Helping Investors find their way

Investor's Quarterly - WINTER EDITION 2017

Click HERE to open the full pdf version of our Investor's Quarterly Newsletter.

HIGHLIGHTS:

2016 Year In Review - The equities markets began 2016 with a fizzle; it was their worst start to the year in history. As the year progressed, economic indicators, corporate earnings, and energy prices improved and the equity and high yield bond markets quickly recovered. Looking back, we had a few surprises in 2016, not the least of which was the Brexit vote in June, which saw U.K. citizens voting in favour of leaving the European Union. In November, we witnessed Donald Trump's unexpected U.S. presidential victory. 

What's Ahead for 2017 - Economist and IA Portfolio Manager, Clement Gignac, believes that the Canadian stock market could be in for "another decent year." He also spoke positively about the potential for equities in the Europe, Australasia, and the Far East to outperform given their reasonable valuations. Possible changes to trade relations within NAFTA are difficult to judge at this point but Trump has made it clear that he wants to revisit the agreement between the U.S.A., Canada, and Mexico. A shift from globalization to protectionism would mean increased tariffs and trade barriers, which would result in higher prices and inflation.

Investor 101: Understanding MERs - (This article first appeared in our Winter 2016 newsletter.) The Management Expense Ration (MER) of a mutual fund is the total of the management fee, operating expenses (administration) and GST/HST charged to the fund each year. It is expressed as a percentage of the fund's average net assets for the year. The average equity mutual fund MER in Canada is 2.49%. The MER covers the cost of everything the team you have working for you does, which includes the Fund Management Company, Mutual Fund Dealer, and your Financial Advisor. 

It's That Time of Year Again - The deadline for 'First 60 Day' RRSP contributions is: March 1st, 2017. Your 2016 contribution limit is based on 18% of your 2015 earned income up to a maximum of: $25,270. Unused RRSP contribution room from previous years is carried forward. Check your Notice of Assessment to determine the exact amount of contribution room you have available.  

TFSA or RRSP - As of January 2017, Canadians have an additional $5,500 of investment contribution room available to add to their Tax Free Savings Accounts (TFSAs). This bring the lifetime contribution limit to $52,000. Although money contributed to a TFSA is not tax deductible, all investment growth and withdrawals are tax free and withdrawals can be re-contributed. Whereas RRSP contributions are tax deductible and investment growth is sheltered from tax, but withdrawals are taxed as income and cannot be re-contributed. Which investment vehicle is right for you depends on a number of factors. We can help you determine which option makes the most sense for you. 

Fixed Income Commentary from IA Clarington - Fixed Income Portfolio Manager, Jeff Sujitno, says "investors want low volatility and minimal surprise risk in their fixed income, first and foremost." His team's investment strategy is consistent with this view as they build portfolios that favour capital preservation over outsized returns. "The unexpected victory by Donald Trump caused us to revisit our expectations for inflation, U.S. interest rate policy and the current stage of the credit cycle... The opportunities in fixed income will be in floating rate debt and shorter duration sprad products with the ability to cushion against rising interest rates. We continue to like senior loans and high yield bonds with shorter maturities." 

Legal Impact of Your Digital Trail - These important reminders come from LegalShield regarding the digital trail we leave online. Make sure you know the implications and protect your legal rights.

Maintain Your Attorney-Client Confidentiality: This information can't be used against you in court. Talking about your legal matter on social media or with anyone other than your attorney is a serious breach of confidentiality.

You Are Never Truly Anonymous: There is no anonymity online; everything can be traced back to its source and could come back to haunt you.

Who's Monitoring Your Location?: Many apps track your location. Information from navigation apps can be used against you in court. Be sure you understand how these apps use and store your data.

Do Not Discuss Your Divorce or Child Custody Matter Online: It's becoming more common for social media posts to be introduced as evidence in divorce and child custody cases. Consider taking a break from social media during a divorce or custody dispute.

Your Posts Could Be Used Against You In Court: The use of information gathered from your digital trail created through social networking is increasingly common in both civil and criminal matters. Discussing illegal activity online could land you in hot water.

Your Employer May Be Watching: Job applicants and employees should be aware that their profiles and posts could be used by employers to learn more about them. Check your privacy settings and don't post anything online that you wouldn't want your boss or co-workers to see. 

Please click HERE to open the full pdf version of this newsletter.  

 

 


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