The Government is introducing a new Tax Free Savings Plan (TFSP) beginning January 1, 2009.  There are many good reasons to put your money into this type of vehicle.

If you are 18 yrs or older and live in Canada, you can sent aside up to $5000/year into a TFSP.  If you don't use all your contribution room one year, you can move it forward year to year.  You will be able to withdraw your money at any time for any reason.  Contributions to a spouses TFSP is allowed and the TFSP assets can be transferred to a spouse upon death.

Your contributions will not be deductible for income tax BUT any investment income including capital gains inside will not be taxed when withdrawn.  No income earned inside or any withdrawal will affect your eligiblity for federal income-tested benefits & credits

If you would like more information on this type of investment vehicle please give me a call or an email.

Norine Stewart

250-718-8349

Investing throughout the year is usually easier than making one lump sum per year for most investors.  The longer you put your money into an investment, the faster it can grow for you.  

Dollar-cost averaging is making monthly or quarterly contributions to your investment.  In dollar-cost averaging when the price is lower, your investment buys more units.  When the price is lower, your investment buys fewer units.  As you invest year round it will average out the cost per unit and will lead to higher returns long term.

Setting up a monthly, bi-monthly or quarterly payments to your investment is easy.  Just send me an email or give me a call.  I would be happy to connect with you.

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Canadian investors should sit tight and keep an eye out for bargains on their home market, according to one of the country's biggest investment fund companies.

Fidelity Investments is sticking to its "Go Canada" thesis, citing the long-term effects of the creation of a new middle class in the developing world.

So much has already transpired that it's good to note that among the major markets, Canada has been a reasonably safe haven because of the strong fundamentals," says Bob Haber, CIO of Fidelity. "I'd still say it's not a bad time to stay in Canada, on both the stock and the bond side."

"Every other time we've had this level of bearishness in the market and this level of Fed action to support the system, it has marked some kind of bottom from which to at least catch our breath and take a look back at stocks," he says. "I don't think the volatility has ended; we don't believe that it is necessarily calm, but we're probably through a major part of this credit readjustment."

While it is too early to call for a recovery in the U.S. financial markets, Haber says the sub-prime element of the credit crunch has already been discounted, with $200 billion written off of the books of financial institutions worldwide.

"My view is that the sub-prime part of this crisis came to an end on Monday [March 17]. Not that there aren't sub-prime mortgages in the States that won't have problems financing themselves, but from the bond and stock market standpoint, we've now taken out and shot [Bear Stearns] and discounted paper associated with sub-prime, basically down to nil. It's an important marker on the road to ending this bear market, especially in the U.S."

While some may think fighting inflation has taken a backseat to economic stimulus, Haber argues that producing inflation is the real goal.

"One of the major issues with the American financial companies is that given the hits they've taken in the first phase of this credit cycle, their capital is generally depleted," he says. "If the value of the assets on their balance sheet starts to deflate, they've got real problems. I think the Fed is desperately trying to inflate the system to some asset-price stability."

But by pumping more liquidity into the market, the Fed risks repeating its past mistakes.

"For too many years, we've had too much easy money, easy credit and low volatility, which created this leveraging of investments," explains Brian Miron, co-portfolio manager for all of Fidelity's Canadian fixed income portfolios and sub-portfolios. "Deflating asset prices have blown a hole in investors' pockets as well as the banking system."

This time around, it appears the risks of doing nothing far outweigh the risks of flooding the market with more "easy money."

For investors still leery of the equity market, he points out that the credit crunch has dragged down the asset value of "true investment grade" debt issues, along with the more suspect securities.

"My sense is that some of the best returns for the rest of the year will come from taking advantage of good credit analysis, buying true investment-grade paper in Canada and getting the yield, plus the wide spread."

Despite the recent sell-off in commodities, Haber remains bullish, particularly on agricultural goods, gold and energy, where stocks still don't reflect the high price of oil.

"The market is turning its attention to the economy and is trading down commodities, either because of perceived American weakness or as a deleveraging byproduct of what's gone on elsewhere on the street," Haber says.

The Canadian economy and markets do face short-term challenges, however. Miron points out that the Canadian economy rarely decouples from the U.S. economy and that the effects of the American downturn will be felt north of the border. But he points out that the Canadian economy is starting its slowdown from a much healthier position, so the downturn should be muted.

"The global financial markets are still facing some degree of stress, and I don't think it's over yet, but we have been here before," says Miron. "I'd recommend investors exhibit patience and conservatism when it comes to short-term investing but also be prepared to be opportunistic."

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

Looking forward to a wonderful day of training in Langley.  Just checking out our new Website.  It looks amazing so far!

Norine