Janea Bellay

IN THIS ISSUE:

• Take the Financial Investor Literacy Test!
• Answers to the Quiz!
• Why use a Financial Advisor?

 

Take the Financial Investor Literacy Test!

1.    To the best of your knowledge, if you have invested in a mutual fund containing bonds or mortgages, and interest rates went up, what would happen to the value of your fund? Would the value of your mutual fund likely increase, decrease, or stay the same in value?

1. Increase in value
2. Decrease in value
3. Stay the same
4. Don’t know

 

2.     Let’s say you had a choice of receiving $1,000 in bank interest, $1,000 in rental income, $1,000 in dividends from a Canadian stock or $1,000 as a bonus from an employer. Which of these should give you the most dollars after deducting the taxes owed?

1. Dividends
2. Net Rental Income
3. Bank Interest
4. Bonus from my Employer
5. Its all the same after taxes
6. Don’t know

 

3.     To the best of your knowledge, life insurance is used to:

1. Provide a death benefit to my loved ones
2. Fund a Buy/Sell Agreement for Business Owners
3. Provide an employee benefit
4. Pay mortgages and debt
5. Secure a loan
6. Guarantee future insurability
7. All of the above
8. Don’t know

 

4.     Let’s say you’ve been investing in shares typical of those sold on the Toronto Stock Exchange for the last 20 years. To the best of your knowledge, in how many of those 20 years did the stock market go up?

1. 4 out of 20
2. 7 out of 20
3. 10 out of 20
4. 12 out of 20
5. 15 out of 20

 

5.     Which of the following investments over the long term that is since 1950, provided Canadians with the BEST returns before any taxes were due?

1. Canadian Savings Bonds
2. US Stocks
3. Long Term Corporate Bonds
4. Canadian Stocks
5. 5 year GICs
6. Don’t know

 

6.     And which of those same investments over the long term, since 1950, provided Canadians with the WORST returns before any taxes were due?

1. Canadian Savings Bonds
2. US Stocks
3. Long Term Corporate Bonds
4. Canadian Stocks
5. 5 year GICs
6. Don’t know

 

7.     To the best of your knowledge which of the following best describes a “Capital Gain”? Would it be:

1. The profit you make when you sell stocks or bonds
2. The annual increase in your net worth
3. The interest you received on an investment
4. The increase in value of your RRSP investments
5. Financial gifts from another family member
6. Don’t know

 

8.     If Ray starts investing at age 25 and invests $50/month, and Donna starts investing at age 40 at $150/month, at age 65 who has more saved in their retirement account? Based on a 7% interest rate?

1. Ray will have more in his account
2. Donna will have more in her account
3. They will have the same amount
4. Don’t know

 

Answers!

1. To the best of your knowledge, if you have invested in a mutual fund containing bonds or mortgages, and interest rates went up, what would happen to the value of your fund? Would the value of your mutual fund likely increase, decrease, or stay the same in value?
   1. Increase in value
   2. Decrease in value – You should have a good mix of bonds and equities in your portfolio so that when the markets go up you are protected and when the markets decrease you are protected!
   3. Stay the same
   4. Don’t know

 

2.     Let’s say you had a choice of receiving $1,000 in bank interest, $1,000 in rental income, $1,000 in dividends from a Canadian stock or $1,000 as a bonus from an employer. Which of these should give you the most dollars after deducting the taxes owed?

1. Dividends – Dividends have tax preferential treatment. If you are in a high tax bracket, ensure your advisor has looked at some tax advantageous investments in your portfolio.
2. Net Rental Income
3. Bank Interest
4. Bonus from my Employer
5. Its all the same after taxes
6. Don’t know

 

3.    To the best of your knowledge, life insurance is used to:

1. Provide a death benefit to my loved ones
2. Fund a Buy/Sell Agreement for Business Owners
3. Provide an employee benefit
4. Pay mortgages and debt
5. Secure a loan
6. Guarantee future insurability
7. All of the above – Most people are surprised by all the things life insurance can do. Talk to your Insurance Advisor and find out IF life insurance is right for you.
8. Don’t know

 

4.    Let’s say you’ve been investing in shares typical of those sold on the Toronto Stock Exchange for the last 20 years. To the best of your knowledge, in how many of those 20 years did the stock market go up?

1. 4 out of 20
2. 7 out of 20
3. 10 out of 20
4. 12 out of 20
5. 15 out of 20 – Historically the stock market UP years have outweighed the down years!

 

5.     Which of the following investments over the long term that is since 1950, provided Canadians with the BEST returns before any taxes were due?

1. Canadian Savings Bonds
2. US Stocks – Again, its good to talk to your Investment Advisor about the right strategy for your portfolio.
3. Long Term Corporate Bonds
4. Canadian Stocks
5. 5 year GICs
6. Don’t know

 

6.     And which of those same investments over the long term, since 1950, provided Canadians with the WORST returns before any taxes were due?

1. Canadian Savings Bonds
2. US Stocks
3. Long Term Corporate Bonds
4. Canadian Stocks
5. 5 year GICs – Over the long term, these do not perform well.
6. Don’t know

 

7.     To the best of your knowledge which of the following best describes a “Capital Gain”? Would it be:

1. The profit you make when you sell stocks or bonds – Currently 50% of realized capital gains are taxed in Canada at an individual’s tax rate. Some exceptions apply, such as selling one’s primary residence which may be exempt from taxation. Capital gains made by investments in a Tax-Free Savings Account (TFSA), are not taxed. Ask your advisor how this benefits you.
2. The annual increase in your net worth
3. The interest you received on an investment
4. The increase in value of your RRSP investments
5. Financial gifts from another family member
6. Don’t know

 

8.     If Ray starts investing at age 25 and invests $50/month, and Donna starts investing at age 40 at $150/month, at age 65 who has more saved in their retirement account? Based on a 7% interest rate?

1. Ray will have more in his account – Ray will have invested $24,000 and Donna will have invested $45,000. But because of compound interest, Ray’s investments have stayed invested longer. Therefore at age 65 Ray will end up with about $132,000 and Donna will end up with about $122,000 at 7% interest. The earlier you start investing the better!!
2. Donna will have more in her account
3. They will have the same amount
4. Don’t know

 

Why Use a Financial Advisor

 

Investment discipline.  Money is an emotional issue, and perhaps the single greatest benefit to using a financial advisor is my independent, impartial advice.

Experience.  Imagine what it’s like to spend your day working with clients, and talking with them about their financial situations. Over time, I develop a base of experience that enables me to steer you through various life stages and business cycles. Whether it’s saving for retirement or a child’s university years; whether you’re starting a business or dissolving one – I can help.

Balancing risk and reward.  I add value in many ways that do not show up in your portfolio statements. For example, I can prevent you from taking on undue risk or point out your self-destructive investment habits. The flip side of controlling risk is ensuring that you do take some risks so you are positioned to participate in good opportunities, particularly in equities.

The value of time.  I enable busy people like yourself to focus on their careers and families.

Tax efficiency.  I can help you maximize your investment returns by keeping you abreast of tax rules and learning about tax-efficient products offered by fund companies.

Consolidated information.  I consolidate massive amounts of financial information to help investors stick to the basics (such as diversification) and watch the details (such as avoiding overlap in fund holdings).

Referrals.  I can put you in touch with other financial services providers, such as tax and estate specialists.

Financial advisors help investors avoid emotional decisions and mistakes that occur during exuberant or difficult markets. I do this in the following ways:

• Systematic investment: Fixed, monthly investments into a fund (e.g., $500/month) allow investors to buy more units when prices fall and fewer units when prices rise. This can smooth out volatility.
• Plan: When I provide a plan, I often specify an asset allocation that is suitable to the investor’s needs (for example, 40% fixed income, 20% cash, 40% equities). So, if a certain category falls, I meet with you to rebalance to keep categories at their target weights. This provides a discipline that can help investors through difficult markets.
• Sounding board: I provide a “big picture” view of a portfolio. At times, certain elements of the portfolio will perform better than others, but those different performance patterns combine to produce a smoother overall experience. That’s the goal of proper diversification.
• Staying the course: When markets are volatile, many investors panic and head for the exits. Oftentimes, that’s exactly the wrong time to sell. I can talk through what’s happening in the markets and help you stay the course.

Janea Bellay, Your Insurance & Investment Advisor

Contact our financial planning office in Saskatoon today, I am happy to help you envision your Financial Plan!

Janea Bellay

Performance Financial Services Inc

217-3501 8^th Street East

Saskatoon, SK S7H 0W5

Tel: 306-281-3891

janea@performancefinancial.ca

 

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Questions or comments? E-mail us at janea@janeabellay.com or call 306-281-3891.

LEGAL DISCLAIMER

Janea Bellay is an independent self-employed insurance and investment representative, licensed to sell insurance and investment products and services through Performance Financial Services Inc. This is an independent MGA brokerage, and part of the United MGA Group of Canada. Mutual funds are offered though Desjardins Financial Security Investments Inc. Commissions, trailing commissions, management fees and expenses may be associated with mutual fund investment. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The information in this article is not intended nor should it be considered as providing specific legal or tax advice. Individuals should consult with their individual advisors to ensure that any information is applicable and appropriate to their specific situation.