Archive for February, 2009

27
Feb

By Shamsh Moosa 1 Comment
Categories: Weekly Market News

The big picture

Citigroup’s new boss: The U.S. Government

Toronto’s main stock index was 63.80 points lower today, following a three-session rally, as the price of oil fell and U.S. banking news pressured financial shares.  The financials group had bounced higher earlier this week on better-than-expected quarterly results at big Canadian banks.

The U.S. government will boost its stake in Citigroup Inc to as much as 36 percent, increasing the bank’s capital base.  The bailout bid is the third for Citigroup in the past five months and will dramatically dilute existing stockholders stakes to as low as 26 percent.  The government will convert up to $25 billion in preferred shares for common stock.  This will give the government greater influence on Citigroup’s operations, short of out right nationalization.

Earlier in the week, in his first formal address to Congress, Obama declared that the “day of reckoning” had arrived for an indulgent nation. He promised to press forward with major initiatives in health care, energy and education, while warning the nation’s major banks that he will “force the necessary adjustments” to push them back to viability.

Canadian economic data will continue to deteriorate as the country grapples with a recession, Canadian Finance Minister Jim Flaherty said on Monday.”I anticipated in the budget, in the economic action plan, a lot of bad news this year and we’re getting it,” he told reporters. Indeed, Statistics Canada figures released the same day showed retail sales plunging 5.4% in December, the largest such fall in 15 years. With weak consumer spending, a sagging housing market, and a battered export sector dragging the economy more deeply into recession, it’s now widely expected that the Bank of Canada will announce an interest rate cut next week.

The markets

Stocks hit 11-year low

The carnage on Wall Street continued this week after share prices fell to their lowest levels in more than 11 years on Monday. The falls in the S&P 500 and Dow Jones industrial average pushed them below the Nov. 21, 2008 closing levels, which had marked the previous lows point of the current cycle. Shares on the TSX also had a rough week, but rallied 3% Thursday on news of solid earnings reports from Canadian banks and rising oil prices.

In a move to purge default-prone borrowers from its ranks, American Express has taken the unprecedented step of offering selected customers a $300 AmEx prepaid gift card if they pay off their balances and close their accounts. AmEx declined to disclose the specific criteria used to determine who is eligible for the offer.

Recommendation

Bank Preferreds

When investing in fixed income, it is important to understand the hierarchy of corporate debt instruments.  The ranking of claims is as follows: Senior secured loans and bonds, unsecured senior bonds, unsecured subordinated bonds, preferred shares, and finally, common shares.  Recently, the Canadian banks have been headlining the news raising capital in the form of preferred shares.  Preferred shares are a hybrid between debt and common equity.  Preferred shares act like bonds where they have a maturity date that redeems at a par value of $25.00; however, they trade on the exchange like common equity.  The advantages of preferred shares are that they produce dividend income instead of interest income, thereby, making it a tax advantage instrument.  In addition, preferred shares offer security of principal and lower price volatility.  Financials such as Manulife, TD, CIBC, NA and Royal Bank have issued preferred shares recently with an average yield of 6.5 percent and a rate-reset of 5 years.  Email me to find out the exact yield and rate-reset values.


20
Feb

The Big Picture-What About The Stimulus?

By Shamsh Moosa 0 Comments
Categories: Weekly Market News

Even though President Obama revealed a plan for homeowners and signed a $787 billion stimulus package, the market has learned over the past 4-5 months not to over react to any “plans” or “announcements” because 1) they still need to put the plans into place, 2) we don’t even know if they’re going to work, and 3) if they do work then we’re going to have to wait a good 6 to 12 months to see the end result. This is the case for anything related to “stimulus packages”, interest rate cuts, or housing recovery plans and this is why the market remains in limbo as we’re all in a “wait and see” mode. Most investors are hoping that plans and policies introduced so far will be enough to eventually turn the U.S. economy and thus the markets around. A failure to get results will lead to more proposals, which of course will delay any eventual recovery. This is not all bad news, an expansion will eventually materialize…there is no doubt about that as an expansion has always followed a recession since the beginning of time. The debate of a recovery is not whether a recovery will occur, but when it will occur. Most economists are pointing to a late 2009 bottom for the U.S. (and therefore, global) economy, but that timeline assumes that policies and plans that have been put into place will produce desired results. While I would point out that a late 2009 bottom is possible, I also have to caution investors that such a timeline may prove to be optimistic from a timing perspective and therefore, patience is definitely going to be required this year.

The markets

Rumbles of Bank Nationalization

New fears about the deepening global recession and increased talk of U.S. bank nationalizations sent markets from Tokyo to New York lower this week. During trading on Friday, the Dow fell to its lowest level since 1997. Meanwhile U.S. gold futures climbed above the psychologically important level of $1,000/ounce on Friday as nervous investors turned to the commodity as a safe haven amid tumbling stocks and economic uncertainty. Senate Banking Committee Chairman Christopher Dodd was quoted as saying it may be necessary to nationalize some banks, “I don’t welcome that at all, but I could see how it’s possible…I’m concerned that we may end up having to do that.” In the coming weeks, the U.S. Treasury is expected to subject up to 25 banks, with assets exceeding $100 billion each, to a “stress test” to decide which need additional capital.

The Canadian banks, which could be put at a competitive disadvantage internationally if the U.S. banks are nationalized, are leading losses in Canada. TD Bank (TD) will kick off bank earnings season next Wednesday and investors are selling off these banking names prior to results.

Oil prices fell today at $38.94 a barrel as the deteriorating global economic outlook continued to weigh on the market. Earlier in the day, crude prices had dropped below $38, but trimmed losses after the White House said it strongly believed in a privately held banking system, trying to smooth out fears of banking nationalization.

This has been a tough week regarding economic outlook and negative news reflecting the financial sector, however, it is important that the market tests the November lows and finds some stability. The November volatility index was at an all time high around 80 and this week it hovers around 50 points. The negative news will continue to flow, however, that being said, if the Canadian banks report decent earnings next week and their dividends are not threatened by a cut – we could see a potential rally.

03
Feb

Understanding how investment income is taxed.

By Shamsh Moosa 0 Comments
Categories: Understanding How Income Is Taxed

When investing outside of the tax-sheltered environment of an RRSP or RRIF, it is important to consider an investment’s after tax rate of return in conjunction with your risk tolerance and investment goals. To reduce the tax paid on your investment income, you should consider investments that generate capital gains or Canadian source dividends as they are taxed more favourably than interest income.

Interest income earned from investments such as T-Bills, Bonds, and GICs are generally taxed at the highest marginal tax rate. The marginal tax rate is the rate applied to each additional dollar of income you earn.

Dividends earned from a Canadian Corporation are taxed at a lower rate than interest income. This is because dividends are eligible for a dividend tax credit, which recognizes that the corporation has already paid tax on the income that is being distributed to shareholders.  This, however, only applies to dividends from a Canadian corporation. Dividends paid from a foreign corporation are not eligible for the dividend tax credit.

Capital gains result when you sell an asset for more than you paid for it. This gain is offset by any losses and can be further reduced by any expenses that are incurred by the purchase or sale of the asset. The result is your net capital gain, however only 50 percent of that net gain is taxable at the appropriate federal and provincial rates.

The table below illustrates the tax treatment on the different types of a $1000 investment income; including interest, dividends and capital gains.

Income Earned Table

03
Feb

Dividends Can Help Boost Long-Term Performance

By Shamsh Moosa 0 Comments
Categories: Understanding How Income Is Taxed

Conservative investors have long valued dividend stocks for their steady, predictable income and their stability in volatile markets. While clearly attractive in the short term, dividend income can also boost long-term investment returns.

Focusing on dividends can be a wise strategy for those seeking long-term capital appreciation in their portfolios without a high level of risk, as well as for investors who are close to retirement and require regular income.

Conventional wisdom is that dividend investors sacrifice capital gains for income. However, over time, dividends have played a major part in generating returns for investors. According to Standard & Poor’s research, dividends have contributed 30% of the total return for the S&P/TSX Composite Index since 1956.

Dividend investments have the flexibility to support many goals, as payouts can be reinvested in the same company, invested elsewhere, or used to generate regular cash flow. Dividend tax credits, made more generous in 2006, give favoured tax treatment to eligible dividend income paid out by Canadian companies.

Helps build returns
The advantages of this strategy can be magnified even further by investing in companies with a record of regularly increasing their payouts. For example, a stock purchased at $10, with a 30-cent annual dividend, would have a 3% yield at the purchase price. However, if that company raised its dividend by 10% in each of the next three years, the dividend would rise to almost 40 cents, or 4% of the original purchase price, producing overall gains year after year.

Rising dividend payouts can also be used to identify companies that are in good corporate health. Companies that consistently increase their dividends tend to have strong fundamentals, stable earnings, and relatively high levels of sustainable free cash flow. These companies also tend to fare better than average during market downturns.
While more research is always necessary when considering a new investment, dividend history is certainly a useful gauge.

Tied to stock performance
Research also suggests that rising dividends go hand in hand with superior stock performance. The recently created Standard & Poor’s Canadian Dividend Aristocrats index tracks a portfolio of companies that have increased their dividends for at least seven consecutive years. The index’s members have more sustainable payout ratios, have shown better returns on equity, and have higher earnings and dividend growth than the Canadian market overall.

In the U.S., this out-performance is even more dramatic. The S&P High-Yield Dividend Aristocrats index, composed of 50 companies that have increased their dividends for 25 consecutive years, outperformed the S&P 500 index by a wide margin in the seven-year period to the end of
2006. And the S&P Aristocrats index rose during the “down” years of 2000 and 2001, while the S&P 500 declined materially.

What to look for
In Canada, the list of the strongest dividend-payers includes the major banks and financial companies, utilities, energy companies, and real estate companies. Some income trusts and real estate investment trusts (REITs) also have a record of raising distributions; however, more care is necessary with trusts because of their higher volatility.

In the U.S., financial companies also lead the list, along with a number of companies in the consumer staples, consumer discretionary, health care, and industrials sectors. More favour-able tax laws and soaring corporate profits have seen U.S. dividends rise significantly in recent years — a trend that ScotiaMcLeod analysts believe is likely to continue. With cash levels at record highs, we expect large U.S. corporations to continue returning cash to shareholders at record levels.

Most investors identify strong returns with rising stock prices and hefty capital gains. However, it’s worth considering the role of dividends when structuring your portfolio. Investing with an eye to steady and rising dividends can create a portfolio whose long-term returns exceed those based solely on capital gains, with less volatility. If you’d like to review the role dividends play in your portfolio, please contact me.

Top dividend-paying sectors
Energy 12.65%
Consumer Staples 6.49%
Consumer Discretionary 2.28%
Utilities 14.45%
Industrials 2.95%
Financials 61.19%

Source: Standard & Poor’s, 2007; total may not equal 100% because of rounding.
The financials, utilities, and energy sectors provide the broadest range of quality dividend stocks, as illustrated in this breakdown of companies in the S&P/TSX Canadian Dividend Aristocrats index. This benchmark measures the performance of 35 constituent companies that have consistently increased their dividends every year for at least seven years.

Additional Notes
Maximize your dividends with a DRIP.
One way to maximize your returns is to reinvest dividends into new shares of the company. The easiest way to do this is through a Dividend Reinvestment Plan, or DRIP. Offered by many major companies, these plans have several benefits.

•    Convenience: Dividends are reinvested automatically, eliminating the need to make multiple trades.

•    Cost savings: There is no commission on the purchase of new shares with the dividend proceeds. There may be trading fees, however, and tax will still be payable on the dividends, even though no cash distribution is received.

•    Easy to set up: A DRIP may be administered by the company itself, or by an agent or broker. Joining the plan usually involves completing an authorization form; it may be necessary to have your shares registered in your name.

I can assist you in finding out whether the companies in which you invest have a DRIP, and to help you make the necessary application.

03
Feb

Tax-Free Savings Account (TFSA)

By Shamsh Moosa 1 Comment
Categories: Retirement Planning

A Savings Plan for All Canadians for Their Future
The Government proposes to reduce the taxation of savings through the introduction of a Tax-Free Savings Account (TFSA).

How the Tax-Free Savings Account Will Work
• Starting in 2009, any individual (other than a trust) who is resident in Canada and 18 years of age or older will be able to accumulate annual contribution room of $5,000 each year. Certain provinces legislate that an individual may have to be 19 in order to be eligible to establish a TFSA and save within a TFSA account.
• Contributions will not be deductible.
• Capital gains and other investment income earned in a TFSA will not be taxed.
• Withdrawals will be tax-free.
• Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
• Withdrawals will create contribution room for future savings.
• Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
• Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
• The $5,000 annual contribution limit will be indexed to inflation in $500 increments.

Why should you open a TFSA?
• The TFSA will provide a flexible savings vehicle for Canadians.
• Since not everyone is able to save each year, individuals who are unable to contribute $5,000 in a year will be able to carry forward unused contribution room to future years.
• The TFSA complements existing savings plans such as registered pension plans, RRSPs, Registered Education Savings Plans (RESPs) and Registered Disability Savings Plan.

Full Flexibility to Withdraw and Re-Contribute
• In addition, in recognition of the fact that most people are likely to have multiple savings objectives at the various stages of their lives—e.g. to purchase a car, home or cottage—the full amount of withdrawals may be re-contributed to a TFSA in the future, to ensure that there is no loss in a person’s total savings room.
• In recognition of the fact that couples often make their savings decisions and plan for their financial security on a joint basis, individuals may contribute to the TFSA of their spouse or common-law partner, subject to the spouse or partner’s available contribution room.

A Savings Account for Post-Retirement Needs
• The TFSA will also provide seniors with a savings vehicle to meet any ongoing savings needs, something to which they have only limited access once they are over the age of 71 and are required to begin drawing down their retirement savings. Based on current savings patterns, seniors are expected to receive one-half of the total benefits provided by the TFSA.

03
Feb

First the plan, then the portfolio

By Shamsh Moosa 0 Comments
Categories: Principles For Long Term Investing

A portfolio is part of a financial plan, not the other way around.

I talk to a variety of people during the week—clients, potential clients, friends and family.  Most (if not all) of these people have investment portfolios.  But with the exception of my clients, very few of them have financial plans.

There’s a big difference between a portfolio and a plan.  A portfolio is a collection of investments, gathered together in an account with little regard for long-term strategy.  A plan, on the other hand, is all about strategy.  It is a detailed roadmap for achieving financial goals within a given time frame.  In this way, an investment portfolio serves the financial plan.  Not the other way around.

Quite frankly, I see too many people make investment decisions in a vacuum—without looking at the “big picture.”  What are you trying to accomplish?  What’s the end goal of investing in XYZ stock?  Too often these questions are ignored, and a stock is bought simply because its share price seems to be going up.  The result is a hodge-podge of investments that performs poorly, and often forces the investor to take on a lot more risk than is necessary.  That can leave the investor frustrated and anxious at the inability to attain financial goals.  Which can lead to riskier and riskier investments.  And so the cycle continues.

It doesn’t have to be this way.  If you have an investment portfolio, that’s a good start.  But you need a financial plan as well.  Here are three things a financial plan can do for you.

Fills in the big picture
A financial plan gives you a rationale that you can apply to investment decisions. For example, if you’re faced with an investment opportunity, and you don’t know whether you should take it or not, simply review your financial plan and ask yourself:  “does this investment bring me closer to my goals?  Does this investment fit into the big picture?  Does it fit in with my stated risk tolerance?”  If you can answer yes to all three, then the investment is worth considering.  If not, you move on.

Offers discipline
A financial plan strengthens your commitment to financial goals.  It encourages you to take profits and to accept losses when it makes sense to do so.  It serves as a “reality check” when you hear hot tips, and prevents you from overconcentrating the portfolio in a single stock or market sector.  This alone can do a lot to protect your financial future.

Offers peace of mind
A financial plan helps you sleep at night.  When you know where you’re going (and why you’re taking a particular route to get there), you feel more confident about the future.  A well-written financial plan takes market volatility into account, and can provide you with direction in good markets and bad—that can be very valuable in times of volatility.  But it’s not just about the market.  Life can be uncertain too.  A financial plan can account for unexpected circumstances in your life—if you become disabled, for example.  You’ll sleep better because you’ll know that no matter what happens, your plan is working to achieve your long-term goals.

Contrary to popular belief, writing a financial plan doesn’t have to be difficult.  All it takes is a little commitment.  And when you see others who don’t have a plan anxious and stressed about not meeting their financial goals, you’ll understand just how valuable a financial plan can be.

03
Feb

Planning For Your Children’s Education: Registered Education Savings Plan (RESP)

By Shamsh Moosa 0 Comments
Categories: Retirement Planning

There are several ways to fund a child’s post secondary education; one might be to anticipate a child will receive scholarships or use student loans; ‘pay as you go’ although budgeting your cash flow will be more difficult; or start a savings plan now to prepare for the inevitable future expense. The following article will focus on one of these savings plan strategies; a Registered Education Savings Plan (RESP).

Background
An RESP is a tax deferral plan designed to help save for a student’s post-secondary education. It was created as a way for Canadians to save for education without the growth being taxed under the regular attribution rules. Normally, when you give your minor child money, interest or dividends earned on this money is taxed as if you had received the income i.e. it is attributed back to the parent and taxed in their hands. Please note: capital gain income does not attribute back to the parents.

Previously the rules governing an RESP were onerous. If your child did not attend a qualifying institution (i.e. college or university), all of the growth, interest, dividends and capital gains went to the educational institution that you designated on your RESP contract. The good news is that the Canada Customs and Revenue Agency (CRA) has significantly enhanced the RESP rules. In addition to the tax advantages, there are increased savings limits, additional termination options and the Canada Education Savings Grant (CESG).

Rules
Although contributions to an RESP are not tax deductible, all of the income in the plan compounds on a tax deferred basis. Further more, when the accumulated income is withdrawn from the plan to pay for education expenses, the student pays the taxes not the contributor. In most cases, this income would attract little tax because the student’s basic personal exemption and tuition and education credits will offset this tax liability.

Any individual can set up an RESP. This includes grandparents, aunts, uncles, godparents and friends (does not include trust or corporations).

The contributions may be made for up to 21 years, to a lifetime maximum of $50,000 per beneficiary with no annual maximum contribution. If these limits are exceeded, a one per cent per month penalty tax is charged until the over-contributed amount is withdrawn from the plan.

If the child does not proceed with post secondary education, the contributions are returned to the contributor with no tax consequences and the CESG is returned to the government. The accumulated income that has not been paid out to the beneficiary can be returned to the contributor by either.

03
Feb

How to be a conservative investor

By Shamsh Moosa 0 Comments
Categories: Principles For Long Term Investing

The hallmarks of the conservative investment approach

The other week I was talking to an acquaintance of mine about the difference between a conservative investor and an aggressive investor.

Great question.  An important question too.  Because in my experience, too many people out there are too aggressive with their portfolios.  They take on more risk than they have to, and other than sleepless nights, they have very little to show for it.  These people would be far better taking a more conservative approach to their wealth, slowly building their wealth over time, rather than looking for the “big score.”

With that in mind, allow me to provide you with some of the guiding principles that go behind the conservative investment approach that I take with my clients.  Hopefully, these points will convince you that you should be a conservative investor too.

Think risk first
The most important part of being a conservative investor is to think risk first.  To the conservative investor, protecting wealth comes first, and building wealth comes second.  The conservative investor always knows how much risk he or she is willing to accept to achieve his or her investment goals.  And the conservative investor never takes on more risk than is needed to accomplish those goals.  This is an important principle that a lot of investors get wrong.

Be cautious with projections and assumptions
Investing isn’t an exact science.  When creating a financial plan, there’s a whole bunch of projections and assumptions that have to be made (about what will happen to the market over the next five to ten years, for example, or to inflation).  Even though we don’t know for sure what the future will hold, we have to go ahead and assume.  The conservative investor will err on the side of caution with these assumptions, and will base projections on historical averages (or perhaps a little lower).  This approach allows for some “wiggle room” in the financial plan, and ensures the overall plan remains intact no matter what happens in the market.

Diversify, diversify, diversify
Betting big on a single stock (or a single market sector) may be fine for gamblers and day-traders but not for the conservative investor.  The conservative investor always takes the time to work out a personal asset allocation strategy, and diversifies the portfolio across a variety of assets, economic sectors, and geographic markets.  That way, if something goes wrong in one part of the portfolio, it won’t result in a financial disaster.

Review and modify
Even the most well constructed portfolio needs to be reviewed and modified once in awhile.  That’s why the conservative investor pays attention to company fundamentals on an ongoing basis, and keeps up-to-date with economic events.  If a change needs to be made (in order to bring the portfolio back in line with the investor’s risk tolerance, for example) the conservative investor will make the change.  In this way, the conservative investor minimizes the risk of holding on to losing positions.

Work with a professional
Finally, the conservative investor understands the value of professional advice.  No matter how experienced the conservative investor is when it comes to investing, he or she knows that a second opinion is necessary. By working as a team with their Investment Executives, conservative investors keep their portfolios strong.

I admit the conservative investment approach isn’t the only way to make money with your investments. However, in my experience, it’s the approach that works best for most people.  Keep it conservative; keep it simple, and think about protecting your wealth rather than playing “stock market roulette.”  That’s the strategy that can help you achieve your financial goals, without undue risk.

03
Feb

Back to Basics: A Reminder of RRSP Musts

By Shamsh Moosa 0 Comments
Categories: Retirement Planning

To play any game, it is important to know the rules and how they may affect the outcome or result of the game. Not to suggest that planning for retirement is a game, but knowing how RRSP rules can affect your retirement planning is very important. Below are a few of the “must knows” for your RRSP planning.

1. Maximize your contribution
The more you put away the more you will have. It is important to know the maximum allowable limit for your financial situation. Currently for 2008, you can contribute 18% of your prior year’s earned income up to a maximum of $20,000 less your pension adjustment (PA) and your past service pension adjustment (PSPA). Remember also that carry-forwards of unused contributions from 1991 onward can also be contributed.

2. Contribute Today
The sooner you contribute, the sooner your savings start growing for your retirement. The compounding of interest returns can make a big difference on your RRSP balance over time.

3. Spousal RRSPs
Contributions can be made to a spousal RRSP that will allow income splitting at retirement, which in turn will reduce the amount of tax that you will pay. Contributions are limited to your personal limit.

4. No More Foreign Content Limit
• 30% foreign content limit in RRSPs and registered pension plans is now a thing of the past.
• Canadian investors now have the option to invest up to 100% of their retirement plans into foreign securities, without penalty.
• Opportunities for money managers to seek out the best investment opportunities wherever they exist is wonderful news for Canadians - provides the opportunity for greater diversity and more attractive risk-adjusted returns.

5. Consolidation
Consolidating your assets leads to more efficient asset management as well as reduced costs.

03
Feb

6 Principles For Long Term Investing

By Shamsh Moosa 0 Comments
Categories: Principles For Long Term Investing

1. Have a plan and stick to it
Successful investing requires a game plan that outlines your goals and objectives and ensures you are on the right track when making decisions. This plan will prevent you from taking on more risk than you should when markets are rising and will help you make appropriate decisions when the world appears to be falling apart. Your goals may be a successful retirement, education for children, paying down a mortgage or buying a second home. Your risk profile can be related to your time frame, present wealth or the consequences of not achieving your goals. While you are the best judge of these objectives and your tolerance for risk, I can help you formalize these goals into a customized plan.

2. Be diversified and balanced
With a balanced portfolio that includes stocks, bonds and cash, an investor can reap the benefits each of these different assets offers. Stocks offer growth and inflation protection, bonds offer income and stability, and cash offers insurance for future opportunities. Diversification can both improve return and reduce risk in an investment portfolio. By including a variety of different industries and companies, you can offset weaknesses in some areas with strengths in others. Similarly, investing internationally can expose an investor to many different business cycles, so weakness in one region can be balanced by strength in others.

3. Think long term
Evidence shows that trying to time the market just doesn’t work. Instead, I encourage you to focus on longer-term trends, not temporary fluctuations. Statistics show that, on average, the longer investors hold equities, the better their chances of earning a positive return. With time on your side, an investment portfolio can benefit from the many more positive years capital markets have experienced versus the occasional, albeit sometimes severe, down years.

4. Buy and retain quality

The best way to avoid a disaster is to focus on quality. Financial stability and strength as measured by low and manageable debt levels; a stable history of profit and dividend growth; and a strong management team capable of executing a strategic plan for growth are some of the factors that can determine quality. However, corporations and industries change, and so does their quality. Therefore, it is important to regularly compare your holdings against a quality checklist and make changes where appropriate.

5. Stick with the winners; eliminate the losers
Investors want to believe they’ve picked winners. Even when they’ve made investment mistakes, they may hold onto poor performers hoping for a turnaround. So often we sell our winners and pat ourselves on the back while we keep our losers. The ultimate result: a losing portfolio backed by a lot of hoping. Having a disciplined approach to investing, taking losses early and letting profits run on your winners can lead to better and more consistent returns.

6. Review, reassess, rebalance
Having made a plan and put it into effect, an investor can’t just forget about it. Monitoring your plan and regularly reviewing your portfolio are as important as creating and implementing the plan itself. Capital markets change. Your own objectives and risk profile may change with wealth and age. By monitoring where you are relative to your plan or in terms of capital markets, you can make the necessary adjustments to ensure you are headed in the direction right for you. This process of planning, reviewing and rebalancing will ultimately ensure financial success.

The best plan of action is to make sure you have a solid plan. Please contact me today to review your personal portfolio.

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