08 Aug 2013, Posted by Prem Malik in MALIK'S CORNER, No Comments.

Malik’s Corner: Markets, Flash Floods, Insurance, Joint Bank Accounts, Credit Cards, GIC’s and More..


Finally, we have a welcome summer in Toronto. I hope that the flash floods of last week are one off incidents and not a sign of things to come. From a financial planning standpoint, do look up your insurance policies for your personal and recreational properties and increase insurance coverage as you see fit. It will allow you to sleep well at night.   

 

Markets:

 

As mentioned in my previous commentaries, volatility is here to stay. Headlines make nervous investors jittery and this is not going to end soon. US finance chief Bernanke made comments in June and the US stock market fell 5% over two weeks. It has since climbed back by 7%. Expert readings on these markets are from extreme bullishness to extreme panic. Stay the course if invested for the long run. Returns in most clients’ portfolios are high single digits to low double digits for 2013. If you are on the sidelines waiting to get in, dollar cost average back into the markets.

 The enclosed article is simple and to the point and there is little to argue of why the US economy is resilient and the future looks good. Canada looks cheap, as the markets have done nothing in 2013. Today’s purchase of Shoppers Drug by Loblaws is a reflection of things to come. Consolidation, share buy backs will create investor value. Gold and energy stocks are now available at 30 cents to the dollar from their highs but you have to know what you are doing. 

 In brief, over the long term, markets look good and you must stay the course.

 

Other important pointers based on a recent conversation with new clients:

 

  1. Joint bank accounts: Not a bad idea to have a joint account to deposit income cheques and pay your bills from. This allows the family to compare income vs. expenses and make adjustments where necessary and budget for big expenses. The account should serve as a reservoir to feed other savings such as RSPs etc. As the account is joint, both husband and wife have access to it that is very useful if one of them should die unexpectedly. Single name bank accounts are frozen on death and released after probate and can create financial headaches.

 

  1. Credit Cards: The problem with credit cards is that they are credit cards and in a majority of cases have in-built rewards that entice you to use them. If you do not have a disciplined way of paying them off every month, they can create financial headaches. I recommend that a family should sit down and talk about the use of credit cards or debit cards and then choose the best one for them. A family should chose one card where the rewards system benefits their choice collectively and make sure it is used to collect the points and paid off 100% on due date. There are a number of very good sites that help compare credit cards and their ‘perceived value adds’ and their costs. Good idea to do your homework. http://www.ratesupermarket.ca/credit_cards/

 

  1. GIC’s: Make sure you have an idea of your GIC’s and when the come due. Most financial institutions will roll them over for the same period you bought them. I just saw a GIC paying 0.66% locked in for 2 years. My advice to clients is that long-term money should be in dividend paying funds or ETF’s. The difference in return is staggering. Short-term funds should be in a high interest account such ING or others of this nature.

 

  1. Beneficiary on registered accounts such as RSP’s and TFSA’s. I have seen documents which list the beneficiary as an ex spouse, or the estate. Be mindful as without a will this will create a problem. This is important and should be done immediately.

 

  1. Please do not sit on cash in an ING account when you could open an RESP and get a government grant of 20%.

 

  1. Please do not sit on cash in ING…open a TFSA and stick the cash into a high interest account with ING….if the need is short term. At least the interest is tax-free.

 

Have a safe and enjoyable summer. I am in Toronto and am available to meet at your convenience.

 

Kind regards,

 

Prem

 

Disclaimer

 

The information contained herein are obtained from sources believed to be reliable, however, its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. These comments and opinions are not necessarily the opinions of Queensbury Securities Inc. Securities mentioned may not suit all types of investors. Before making any investment decision, contact your investment advisor to discuss your investment needs.


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