVE FOR CHILD SUPPORT, THERE ARE NO SPECIFIC RULES FOR SPOUSAL SUPPORT UNDER THE DIVORCE ACT.

Each case is different. Unfortunately, you cannot accurately predict who will be paying how much. Either spouse can apply for support.

Some of the factors that will be considered under family law when determining spousal support are:
a. the incomes of the spouses
b. the length of the marriage
c. the roles of the spouses during the marriage

The courts will try to be fair and provide reason to the receiving spouse to become self-supporting.

In the Income Tax Act, spousal support payments are deductible to the paying spouse and included as income by the receiving spouse. However, for these rules to apply, the spousal support payments must be structured as a determined, regular payment, for example, $1,000 monthly. If a payment is not structured, it will not be deductible by the paying spouse. For example, if a former spouse pays a $500 car repair bill for the other spouse, this is not a deductible expense for the paying spouse.

If you have any further question please contact Jay Llave:

Jay Llave
Insurance and Financial Advisor
www.jayllave.com
(416) 545-5317

Tags: canada family law, FRO, spousal support

A 2010 TD Waterhouse Female Investor Poll, found that three-quarters of Canadian women aged 45 to 64 feel they are savvier investors than their mothers were at the same age.

This is a good thing. Women are now more engaged in financial planning than ever before, which is a pretty dynamic shift from a generation or two ago when many women’s finances were under their husband’s control and they relied on “pin money” to make discretionary purchases.

Becomin more independent is one of the basic steps toward financial success.

The Investor Poll found that when they were growing up, only 5% of daughters surveyed had mothers who told them to be independent – to have their own investments and bank accounts. Contrast that to today, where 69% of women have savings and investments in their own name.

There is still room for improvement … women have acheived their goal of “financial security” however many do not have a cohesive plan to achieve it. Even though it is the foundation of a financially secure future, only three in 10 women have a formal financial plan.

I want to address another issue, the women surveyed for the most part are Canadian women born here in the last 2 or 3 generations. Canada is a land that has many new immigrants. These women and men come to this country with an experience and belief system about financial institutions that may not hold true for Canada but is true from the country that they left. I will give you an example. I met this lovely, hard working, independent woman from Argentina and she told me that at home you did not trust banks. If you put your money in and the bank was robbed or money wasn’t invested well, you can find yourself without your money. There are little to no bank regulations to safeguard your money. In Canada the banks cover up to $100,000.

To me the first step is understanding our system and where you feel your money will be best served. It is likely that you will not have your money with one person or in one place. EDUCATION, AWARENESS, TRANSPARENCY – so that we can make good financial decisions.

In the Poll women defined financial success in many ways. The two most important factors were being able to pay their bills and having saved enough for emeregencies. This is comendable however very conservative and your money may not be placed in situations that will offer you the best returns — FOR YOUR FUTURE. If I stuck my money in a savings account with no interest being earned the value of that money over time will de-value just by nature of yearly inflation. Now, those investors that saw the markets as volatile just prior to the collapse in 2008, to me were very aware and understood that being in cash at that time made sense. Many lost money – some millions – in the 2008 Financial Collapse.

How about being guided so that you can begin to plan your future – be in a position to help your children if they need it, buy your dream retirement home, be able to travel if you want.

A new definition of success has been offered – a more balanced definition of success: One that not only achieves financial security, but also allows you the flexibility to live life the way you’ve always dreamed.

It’s time to raise the bar – for Canadian women and women who have just immigrated to Canada and need to learn a new system and/or way:

Maya Angelou wrote (I love her writing!): “When we know better, we do better.”

Women represent 50% of the population – our economic power is growing – let’s start to match it with our awareness!

All my best,

Sandra

Jay has written a wonderful article with really good suggestions/advice. When considering our finances – our estate, our health — the needs can change over time. As well, our responsibilities may also change. We are seeing just the beginning of the impact an aging population. While some are experiencing the “sandwich” feeling (taking care of children and older parents), this is becoming more and more a reality for many. Within my own family, my first cousin and father have been faced with making choices and decisions – health and finacial.

Take some time and read this article. If you have any further questions please contact Jay at the number below.

YOUR PARENT’S ILLNESS MAY BE SUCH THAT HE OR SHE REQUIRES SOME DEGREE OF IN¬HOME CARE. THERE ARE VARIOUS SERVICES AVAILABLE.
A part of empowerment is control over your finances and planning for life events. We age with our parents and with the lack of government resources; these are very real life situations.
Your parent may find that due to his or her illness he or she does not have to be hospitalized or in an institution but can remain at home with some assistance. The extent of the assistance will vary. Depending on the circumstances you, your family or friends may be able to provide some of this help and this is an area where you should have an open and frank discussion with the interested parties to determine if this is practical. Your parent’s needs might be quite modest and able to be met without putting unreasonable demands upon anyone else’s time. In other cases you may come to the conclusion that outside help is required. Some of the areas of assistance to be considered are:

Meals
Your parent may be in the situation where he or she can manage to make himself or herself breakfast and lunch, but do not feel up to making an evening meal. You and your family may decide that you can do some periodic shopping to keep him or her supplied with essentials as well as provide an evening meal. However, family schedules and proximity may make providing regular meals impractical so a popular alternative could be ‘Meals on Wheels’ or a similar program in your community. For a relatively modest cost, usually about $5, your parent will receive a nutritious, balanced meal delivered to his or her home.

Transportation
When you parent is ill but still able to get around you will need to consider the extent of their mobility and needs. Devices such as canes and walkers can be of great assistance to people with reduced mobility. Electrically powered scooters are also available but can be rather expensive (~$2,000). If your parent is relatively mobile, he or she may want to get out periodically to shop or attend doctor’s appointments. You and other family members or friends may be able to arrange a schedule to make these trips. If this is not practical, many communities have organizations that provide transportation services for those with limited mobility as well as volunteer drivers who can take the patient to doctor’s appointments or therapy sessions.
If your parent is still able to drive their car, you should look into getting a disabled parking sticker to minimize his or her walking. e appropriate provincial ministry will require a signed statement from a qualified health professional that the applicant qualifies on medical grounds.

Home and Garden Care
If your parent is able and prefers to remain at home, he or she will probably require some assistance in maintaining his or her home and garden. You and your family members may be able to arrange an acceptable schedule and list of responsibilities. Required assistance will probably include laundry and cleaning as well as garden maintenance, snow removal, etc. If family and friends are unable to manage these things, there may be local volunteer services available that provide assistance for infirm/disabled persons. You may have to make arrangements with local companies that will require paying commercial rates which must be factored into the budget.

Visiting and Monitoring
When your parent is at home, you will want to arrange for visitors to call on a regular basis. This will not only help to ensure that he or she is managing but provide some important social contact. Live-in Assistance
Your parent’s condition may be such that he or she will require more constant care with an attendant in his or her home for most or all of the day. This will be a more expensive option. You should check to see if there are government agencies to assist you in finding and paying for in-home care. The relative costs of having your parent live in a residential facility would need to be considered as well as the emotional factors since many elderly people are attached to their homes and are very reluctant to move to a care facility.

Adult Day Care
Many communities offer facilities where seniors can spend their days in a safe, social environment.

Respite Care
If you and/or other family members are providing in-home care for your parent, there are Respite Care programs where a qualified attendant will visit periodically to provide care for your parent while the primary caregiver can ‘take a break’. is can be an important service to prevent the build-up of stress for the caregiver(s).

Where to Start
Please contact me. I have access to a great deal of information on the type of support services available. For example, in Ontario, the Ministry of Health and Long Term Care is an excellent place to start to learn about the options available to assist people in finding and funding in-home care.

Jay F. Llave
“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317
http://www.jayllave.com About me
http://www.jayllave.com Our BLOG

I hope you enjoyed this as much as me.

All my best,

Sandra

Tags: assitance, finances, long term health care, meal choices, montoring care, respite care, sandwich generation, social services available to older people, the ministry of health (ontario) and long term care, transportation

I met with Warren Blatt, one of my financial planners and we started to talk about the financial crisis and how it woke people up to asking better questions and making better choices. In Canada people were hit however miniscule compared to the US and other European countries. Our debt in Canada is only 3% versus 66.2% in the US, Japan 121.7%, Greece 104.3%, and Italy 116%. This does not mean that we can allow our debt to equity ratio (how much debt we have: mortgage, loans, etc. versus what we own – equity) to climb. While interest rates and mortgage rates remain low in Canada, small changes can impact us – means we have to pay out more money to cover the loans and less money in our pocket to spend on the necessities for our families.

Saying that now is a good time to think about where you are putting your money. Women in Canada represent 50% of the economic power. Now is the time to assess, do I like the person/people I am working with? Do they listen to my questions and answer them to my full understanding? Are they accessible and can I reach them in a timely manner? What are my fees that I am paying them? Are they being up front about my investment and the yearly fees I pay? I have already told you that I refuse to invest in mutual funds for I feel that the 2.5% yearly management fee that is being charged for these funds is not warranted to their return (how much I earn on this investment) compared to other options which yield higher returns and have less fees.

It is about new beginnings and taking back your power and responsibility. Do not be swayed and make sure that you invest in things that YOU FEEL comfortable with.

Canada is in a good financial position compared to the rest of the world.

I just read a disturbing article that talked about how in the US there is a growing income inequality which can destabilize the US. From 1980 t0 2005 more than 80% of wealth went to the top 1% . Productivity increased by 20% yet virtually none of the increase translated into wage growth at middle and lower incomes. According to this article and a source, “according to the CIA income distribution in the US is more unequal than in Guyana, Nicaragua and Venezuela and is roughly on par with Uruguay, Argentina and Ecaudor.”

Even Alan Greenspan has noted this issue which seems to have been pushed down in America. He says, “This is not the type of thing which a democratic society can really accept without addressing”.

For my counterparts in the US you have an election coming up – you need to bring this to light. You want to bring your country to a better financial position.

In the meantime, take a look at your finances and make decisions that allow you to get yourself out of debt, if you are in debt, and see how you can begin to rebuild your future! It’s all about baby steps.

All my best,

Sandra

Tags: Alan Greenspan, CIA, financial inequality in US, Latin Amrerica

WHEN YOUR MARRIAGE BREAKS UP, YOU MAY WANT TO CHANGE WHO RECEIVES YOUR ASSETS IN THE EVENT OF YOUR UNTIMELY DEATH.

There are various issues to consider:
a. Your Will
Usually couples make each other the beneficiary of their Wills. When you get divorced, any provisions in the Will where the former spouse is left assets or made the Executor are revoked. Therefore, you will need to reassess the provisions in your Will. Consequently, if you are drafting a new Will after a marriage breakdown, you should make sure that any dependent children are properly provided for on your death. The Family Law court can step in and overrule your Will if you don’t. Take the opportunity to review 2bempowered Will planning checklist on important issues to consider when creating a Will, and complete this 2bempowered personal record keeper to help you gather and update important information that you can share with loved ones including your executor or executrix.

b. RRSPs and RRIFs and Life Annuities
With these investment structures you can (and should in most circumstances) have named beneficiaries. When your relationship breaks down you will need to look at these to determine if the beneficiaries are still appropriate in your new situation.

Insurance
In many cases, married couples name each other as the beneficiaries of their life insurance policies. If you are becoming separated or divorced, you may want to reconsider who you name as your beneficiary. If you do not contact the insurance company, your former spouse will continue to be the beneficiary of the policy. In the case of relationship breakdown, you may want to change the insurance coverage on your life in order to provide for your children should anything happen to you.
Depending on the nature of the separation agreement, you may be required to buy life insurance with your former spouse and/or children named as the beneficiaries. This is typically the case where spousal and/or child support is being paid by the primary income earner. This ensures that if the supporting spouse dies, there would be enough money to support the children. In the case of this type of policy, the beneficiaries are ‘Irrevocable’. That means the beneficiary cannot be changed to someone else without the written permission of the current beneficiary.

Jay F. Llave
“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317
http://www.jayllave.com About me
http://www.jayllave.com Our BLOG

2bempowered’s Personal Records Keeping:
Make sure that your spouse/siginificant other/children/executor know where the following Documents and Information Is:
* your will
* the family passports – for each person
* Birth Certificates OR Landed Immigrant Status Papers OR Citizenship (if new)
* Health Card for all family members
* CPP information
* RRSPs – what are you invested in?
* Name and number of Children’s doctor: family, eye, dentist, specialists
* What bank(s) do you and your significant other deal with – all accounts
* Name of your financial advisor(s) – what does he/she financially control? There may be different people that you deal with.
* Investments – mutual funds? Insurance? Reits? Where is the money invested?
* Name of accountant(s) and lawyer(s)
* Who is your mortgage registered with – what is the status: renewal date, how much owing on it, etc. Whose name is on the mortgage? Is there a lien on the house?
* Car leasing information
* Property taxes – are you paid up to date?
* Personal taxes – is your spouse paid up to date?
* Personal Bankruptcy- will this affect the estate?

2bempowered’s Will Planning Checklist:
* in the case of joint custody, if you die before your ex-husband/wife the children will go to the custody of the living parent. In a case where both parties are gone you must think about who you want to leave your child/children to – who will be the most responsible, parent in the way that you want, and loving to your child/children.
* in the case of sole custody then naming a person to care for your child/children is imperative. Again, think about the most responsible, a person/couple who parents in the same way you do, and one who loves your child.
* Make sure that you have enough life insurance for your children so that they can live in a lifestyle that they are used to. Term insurance is inexpensive. Name your child/children the beneficiaries
* In a will you have a financial executor – choose wisely, one that will work in the best interests of the child/children, you can trust with the money that is left, and will honour your wishes. I have spread out the distribution with 25% at age 21, 25% at age 30 and the remainder at age 35. I am concerned that if my children are left with too much money at a young age they will blow it. The executor will have discretion to distribute for what is necessary – education and so on.
* In a will you also have a medical executor – make your wishes known to this person – Do not want to have heroic measures done? Do not want to live in a vegetative state? Make sure that your beliefs are known to this person so that they will carry them out.
* In the case of property – make sure that all your taxes are covered so when the property is transferred to the child/children (young or old) that they do not have to worry about this. In many cases, property – second homes, cottages, condos, apartment buildings, etc. are passed on and there is a capital gains tax that if not financially considered can make the property too expensive for the child and will need to be sold. (This is in Canada – other countries may have different rules).
Make sure that they are the beneficiaries of your property.
* RRSPs – make sure again that you have the taxes covered for your investments. RRSPs work because they are a deferred tax – someone will have to pay for the taxes.
Make sure that the child/children are listed as the beneficiaries.
* Insurance – make sure again there are no tax costs – and make sure

I strongly suggest that you sit down with a lawyer and discuss what your needs are. A will doesn’t have to cost a lot of money – $300-$400. It is a worthwhile investment and will give you peace of mind.

Depending on what country you live in you will have to find out the laws around transferring property (primary and secondary), RRSPs (registered retirement savings plan) and so on.

Don’t wait do it now!

All my best,

Sandra

Tags: divorce, estate planning, executors, financial planning, listing beneficiaries, wills

I wanted to share with you and article that I received from my financial advisor on Mutual Funds. I just talked to him this morning and we both agreed FOR ME, I will not be investing in any more mutual funds. Why? The return on a mutual fund is less than the fees that your advisor charges to maintain it from year to year. There is often a yearly cost to “running” the fund and there is often a hidden upfront or back-end cost that if you want to get out the fund before a certain time frame you will be charged XX dollars.

What can you do, as an educated investor – ASK QUESTIONS – Is there a yearly cost to maintain this fund? If I want to cash out the fund because I need the money will there be a cost? How long do I have to keep it before it is clear and free? Often it is 7 years, before you can get your money without a “penalty cost”.

Here is the article printed in the Toronto Star. Note that other countries have decided to BAN Mutual Funds.

This article appeared in today’s Toronto Star. It is another article confirming my despise for the mutual fund industry. Canada continues to drag its feet while countries like the UK, Australia, and the US are steadily banning the use of mutual fund trailer fees …. Enjoy the article.

http://www.thestar.com/article/846861–daw-industry-defends-mutual-fund-trailer-fees

Financial advisers are watching nervously and defending their value to Canadians as three other nations prepare to outlaw or curb what is, for most, their primary source of income.

Earlier this year the United Kingdom moved to outlaw by 2012 the sales commissions that are embedded in fees for investment products. Australian regulators proposed something similar. Then, late in July, the U.S. Securities and Exchange Commission (SEC) voted to cap such fees for mutual funds at a quarter the 1 per cent fee included in some funds in Canada.

No caps or bans are on the horizon in Canada. Yet associations for the investment industry and advisers were caught by surprise by the SEC’s vote. So the potential ramifications are already a hot topic for discussion.

A lot of money is at stake. Carlos Cardone, senior consultant with research house Investor Economics, says about $2 billion was deducted from Canadians’ mutual fund assets in 2009 to pay advisers what are called trailer fees.

That compares with about $9.5 billion in the U.S., with ten times the population. The Canadian figure excludes what banks embed in their funds to pay sales and advisory staff. Bank funds hold roughly 30 per cent of total mutual fund assets in Canada.

Cardone predicts a decline in trailer fee revenue, with or without changes in the law on such fees.

“Trailers are likely to be the next frontier for the decline in (fees for expenses) for mutual funds,” he said Wednesday. He foresees banks’ with lower fees will sell more mutual funds, driving others to lower total fees. At the same time, there is a relatively small but rapidly growing trend toward paying separately for advice and buying low-fee funds online.

The cost of advice and management for mutual funds is at the heart of the debate over whether the federal or provincial governments in Canada should offer cheaper alternatives for saving for retirement.

So the mutual fund industry and adviser associations are fighting back. The are emphasizing the value of advice in promoting savings and responsible money management, and using consumer surveys to prove their point.

Cary List, president the Financial Planners Standards Council that accredits and monitors Certified Financial Planners, says his groups’ research has found that 80 per cent of consumers who pay for financial advice make use of registered savings plans.

That compares with only 37 per cent of Canadians who try to get by without professional advice.

A separate report released Wednesday by the Investment Funds Institute of Canada reports data that individuals who choose financial advice accumulate more assets and are better prepared, financially, for retirement.

“Advised households, where the head of the household was between 45 and 54 years of age had nearly three times the level of investable assets of non-advised householders,” according to the report. “Having advice is strongly associated with the accumulation of financial wealth regardless of income level or age of household.”

It’s possible, however, that higher level of savings came first and the desire for advice second.

But List suggests that including the cost of advice mutual fund fees helps to ensure more Canadians will get advice. ( He would prefer they get it from CFPs, who have a code of ethics that requires them disclose the fees and put the interests of clients ahead of their own.)

“There is more need for professional advice than ever before,” he argues, pointing to the worrisome decline in the rate of savings in Canada to a lower level than in the United States.

“Currently, we don’t see an environment where people are willing to pull out their cheque book to pay for advice,” he said. Only about a tenth or 1,500 earn a living without being licensed to sell financial products and earn embedded sales commissions.

jdaw@thestar.ca

Tags: back end costs, front-load costs, Jeff Kaminker, Mutual Funds, Toronto Star paper

I am thrilled that this is so. I was asked to speak at one of my chapters on the topic of Financial Empowerment.

I sent two topic ideas:

1. The Role Of Women Today – it has been documented that women are no happier today than their predecessors – even going back to the Women’s Movement in the 1970s. Women are reaching greater positions within the corporate world, within countries – even leading countries – yet to do so there has been a mind set that women need to behave like men, be aggressive, manipulative and step on people – we have a glass ceiling. This is not true. Women can still achieve what they want and do it in a way that allows them to draw on their masculine energy (create my value/speak my truth) and feminine energy – nurturing, kind and compassionate.

2. Financial Empowerment- for too long women have handed off to their spouse, accountant, financial advisor their finances to the point that if something happened to their spouse or significant other they have no idea of their financial situation. Learn that taking back your responsibility and accountability can be fun — it’s a lot like organizing your closet!

While I like the first topic I am determined to bring financial awareness to women – mostly reducing the fear around this area and having them understand that they already perform so many of the actions on a daily basis – budgeting, organizing, tacking stock, and just plain doing!

I will let you know how it goes. I plan to bring this workshop to all women.

Let’s make 2010/2011 the year to take back your power – it puts you in a position to make good decisions and in the least be knowledgeable of your financial position.

All my best,

Sandra

Tags: budgeting, finance, financial awareness, financial literacy

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