Successful investing seminar

56
MULTI INSURANCE Retirement & Financial Planning Successful Investing through tax sheltered investments By: Aleem Visram, HBA, MBA, IFIC Multi Insurance Retirement & Financial Planning (647)986-9163 [email protected]

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Transcript of Successful investing seminar

Page 1: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Successful Investing through tax sheltered investments

By: Aleem Visram, HBA, MBA, IFIC

Multi Insurance Retirement & Financial Planning

(647)986-9163

[email protected]

Page 2: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

AGENDA

Introduction & Background

Why worry about Retirement Planning?

Compounded Interest effect

Tax Deferred Savings

RRSPs vs. non-Registered Savings

RRSPs vs. TFSA

RESPs

Investment options

Mutual Funds

Segregated Funds

Investment Strategies

Risks to your retirement plan

Final tips

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MULTI INSURANCE Retirement & Financial Planning

Multi Insurance Retirement and Financial Planning

Proven track record of success with 37 years in the business and over 1,000 clients

Aleem Visram has an MBA from the Richard Ivey School of Business and is certified by the Investment Funds Institute of Canada (IFIC)

Bahadur Visram is among the top performing financial advisors in Canada with Chartered Life Underwriter (CLU), Certified Financial Planner (CFP) and Chartered Financial Consultant (CHFC) designations

Independent Advisors that can deal with ALL Mutual Fund and Life Insurance companies licensed to do business in Canada

Will provide you with the best rates available in Canada

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MULTI INSURANCE Retirement & Financial Planning

Multi Insurance Retirement & Financial Planning

Holistic approach to include a customized plan with a broad range of financial planning strategies to cover all your financial needs, including:

Retirement Planning – A solid plan can make the difference between a comfortable retirement and one that is inadequately financed. This

includes RRSP, RESPs, TFSAs and Mutual Funds.

Tax Planning – Looking for investment opportunities to help reduce

tax liabilities

Estate Planning – Ensuring that you have greater control of your

assets and preserve them from unnecessary legal and tax costs upon

death

Insurance- Ensuring that you and your family have adequate life,

critical illness and disability coverage to provide you with sufficient

funds in the event of an illness or death

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MULTI INSURANCE Retirement & Financial Planning

Why do you need to worry about retirement planning now?

In 2011 over 59% of retired Canadians don‟t have enough

money for their retirement

The average Canadian over age 65 spends $51,000 per

year

Old Age Security and CPP only provide an average of

$13,272 per year

You need a gross pre-tax earnings of approximately

$90,000 per year to receive a net after tax income of

$51,000 per year

The CURRENT average life expectancy of a male is 83

years and a female is 85 years

If you live to the average Canadian age and spend the

average $51,000 per year, you will need $1.5 million to $2

million in retirement income

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MULTI INSURANCE Retirement & Financial Planning

How do you save enough for retirement?

Imagine you have a twin and both of you are investors

You Your Twin

invest $2,000 a year invests $2,000 a year

at 10 per cent compounding at 10 per cent

compounding

annually for 10 years annually for 30 years

starting at age 25 starting at age 35

Who ends up with more?

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MULTI INSURANCE Retirement & Financial Planning

Retirement

Starts investing Your twin

Stops investing Your twin

$361,887

$611,817

25 30 35 40 45 50 55 60 65

Start investing You

Stop investing You

Based on annual contributions of $2,000 and assuming a 10 per cent average annual compounding rate of return

Essential: start early, think long term

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MULTI INSURANCE Retirement & Financial Planning

Avoid the Tax Man!

In Canada you pay taxes on your HIGHEST income first,

so the more money you make, the higher taxes you pay

Avoid paying high taxes through tax deferred savings

Income Income Taxes

Over $128,800 46%

$83,088-

$128,800

43%

$78,361- $83,088 39%

$75,550- $78,361 35%

$66,514- $75,550 33%

$41,544- $66,514 31%

$37,744- $41,544 24%

Up to $37,744 20%

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MULTI INSURANCE Retirement & Financial Planning

Registered Retirement Savings Plan (RRSP)

A RRSP is a personal savings plan registered with the federal government

You can contribute 18% of your income each year (to a maximum of

$22,450) and receive up to $10,000 in tax refunds each year

Deduction room is based on previous year‟s earned income (2011 deduction

based on 2010 income) plus unused contribution room from previous year

less pension

Wide selection of investment options, such as mutual funds, stocks, bonds

and GICs

Flexible retirement options

Money grows on a tax-deferred basis with compounding interest until

withdrawn

If you die your RRSPs will be rolled over to your spouse tax free

Deadline to purchase RRSPs is February 29, 2012

An RRSP is the best tax deferred investment

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MULTI INSURANCE Retirement & Financial Planning

Why should I invest in RRSPs?

An RRSP can help maintain your standard of living

Helps to ensure you have a comfortable retirement without having to worry about money

Tax Benefits:

Income tax is deferred until the money (and earnings) are

withdrawn at retirement.

Your money compounds annually with tax free growth

At retirement, your annual income (including money

withdrawn from your RRSP) will likely be lower than your

income today.

Therefore, you will be earning in a lower tax bracket, which

means that a smaller percentage of your income will go to

taxes.

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MULTI INSURANCE Retirement & Financial Planning 10

Additional Benefits:

Home Buyers Plan (First Time Homebuyer)

Up to $25,000 can be borrowed from your RRSP to buy a home,

without counting the withdrawal as income

If you and your spouse each have RRSP, you can borrow up to

$50,000 between two of you if taking joint ownership

Must be repay loan (no interest) within 15 years.

Lifelong Education Plan

Allows you to withdraw a maximum of $20,000 for

education/tuition.

Must be repaid within 10 years.

Special RRSP Features

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MULTI INSURANCE Retirement & Financial Planning

Savings program based on

a monthly contribution of $200

for 30 years at an annual rate

of 10 per cent into a Registered

Retirement Savings Plan

(RRSP)

10 years 20 years 30 years

$36,173 $41,310

$113,952

$153,139

$281,192

$455,865

Growth within an RRSP

Growth outside an RRSP

RRSP vs. Non RRSP

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MULTI INSURANCE Retirement & Financial Planning

The Power of RRSPs and Compounded Interest

Example: Sabrina is 30 years old and makes $100,000 per year. She wants to retire

at age 65 and is wondering if she should invest in RRSPs for tax savings.

Tax Shelter vs. No Tax Shelter Investments

Item No RRSPs RRSPS

Gross Income 100,000$ 100,000$

Less: RRSP Contribution (18%) 18,000$

Taxable Income 100,000$ 82,000$

Tax (assume 40% Marginal Tax Rate) 40,000$ 32,800$

Net Earnings after Taxes 60,000$ 67,200$

Annual Income Tax Refund 7,200$

Net After Tax RRSP Contribution 10,800$

Tax Savings at Retirement (age 65) 252,000$

Contribution by Age 65 (after Tax Refund) 378,000$

RRSP Value at Age 65 (6% Compounded Interest) 2,126,176$

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MULTI INSURANCE Retirement & Financial Planning

Spousal RRSPs

If there is an income discrepancy between you and your spouse, you can contribute to your spouse‟s RRSP (or common law partner) to reduce your tax liability

Strategy

Contribute to an RRSP for your spouse, and claim the deduction

yourself. Total contributions (to your own and spouse‟s plan) are still

subject to normal RRSP limits

Advantage

Spouse will ultimately be the one who reports the income for tax

purposes, when the funds are withdrawn on retirement or otherwise.

Overall, this would result in lower tax on the income. However, the

spousal RRSP belongs to the spouse or common law partner.

Note: There are attribution rules to avoid short term income-splitting

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MULTI INSURANCE Retirement & Financial Planning

Spousal RRSPs

Example: Karim makes $100,000 and his wife Aliya makes $30,000.

Strategy

Karim buys a spousal RRSP contribution for $18,000 and gets a tax

break in his own high tax bracket

There cannot be any contribution to the Spousal plan for the following

2 years

Aliya can withdraw the money from the Spousal RRSP in the third year

and pay taxes in her own tax bracket, which is much lower than Karim‟s tax bracket, thereby saving on the withdrawal as well.

This is used when:

1. The family is planning on having a child and one of the spouses will not be working

2. If one of the spouses is in a lower income tax bracket

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Can I withdraw from my RRSP?

Money invested in an RRSP is accessible at any time.

All withdrawals are taxable at that time.

You should generally not draw money from your RRSPs to

pay for ordinary living expenses, cars, furniture or those

sorts of items

RRIFs

At Age 71 at the latest, your RRSPs must be transferred to

Registered Retirement Income Funds (RRIFs) or some other

income plan

You must withdraw a minimum income each year from your

RRIF (increases every year) – only amount withdrawn in subject

to tax each year

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MULTI INSURANCE Retirement & Financial Planning 16

Funding Your RRSP

Regular contributions are better than lump sum contributions

near the yearly deadline.

Allows the money to grow tax free longer

Provides for dollar cost averaging: consistent investment on a

monthly or quarterly basis avoids market fluctuations

What about taking out a loan?

If you invest your maximum allowable amount, you may be

entitled to a larger tax refund, which can be used to partly pay off

the loan.

What if I cannot contribute the maximum amount?

If you do not contribute to the maximum allowable amount, the unused contribution room is carried forward indefinitely.

This information can be found on your “Notice of Assessment” from the Canada Revenue Agency (CRA) or call 1-800-267-6999

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MULTI INSURANCE Retirement & Financial Planning

Three Investing Scenarios

Three Individuals Contribute $13,500 annually at 6%

compounded annually

Individual Contribution Strategy Value in 35 Yrs

A January at the beginning of the

tax year $1,552,391

B December at the end of the tax

year $1,504,370

C $1,125 every month

$1,594,632

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MULTI INSURANCE Retirement & Financial Planning

Is it better to pay down my debt or borrow money for an RRSP?

Pay Down extra to your debts

(mortgage, student loans, line

of credit)

$10,000 contribution on a debt

with a current rate of 3% -4% will

result in a savings of $300- $400

WHICH WOULD YOU PREFER:

$3,000- $4,000 each year or

$300- $400 each year?

Borrow Money for an RRSP

Get a line of credit for $10,000 at

a current rate of 3% to 4% will

cost $300 to $400

Using the $10,000 loan to invest in

RRSPs will result in an immediate

tax refund of $3,000- $4,000,

which is a 30% to 40% return on

the principal

Sara can use the tax refund to pay

back the loan or pay down her

mortgage

Sara‟s $10,000 RRSP contribution

will also grow tax deferred with

compounding interest

Example: Sara is wondering if she should borrow $10,000 from the bank to

contribute to her RRSPs, or use the money to pay down extra towards her debt.

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MULTI INSURANCE Retirement & Financial Planning

Borrowing for an RRSP

The Benefits of Using a Loan to Contribute

Borrow $1,000 to contribute to your RSP $1,000

Return on $1000 RSP investment at 6%

for 1 year: $60

for 10 years: $791

for 40 years: $9,286

Repay loan over 12 months - total of

payments

$1,033

Loan interest paid over the 12 months $33

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MULTI INSURANCE Retirement & Financial Planning

New in 2009 - TFSA

You can contribute $5,000 per person per year

Available for any Canadian Resident over 18

No taxes paid on any income/ dividends/ capital gains earned

Including 2012, cumulative contribution room is $20,000

The amount withdrawn can be put back in the TFSA at a later date

without reducing your contribution room.

Neither income earned in a TFSA nor withdrawals will affect your

eligibility for federal income-tested benefits and credits such as the

Canada Child Tax Benefit (CCTB), benefits from Employment

Insurance (EI), GST Credit, Guaranteed Income Supplement (GIS),

Old Age Security (OAS), or Working Income Tax benefit (WITB).

Contributions to a spouse‟s TFSA will be allowed and TFSA assets

can be transferred to a spouse upon death.

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MULTI INSURANCE Retirement & Financial Planning

Invest in an RRSP and TFSA

TFSA RRSP

Are your contributions tax-deductible? No Yes

Will you pay tax if you withdraw your money?

No Taxed as ordinary income

Can withdrawn amounts be added to your contribution room for the following year?

Yes No

How much can you contribute? $5,000, regardless of

income level

Contribution room is based on your earned income, with a

maximum of $22,450 for 2011

Will withdrawals affect your eligibility for government benefits and credits such as Old Age Security or Guaranteed Income Supplement?

No Possibly – depending on your

income level

Do you have to close or convert your account at a particular age?

No, you can continue saving in a TFSA for as long as you want

Yes, an RRSP must be converted to a Registered

Retirement Income Fund (RRIF) or annuity at age 71

Where can you invest the money? A wide variety of investments, including mutual funds,

stocks, bonds and GICs

A TFSA AND AN RRSP ARE BOTH DESIGNED FOR TAX BENEFITS –

BUT THEY HAVE DIFFERENT ADVANTAGES

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MULTI INSURANCE Retirement & Financial Planning

RESPs

Currently the average cost of post-secondary education is

approximately $20,355 per year, for a 4 year program cost of

over $80,000 per child

In 2016, that cost will increase to approximately $27,123 per

year, or over $100,000 for a 4-year post secondary education

per child

RESPs are Registered Retirement Savings Plans that provide

tax sheltered earnings and grants from the government

You can contribute up to $5,000 per child per year tax free

until the child reaches 18 years of age

Through the Canadian Educations Saving Grant (CESG), the

government provide a grant of $500-$800 (I.e. 20-26%) on the

first $2,500 in RESP contribution per year per child, to a

maximum lifetime grant of $7,200

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MULTI INSURANCE Retirement & Financial Planning

RESPs

The money can be withdrawn tax free from an RESP and

used towards any expense related to the child‟s post

secondary education, including tuition, books,

accommodation

A Family RESP Plan is recommended if you have more

than one child, as the money can be combined to use for

either or both children, giving you increased flexibility

In the event the child does not attend post secondary

education, the money can be rolled over into an RRSP

without penalty (as long as there is RRSP contribution

room available)

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MULTI INSURANCE Retirement & Financial Planning 24

What are my investment options?

Equities (Stocks)

Ownership in company, Share in company profits

Canadian or foreign, collect dividends

Fixed Income (Bonds)

Promise to repay debt, Receives interest

Government and Corporate

Money Market/GICs

Federal government debt, Short term, bank certificates

Segregated Funds

Mutual Funds

Exchange Traded Funds (ETFs)

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MULTI INSURANCE Retirement & Financial Planning 25

What Do I Invest In? cont.

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MULTI INSURANCE Retirement & Financial Planning 26

Determining Asset Allocation

This decision is yours based on a variety of factors including:

Your Age;

Time Horizon - when you want to retire;

Risk Tolerance;

How much money you will need in retirement

Young age/long time horizon + low liquidity requirements +

high risk tolerance = higher exposure to equities

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MULTI INSURANCE Retirement & Financial Planning 27

Segregated Guaranteed Investment Funds (GIFs)

Currently provide guaranteed 5% annual rates of return for

lifetime (without compounding) irrespective of market rates

(as in a GIC)

Investments also have market resets every 3 years: if the

market rate is higher than the guaranteed 5% rate, you get

the higher return with no downside risk

Investments grow on a tax deferred basis until they are

withdrawn at retirement

Annual payout of 5-7% of the total fund value for life, which

is considered return of capital and dividends (lower taxable

gains for non-registered investments)

Upon death, the full remaining value transfers to your

beneficiary tax free

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MULTI INSURANCE Retirement & Financial Planning 28

Segregated Guaranteed Investment Funds (GIFs)

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MULTI INSURANCE Retirement & Financial Planning

Mutual Funds vs. Segregated Funds (Guaranteed Income Funds)

Seg Funds (GIFs) Mutual Funds

Maturity Guarantee YES NO

Death Benefit

Guarantee

YES NO

Ability to Reset

Guarantees

YES NO

Potential for Creditor

Protection

YES .. Some provinces

for bankruptcy only

Taxation Time weighted

distribution

Distribution to all

shareholders equally

Fund Distributions Reinvested in the

fund

Monthly, quarterly

annually

Client reporting Semi-annually Semi or quarterly

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MULTI INSURANCE Retirement & Financial Planning

Original Investment 1,000,000

FMV drops 10% 3 yrs. later $900,000 (upon client’s death)

Non-Reg DSC Fee (5.0%) $50,000

Probate & Estate Fees*** $54,500

(5.45%)

Net Proceeds $795,500

Bypass Probate*

No Tax Implications

FMV + Top-Up

$1,000,000+

$1,000,000

minimum

Keep Seg Fund**

Collapse DSC Free

$1,000,000

minimum

•* Only if a beneficiary is named ** Assumes spouse/common-law partner is named as successor owner and annuitant. •*** Cost will vary from province to province and on the complexity of the estate.

Segregated Funds (GIFs)

100% Death Benefit Guarantee

• 100% of Deposit Value or

• Market Value or

• Previous Guarantee Reset Value

Segregated Funds- Guaranteed Income Funds (GIFs)

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MULTI INSURANCE Retirement & Financial Planning 31

What are my Mutual Fund Options?

Types of Mutual Funds:

Money Market: low risk, low return

Fixed income: regular income stream, low risk

Growth/Equity: long term, based on stock

market performance

Balanced: reasonable returns, mix of products,

low to moderate risk

Specialty: specific to a geographic region or

industry, higher risk

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MULTI INSURANCE Retirement & Financial Planning

Fixed Income lowers volatility in a portfolio … even with rising interest rates

BOND AND STOCK PORTFOLIOS (1941 – 1981)*

Source: Ibbotson Associates, FMRCo (MARE) as at September 30, 2009.

6% 8%

9%

11%

3%

14%

4%

5%

7%

10%

0%

2%

4%

6%

8%

10%

12%

14%

16%

100% Bonds 30% Stocks /

70% Bonds

50% Stocks /

50% Bonds

70% Stocks /

30% Bonds

100% Stocks

Tota

l Ret

urn

(%)

Avg. Return

Std. Dev.

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MULTI INSURANCE Retirement & Financial Planning

30-Year Fixed Income Bull Run is Nearing its End What Got Us Here, Won‟t Get Us There

•Source: Bloomberg, as of December 31, 2011.

1

2

3

4

5

6

7

8

9

10

1995 1999 2003 2007 2011

Yie

ld (

%)

Govt. of Canada Bond 10 Yr Prov. of Ontario Bond 10 Yr Canadian Corp. Bond A 10 Yr

3.4%

3.0%

1.9%

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MULTI INSURANCE Retirement & Financial Planning

Little Left After Tax & Inflation

1.9%

3.0%

3.4%

1.02%

1.6%

1.8%

Net of Interest Income

Tax

-1.9%

-1.3%

-1.1%

2.9%

2.9%

2.9%

46.4%

46.4%

46.4%

•Sources: PC Bond Research, Bank of Canada and Bloomberg, as of

December 31, 2011. – Assumes a marginal tax rate of 46.4% which is the

top rate for Ontario in 2011.

Gross Yield

Federal

Government

Bonds

Provincial

Government

Bonds

Corporate

Bonds

Net of Inflation

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MULTI INSURANCE Retirement & Financial Planning

$200,000

$220,000

$240,000

$260,000

$280,000

$300,000

$320,000

$340,000

$360,000

Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11

Po

rtfo

lio

va

lue

Being overly conservative in the recovery?

Source: Datastream, September 30, 2011. Balanced portfolio 50% S&P/TSX Composite Index, 35% DEX Universe Bond Index, 15% DEX 91 day T-Bill. All bond portfolio consists of 100% DEX Universe Bond Index.

300,000

Remained invested in a balanced portfolio

Sold at low, invested 100% in bonds

Most are

somewhere

in-between

S&P/TSX

Trough

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MULTI INSURANCE Retirement & Financial Planning 36

Diversification

Holding a wide variety of investments in a portfolio so that no single

investment can make or break overall performance

YOU CAN DIVERSIFY BY:

Asset class (equities, fixed income, cash)

Sector (industrials, financial services, energy, etc.)

Geography (Canada, U.S., Europe, Asia, emerging markets, etc.)

Company size (small, mid and large capitalizations)

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MULTI INSURANCE Retirement & Financial Planning

Why diversify? No one can tell what

will happen

Diversification helps ensure that high returns from one part of your portfolio can compensate

for slower returns in another

By smoothing out the highs and the lows, diversification provides more consistent returns

Sales

Timee

•Sunglasses

•Umbrellas

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MULTI INSURANCE Retirement & Financial Planning

•Foreign equity: MSCI EAFE Index

•Global equity: MSCI World Index

•Emerging markets equity: MSCI Emerging Markets Free Index

•U.S. equity: S&P 500 Index

•U.S. small cap. equity: Russell 2000 Index

•Canadian equity: S&P/TSX Composite Index

•Canadian small cap. equity: Nesbitt Burns Small Cap Index

•Canadian bond: DEX Universe Bond Index

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

U.S. equity

38.0%

Emerging markets

57.2%

Canadian bond

10.2%

U.S. small cap.

8.9%

Canadian bond

8.7%

Canadian small cap.

50.2%

Emerging markets

16.8%

Emerging markets

31.2%

Emerging markets:

32.1%

Emerging markets:

18.6%

Canadian bond

6.4%

Global equity

33.5%

Canadian equity

31.7%

Canadian equity

7.4%

Canadian bond

8.1%

Canadian small cap.

-4.9%

Emerging markets

27.8%

Canadian equity

14.5%

Canadian equity

24.1%

Foreign equity

25.9%

Canadian equity

9.8%

U.S. small cap

-17.9%

Foreign equity

28.8%

Foreign equity

20.0%

U.S. small cap.

0.4%

Emerging markets

3.8%

Emerging markets

-7.0%

Canadian equity

26.7%

Foreign equity

11.5%

Canadian small cap.

14.3%

Global equity

19.6%

Canadian bond

3.7%

U.S. equity

-23.3%

Canadian bond

9.2%

Global equity

18.1%

Canadian small cap.

0.4%

Canadian small cap.

1.1%

Canadian equity

-12.4%

U.S. small cap.

20.5%

U.S. small cap.

9.7%

Foreign equity

10.7%

U.S. small cap.

17.9%

Canadian small cap.

-1.4%

Global equity

-26.9%

U.S. small cap.

4.6%

Canadian small cap.

17.4%

U.S. equity

-5.9%

U.S. equity

-6.4%

Foreign equity

-16.8%

Foreign equity

13.4%

Canadian small cap.

7.4%

Global equity

6.7%

Canadian small cap.

17.6%

Foreign equity

-5.7%

Foreign equity

-29.8%

Canadian equity

-1.6%

U.S. small cap.

14.6%

Global equity

-10.2%

Global equity

-11.6%

Global equity

-20.7%

Global equity

8.9%

Canadian bond

7.1%

Canadian bond

6.5%

Canadian equity

17.4%

Global equity

-7.5%

Canadian equity

-33.0%

Canadian small cap.

-19.0%

U.S. equity

14.4%

Foreign equity

-11.2%

Canadian equity

-12.6%

U.S. small cap.

-21.3%

Canadian bond

6.6%

Global equity

6.4%

U.S. equity

2.4%

U.S. equity

15.4%

U.S. equity

-10.5%

Emerging

markets:

-41.4%

Emerging markets

-19.9%

Canadian bond

-1.1%

Emerging markets

-28.2%

Foreign equity

-16.5%

U.S. equity

-22.9%

U.S. equity

5.3%

U.S. equity

2.8%

U.S. small cap.

1.9%

Canadian bond

3.8%

U.S. small cap

-16.5%

Canadian small cap.

-46.6%

… or which asset class will lead

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MULTI INSURANCE Retirement & Financial Planning

… or what region will lead

Canada U.S. U.K. Europe Japan Asia

1998 -1.58 38.01 23.48 43.16 15.60 2.16

1999 30.43 14.37 13.68 10.88 66.28 53.18

2000 19.04 -5.93 -9.74 -4.24 -30.39 -34.59

2001 -8.39 -6.35 -10.22 -17.50 -24.90 4.06

2002 -12.44 -22.91 -15.36 -21.12 -9.83 -10.17

2003 26.72 5.26 9.93 16.66 13.40 18.57

2004 14.48 2.81 12.21 12.76 7.96 9.03

2005 24.13 2.29 6.40 7.78 22.92 18.79

2006 17.26 15.35 32.59 34.90 1.66 31.69

2007 9.83 -10.53 -9.15 -0.38 -19.59 13.12

2008 -33.00 -23.29 -36.98 -31.26 -10.68 -37.94

LEADING REGION

•Source: Fidelity Management & Research Company as at December 31, 2008. Expressed in CDN$. Indices used: Canada: S&P/TSX Composite Index; U.S.: S&P 500 Index; U.K.: FTSE All Share Index; Europe: MSCI Europe ex-U.K. Index; Japan: TOPIX Index; Asia: MSCI AC Far East ex-Japan Index.

AVERAGE ANNUAL RETURNS (%)

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Leading sectors change without warning

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Consumer Discr. 34.89 26.37 -20.53 -4.40 -23.25 13.55 6.59 -1.56 21.57 -17.25 -28.23

Consumer Staples 31.12 -20.38 15.91 -2.21 -3.93 -3.14 3.97 3.09 21.12 1.33 -5.47

Energy 12.27 15.64 11.11 -1.00 -7.09 4.47 19.20 25.43 18.73 11.12 -23.73

Financials 20.91 2.96 15.40 -11.32 -16.96 15.18 9.32 8.68 24.84 -21.31 -43.20

Health Care 46.34 -15.14 31.76 -7.58 -18.70 -1.07 -1.55 6.08 11.21 -11.04 -3.33

Industrials 15.45 21.23 2.94 -10.19 -23.09 14.42 10.86 9.01 19.42 -1.30 -29.86

Information Tech. 80.57 89.51 -39.43 -25.12 -39.33 22.44 -5.05 1.79 9.83 -1.70 -31.07

Materials 7.33 22.07 -9.03 1.46 -5.28 20.23 9.40 16.17 29.62 14.01 -38.53

Telecom 63.44 35.68 -38.42 -20.59 -29.41 3.84 9.29 -11.99 33.23 4.21 -17.14

Utilities 33.28 -17.73 28.99 -17.02 -16.41 6.61 19.79 10.45 37.30 4.21 -12.85

AVERAGE ANNUAL RETURNS (%) WORST PERFORMERS BEST PERFORMERS

•Source: Ibbotson. Annual returns by sector based on the MSCI World Index, as of December 31, 2008. Expressed in CDN$."

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MULTI INSURANCE Retirement & Financial Planning

•Specialty Funds

Fidelity Small Cap America Fund– 2011 7.71%

Small- and mid-capitalization U.S. market

Concentrated portfolio (30-45 stocks) with below average volatility

Excellent performance: 1yr 7.71%; 3yr 19.09%; 5yr -0.49%, 10yr -0.01%

Fidelity Canadian Large Cap Fund- 2011 10.55%

and international mid- and large-capitalization companies

Fidelity Canada‟s oldest Fund with concentrated holdings (30-45 stocks)

Consistent top performer for over 10 years in the Canadian equity marketplace

Exceptional short and long term performance: 1yr 10.55% ; 5 yr. 7.40%; 10 yr. 9.01%

Fidelity Dividend Plus Fund – 2011 3.13%

aims to provide a high total investment return and competitive market yield by investing in dividend-paying equities incl. REITs.

Proven Manager track record, formerly known as Fidelity Income Trust Fund

“Get paid to wait” - monthly distributions paid

Solid performance on the upside and downside:1 yr. 3.13%; 3yr. 21.70%; 5yr. 8.16%

Fidelity Investment Top Funds

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MULTI INSURANCE Retirement & Financial Planning

Fidelity Income Allocation Fund – 2011 7.22%

Neutral mix (30% equity, 70% fixed income, including US High Yield and US CMBS)

Managers have the ability to tactically move between asset classes (domestic equity, foreign equity, fixed income, cash)

Oversight management team to help with tactical decision making

Stellar short and long term performance: 1 yr. 7.22% ; 3 yr. 18.49%, 5 yr. 6.42%

•Canadian Fixed Income Balanced Fund

•Canadian Balanced Income

Fidelity Canadian Balanced Fund – 2011 -1.11%

Neutral mix (50% equity, 40% fixed income, 10% high yield bonds currency hedged)

Strategic asset allocation strategy which provides consistency when constructing as a core for a portfolio

Exceptional short and long term performance:1 yr. -1.11% ; 5yr. 3.78%; 10 yr. 6.34%

•Canadian Balanced Fund

Fidelity Monthly Income – 2011 6.18%

Neutral mix (30% Canadian equity, 30% Canadian fixed income, 10% U.S. high yield currency hedged, 10% U.S. CMBS

currency hedged, 20% Canadian income trusts)

Management team have the ability to tactically switch between asset classes

Consistent short and long term performance: 1 yr. 6.18% ; 3yr. 15.12%; 5yr. 5.07%

Fidelity Income and Balanced Funds

Page 44: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Franklin Templeton ALL STARS Period ending December 31, 2011

Fund Name Inception 1 Yr 3 Yrs 5 Yrs 10 Yrs S.I.

Bissett Canadian High Dividend Fund 11/24/2000 1.85 21.92 10.34 13.70 14.6

Bissett Microcap Fund 11/24/2000 9.55 37.20 7.30 17.72 17.33

Bissett Dividend Income Fund 11/24/2000 8.00 13.38 4.20 7.67 7.99

Templeton Global Bond Fund

6/18/20012

2.80 6.70 7.86 7.51 8.07

Templeton Emerging Markets Fund 09-20-1991 -19.91 18.00 0.70 11.80 6.51

Page 45: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Making and sticking to a plan is more difficult in times of high market volatility

Source: Westcore Funds / Denver Investment Advisors LLC, 1998.

Optimism

Excitement

Thrill

Euphoria

Anxiety

Denial

Fear

Desperation

Panic

Despondency

Depression

Hope

Relief

Optimism

Temporary setback,

I‟m a long term investor

Wow, I feel great

about this investment

•Maybe the markets

just aren‟t for me

POINT OF FINANCIAL RISK

POINT OF FINANCIAL OPPORTUNITY

Capitulation

Page 46: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Emotions: The Media Worried about market volatility and your investments?

Page 47: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Emotions: The Media What a difference a day makes!

Page 48: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Emotions: The media

•Source: Globe & Mail, August 19, 2011. •Source: Toronto Star, August 19, 2011.

Media headlines are influencing client decisions

Page 49: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Period Length of Bear Bear Decline

Apr 56–Jan 58 21 mos. -24%

Oct 73–Nov 74 13 mos. -33%

Jun 81–Jun 82 12 mos. -39%

Aug 87–Nov 87 3 mos. -25%

Apr 98–Sep 98 4 mos. -27%

Sep 00–Sep 01 14 mos. -38%

Jun 08–Mar 09 10 mos. -50%

Average 11 mos. -34%

Can we learn from the past? Absolutely!

•Source: FactSet and Morningstar Research, S&P/TSX as of July 31, 2011 (Bear Markets) and August 31, 2011 (Bull Markets)

S&P/TSX – Bull and Bear Markets – 1956 to 2011

Subsequent Period Length of Bull Bull Rise

Jan 58–Jul 59 19 mos. 46%

Dec 74–Aug 75 9 mos. 27%

Jul 82–Dec 83 18 mos. 99%

Dec 87–Jan 90 26 mos. 34%

Sep 98–Aug 00 24 mos. 109%

Oct 01–Apr 02 6 mos. 16%

Mar 09–Aug 11 30 mos. 69%

Average 19 mos. 57%

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MULTI INSURANCE Retirement & Financial Planning 49

$88,227.63 or

9.1% annual

compound

return

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Oct-

83

Oct-

84

Oct-

85

Oct-

86

Oct-

87

Oct-

88

Oct-

89

Oct-

90

Oct-

91

Oct-

92

Oct-

93

Oct-

94

Oct-

95

Oct-

96

Oct-

97

Oct-

98

Oct-

99

Oct-

00

Oct-

01

Oct-

02

Oct-

03

Oct-

04

Oct-

05

Oct-

06

Oct-

07

Sept-

08

Value of $10,000 invested in S&P/TSX 25 years ended September 30, 2008

Crash of 1987

2000 - 2002

bear market

1998 market

crisis

2008 Global

financial crisis

Economic

Slowdown

Early 90’s

recession

Source PerTrac

Market behaviour: Staying the course produces healthy returns

Page 51: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Stay invested- It pays off

Average Annual Return Growth of $10,000

Fully Invested 9.1% $57,075

Missed 10 Best Days 5.8% $30,926

Missed 20 Best Days 3.7% $20,662

Missed 30 Best Days 1.8% $14,346

Missed 40 Best Days 0.2% $10,374

•Source: Bloomberg as of July 31, 2011.

S&P/TSX – 20 Years Ending July 31, 2011

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MULTI INSURANCE Retirement & Financial Planning 51

13.2%

$1,193,792

3.7%

$206,812 3.0%

$180,611

US Inflation Average US Investor S&P 500 Index (US$)

Source: 2006 Dalbar Inc. (US) Research Report.

$1

00

,000

in

ve

stm

en

t o

ve

r 2

0 y

ea

rs

“While the S&P 500 returned 13.2%

over 20 years, the average investor

return was only 3.7%”

– Dalbar Inc.

Market timing is the #1 reason investor

returns pale in comparison

Investor misbehaviour:

Difficult to win by trying to time the market

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MULTI INSURANCE Retirement & Financial Planning 52

-40%

-20%

0%

20%

40%

60%

80%

1-year 2-year 3-year 4-year 5-year 7-year 10-year

Best and worst 1-year returns

differ by more than 90%

No negative 7- or 10-year

periods in over 25 years.

An

nu

al c

om

po

un

de

d r

ollin

g p

eri

od

re

turn

s

Source: Pertrac, S&P/TSX Composite Index, 1983 to 2008.

S&P/TSX Composite Index performance over 25 years

Sound investor behaviour:

Long-term strategies limit worries

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MULTI INSURANCE Retirement & Financial Planning 53

What happens when I die?

The value of your RRSP/TFSA is paid to the beneficiary you have designated.

The RRSP can be transferred to a surviving spouse on a

tax free basis. However, once the surviving spouse dies

the entire RRSP value is fully taxable as income to the

beneficiary or beneficiaries

If there is no beneficiary, the RRSP is paid out to your

estate. The beneficiary of the estate will have to pay taxes

on the full amount as taxable income.

For example, if you have $1 million in RRSPs, when you

and your spouse die, your beneficiary will need to pay

taxes on the $ 1 million, i.e. $480,000 in income taxes.

You can do estate planning by getting a joint last to die life

insurance policy to cover you in the event of death to

avoid your beneficiaries paying taxes on your estate.

Page 55: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning 54

Final Tips: Investing 10 Commandments

1. If you haven‟t started saving, start now. It‟s never too late to invest.

2. Invest early and often and take advantage of the „time value of money.‟

3. Choose mutual funds and put your money in the hands of professionals who

have the investment know-how to help you reach your goals and retirement.

4. Maximize your RRSP Contribution to take advantage of your single greatest

opportunity to defer taxes and save for retirement.

5. Don‟t be too cautious and choose all low-risk investments or too aggressive

and choose all risky investments. A diversified portfolio should include a

variety of assets to minimize risk and maximize return.

6. Think long-term instead of letting short-term market volatility sway your

investment decisions.

7. Take advantage of „dollar-cost averaging‟ with a pre-authorized chequeing

(PAC) withdrawal that spreads your mutual fund purchases over time through

manageable monthly contributions.

8. Use an RRSP loan to maximize your tax refund if you don‟t have savings.

9. Transfer your non-registered investments to an RRSP for tax savings.

10. Don‟t wait until the deadline to submit your RRSPs- its better not to be rushed!

Page 56: Successful investing seminar

MULTI INSURANCE Retirement & Financial Planning

Questions? Contact me for a free, no obligation consultation:

Aleem Visram, HBA, MBA, IFIC

Financial Consultant

Cell: (647) 986-9163

E-Mail: [email protected]

MULTI INSURANCE

Retirement & Financial Planning