An exclusive newsletter from Mark J. Krygier, LL.B., CFP
Vice President & Portfolio Manager
Volume 13, Issue 4
“If the U.S. government were a
Investment lessons are not just for the wealthy!
person and came to our branch While the average Canadian has the financial challenge of balancing between
for a debt consolidation loan, mortgage commitments, lifestyle costs, children’s educations, insurance protection
I’m sure we would decline and retirement planning – there is another group of society that has a very different
them!” financial challenge. The phrase “high-net-worth” is an overused term with a
Joel Caughell, Bank Manager changing definition over time. Years ago, being a millionaire indicated one had
TD Canada Trust
considerable means. Today in Toronto, Vancouver and many other major cities,
being a millionaire means owning a reasonably-sized home and not much more.
Did you know? Whatever the definition, there are those in an even higher category - the ultra-high
net worth category - who are often the backbone of most philanthropic endeavours.
Canada has the highest commercial
property rent taxes in the world, as Despite the obvious differences, an interesting study by JP Morgan Private Bank
commercial property owners here pay about the ultra-wealthy has some excellent lessons for all of us to learn.
tax of about 54% on their rental
income, versus 23.5% for the average This study on the ultra wealthy looked at The Forbes Wealthiest Top 400 list. It
amongst 23 countries, as reported
recently in the National Post. The noted that from 1982 at the list’s inception to 2004, only 50 names remained on the
U.S. has the second-highest tax rate list. That means that the odds of sustaining relative wealth, across even one
of about 41%, while Norway is third generation, are “a mere 13%”. What was the “biggest landmine” to preserving
with 36%. Almost 34% of the wealth? Amongst those that lost wealth, overconcentration in a particular
Canadian charges are accounted for
by income tax and a real-estate tax.
investment was the common factor, whether that investment was in oil, real estate or
a single stock. Ironically, while it took concentrated risk to create excessive wealth,
To reach me: this was the same risk that destroyed it. The challenge facing the ultra-wealthy is to
preserve their lifestyle and to pass on their wealth intergenerationally. How was that
T: 416-512-6441 best accomplished? The study concluded simply that “diversification is the key to
email@example.com survival”, a lesson for all of us to heed. Other risks to wealth, from which we can
also learn, included misuse of leverage, spending beyond one’s means, and as a
Or call: cautionary note for those with an inherent mistrust of capital markets – being too
Avital Pearlston, CFP conservative with one’s investments.
Associate Investment Advisor
T: 416-512-6674 Bottom line – investors in all walks of life have something to learn from the
firstname.lastname@example.org successes and failures of the ultra-wealthy. While it takes some risk to make money,
The Madison Centre
common sense diversification is a better strategy for preserving one’s wealth. The
4950 Yonge St., 16th Floor life-long challenge then is to actively manage one’s risk and return opportunities.
Toronto, Ontario M2N 6K1
CAPITAL MARKET HIGHLIGHTS
Canadian GDP has slowed to a 1.0% annualized gain, the weakest gain since the lows of the credit crunch.
Canadian interest rates are not expected to rise until at least the second half of 2011.
Ireland’s debt was bailed-out with $US 100 billion from the IMF and the EU. Could Portugal and Spain be next?
The Bush tax cuts are set to expire in the U.S. unless Obama’s administration and a Republican led Congress can
agree to an extension by year-end.
WHAT TO DO NOW?
Evaluate your own financial strategy by putting it to a “stress test”. Are there any areas to improve? If so, act now!
FINANCIAL SUCCESS SOLUTION$ - We’re preparing for your retirement – are you?
In building a retirement plan it is important to first identify those areas which are most in need of review and planning.
Therefore, when we meet with clients or potential clients, here are some of the questions we ask:
Do you have clear, well-defined future goals?
Do you have a written strategy to achieve your personal and financial goals?
Is your investment portfolio consolidated, integrated and organized?
Do you have a clear understanding of the amount of risk you are assuming in your portfolio?
Have you implemented tax-saving strategies in your retirement and investment plan?
When was the last time you reviewed your vision, plan and progress?
Do you have a strong sense of confidence in your personal and financial future?
To begin a pre-retirement investment plan: Call my Associate Advisor Avital Pearlston directly at 416-512-6674.
STOCK WATCH GLOBAL BENCHMARKS
ETFs TO WATCH (In Canadian $ to November 30, 2010)
TransCanada Corp - TRP CDN Advantaged High Yield
Bond ETF – CHB (TSX) - Asset Class YTD 3-Year
(TSX) - $36.48
Year High: $39.28 Low:$30.01 S&P 500 (USA) 5.1% -4.3%
In Brief: This ETF offers a low NASDAQ 7.3% -1.2%
Owns a network of natural cost and liquid way of accessing
gas pipelines across North TSX 60 (Canada) 9.5% 0.3%
high yield corporate bonds which
America extending more than offer compelling returns in this MSCI Europe -9.1% -13.8%
59,000 km. low yield environment MSCI EAFE -5.4% -11.9%
It owns, or has interests in,
Some of the benefits of this ETF: China Shanghai -14.3% -13.0%
over 10,900 MW of power
generation. Bonds are not investment Brazil Bovespa -2.1% 5.0%
Very attractive dividend of grade so it makes sense to MSCI World -0.5% -8.7%
4.38% hold them in a diversified mix 3-mo. CDN T-Bill 0.4% 1.4%
The ETF is traded like a
Risks: Changes in the 5-yr GOC Bonds 5.7% 5.8%
stock vis-à-vis transparency.
regulatory environment could Yield of 7.4% is very high and U.S.$/CDNemail@example.com -2.6% 0.9%
negatively impact profits. the risk is well diversified (% change)
U.S./ INTERNATIONAL In summary: This ETF is suitable Diversifying asset classes is the
for those seeking higher yields. first step in managing risk!
EMR (NYSE) U.S. $55.12
Year High: $57.29 Low: $40.52
Designs and manufacturers MY THANKS: WHAT AM I UP TO?
array of electrical and To Rahim M., Galina U., Amin C., Recently I read a finance book entitled,
electronic products and Deepika J. and Daniel M. for “The Big Short – Inside The Doomsday
systems. referring my services. If you know Machine” by Michael Lewis. The
Recently completed $1.5 someone - family, friends or author takes the reader through a
billion acquisition of Chloride, colleagues - who may be able to fascinating look behind the scenes at
a U.K. power system use some assistance with their the U.S. subprime mortgage market
provider. investment planning and you think and the players involved. The book is
that I can be of some help, contact an excellent read and reinforces my
Risks: With the stock price me and I would be pleased to call view that keeping investment
high, wait to commit new money. and meet with them personally. strategies simple helps avoid risk.
The statements and statistics contained herein are based on material believed to be reliable, but are not guaranteed to be accurate or complete. This newsletter was prepared
by Mark Krygier who is a TD Waterhouse Investment Advisor and is for informational purposes only. It is not an offer or solicitation with respect to the purchase and sale of
any investment fund, security or other product and does not provide individual, financial, legal, investment or tax advice. Please consult your own legal and tax advisor.
Particular investments or trading strategies should be evaluated relative to each individual's objectives in consultation with the Investment Advisor. Equity prices and yields
quoted are as of the first day of the month of the newsletter’s publication. TD Waterhouse Canada Inc. and its affiliates and related entities are not liable for any errors or
omissions in the information or for any loss or damage suffered. TD Waterhouse Private Investment Advice is a division of TD Waterhouse Canada Inc, a subsidiary of The
Toronto-Dominion Bank. TD Waterhouse Canada Inc. - Member CIPF. TD Waterhouse is a trade-mark of The Toronto-Dominion Bank, used under license.