Managed Money Reporter Newsletter — Issue 268, March/April 2012

Editors: Carl Spiess & Allan McGlade

Featured Articles

Your 5 Year Plan

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA

Scotiabank and ScotiaMcLeod are currently promoting the "5 Year Plan". At the Spiess McGlade team, we have long been believers in having a detailed financial plan with goals and actionable items to help you get to where you want to be. We would be pleased to update your current plan, or start one for you if you have been putting it off until now. Here are some details from our Scotia's 5 year plan marketing campaign to inspire you.

Make the next 5 years count

Your financial planning process begins by defining your goals – for example, a comfortable retirement or a child's education. We will work with you to select the products and solutions that match your unique needs at your stage of life and tolerance for risk. And we can continually assess your portfolio and life situation over time as your needs and circumstances evolve.

Every stage of life presents financial opportunities and challenges. For example, after college or university, most people start their first job and move into their first apartment. At this stage, cash inflow is meagre while cash outflow is usually substantial. But, time is on your side. Working with us on a 5 year plan can put you on the right track early to maximize growth potential over the long run. Growth-oriented mutual funds may be a good fit.

In mid-life, capital spending and financial obligations are high, as many people buy homes and raise families. But income also rises. At this stage, people tend to become more serious about investing. A 5 year plan can identify the best strategies for meeting your short, medium and long term goals, whether a high-interest savings account for emergency savings, a Tax Free Savings Account with GIC's for medium -term needs, or mutual funds for longer term goals like retirement.

As the years pass, your mortgage may be paid off or close to being paid off. As other financial responsibilities are met, such as children's education, money should increasingly be put aside for retirement purposes into RRSP's. Your asset allocation might shift from risky to reasonably conservative, with speculation taking a back seat.

As you approach retirement, you have an ideal opportunity to add to your nest egg as earnings should be near their peak and capital expenditures low. Your 5 year plan will focus on topping up your RRSP's and other financial plans. Investments should be increasingly conservative. It is also important to remember at this stage that estate planning for the distribution of wealth to loved ones should be planned.

Wherever you are on the road of life, make the most of the next 5 years. Speak to us today

More on Your 5 Year Plan


A Banner Start to 2012

The first two months of 2012 have seen solid returns for equity investors. International and US investments had particularly strong returns after many lacklustre years. Despite what has felt like sideways markets for some years now, there have been some glimmers of hope. For our clients nearing retirement, that has provided an opportunity to make accounts more conservative, locking in some recent gains.

Here is what ScotiaMcLeod's portfolio management group has to say in their Winter 2012 issue:

For a very recent set of forecasts for the TSX, interest rates, the dollar and gold, see:

And a good article summing up the winners and losers in February:


Rethinking Asset Location

For two decades we have been advising our clients that a balanced portfolio's asset allocation can be made even better by reviewing "asset location". Basically the idea is that where possible, bonds and GICs should be held in the RRSP or TFSA accounts, and equity investments should be held in the open investment account where one can pay less tax through the dividend tax credit and through capital gains tax deferral.

Now comes an article from respected Canadian tax expert Jamie Golombek:

While he makes a good point, we are not ready to start moving assets around. First of all, the financial situation is not as extreme as he implies. Fixed income assets are paying more than the 1% he talks about. We are currently getting 2.7% guaranteed on 5 year GICs. We will however, continue to keep an eye on this situation and advise you accordingly.

Equity linked notes

The strangeness of current markets has lead to some interesting product development. We currently have equity linked notes available for a limited time. With an equity linked note, you are assured of a return of your principal, plus a variable return based on the performance of a basket of stocks. For example, our current Bank of Nova Scotia Canadian Equity Value Deposit Notes have a 5 year term and their final return will be somewhere between 0% and 8%. Since a 5 year GIC is currently yielding 2.7%, this essentially means a 2.7% possible (opportunity cost) loss, or a maximum 5.3% potential gain above a regular Guaranteed Investment Certificate. Please contact us if you are interested in discussing how this investment might fit into your portfolio.

More on tax efficient investing


The Spiess McGlade Team's Recommended List

We have recently updated our recommended list of funds for 2012. The list can be found at:

Please note that the list covers mutual funds which have broad appeal, but we have many other investments available which especially begin to make sense for larger investment accounts. See:

We are continuing to see growing interest in passive and also new actively managed Exchange Traded Funds, high net worth Private Investment Programs and other tax efficient investment programs ideal for clients with larger account sizes looking to maximize returns by minimizing management fees. We will be profiling these higher end investment solutions in upcoming issues of the Managed Money Reporter.

Contact us if you have questions or would like an account review.


Upcoming Team Charity Events

For any clients that met with us in November, you will have noticed that Carl and Andrew grew moustaches and participated in Movember, raising over $2,500 for Prostate Cancer Research. Our team enjoys participating in a number of charity fundraisers each year. Two major events are coming up soon.

Climbing Higher

So far, 3 of your investment team members have signed up for the WWF CN Tower Climb on April 19th.

The Rat Race

The major Scotia event coming up will be the Scotiabank Rat Race in support of the United Way, scheduled for June 14th, 2012. This is an annual favourite of the Spiess McGlade Team – there is nothing like a little intra-office competition! We will be sure to have several entrants signed up once registration for that fun event begins.

To learn more about how Scotiabank and ScotiaMcLeod are involved in your community, please visit


Recommended Reading - Warren Buffett

Here is a quick version of Warren Buffett's annual letter to Berkshire Hathaway shareholders. It concisely explains why he believes that stocks should inherently be the best investment long term, outpacing bonds which are seen as risky now, and also non-productive assets like gold. He also makes a great case for continuing to invest in US companies. This agrees with our assessment for Canadians that we should be moving assets into the US and Global markets.


Recommended Link of the Month

If you liked the article above, it is worth a visit to the actual site to see what great information is available on a rather boring looking site. Warren Buffett's annual report for Berkshire Hathaway is usually informative. This year it is again worth seeing what the world's greatest investor is thinking about companies, profits, gold and what makes good investment sense.



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F.  416.863.7479

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