Managed Money Reporter Newsletter — Issue 275, July/August 2013


Editors: Carl Spiess & Allan McGlade


Featured Articles



Back to School

Carl Spiess

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

Every year I am thrilled that we are able to help clients fund their children’s education by drawing on their Registered Education Savings Plans.  RESPs are a terrific way to save, and the government adds a 20% grant of up to $500 on your contribution of up to $2,500 per child per year.  So far this year, our team has processed hundreds of thousands of dollars of RESP withdrawals! 

If you have a son or daughter heading off for post-secondary education, please contact our RESP specialists, Debbie Ann Espiritu or Michael Ospina (who is covering Claudia's RESP duties during her maternity leave) for help on completing the forms for a withdrawal this fall. Please note, RESPs are not just for university, a wide variety of colleges and other educational institutions both in and out of Canada qualify, and the RESP doesn’t just cover tuition. Books, computers and even housing costs can be paid for with RESP proceeds.

Note - For Ontario residents, we also encourage you to visit the Ministry of Training, Colleges and University website to see if you qualify for a 30% Ontario Tuition Grant. While this program is not directly related to RESPs or your ScotiaMcLeod accounts, it is a great way to help reduce the cost of post-secondary education.

If your children (or grandchildren) are younger, please contact us for information on how to set up an RESP.  For more information, please visit our RESP information page which has full details on the government grants, age restrictions on contributions and much more.

 

More on financing education

 

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Market and net worth update

Looking at the one-year returns of our recommended fund list shows numbers that are nothing short of spectacular. Investments outside of Canada have shined especially brightly. In the Canadian Equity category, it is also interesting to note how much better the actively managed (and more expensive) equity funds have performed vs. the lower cost index fund.  This is largely due to increased foreign content in some of those Canadian funds, but interesting nonetheless.

This would be a good time to have a review meeting with us.  You may well be surprised to hear us recommending that we take some profits on your market based funds (even bond positions and high income funds) and invest in a ladder of GICs that can mature and be invested at higher yields in coming years if rates begin to rise.  This can help to rebalance your overall portfolio which has likely become a bit heavier on the equity side after some good returns.

We’d be happy to also update your retirement plan to look at your overall net worth.  It is interesting to note that with increasing housing prices, coupled with low ongoing borrowing costs and rising investment markets, Canadians' average net worth has been propelled to a record high.  As reported by the Globe and Mail, the average Canadian household net worth now tops $400,000.

More on net worth

 

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Lifecycle Fund Review

In 2005, lifecycle funds came to Canada.  They are also called retirement date or target date funds. Back in our first article on lifecycle funds, we were very bullish on these investment vehicles and we continue to believe that they are a terrific investment option for many clients who want a fully managed, diversified and hands off investment that will automatically become more conservative as they approach retirement. ScotiaMcLeod offers a great selection for our clients:

In other lifecycle fund news, Scotia Asset Management (a related company and part of Scotiabank) had a limited offering of 2010, 2015, 2020 and 2030 lifecycle funds available and they are now proposing fund mergers on their Scotia Vision funds.  Affected clients will be contacted directly.

We continue to like and recommend the Fidelity Clearpath portfolios for many of our clients.  In fact, we recommend those funds as a replacement for a long time holding on our recommended list, Fidelity Canadian Asset Allocation which has been placed on performance watch.

Clarington Target Click funds have also been good in our client’s RESP accounts, where we used the target dates and guaranteed investment growth to match when the children would need the fund proceeds for school.

Please contact us for more information on lifecycle funds or for any of your investment questions.

 

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Recommended reading

The summer edition of our "Investment Portfolio Quarterly" report is available online and in fact, the direct link to it is updated as soon as it is published:

It has great articles on individual stocks, global fixed income funds, exchange traded funds (ETFs), and financial planning.

Scotiabank's global forecast update is also interesting with detailed forecasts on economic growth around the world:

If you ever have any questions about your account or the services we provide for you, you will likely find the answer in our terms and conditions and relationship disclosure document.  This document, provided during your account opening process is an important source of information about your relationship with us at ScotiaMcLeod.  It has recently been updated and we encourage you to ask us if you have any questions at all about the contents:

Many other interesting and timely publications can be found on our Market Watch page:

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Mackenzie Investments simplifies fund lineup

On August 16th, Mackenzie Investments undertook some major name changes and fund consolidations on 19 of their funds.  We fully support such changes. We feel they ensure that the holdings of those investors in smaller funds are being proactively managed and monitored on a go forward basis. No action is required and mergers will not incur tax consequences for investors. Affected clients will see information on their next statements. Please contact us if you have any questions.

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Brandes becomes Bridgehouse

US investment manager Brandes has been in Canada for many years now, but they have recently changed their overall branding (pun intended) to reflect that they actually offer three investment management firms with a variety of funds. Bridgehouse Asset Managers now run funds from these management teams:

Brandes Investment Partners, L.P. Sionna Investment Managers, Inc. Lazard Asset Management (Canada)

In keeping with our back to school edition of the MMR, we are pleased to note that Brandes gives out 10 scholarships a year, each worth $1,000. Check out the students' winning essays at:

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Recommended Link of the Month

We are Canada's central bank. We work to preserve the value of money by keeping inflation low and stable.

Recently a client and I had a great discussion about inflation.  I recommended a review of the Bank of Canada website, where there is terrific detail about how inflation is measured in Canada.  For example, overall inflation was 1.2% over the last 12 months.  With a new Central Bank Governor, Stephen S. Poloz, we recommend a quick review of the website, which ultimately is one of the most important institutions controlling the value of your dollars. 

On July 17th, the bank announced that it is maintaining its target for the overnight rate at 1 per cent. The bank rate is correspondingly 1-1/4 per cent and the deposit rate is 3/4 per cent.  (Scotiabank’s prime lending rate remains unchanged at 3% since September 2010.)

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T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

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