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Hi All

We are having a summer heat wave !!!  Stay hydrated and stay cool .

Just a quick update on my CFP progress. We are finishing the third course  Comprehensive Practices in Risk and Retirement Planning. One quiz and the exam to go. Then course four. We are on target to write the first FPSC final 6-hour exam in Nov.  So far I have done well with the course material  and really enjoyed the class I attend once a week. It’s been a great help and support .

When it’s too hot to be outside, stay in!  Its a great chance to sit and do a mid-year review of your investments, handy to have those June statements,  and go over all your other financial papers.  Is your will current?  Where is that life-insurance policy, and how old is it anyhow ???? Has anything changed in the way of beneficiary designations ???  Moved ???   Married/divorced? Added to the family? Changed employment or employment status?  Tally up a pre-tax estimate.

So many things to do in the cool of the basement …

Stay cool people

Here are a few of the major mistakes we as agents see clients make when purchasing life insurance.

How many of these mistakes are costing you time and money?

Top 12 mistakes people make regarding their life insurance

1. Blindly trust their advisor, any advisor

• a. Many advisors specialize in gaining trust and selling product ONLY
• b. Important financial decision for welfare of family
• c. Mistakes can be costly (hundreds of thousands of dollars)
• d. Use a specialist? Why not get a second opinion? Existing or new.
• e. Get it in writing

2. Don’t know why

• a. Only one true need

3. Make decision emotionally (100%)

4. Don’t use guaranteed products

• a. Usually based on greed + unrealistic expectations and salesmanship and misunderstanding of how these things work (most advisors don’t understand on this stuff works either).
• b. Buy wrong type. Illustrates well but can result in overpaying and losing insurance
  i. Examples include YRT Universal Life and enhanced Whole Life

5. Don’t optimize

• a. See Life Guide survey
• b. Calculate ROI

6. Don’t know what they’re buying

• a. Get involved in grandiose schemes that they don’t fully understand (see 1. Above) and involve bank financing and/or complex tax strategies that can “blow up” if not carefully set-up (initially) and administered (on-going).

7. Misleading presentation

• a. Purchase a policy without being fully made aware of their options and shown a market survey and

8. Double duty dollars

• a. Cash accumulation doesn’t work. Double duty dollars.
• b. Tends to result in overpaying for what you get

9. Don’t coordinate with other financial planning

10. Haven’t discussed their Bequest Preference

11. Don’t compare to alternatives

12. Don’t measure solution to determine viability and appropriateness

How to make sure you have the right policy.

1. I don’t know how much I have and why

2. I don’t know what type I have (3 types, some guaranteed, some aren’t)

3. I don’t know about structure (corporate) (beneficiary)

4. I don’t know if I’m optimized (cheaper, take advantage of features, understand what 300 contract pages say).

Biggest Mistake

1. Spend too much

2. Non guarantees that make insurance look good

3. Relying on salesman

4. Blind trust

5. Don’t put it in writing

6. If you don’t fix it early, you might not be able to

7. No on-going communication and reviews

What are most people not aware of:

1. Understand contract

2. No idea of how much and why

3. Understand different types

4. Short term focus/emotion

5. It’s part of a planning process

6. Dealing with unqualified people (knowledge is critical)

Its getting to be that time! Income taxes and RRSP season go hand in hand. But we have a new twist this year—the TFSA. Which is best for you?

Depending on your projected retirement income, either could be the answer. Projections using just the math show both to be even bets in the long run; however, if you have a significant RRSP account or pension coming,  look more closely at the new TFSA.  All the same investment vehicles qualify, and the market looks good to get in! No more standing on the sidelines people, it’s time to get your feet wet in the investment pool.

If you have more questions contact me  or any professional advisor !  Get the straight facts on investing.

It’s been too long since I updated but I have a good excuse !!

I have gone back to school to pursue my Certified Financial Planner’s designation. It will take me over a year and consists of 4 modules and a 6-month proficiency course then exam. I am really enjoying the course material and to-date, we have covered  a variety of information from family law to government benefits. Our next module will  cover income tax, how exciting.  I will still try to update and post relevant educational material as time permits. Wish me luck!

Hi All

Its that time again   !!!

Come visit me at my booth at the Hastings Plowing Match  Aug 19 & 20

The match is being held on the farm of Art DeSnoo and his brother  in Thurlow

Check out the Hastings Plowing Match web site for all the particulars

Hi All,

Here is a fascinating article  written by an ordinary guy —a wealthy ordinary guy though.

He has some great tips and comments on building wealth, and I really like his advice on educating oneself financially.  So take a rainy day and read on how Hedley Dimock achieved his dream life.

For more advice on the agricultural ideas in the article, see the following sites or links

www.fbc.ca       www.ofa.on.ca                    www.cra.gc.ca

—–

•http://www.canadianmoneysaver.ca • September 2004

Wealth Creation and Preservation
Top Ten Techniques from 45 Years of Investing

Hedley Dimock

Let me start by describing where I am coming from with these techniques and thus my bias. These techniques (which would be called “secrets” if I was selling something) have come from my experiences as an investor and are focused on what has worked— not on one or more theories of investing. I was a millionaire
at age 50 while earning less than $50,000 a year. So, these are “in my pocket” techniques—no fancy charts or graphs—and more successes than failures. But many of the failures have consolidated my techniques, as it is one thing to read about what not to do and another to then do it and lose money.

I am a retired university professor and organization consultant presently just writing, operating a Christmas tree hobby farm, and managing 9 financial portfolios
and some real estate. I am not in the finance business and have nothing to sell you.

1. Take charge of my own investments. No one is more concerned about my money than I am. For many years I was too busy making money to spend
time managing my investments. I monitored Trimark’s Select Growth’s rate of return compared to the Trimark Fund of which it was a clone. As Select Growth produced over a 1% lower return a year, I converted my Select Growth without cost as soon as the delayed commission (rear-end load) feature expired.

2. Gather informed opinions and data from many sources. I read, ask questions, listen to my friends and colleagues, and file the track records of my present investments and possible future ones. I tracked the 10-year return of the Trimark Fund for 3 years before investing in it. It was first then and still is 9 years later. I subscribed to three investor newsletters for a few years before finding MoneySaver. Each has taught me a lot and shown me new ways of looking at data on returns and their tax implications. The single best tax book I’ve read is Personal Tax Planning by the certified general accountants of Ontario. I read it every year to keep up with the tax changes.

3. It is not what I make but what I keep that counts. My present net worth, while earning a modest income (maximum $50K), substantiates this action. It was confirmed years ago, for example, by my next door neighbour— a financial advisor—who had 2 BMWs, 2 ultralight airplanes, a beautifully renovated house and swimming pool. I was getting a bit envious as our lifestyle was very plain with only 2 entry level cars, until he went bankrupt and moved away.

4. Taxes are usually the biggest taker of what you make. There are marvelous ways to minimize and defer taxes. I learned about them through my readings, but a few I had to figure out for myself. Tax exemptions are part of minimizing taxes. I am a member of the Ontario Federation of Agriculture which exempts me from Ontario’s 8% sales tax on farm-related purchases. My hobby farming makes me eligible for reduced property tax, and I signed up with the Conservation Tax Incentive Program for another reduction. These are farming examples but there are similar exemptions and reductions in many areas. The best tax minimization and avoidance strategy I have found is to do my partner’s and my own tax return. You can do the paper return before, after, or with your tax consultant. If I didn’t do it myself, I wouldn’t know the relationship between and among the tax credits, tax brackets, clawbacks, surcharges and comparable rates for my three income sources. My learnings have included: how to split income most effectively (dividends are best for the low-income partner), which partner should declare medical expenses and charitable donations, whether the donation credit should be postponed to a future year, how to shift income to be in a lower tax bracket while avoiding clawbacks and surcharges, and how to withdraw money from an RRSP tax-free. It is one thing to do last year’s return accurately and use all the benefits available, but quite different to figure out how you can save 10-20% on taxes for the next return by rearranging your income. •http://www.canadianmoneysaver.ca • September 2004

5. Split income.
Splitting our incomes has saved us a couple of thousand dollars a year since I learned how it works. As we refined our splitting, Mary was able to make at least half of my income and pay little, if any, tax. This took a while. Mary mostly worked part-time and had no pensions or savings. But I finally found out that the baby bonuses that she invested in our first farm entitled her to share the money from selling the farm. Four other openings were also available for splitting—only one was suggested by an investment advisor.

6. Set up and contribute to an RRSP very carefully. RRSPs are not for everyone and there are many potential drawbacks to consider. When self-directed RRSPs came out in the mid-1970s, I thought they were the best thing since canned beer, and quickly got one. I was holding a number of corporate bonds and preferred shares at the time and put them in my SDRRSP. My maximum contributions in the ‘70s were low as half the limit was taken by my university pension, so our savings were mostly in non-registered accounts. This was fortunate because I gradually uncovered the serious limitations of my RRSP and stopped contributing. After its conversion to a RRIF I started wishing even more that I had not contributed as much as I did. My present opinion on RRSPs agrees with the C. D. Howe report that one third of Canadians with low incomes should not use an RRSP as savings for their future. For the rest, people should determine what percent of their retirement portfolio they want in fixed-income securities (usually 30-60 %) and have only those investments in their RRSP.

7. The plan and process of creating wealth is most important. As David Chilton (The Wealthy Barber) said, “Ninety percent of wealth creation is spending less than you make.” The power of compound interest means that investing regularly at an early age can outweigh the return of periodic “hot” investments. A plan with clear goals and measurable objectives for wealth accumulation beats opportunistic investing. Work your plan with how much and when to invest and don’t fret the “what”. The wealth creation goal Mary and I established was to be financially independent by age 50 or at least by 55. Independent for us meant not having to be dependent on future work income, government benefits, or company pension plans. Our plan of consistent investment of 10-20% of my earnings, the growing economy, and some good luck enabled us to reach our goal at age 50. While there was no theme for our success, three farms and solid blue chip-stocks (Bell Canada was our rock) were the winners. The duds were 80% of our mutual funds. Near disasters were Massey- Ferguson, Dennison Mines and Royal Trust (near disasters because they were preferred shares and we did receive some compensation).

8. Invest in things you like and are going to use. Investing is more fun when the things you buy can enhance your everyday life or provide enjoyable activities. I have reported my fondness for the Bank of Nova Scotia stock as Nova Scotia is the location of the Dimock ancestral home in Canada and my father’s birthplace. Our three houses have been marvelous investments as have our two cottages. We enjoyed a vacation farm so much that we moved to it after six years and commuted by train to work in Montreal. When we moved to Guelph, we bought another farm near the city. Our hobby farms have been the single biggest contributor to our wealth creation and my physical health and emotional well-being.

9. Be very careful with mutual funds. The media hype on mutual funds can be very misleading if not pure B.S. (beguiling statements). The management expenses plus brokerage fees for the average Canadian equity fund is over 2.8% a year. Over a fifteen-year period about one fund in ten will beat the index of stocks to which it is related. The proliferation of iUnits and exchange- traded funds covering most markets mean you can be diversified, play a global or specialized market and beat most mutual funds while deferring tax on the fund’s yearly earnings and capital gains. I was an enthusiastic mutual fund participant with my first purchase 45 years ago (AGF Growth). As I watched their performance and studied them more carefully, I have reduced my enthusiasm and most of my fund holdings. The two I haven’t sold, all or part of, are ABC Fully Managed and Trimark Fund (though it is on my watch list after 3-4 years of mediocre performance).

10. Stay the course. I did not start to increase our net worth until I had a plan with clear and attainable goals and yearly measurable objectives to see how we were doing. I have worked hard not to get suckered out of position by flaky trends and the media hype over the sexy avant-guard investment or hot stock. I did get scammed by a persuasive salesperson on a penny gold mine stock. Well, everyone knows better, but there is nothing like learning from experience. The stock changed its name and then mysteriously disappeared. During the run-up of sexy high-tech stocks, I held the course but got caught by the Nortel shares I inherited from my large Bell Canada holdings.

My attempts to predict the market have also met with failure. I sold Imperial Tobacco (Imasco) when I saw a series of lawsuits coming. By selling, I also lost Shoppers Drug Mart and Canada Trust. Even after they were sold, all three did well. Stay the course or as Tom Peters said of the best run companies (In Search of Excellence) “stick to your knitting”— what you know best—and “never acquire any business you don’t know how to run”.
Hedley Dimock, EdD, RR1, Puslinch, Ontario N0B 2J0
(519) 822-2749 hdimock@infinity.net

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I was asked by a good friend to write an article for her online adventures, and if you follow the above link you can see half of it!

I will add the other half to my web site soon !

Enjoy the link lots of great information and inspiration

Welcome to Spring !

I recently was invited to the Farm Credit Canada (FCC) forum entitled Big Ideas. Three great speakers and a super lunch  it was a really nice day. Here’s a recap of what I heard and came away with.

Rex Murphy, a CBC commentator and journalist. This Rhodes scholar hailing from Newfoundland provides a perspective and forsight into today’s affairs that is both real and funny. His description of life on the coast, and the links between farmers and fishers was inspiring and thoughtful. The ever-present dry wit and sarcastic intellect of Rex bring home a deep message of unity—but all with a smile on our faces and the occasional belly laugh.

Joan McCusker, Olympic Gold medal winner Curling. Again funny and informational. Joan demonstrated the parallels of sports-psychology and successful strategies used in business, community and family. Her constant message that ordinary people can do extraordinary things and build extraordinary lives.

Finally we get to my favorite David Chilton, the author of The Wealthy Barber. His best-selling book on finances is one of my all-time best-reads (for finances anyhow). His common-sense approach to financial planning and business take the intimidation factor out, and he sprinkles in good doses of humour so the message sticks even better .

After a quick review of how and why he wrote The Wealthy Barber, David got to what we wanted to hear, his take on the recent financial situation.

Despite the crisis enveloping the rest of the world, he remains quite confident in Canada’s financial stability. With the increased globalization and complexity of today’s market, there is a cascade-effect to be expected. He deplored the US-housing situation, non-recourse loans, no controls, the flawed theory of always-increasing-real-estate values, and just plain greed. He warned us to be careful when listening to the news, especially the economists from the big banks—have they ever been right ?

He followed with an ABC of ideas and comments.
Here are a few highlights:

Advisors with older clients be cautious—but not too conservative—cash may not be the best holding if inflation comes back (my thought the same for GICs).
Be real, use perspective when goal-setting.
Common sense as your guide—Use the power of compounding for you not against you.
Diversify your holdings—pay off your debt (compounding against you).
Estate Planning: we should be thinking of this  do we have too much money ? Give it away  before the government gets it.
Forced Savings pay yourself first—simple concept hardest to do—but there are ways, automatic chequing into a savings account,take it off the pay check first, his theory that budgeting never works, most people will or can not budget.
Goals—set one—then put it in writing     g is for gold as well   a great inflation fighter
Health—dont take it for granted
Insurance  David’s my man; he likes life insurance, and most people have too little, it can be another form of income during retirement (whole life) and a market buffer.

He ran out of time to do much more but he did note that the one thing Canadians all have in common is to complain!

He wanted to tell us all to Cheer Up; we have it great here  and life is good!

Hi All

I just reviewed a great micro site by Invesco Trimark  Knowingpays.ca —great information on how to deal with today’s market—too bad it was not out earlier !

This is a must read for those of you concerned by December statements and thinking of making changes.

The sky is not falling  but some of our retirement portfolios are. While the majority of Canadians have plenty  of time ’til retirement  to recover from this market correction (and they will), it does well to remind us of just how those portfolios are positioned, and what we may need to do to ensure we have access to steady income in retirement—no matter what the market is doing.

Most portfolios are based on what we call asset allocation. Asset allocation combines different investments from various classes such as the technology, resources, and financial sectors to build a portfolio suited to the individuals risk tolerance and time frame.

The diversification of investments between sectors, geography and type (equities, fixed income) acts as a buffer to reduce risk  but still allow for good returns over time.

For many of us facing retirement asset allocation may not be enough to enusre your savings will last a lifetime. Many planners now speak of product allocation as well. Product allocation divides assets amongst different investment products to create a secure guaranteed life time income.

The methodology behind it stresses that no one product should exclude another. Based on personal finances, time frame, risk tolerance, personal longevity risk and goals, product allocation will determine which investments are most suitable for you to achieve your optimum retirement income, and how much of your savings you should put into each investment product.

The range of products available to investors is wide and varied from stocks, bonds, mutual funds, GICs, segregated funds and annuities. In response to consumer demand and demographics, investment companies continue to develop and refine new products such as principal-protected notes and GMWB  Guaranteed Minimum Withdrawal Benefit  programs.

One cannot forget however an old tried-and-true investment strategy bricks and mortar. Considered by some a non-traditional investment, real estate is increasingly finding its way into many more traditional investment areas like REIT trusts and mutual funds.

Why include real estate? Benefits like inflation-hedging and added diversification are great additions to any portfolio and can effectively dial up a portfolio’s return for a given level of risk, or visa versa, dial down risk for a given return.

Like with any investment, seek the advice of a professional and do your homework before you dive in. Good luck and good investing.