April has turned out to be much better than the
past few years. I have even gotten a couple of partial rounds in on the golf
course. I trust the following information will be useful and informative for
you. As always, thank you for placing your trust in our office.
March was generally a sideways month for most of
our portfolios. Small gains and small losses in a variety of assets generally
offset each other. The TSX(Canada) is only up about 2.6% so far this year while
the S&P 500(USA) is up about 10%. The big surprise for a lot of people is
likely Europe with the MSCI all Europe up 13% so far in
2015. (source:Fidelity Investments:Datastream)
The strong growth in Europe helps to illustrate why
I am in favour of diversification. It is terribly hard to predict where returns
are going to come from in any one year.
Our rolling 12 month rates of return are all still
well above average. One thing I am watching and studying is whether
we will be looking for a currency hedge for the Canadian dollar in the future.
A rising Canadian dollar would put pressure on some of our foreign
holdings. Historically, unhedged investing has provided the stronger
return and, as of now, there is not a good case for a rising Canadian dollar or
excess risk but it is something I am monitoring.
There are three big costs we actively look to control on your behalf.
Overhead, Behavioral, and Taxes.
Overhead is the cost for you to have your money invested. We actively
look for managers and products with lower cost MER’s. In 2015 we
have decided to stop opening any new accounts using funds that pay a commission
and we are currently moving clients to lower costing options as they become
available. We are doing this simply because it is the right thing to do.
We help reduce the behavioral cost for you by assisting all our clients
in making sure decisions reflect good financial reasons and not
emotion. Finally, being a CPA, I am always mindful of minimizing
client taxes.
I enjoyed speaking to the Pioneer Prairies Kiwanis this
week. I explained the costs and benefits of having an advisor and
received some excellent, well thought out, questions from the members of that
group. I also updated them on changes in the budget. The
members were telling me that their number have been dwindling over the
years. The exact reason service group numbers are dwindling is the
exact reason interest rates are low worldwide. Our aging population
is not consuming the way they did 30 years ago. The baby boom generation is
retiring and there simply aren’t as many consumers behind them. This
is going to mean the service groups will continue to decline and, very likely,
long term investment rates will continue to be below averages we saw from the
1950’s to the 1990’s.
As a CPA (Chartered Professional Accountant), I will be providing some
tax tips from time to time to help in our financial planning.
TFSA contribution doubles to $10,000.00 per year.
If you have never made a contribution to a TFSA,
you and your spouse can each have $41,000.00 inside a TFSA as of
2015. At $81,000 and growing this is now a very important planning
tool. If you don’t already have a TFSA please contact us. If you have a TFSA
and are not sure you are getting the maximum out of it, please contact us.
Warren