| Glossary of
Financial Terms | | |
| Portfolios
of great funds that automatically rebalance.... Are they an investment
solution? |
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| The prolonged negative returns
of much of the mutual fund market over the past few years has led
many investors to take a sober look at what type of funds they have
been putting their money into and whether or not their holdings actually
suit their risk profile. If the previous investment approach was ad
hoc, flavour of the moment or somehow managed to end up overweight
in categories that are now incompatible with the volatility they are
prepared to live with, some restructuring is in order. |
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| Segregated
Funds: What are they and are they right for your portfolio? |
|
| They are both pools of financial
assets managed by investment professionals, they cover all of the
different asset categories which are designed to fit a wide variety
of Investment objectives. Flip the coin over and you will find a number
of differences which are worth noting. Segregated Funds, which are
available only from Life Insurance Companies, provide investors with
a number of benefits which are simply not available from mutual funds. |
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| MBSs: Look
before you leap |
|
| Before jumping into a Mortgage
Backed Security (MBS) there are a few details that should be understood
so that an informed decision can be made on what is being purchased. |
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| Systematic
Withdrawal Plans |
|
| When people retire, they are
frequently advised to put their money into a Term deposit or a GIC
and live off the interest. At first glance, this may seem to be a
wise decision because the income from the interest initially appears
to be sufficient to meet their needs. But a few details that should
be understood so that an informed decision can be made on what is
being purchased. Over the years, however, the income received decreases
in real value because of the effects of Inflation and the taxes paid
on interest income. |
|
| Mortgage Backed
Securities |
|
| Mortgage Backed Securities (MBS)
fulfill two important investment objectives. First, MBS are completely
guaranteed by the federal government through the auspices of the National
Housing Act. In fact, these securities are backed by the Canada Mortgage
and Housing Corporation (CMHC). Secondly, the yields are often better
for these securities than for comparable Government of Canada securities. |
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| Reverse
mortgages |
|
| Reverse mortgages are a relatively
new phenomenon in Canada but are destined to become more popular.
The concept is simple enough. A lender applies a mortgage against
the borrower's Principal residence and purchases an annuity for an
equivalent amount. |
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