This is a special time of year and we hope you get the opportunity to relax and celebrate with your loved ones. Everyone at Fisgard would like to say THANK YOU for the support and patronage you have shown us over the past years. It is truly appreciated.
Fisgard has been nominated by our peers in the business community for a Vancouver Island Business Excellence Award in the "Financial Services" category. The award is offered by the publishers of Business Vancouver Island magazine.
With over 300 nominations in 20 categories, Fisgard is proud to be a finalist. Nominees are required to fill out an extensive questionnaire of wide-ranging questions for consideration in fields such as customer service, staffing, community involvement, environmental initiatives, and support for arts funding.
The 11th annual Vancouver Island Business Awards take place on January 27 at the Vancouver Island Conference Centre in Nanaimo.
Thursday, December 23, 2010
Friday, September 3, 2010
All About the RESP
Invest in Youth! Invest in Canada! Back to School! Registered Education Savings Plan time!
Every parent - or uncle or aunt or grandma or grandpa or brother or sister or friend and supporter of Canada's youth and education - should open an RESP for the student(s) of their choice. This way the student receives valuable federal (also provincial in some cases) matching grants, and gets to tax-shelter investment income. And - most importantly - will not be held back for years and years after college or university by costly student loans. As Canadians we must do all we can to educate our youth, and move heaven and earth to make sure our future citizens and leaders are not burdened with unmanageable student loans at the very time they should be spreading their wings with their newfound education and talent. Good RESP plans for our Canadian youth are vital, and are an honour to contribute to.
PARENTS AND OTHER EDUCATION SUPPORTERS NEED TO MAKE THREE KEY DECISIONS WHEN OPENING AN RESP:
1) DETERMINE THE TYPE OF RESP ACCOUNT YOU WANT TO OPEN
There are different kinds of RESP accounts. The two main types are self-directed plans and pooled programs. Avoid pooled programs - such as scholarship plans! They are costly and unnecessarily complex. With most scholarship plans upwards of three years of your first RESP installments will go towards fees, and little if any money goes to education savings. The wise RESP subscriber/donor must keep things simple, low cost and flexible. This can be achieved with self-directed RESPs. Again, avoid pooled Scholarship programs as they almost invariably require a minimum deposit, compulsory regular contributions and have costly up-front and ongoing service fees. And they can be extremely costly to get out of once the subscriber finds out how much they actually cost compared to how miniscule the benefits are. In short, avoid Scholarship Plans (pooled programs). They cost too much, and deliver little, if anything. They are fee-driven.
Make sure your RESP program is self-directed; that is, directed by YOU as to which investments to make. Avoid institutional RESPs where someone else decides what to invest your RESP money in. YOU know best.
Pooled RESPs - that is, scholarship plans - have features that are unnecessarily complicated. Before you open an RESP you should absolutely ensure that you have the right to transfer your RESP if you are not satisfied with its performance. With pooled scholarship plans it is very expensive to transfer out of the program. They like to lock you in. Penalties to transfer to better investments are economically prohibitive. Do not invest in an RESP that does not allow you to change plan providers anytime that you are not satisfied with your RESP's performance. The key to a successful RESP is accumulating earnings through compound interest, not paying fees to scholarship plan providers.
2) WHEN TO CONTRIBUTE TO AN RESP?
Most pooled scholarship plans have a set dollar contribution to be made at specified times. The self-directed RESP lets you decide when YOU want to contribute, and how much YOU want to contribute. You can skip a year, or contribute more, depending on your financial situation. This is important given the financial stress that many young families go through while raising a family.
Age 15 is a key year for RESP planning, particularly in terms of maximizing the Canada Education Savings (CES) Grant benefit to RESP subscribers. We recommend parents and other subscribers contribute at least $2,000 to the RESP, or have made $100 yearly payments for 4 years, before age 15. If this is not done, then children are not eligible for the CES Grant if contributions are made between the ages of 15 to 17.
There is often confusion around how much CES Grant may be carried forward if contributions to an RESP are not made in a given year. CESG amounts are allowed to accumulate (beginning in 1998) until the end of the year in which a child turns 17 (subject to the special rule above). This is good news for parents and other RESP subscribers who were not able to start an RESP right away.
Unused CESG amounts can be carried forward for use in future years:
1998 to 2006: Up to $400 is added to the CES Grant room for each eligible child per year since 1998 (or since birth if the child was born after 1998).
2007 or later: Up to $500 is added to the CES Grant room for each eligible child per year since 2007 (or since birth if the child was born after 2007).
The maximum yearly RESP contribution is $5,000 that would receive the matching basic CESG of $1,000. In other words if a subscriber were to contribute the full allowable life-time $50,000 RESP for a beneficiary of age 14 it would not be possible to receive the full $7,200 CES Grant.
For parents eager to begin contributing to an RESP to obtain the maximum CESG we recommend contributing $2,500 per year for the first 14 years and $1,000 in year 15. This strategy enables the contributor to obtain the maximum grant amount of $7,200 ($36,000 x 20 per cent).
Another strategy combines the above (contributions over 15 years) with an additional contribution of $14,000. Although the $14,000 would not attract the CES Grant, the extra dollars invested would maximize the lifetime contribution limit of $50,000.
Parents who have children 10 years old should begin an RESP immediately if they are looking to obtain the full $7,200 CES Grant.
To help parents determine the latest point at which they can begin contributing to an RESP, and still receive the full $7,200 in CESG, we have inserted the table below. It assumes that the subscriber will contribute the maximum amount possible in order to attract the maximum CES Grant.
* CES Grant above assumes only the basic grant. Additional grants may be available from certain provinces and/or for low-income families. In some cases parents can wait until age 11 if they are receiving grants beyond the basic CESG.
The table provides a catch-up strategy which involves contributing $1,000 when your child is 10 and $5,000 (maximum yearly contribution amount eligible for matching CESG) each year between ages 11 and 17. This enables you to obtain the maximum amount of federal government money ($7,200).
3) PARENTS AND BENEFACTORS MUST CHOOSE THE 'RIGHT' RESP INVESTMENT
In a pooled scholarship plan you have no choice or flexibility with respect to the types of investments you prefer in your RESP. That's why RESP subscribers should avoid pooled scholarship plans. RESP investors must be able to decide what they want their RESP money invested in. With a 'self-directed' RESP they can do this. It's clearly the best option. Again, do not invest in an RESP you cannot easily - and without cost - transfer out of in favour of a better plan. Do not get 'locked in' to an RESP.
Risk should be avoided throughout the life of the RESP investment. Speculative plays such as stocks and mutual funds do not belong in something as important as a child's education program. There is no need to gamble with something so important. The simple stress-free trouble-free compound interest investment is best for the RESP. Steady, reliable growth.
Why gamble when you don't have to?
DON'T SPECULATE --- JUST INVEST!
DOs & DON’Ts of RESP INVESTING
DO NOT put your money into pooled ‘scholarship’ plans. Not only are they unreasonably complex, but they are fee-driven and return little, if anything, on your money.
DO NOT speculate and take chances with volatile stocks and mutual funds. In short, do not gamble with a child’s education fund. You don’t have to gamble, you don’t have to speculate. Just INVEST!
DO NOT put your RESP money into a fund that you cannot transfer out of easily and at no cost.
INSTEAD:
INVEST your RESP funds only in secure stress-free trouble-free compound interest investments. Steady consistent reliable growth is what you want.
INVEST your RESP funds only in ‘self-directed’ plans that YOU control.
Every parent - or uncle or aunt or grandma or grandpa or brother or sister or friend and supporter of Canada's youth and education - should open an RESP for the student(s) of their choice. This way the student receives valuable federal (also provincial in some cases) matching grants, and gets to tax-shelter investment income. And - most importantly - will not be held back for years and years after college or university by costly student loans. As Canadians we must do all we can to educate our youth, and move heaven and earth to make sure our future citizens and leaders are not burdened with unmanageable student loans at the very time they should be spreading their wings with their newfound education and talent. Good RESP plans for our Canadian youth are vital, and are an honour to contribute to.
PARENTS AND OTHER EDUCATION SUPPORTERS NEED TO MAKE THREE KEY DECISIONS WHEN OPENING AN RESP:
1) DETERMINE THE TYPE OF RESP ACCOUNT YOU WANT TO OPEN
There are different kinds of RESP accounts. The two main types are self-directed plans and pooled programs. Avoid pooled programs - such as scholarship plans! They are costly and unnecessarily complex. With most scholarship plans upwards of three years of your first RESP installments will go towards fees, and little if any money goes to education savings. The wise RESP subscriber/donor must keep things simple, low cost and flexible. This can be achieved with self-directed RESPs. Again, avoid pooled Scholarship programs as they almost invariably require a minimum deposit, compulsory regular contributions and have costly up-front and ongoing service fees. And they can be extremely costly to get out of once the subscriber finds out how much they actually cost compared to how miniscule the benefits are. In short, avoid Scholarship Plans (pooled programs). They cost too much, and deliver little, if anything. They are fee-driven.
Make sure your RESP program is self-directed; that is, directed by YOU as to which investments to make. Avoid institutional RESPs where someone else decides what to invest your RESP money in. YOU know best.
Pooled RESPs - that is, scholarship plans - have features that are unnecessarily complicated. Before you open an RESP you should absolutely ensure that you have the right to transfer your RESP if you are not satisfied with its performance. With pooled scholarship plans it is very expensive to transfer out of the program. They like to lock you in. Penalties to transfer to better investments are economically prohibitive. Do not invest in an RESP that does not allow you to change plan providers anytime that you are not satisfied with your RESP's performance. The key to a successful RESP is accumulating earnings through compound interest, not paying fees to scholarship plan providers.
2) WHEN TO CONTRIBUTE TO AN RESP?
Most pooled scholarship plans have a set dollar contribution to be made at specified times. The self-directed RESP lets you decide when YOU want to contribute, and how much YOU want to contribute. You can skip a year, or contribute more, depending on your financial situation. This is important given the financial stress that many young families go through while raising a family.
Age 15 is a key year for RESP planning, particularly in terms of maximizing the Canada Education Savings (CES) Grant benefit to RESP subscribers. We recommend parents and other subscribers contribute at least $2,000 to the RESP, or have made $100 yearly payments for 4 years, before age 15. If this is not done, then children are not eligible for the CES Grant if contributions are made between the ages of 15 to 17.
There is often confusion around how much CES Grant may be carried forward if contributions to an RESP are not made in a given year. CESG amounts are allowed to accumulate (beginning in 1998) until the end of the year in which a child turns 17 (subject to the special rule above). This is good news for parents and other RESP subscribers who were not able to start an RESP right away.
Unused CESG amounts can be carried forward for use in future years:
1998 to 2006: Up to $400 is added to the CES Grant room for each eligible child per year since 1998 (or since birth if the child was born after 1998).
2007 or later: Up to $500 is added to the CES Grant room for each eligible child per year since 2007 (or since birth if the child was born after 2007).
The maximum yearly RESP contribution is $5,000 that would receive the matching basic CESG of $1,000. In other words if a subscriber were to contribute the full allowable life-time $50,000 RESP for a beneficiary of age 14 it would not be possible to receive the full $7,200 CES Grant.
For parents eager to begin contributing to an RESP to obtain the maximum CESG we recommend contributing $2,500 per year for the first 14 years and $1,000 in year 15. This strategy enables the contributor to obtain the maximum grant amount of $7,200 ($36,000 x 20 per cent).
Another strategy combines the above (contributions over 15 years) with an additional contribution of $14,000. Although the $14,000 would not attract the CES Grant, the extra dollars invested would maximize the lifetime contribution limit of $50,000.
Parents who have children 10 years old should begin an RESP immediately if they are looking to obtain the full $7,200 CES Grant.
To help parents determine the latest point at which they can begin contributing to an RESP, and still receive the full $7,200 in CESG, we have inserted the table below. It assumes that the subscriber will contribute the maximum amount possible in order to attract the maximum CES Grant.
| AGE OF SUBSCRIBER | CONTRIBUTION | CESG | ||
| 10 | $ | 1,000 | $ | 200 |
| 11 | $ | 5,000 | $ | 1,000 |
| 12 | $ | 5,000 | $ | 1,000 |
| 13 | $ | 5,000 | $ | 1,000 |
| 14 | $ | 5,000 | $ | 1,000 |
| 15 | $ | 5,000 | $ | 1,000 |
| 16 | $ | 5,000 | $ | 1,000 |
| 17 | $ | 5,000 | $ | 1,000 |
| 18 | $ | - | $ | - |
| $ | 36,000 | $ | 7,200 |
* CES Grant above assumes only the basic grant. Additional grants may be available from certain provinces and/or for low-income families. In some cases parents can wait until age 11 if they are receiving grants beyond the basic CESG.
The table provides a catch-up strategy which involves contributing $1,000 when your child is 10 and $5,000 (maximum yearly contribution amount eligible for matching CESG) each year between ages 11 and 17. This enables you to obtain the maximum amount of federal government money ($7,200).
3) PARENTS AND BENEFACTORS MUST CHOOSE THE 'RIGHT' RESP INVESTMENT
In a pooled scholarship plan you have no choice or flexibility with respect to the types of investments you prefer in your RESP. That's why RESP subscribers should avoid pooled scholarship plans. RESP investors must be able to decide what they want their RESP money invested in. With a 'self-directed' RESP they can do this. It's clearly the best option. Again, do not invest in an RESP you cannot easily - and without cost - transfer out of in favour of a better plan. Do not get 'locked in' to an RESP.
Risk should be avoided throughout the life of the RESP investment. Speculative plays such as stocks and mutual funds do not belong in something as important as a child's education program. There is no need to gamble with something so important. The simple stress-free trouble-free compound interest investment is best for the RESP. Steady, reliable growth.
Why gamble when you don't have to?
DON'T SPECULATE --- JUST INVEST!
DOs & DON’Ts of RESP INVESTING
DO NOT put your money into pooled ‘scholarship’ plans. Not only are they unreasonably complex, but they are fee-driven and return little, if anything, on your money.
DO NOT speculate and take chances with volatile stocks and mutual funds. In short, do not gamble with a child’s education fund. You don’t have to gamble, you don’t have to speculate. Just INVEST!
DO NOT put your RESP money into a fund that you cannot transfer out of easily and at no cost.
INSTEAD:
INVEST your RESP funds only in secure stress-free trouble-free compound interest investments. Steady consistent reliable growth is what you want.
INVEST your RESP funds only in ‘self-directed’ plans that YOU control.
Wednesday, August 25, 2010
More than 50% of Fisgard’s $232 million capital now comes from Canada’s Registered Savings and Registered Pension Plans. The rest of our capital comes from investors in the form of cash. The majority of Fisgard’s 4,000 investors invest both cash and registered funds from one or another of the following plans:
The reasons are not new. Fisgard has been performing consistently and reliably since 1994. Our investors don’t like surprises; they like performance, nothing less; and that’s what they get. They want reasonable returns, security, consistent income and compound interest growth. Security – Income – Growth; and that’s what we deliver. Our investors want easy-care trouble-free investments. They want to own their investments; they don’t want their investments to own them.
1) Fisgard’s returns have exceeded GIC’s, term deposits, savings accounts and bonds by over 3% consistently since 1994.
2) Fisgard is a simple worry-free investment. No sleepless nights with a Fisgard investment. It’s a healthy investment.
3) The Fisgard investment is not subject to dramatic stock market fluctuations. We don’t speculate – we invest.
4) Fisgard is a straight-forward income and growth investment.
5) Fisgard has never lost capital.
6) Fisgard has never defaulted on a dividend.
7) Fisgard has redeemed all of its investments on time when due.
8) Fisgard has never been late on a dividend payment.
9) Fisgard is a value investor. We invest only in Canada. Real bricks and mortar. No speculation.
10) Fisgard invests only in quality mortgages secured by valuable Canadian real estate property. Hard assets.
11) Fisgard has clearly defined investor cash-out (redemption) dates.
12) Fisgard allows you to fix your investment time frame (set your own liquidity).
13) Fisgard has very little debt (less than 1% of capital), so it is safe and secure.
14) Fisgard is operated by experienced licensed professionals.
15) Fisgard is not fee-driven. No broker fees.
16) Fisgard’s costs are clearly defined. No surprises.
17) Fisgard does not speculate - we only invest. There’s a world of difference between speculating and investing.
18) Fisgard’s service is professional, friendly and courteous. We have an A+ record with the Better Business Bureau.
19) Fisgard is relationship-oriented, not transaction-oriented. We care about our customers. They come first.
20) Fisgard is a people company. We are community supporters.
To discuss a Fisgard investment call 250-382-9255 in Victoria BC or toll free 1-866-382-9255. Ask for:
Rael Boisvert
Aggie Giemza
Dawn Paniz
Willa van der Ros
RRSP | |
SPRRS | |
RRIF | |
SPRRIF | |
TFSA | |
RESP | |
LIF | |
LRIF | |
LIRA | |
IPP | |
RDSP |
The reasons are not new. Fisgard has been performing consistently and reliably since 1994. Our investors don’t like surprises; they like performance, nothing less; and that’s what they get. They want reasonable returns, security, consistent income and compound interest growth. Security – Income – Growth; and that’s what we deliver. Our investors want easy-care trouble-free investments. They want to own their investments; they don’t want their investments to own them.
1) Fisgard’s returns have exceeded GIC’s, term deposits, savings accounts and bonds by over 3% consistently since 1994.
2) Fisgard is a simple worry-free investment. No sleepless nights with a Fisgard investment. It’s a healthy investment.
3) The Fisgard investment is not subject to dramatic stock market fluctuations. We don’t speculate – we invest.
4) Fisgard is a straight-forward income and growth investment.
5) Fisgard has never lost capital.
6) Fisgard has never defaulted on a dividend.
7) Fisgard has redeemed all of its investments on time when due.
8) Fisgard has never been late on a dividend payment.
9) Fisgard is a value investor. We invest only in Canada. Real bricks and mortar. No speculation.
10) Fisgard invests only in quality mortgages secured by valuable Canadian real estate property. Hard assets.
11) Fisgard has clearly defined investor cash-out (redemption) dates.
12) Fisgard allows you to fix your investment time frame (set your own liquidity).
13) Fisgard has very little debt (less than 1% of capital), so it is safe and secure.
14) Fisgard is operated by experienced licensed professionals.
15) Fisgard is not fee-driven. No broker fees.
16) Fisgard’s costs are clearly defined. No surprises.
17) Fisgard does not speculate - we only invest. There’s a world of difference between speculating and investing.
18) Fisgard’s service is professional, friendly and courteous. We have an A+ record with the Better Business Bureau.
19) Fisgard is relationship-oriented, not transaction-oriented. We care about our customers. They come first.
20) Fisgard is a people company. We are community supporters.
To discuss a Fisgard investment call 250-382-9255 in Victoria BC or toll free 1-866-382-9255. Ask for:
Rael Boisvert
Aggie Giemza
Dawn Paniz
Willa van der Ros
Tuesday, August 10, 2010
PIC-A-MIC
With investors flocking to safer investments such as quality CANADIAN real estate property and mortgages secured by CANADIAN real estate, interest in the Mortgage Investment Corporation ( MIC ) has grown significantly. Professional well-managed MICs are generally debt-free and deliver reasonable consistent dividends in the 5% to 7% range. They are not equity (stock and mutual fund) plays that tend to fluctuate dramatically in value, but are income and growth investments (you can either take your dividends in cash for income or you can reinvest your dividends for growth). Most MICs qualify for various Canadian Registered Savings and Registered Pension plan investment. Fisgard MIC for example, qualifies for the
When considering a MIC investment the following are important:
1) Track Record and Longevity
Consider MICs that have good track records and have been in business for a long time, at least 12 years. At a minimum they should have experienced at least two business cycles and have experienced the highs and lows of the real estate and mortgage market.
2) Consistency of Dividends
Consider MICs that have produced dividends without interruption for several years. Be wary of MICs that have had to suspend dividends and redemptions, rendering the investor unable to get income or cash out of his or her investment. This indicates portfolio or management problems.
3) Predictability of Dividends
Consider MICs that are consistent in the amount of dividends paid to you, not high one quarter and low the next. Look for a predictable pattern of dividend returns.
4) Mortgage Portfolio Performance
Insist on proof of mortgage portfolio performance. Ask about the number and dollar volume of impaired mortgages in relation to the total mortgage portfolio, over time, and make sure you are satisfied with that level of performance. Get clear answers as to the amount of investment ‘capital’ the MIC has lost over time.
5) Concentration of Mortgage Investments
Concentration is very important. Ask management about its largest mortgages and what percentage they make up of the entire portfolio. High concentration translates into high risk. Be wary of MICs that have a high concentration of mortgage money with a particular borrower (or a particular group of related borrowers). Also be wary of MICs that have a high concentration of mortgages in a particular type of mortgage, i.e. land development, construction, etc. as opposed to safer finished real estate products such as single family homes. Also be wary of MICs that have a high concentration of mortgages in a particular geographical area, i.e. a high percentage of mortgages in small rural communities that do not demonstrate growth and economic stability.
6) Management Experience and Qualifications
You must be comfortable that there is plenty of professional experience and qualification within the MIC management and staff. Ask for credentials. Are management and staff properly licensed? Are they registered with the appropriate regulatory authorities? Do they have sufficient depth of real estate valuation and mortgage financing experience? How many years have they been practicing?
7) Better Business Bureau and references
Is the MIC a member of the Better Business Bureau? If not, why not? Call the BBB for information on the record of the company, complaints, etc. Ask MIC management for business references, including investors and borrowers, and follow up on them.
8) Redemption (cash out) Provisions
MICs vary in terms of cash out provisions. Be clear as to the date on which you can redeem (cash out) your investment. Avoid investing in a MIC that is vague or open-ended in terms of when you can get your money out. If it is not clear as to when you can get your money out, then don't put it in.
9) Regulatory Compliance
You should invest only in MICs that fully comply with all regulations, including being properly registered and licensed with appropriate provincial securities commissions and mortgage authorities. This compliance information is public knowledge, and there is no reason why a MIC cannot provide full information on its compliance regime. Compliance, licensing and registrations are generally available on the internet.
10) Types of Mortgage Investments
Ask about the types of mortgages in the MIC's portfolio. Section 130.1 of the Income Tax Act specifies that at least 50% of the MIC’s investments must be in a combination of CDIC insured deposits and/or mortgages secured by residential real estate property as opposed to commercial property, otherwise the MIC is offside of the Income Tax Act, resulting in what could be serious adverse income tax consequences. Preference should be given to MICs that have a high proportion of residential compared to commercial mortgages. Of course, you must insist on receiving current year audited financial statements.
11) Geographical Location of Mortgage Investments
Be careful of investing in MICs that lend against property located in areas that do not have economies that demonstrate growth and stability. Often this information can be gleaned from Stats Canada, which has a very comprehensive website.
12) Mortgage Approval Process
Ask management how it selects mortgages. Does the MIC have a credit committee? What is management’s mortgage lending criteria? Does management assess property value itself or does it commission outside bonded/insured professional appraisers? Choose MICs that not only have the depth of experience in management and staff to evaluate property themselves but, as a matter of caution, contract property valuation to third-party professionals, basically A.A.C.I. bonded/insured appraisers.
13) Early Redemption Privileges
Like most financial investments, early redemption (cashing out before maturity) comes at a cost. Few MICs are simply redeemable on demand. It’s hard for a MIC to function that way as its mortgages are rarely, if ever, payable "on demand". Just make sure you are satisfied with the MIC’s early redemption policy and the cost associated with early redemption. An example of an early redemption feature is Fisgard’s Compassionate Early Redemption provision. This particular feature allows an investor, upon the death of a spouse or partner, to cash in the investment prior to the maturity date without penalty. Look for these types of early redemption features in the MIC you are considering.
14) Dividend Statements
Ask for a sample of the MIC’s Dividend Statement, and be satisfied that it is clear and easy to read. There is no reason for a MIC to have a confusing or complicated dividend statement. A MIC is a relatively straight-forward investment (mortgages secured by Canadian real estate property), so its dividend statement should be quite simple.
15) Liquidation Value
If the MIC under your consideration were to be liquidated today, what would its share value be? Good thing to ask. If it is less than what you paid for the share, then ask how you are going to get all of your capital back.
16) Related Funds
A number of MIC managers handle more than one MIC. Some manage several MIC funds under one roof. Is this an advantage or disadvantage to the investor? Is it an unnecessary complication? When mortgage opportunities come to the manager, which fund is the mortgage placed in – and why? What conflicts may arise from this type of situation? Good question to ask.
17) Investment by Principals
Are the founders, directors, officers, employees, etc, invested in the fund? If so, how much? If not, why not? Do their shares have special rights or priviledges that other investors’ shares do not have?
18) Loans to Insiders and Related Parties
Does the MIC lend to its managers, directors, officers, employees or related parties? This may not be illegal, but is not a good practice, even though it may be disclosed in the Offering Memorandum or Prospectus. Definitely something to ask about, and watch carefully.
19) Relationships of MIC fund to MIC Management
Some MICs have internal management, but most have external management. Directors and officers are often the owners of the MIC’s management company as well as the controlling shareholders of the MIC fund itself. This is not necessarily a bad situation, and can even be a good situation. It is just something to be aware of.
20) Conflict Possibilities
Sometimes the MIC’s manager collects fees – finders fees or broker fees – from its mortgage borrowers while at the same time getting paid by the investors for managing their MIC investment. In short, the manager is being paid by the borrower for finding the mortgage and being paid by the investors for managing their MIC investment all at the same time. This should raise some important questions in terms of conflicts of interest.
The higher the risk represented by a particular mortgage, the higher the finders/brokers fee will be. Ask why a manager should be paid a fee by a borrower (a fee based on the level of risk) at the same time as the manager is being paid by the investors to manage their money, keeping it as secure as possible. Is this a conflict of interest? Why don’t finders fees and brokerage fees go directly to the MIC fund for the benefit of the investors?
There are a number of fees that managers collect on a mortgage. Here are some:
Why should MIC investors be put at greater risk because the MIC manager collects a larger fee from a mortgage that poses higher risk? It’s a question you should ask – and insist be clearly answered.
[At Fisgard, for example, all of the above fees go to the investors – not to the manager. This is part of Fisgard’s conflict avoidance policy.]
21) General and Specific Reserves
A well-managed MIC should maintain reserves for doubtful accounts and bad debts. The MIC should have SPECIFIC RESERVES set against each of its impaired mortgages and GENERAL RESERVES to cover potential losses against the whole mortgage portfolio. A reserve program is a prudent businesslike way of accounting for possible losses. You should not invest in a MIC that does not have a reserve program. With MICs that do have a reserve program, you must check and be satisfied with the adequacy of the amount in both the specific and general reserves.
22) Liquidity and Cash Flow
Some MICs are involved in mortgages on construction and development projects. These mortgages involve progressive performance advances which are amounts advanced against the construction or development from time to time as the project progresses. These periodic performance advances are called draws, and a well-managed MIC always has adequate capital available to fund these draws as they come due. If the MIC doesn’t have this capital you should be careful about investing. When researching MICs for possible investment make sure the manager proves to you that the MIC has sufficient capital resources – either cash on hand or readily available through an operating line – to fund all draw obligations. If it is not clear that the MIC can meet its draw obligations, do not invest. A MIC that cannot meet its draw obligations is in the precarious position of being sued by its borrowers.
23) Borrowings (Leverage) and Cash Management
Invest only in MICs that clearly demonstrate a long history of prudent cash management. Cash flow is everything in a MIC. It is not unusual for a MIC to have a bank Line-of-Credit (operating line), but there is a material difference between a MIC that uses its LOC for leverage and a MIC that uses its LOC for short-term purposes, such as being able to forward-commit to mortgage investment opportunities. Ideally a well-run MIC should have 100% of its capital working (earning interest on mortgage investments) and have very little in the bank, just enough for day to day operations. The MIC should have an operating line that allows it to commit to mortgage opportunities even though it may not have the money in the bank at the time. This type of borrowing is prudent, but should be used only on a short-term basis.
On the other hand a MIC that uses leverage (the spread between the rate a MIC can borrow at and the rate it can achieve on its mortgage investments) to generate its revenue should be watched very carefully, and avoided if leverage is excessive. A bank can withdraw its Line-of-Credit facility at moment’s notice, causing instant and serious cash-flow problems in a MIC that depends on the LOC for revenue purposes. Borrowing at one rate to invest at another – playing the spread – is a dangerous game, a bad gamble. One need only look at the on-going global economic crisis to witness the carnage resulting from excessive borrowing (leverage). Avoid investing in MICs that use excessive leverage for revenue purposes. It’s deadly.
24) 1st and 2nd Mortgages
Junior (2nd) mortgages are lucrative investments, but carry greater risk and require specialized experience to be selected and managed properly. Exercise caution when considering investing in a MIC that has a high percentage of the dollar volume of its mortgage portfolio in 2nd mortgages. I stress dollar volume as a MIC may have a relatively small percentage of the number of its mortgages in 2nd mortgages, but that small number may represent a disproportionately high percentage of the MICs overall portfolio dollar volume. Be careful of that type of portfolio. A well-run secure MIC will always have a high percentage of its mortgage investments in quality 1st (senior) mortgage securities. It’s just safer.
25) Redemption Rights
Be wary of investing in a MIC that is not permitted to redeem your investment in full at any time at its discretion. This right will be spelled out in the MIC charter and Offering Memorandum or Prospectus. If a MIC finds itself in a position of having too much money and too few mortgage investments, it is better for the MIC to redeem shares (pay back your money) than for the MIC to be forced to retain excessive ‘un-invested capital’, which could be a substantial cost to the MIC, hence reducing your security and lowering your dividend return.
26) Insured Mortgages and Title Insurance
When selecting a MIC as a potential investment you should enquire as to whether some or all of the MIC's mortgage investments are insured by Canada Mortgage and Housing Corporation (CMHC), Canada Guarantee or Genworth. These are the three insurance companies that provide mortgage insurance, CMHC being a Federal crown corporation. It is unusual for MICs to carry mortgage insurance, but certain MICs may carry insurance on some of the mortgages in their portfolios.
You should also enquire as to whether the MIC in question carries Title Insurance, such as that provided by First Canadian Title or other title insurers. Very few MICs have such an arrangement, but certain MICs may have a contract with a title insurance company. It’s a good arrangement to have.
27) Registered Plan Trustee Fees
If you are considering investing in a MIC through one or another of Canada’s Registered Plans such as the RRSP, RRIF, TFSA, RESP, LIF, LRIF, LIRA, IPP or RDSP, be sure to confirm the trustee costs of maintaining the Plans. Some MICs offer more economical plans than others. For example, the RRSP or RRIF in a particular plan may cost $125 to open the Plan, a certain fee per contribution, and $125 to close the Plan, whereas in other MICs the trustee costs could be higher or lower. In the case of an investment such as the Tax Free Savings Account ( TFSA ) which is limited to a $5,000 contribution per year, or a regular (most often monthly) limited contribution investment such as a Registered Education Savings Plan ( RESP ) or the Registered Disability Savings Plan ( RDSP ) the trustee costs can be prohibitive. Be sure to examine these costs carefully before investing.
[Fisgard’s RRSP/RRIF costs $100+tax per year for the primary plan-holder and $75+tax per year for the secondary plan-holder (such as the Spousal RRSP or Spousal RRIF). Fisgard's RESP costs $24 per year, and its TFSA costs $36 per year, with no set-up and closing-out fees. Fisgard’s RESP and TFSA costs are very low compared to the vast majority of MICs in Canada.]
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When considering a MIC investment the following are important:
1) Track Record and Longevity
Consider MICs that have good track records and have been in business for a long time, at least 12 years. At a minimum they should have experienced at least two business cycles and have experienced the highs and lows of the real estate and mortgage market.
2) Consistency of Dividends
Consider MICs that have produced dividends without interruption for several years. Be wary of MICs that have had to suspend dividends and redemptions, rendering the investor unable to get income or cash out of his or her investment. This indicates portfolio or management problems.
3) Predictability of Dividends
Consider MICs that are consistent in the amount of dividends paid to you, not high one quarter and low the next. Look for a predictable pattern of dividend returns.
4) Mortgage Portfolio Performance
Insist on proof of mortgage portfolio performance. Ask about the number and dollar volume of impaired mortgages in relation to the total mortgage portfolio, over time, and make sure you are satisfied with that level of performance. Get clear answers as to the amount of investment ‘capital’ the MIC has lost over time.
5) Concentration of Mortgage Investments
Concentration is very important. Ask management about its largest mortgages and what percentage they make up of the entire portfolio. High concentration translates into high risk. Be wary of MICs that have a high concentration of mortgage money with a particular borrower (or a particular group of related borrowers). Also be wary of MICs that have a high concentration of mortgages in a particular type of mortgage, i.e. land development, construction, etc. as opposed to safer finished real estate products such as single family homes. Also be wary of MICs that have a high concentration of mortgages in a particular geographical area, i.e. a high percentage of mortgages in small rural communities that do not demonstrate growth and economic stability.
6) Management Experience and Qualifications
You must be comfortable that there is plenty of professional experience and qualification within the MIC management and staff. Ask for credentials. Are management and staff properly licensed? Are they registered with the appropriate regulatory authorities? Do they have sufficient depth of real estate valuation and mortgage financing experience? How many years have they been practicing?
7) Better Business Bureau and references
Is the MIC a member of the Better Business Bureau? If not, why not? Call the BBB for information on the record of the company, complaints, etc. Ask MIC management for business references, including investors and borrowers, and follow up on them.
8) Redemption (cash out) Provisions
MICs vary in terms of cash out provisions. Be clear as to the date on which you can redeem (cash out) your investment. Avoid investing in a MIC that is vague or open-ended in terms of when you can get your money out. If it is not clear as to when you can get your money out, then don't put it in.
9) Regulatory Compliance
You should invest only in MICs that fully comply with all regulations, including being properly registered and licensed with appropriate provincial securities commissions and mortgage authorities. This compliance information is public knowledge, and there is no reason why a MIC cannot provide full information on its compliance regime. Compliance, licensing and registrations are generally available on the internet.
10) Types of Mortgage Investments
Ask about the types of mortgages in the MIC's portfolio. Section 130.1 of the Income Tax Act specifies that at least 50% of the MIC’s investments must be in a combination of CDIC insured deposits and/or mortgages secured by residential real estate property as opposed to commercial property, otherwise the MIC is offside of the Income Tax Act, resulting in what could be serious adverse income tax consequences. Preference should be given to MICs that have a high proportion of residential compared to commercial mortgages. Of course, you must insist on receiving current year audited financial statements.
11) Geographical Location of Mortgage Investments
Be careful of investing in MICs that lend against property located in areas that do not have economies that demonstrate growth and stability. Often this information can be gleaned from Stats Canada, which has a very comprehensive website.
12) Mortgage Approval Process
Ask management how it selects mortgages. Does the MIC have a credit committee? What is management’s mortgage lending criteria? Does management assess property value itself or does it commission outside bonded/insured professional appraisers? Choose MICs that not only have the depth of experience in management and staff to evaluate property themselves but, as a matter of caution, contract property valuation to third-party professionals, basically A.A.C.I. bonded/insured appraisers.
13) Early Redemption Privileges
Like most financial investments, early redemption (cashing out before maturity) comes at a cost. Few MICs are simply redeemable on demand. It’s hard for a MIC to function that way as its mortgages are rarely, if ever, payable "on demand". Just make sure you are satisfied with the MIC’s early redemption policy and the cost associated with early redemption. An example of an early redemption feature is Fisgard’s Compassionate Early Redemption provision. This particular feature allows an investor, upon the death of a spouse or partner, to cash in the investment prior to the maturity date without penalty. Look for these types of early redemption features in the MIC you are considering.
14) Dividend Statements
Ask for a sample of the MIC’s Dividend Statement, and be satisfied that it is clear and easy to read. There is no reason for a MIC to have a confusing or complicated dividend statement. A MIC is a relatively straight-forward investment (mortgages secured by Canadian real estate property), so its dividend statement should be quite simple.
15) Liquidation Value
If the MIC under your consideration were to be liquidated today, what would its share value be? Good thing to ask. If it is less than what you paid for the share, then ask how you are going to get all of your capital back.
16) Related Funds
A number of MIC managers handle more than one MIC. Some manage several MIC funds under one roof. Is this an advantage or disadvantage to the investor? Is it an unnecessary complication? When mortgage opportunities come to the manager, which fund is the mortgage placed in – and why? What conflicts may arise from this type of situation? Good question to ask.
17) Investment by Principals
Are the founders, directors, officers, employees, etc, invested in the fund? If so, how much? If not, why not? Do their shares have special rights or priviledges that other investors’ shares do not have?
18) Loans to Insiders and Related Parties
Does the MIC lend to its managers, directors, officers, employees or related parties? This may not be illegal, but is not a good practice, even though it may be disclosed in the Offering Memorandum or Prospectus. Definitely something to ask about, and watch carefully.
19) Relationships of MIC fund to MIC Management
Some MICs have internal management, but most have external management. Directors and officers are often the owners of the MIC’s management company as well as the controlling shareholders of the MIC fund itself. This is not necessarily a bad situation, and can even be a good situation. It is just something to be aware of.
20) Conflict Possibilities
Sometimes the MIC’s manager collects fees – finders fees or broker fees – from its mortgage borrowers while at the same time getting paid by the investors for managing their MIC investment. In short, the manager is being paid by the borrower for finding the mortgage and being paid by the investors for managing their MIC investment all at the same time. This should raise some important questions in terms of conflicts of interest.
The higher the risk represented by a particular mortgage, the higher the finders/brokers fee will be. Ask why a manager should be paid a fee by a borrower (a fee based on the level of risk) at the same time as the manager is being paid by the investors to manage their money, keeping it as secure as possible. Is this a conflict of interest? Why don’t finders fees and brokerage fees go directly to the MIC fund for the benefit of the investors?
There are a number of fees that managers collect on a mortgage. Here are some:
- mortgage application fees
- processing and administrative fees
- mortgage renewal fees
- late payment fees
- NSF fees
- mortgage discharge fees
- lender fees
- finders (brokerage) fees
- demand notice fees
- foreclosure processing fees
Why should MIC investors be put at greater risk because the MIC manager collects a larger fee from a mortgage that poses higher risk? It’s a question you should ask – and insist be clearly answered.
[At Fisgard, for example, all of the above fees go to the investors – not to the manager. This is part of Fisgard’s conflict avoidance policy.]
21) General and Specific Reserves
A well-managed MIC should maintain reserves for doubtful accounts and bad debts. The MIC should have SPECIFIC RESERVES set against each of its impaired mortgages and GENERAL RESERVES to cover potential losses against the whole mortgage portfolio. A reserve program is a prudent businesslike way of accounting for possible losses. You should not invest in a MIC that does not have a reserve program. With MICs that do have a reserve program, you must check and be satisfied with the adequacy of the amount in both the specific and general reserves.
22) Liquidity and Cash Flow
Some MICs are involved in mortgages on construction and development projects. These mortgages involve progressive performance advances which are amounts advanced against the construction or development from time to time as the project progresses. These periodic performance advances are called draws, and a well-managed MIC always has adequate capital available to fund these draws as they come due. If the MIC doesn’t have this capital you should be careful about investing. When researching MICs for possible investment make sure the manager proves to you that the MIC has sufficient capital resources – either cash on hand or readily available through an operating line – to fund all draw obligations. If it is not clear that the MIC can meet its draw obligations, do not invest. A MIC that cannot meet its draw obligations is in the precarious position of being sued by its borrowers.
23) Borrowings (Leverage) and Cash Management
Invest only in MICs that clearly demonstrate a long history of prudent cash management. Cash flow is everything in a MIC. It is not unusual for a MIC to have a bank Line-of-Credit (operating line), but there is a material difference between a MIC that uses its LOC for leverage and a MIC that uses its LOC for short-term purposes, such as being able to forward-commit to mortgage investment opportunities. Ideally a well-run MIC should have 100% of its capital working (earning interest on mortgage investments) and have very little in the bank, just enough for day to day operations. The MIC should have an operating line that allows it to commit to mortgage opportunities even though it may not have the money in the bank at the time. This type of borrowing is prudent, but should be used only on a short-term basis.
On the other hand a MIC that uses leverage (the spread between the rate a MIC can borrow at and the rate it can achieve on its mortgage investments) to generate its revenue should be watched very carefully, and avoided if leverage is excessive. A bank can withdraw its Line-of-Credit facility at moment’s notice, causing instant and serious cash-flow problems in a MIC that depends on the LOC for revenue purposes. Borrowing at one rate to invest at another – playing the spread – is a dangerous game, a bad gamble. One need only look at the on-going global economic crisis to witness the carnage resulting from excessive borrowing (leverage). Avoid investing in MICs that use excessive leverage for revenue purposes. It’s deadly.
24) 1st and 2nd Mortgages
Junior (2nd) mortgages are lucrative investments, but carry greater risk and require specialized experience to be selected and managed properly. Exercise caution when considering investing in a MIC that has a high percentage of the dollar volume of its mortgage portfolio in 2nd mortgages. I stress dollar volume as a MIC may have a relatively small percentage of the number of its mortgages in 2nd mortgages, but that small number may represent a disproportionately high percentage of the MICs overall portfolio dollar volume. Be careful of that type of portfolio. A well-run secure MIC will always have a high percentage of its mortgage investments in quality 1st (senior) mortgage securities. It’s just safer.
25) Redemption Rights
Be wary of investing in a MIC that is not permitted to redeem your investment in full at any time at its discretion. This right will be spelled out in the MIC charter and Offering Memorandum or Prospectus. If a MIC finds itself in a position of having too much money and too few mortgage investments, it is better for the MIC to redeem shares (pay back your money) than for the MIC to be forced to retain excessive ‘un-invested capital’, which could be a substantial cost to the MIC, hence reducing your security and lowering your dividend return.
26) Insured Mortgages and Title Insurance
When selecting a MIC as a potential investment you should enquire as to whether some or all of the MIC's mortgage investments are insured by Canada Mortgage and Housing Corporation (CMHC), Canada Guarantee or Genworth. These are the three insurance companies that provide mortgage insurance, CMHC being a Federal crown corporation. It is unusual for MICs to carry mortgage insurance, but certain MICs may carry insurance on some of the mortgages in their portfolios.
You should also enquire as to whether the MIC in question carries Title Insurance, such as that provided by First Canadian Title or other title insurers. Very few MICs have such an arrangement, but certain MICs may have a contract with a title insurance company. It’s a good arrangement to have.
27) Registered Plan Trustee Fees
If you are considering investing in a MIC through one or another of Canada’s Registered Plans such as the RRSP, RRIF, TFSA, RESP, LIF, LRIF, LIRA, IPP or RDSP, be sure to confirm the trustee costs of maintaining the Plans. Some MICs offer more economical plans than others. For example, the RRSP or RRIF in a particular plan may cost $125 to open the Plan, a certain fee per contribution, and $125 to close the Plan, whereas in other MICs the trustee costs could be higher or lower. In the case of an investment such as the Tax Free Savings Account ( TFSA ) which is limited to a $5,000 contribution per year, or a regular (most often monthly) limited contribution investment such as a Registered Education Savings Plan ( RESP ) or the Registered Disability Savings Plan ( RDSP ) the trustee costs can be prohibitive. Be sure to examine these costs carefully before investing.
[Fisgard’s RRSP/RRIF costs $100+tax per year for the primary plan-holder and $75+tax per year for the secondary plan-holder (such as the Spousal RRSP or Spousal RRIF). Fisgard's RESP costs $24 per year, and its TFSA costs $36 per year, with no set-up and closing-out fees. Fisgard’s RESP and TFSA costs are very low compared to the vast majority of MICs in Canada.]
Thursday, January 28, 2010
If you haven’t started a TAX FREE SAVINGS ACCOUNT ( TFSA ) --- why not?
The TFSA is as good as it gets in terms of TAX FREE savings. $5,000 a year may not seem like much but, driving what might seem to be a small investment with the power of compound interest, you’ve got an investment winner impossible to beat.
I offer the following TFSA investment scenarios. The scenarios range from the person who can contribute the maximum allowable $5,000 per year to the person who contributes $50 every 2-week paycheque 26 times per year.
Examples of TFSA investments based on a return of 5 % per year.
1) You invest $5,000 ONCE ONLY, and make no further TFSA contributions at all. If you are 18 when you make your first TFSA investment and you let your investment compound for 40 years (until you are 58) your $5,000 will have grown to $36,490. Based on contributions totaling $5,000 this $36,490 represents a TAX FREE profit of $31,490. Averaged over 40 years your TAX FREE return is a superb 15.75% per year. Where can you get that in the stock and mutual fund market? NET - NO TAX!
2) You invest the full allowable TFSA contribution of $5,000 ONCE A YEAR every year (hopefully the 1st of January so you get your investment compounding as soon as possible each year). If you are 18 when you make your first TFSA installment and you let your investment compound for 40 years (until you are 58) your $5,000 per year will have grown to $654,206. Based on contributions totaling $200,000 this represents a profit of $454,606 or an average of $11,365 TAX FREE profit per year. Averaged over 40 years your TAX FREE return ($11,365/$5,000) is a whopping 227% per year. NET - NO TAX!
3) You contribute $50 per 2-week paycheque to your TFSA from age 18 to age 58 (40 years). Over that time you will have contributed $52,000 and your $50-per-paycheque investment will have grown to $164,612 for a profit of $112,612. This is an average yearly TAX FREE profit of $2,815 which amounts to an average yearly TAX FREE return of 216% per year. NET – NO TAX! Such is the power of compound interest!
4) You contribute $100 per month to your TFSA from age 18 to age 58 (40 years). Over that time your TFSA investment grows to $151,781. Having invested a total of $48,000 this represents a TAX FREE profit of $103,781 which is an average yearly TAX FREE profit of $2,595. An average profit of $2,595 a year applied against a contribution of $1,200 a year amounts to a spectacular average yearly TAX FREE return of 216% per year. Not a bad return for an investment of $100 a month. NET - NO TAX!
5) You want to max out your TFSA investment opportunity of $5,000 per calendar year, but want to do this through regular periodic installments, so you contribute $192 every 2-week paycheque to your TFSA. You do this for 40 years, from age 18 to age 58. At the end of that time you will have contributed a total of $199,680 to your TFSA and accumulated a TAX FREE amount of $632,112. Having invested a total of $199,680 to accumulate $632,112 your profit is $432,432. Over 40 years this amounts to an average yearly TAX FREE profit of $10,810. If you apply your average yearly profit of $10,810 against your yearly contributions of $4,992 you’ve earned a whopping average TAX FREE return of 216% per year. NET - NO TAX!
Would someone please tell me where you can earn that kind of profit on a simple safe stress-free modest affordable investment, without undue risk and maintenance?
Go to Fisgard’s TFSA calculator at http://www.fisgard.com/ and plug in your numbers – your TFSA investment scenario – and see how you can accumulate a TAX FREE investment based on what you can afford or what you want to invest. Using the magical power of compound interest you will be pleasantly surprised at how large a small investment – or a series of small investments – will grow to.
COMPOUND INTEREST – THE 8TH WONDER OF THE WORLD!
I offer the following TFSA investment scenarios. The scenarios range from the person who can contribute the maximum allowable $5,000 per year to the person who contributes $50 every 2-week paycheque 26 times per year.
Examples of TFSA investments based on a return of 5 % per year.
1) You invest $5,000 ONCE ONLY, and make no further TFSA contributions at all. If you are 18 when you make your first TFSA investment and you let your investment compound for 40 years (until you are 58) your $5,000 will have grown to $36,490. Based on contributions totaling $5,000 this $36,490 represents a TAX FREE profit of $31,490. Averaged over 40 years your TAX FREE return is a superb 15.75% per year. Where can you get that in the stock and mutual fund market? NET - NO TAX!
2) You invest the full allowable TFSA contribution of $5,000 ONCE A YEAR every year (hopefully the 1st of January so you get your investment compounding as soon as possible each year). If you are 18 when you make your first TFSA installment and you let your investment compound for 40 years (until you are 58) your $5,000 per year will have grown to $654,206. Based on contributions totaling $200,000 this represents a profit of $454,606 or an average of $11,365 TAX FREE profit per year. Averaged over 40 years your TAX FREE return ($11,365/$5,000) is a whopping 227% per year. NET - NO TAX!
3) You contribute $50 per 2-week paycheque to your TFSA from age 18 to age 58 (40 years). Over that time you will have contributed $52,000 and your $50-per-paycheque investment will have grown to $164,612 for a profit of $112,612. This is an average yearly TAX FREE profit of $2,815 which amounts to an average yearly TAX FREE return of 216% per year. NET – NO TAX! Such is the power of compound interest!
4) You contribute $100 per month to your TFSA from age 18 to age 58 (40 years). Over that time your TFSA investment grows to $151,781. Having invested a total of $48,000 this represents a TAX FREE profit of $103,781 which is an average yearly TAX FREE profit of $2,595. An average profit of $2,595 a year applied against a contribution of $1,200 a year amounts to a spectacular average yearly TAX FREE return of 216% per year. Not a bad return for an investment of $100 a month. NET - NO TAX!
5) You want to max out your TFSA investment opportunity of $5,000 per calendar year, but want to do this through regular periodic installments, so you contribute $192 every 2-week paycheque to your TFSA. You do this for 40 years, from age 18 to age 58. At the end of that time you will have contributed a total of $199,680 to your TFSA and accumulated a TAX FREE amount of $632,112. Having invested a total of $199,680 to accumulate $632,112 your profit is $432,432. Over 40 years this amounts to an average yearly TAX FREE profit of $10,810. If you apply your average yearly profit of $10,810 against your yearly contributions of $4,992 you’ve earned a whopping average TAX FREE return of 216% per year. NET - NO TAX!
Would someone please tell me where you can earn that kind of profit on a simple safe stress-free modest affordable investment, without undue risk and maintenance?
Go to Fisgard’s TFSA calculator at http://www.fisgard.com/ and plug in your numbers – your TFSA investment scenario – and see how you can accumulate a TAX FREE investment based on what you can afford or what you want to invest. Using the magical power of compound interest you will be pleasantly surprised at how large a small investment – or a series of small investments – will grow to.
COMPOUND INTEREST – THE 8TH WONDER OF THE WORLD!
Tuesday, January 26, 2010
COMPOUND INTEREST - The 8th Wonder of the World......Albert Einstein
The investor's best friend is compound interest. I never cease to be amazed by the power of compounding on an investment; watching pocket change become millions. There is nothing as powerful as a compound interest investment. It simply GROWS, and as interest continues to be added to interest, inexorably compounding on itself, investment growth is staggering. The compound interest investment is simple, low maintenance, less stressful, and often more economical (no broker fees, etc).
Compounding means that you can earn interest not only on your principal, but also the interest you have accumulated. Interest on interest!
Starting your investment program as early as possible makes a huge difference on how much wealth you accumulate; the benefit of starting to save early in life is greatly magnified by the phenomena of compound interest. With compound interest the growth of your investment is calculated not only on the amount of original and periodic investments, but also on the interest or dividends that have accumulated on the same investment. Interest on Interest!
Simply put, compound interest forces your investment to grow much faster . . . exponentially faster!
It’s simple. Put as much money as you can into a compound interest investment as early as possible, and contribute as often as possible, never removing your principal or interest until you have reached your investment objective. The compound interest investment – the ‘patient’ investment, the ‘quiet’ investment – will always come through for you; but you must give it time – you must give it a chance to grow. The compound interest investment is a simple low maintenance investment that has the additional important advantage of being stress-free, therefore being a healthier investment. And – very importantly – its growth is predictable, so you can confidently and securely plan your future.
Just put a little money aside – regularly – and let it compound!
‘THE RULE OF 72’ – A SIMPLE WAY TO CALCULATE COMPOUND INTEREST
To calculate compound interest use the ‘Rule of 72’. The Rule of 72 is simple: to find the number of years required to double your money at a given interest rate just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at 6% just divide 72 by 6. At 6% interest it will take you 12 years to double your money.
Now run it backwards. If you want to double your money in 12 years just divide 72 by 12 to find that you will have to earn 6% on your money to double it in 12 years. At 6% you will double your money in 12 years.
Keep your investments as simple and trouble-free as possible. Invest your cash or Registered Plan funds (RRSP, TFSA, RRIF, RESP, etc) in compound interest accounts. Why suffer sleepless nights by gambling your hard-earned cash and Registered Savings and Registered Pension Plan funds in stressful high-maintenance costly stocks and mutual funds in which you stand a better chance of losing than winning? Invest, don’t speculate. Simply place your money in a steady growth compound interest investment; then enjoy yourself and let your money grow while you go about living.
OWN YOUR INVESTMENTS INSTEAD OF THEM OWNING YOU!
COMPOUND INTEREST – THE BEST FOR SUCCESSFUL INVESTING!
Compounding means that you can earn interest not only on your principal, but also the interest you have accumulated. Interest on interest!
Starting your investment program as early as possible makes a huge difference on how much wealth you accumulate; the benefit of starting to save early in life is greatly magnified by the phenomena of compound interest. With compound interest the growth of your investment is calculated not only on the amount of original and periodic investments, but also on the interest or dividends that have accumulated on the same investment. Interest on Interest!
Simply put, compound interest forces your investment to grow much faster . . . exponentially faster!
It’s simple. Put as much money as you can into a compound interest investment as early as possible, and contribute as often as possible, never removing your principal or interest until you have reached your investment objective. The compound interest investment – the ‘patient’ investment, the ‘quiet’ investment – will always come through for you; but you must give it time – you must give it a chance to grow. The compound interest investment is a simple low maintenance investment that has the additional important advantage of being stress-free, therefore being a healthier investment. And – very importantly – its growth is predictable, so you can confidently and securely plan your future.
Just put a little money aside – regularly – and let it compound!
‘THE RULE OF 72’ – A SIMPLE WAY TO CALCULATE COMPOUND INTEREST
To calculate compound interest use the ‘Rule of 72’. The Rule of 72 is simple: to find the number of years required to double your money at a given interest rate just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at 6% just divide 72 by 6. At 6% interest it will take you 12 years to double your money.
Now run it backwards. If you want to double your money in 12 years just divide 72 by 12 to find that you will have to earn 6% on your money to double it in 12 years. At 6% you will double your money in 12 years.
Keep your investments as simple and trouble-free as possible. Invest your cash or Registered Plan funds (RRSP, TFSA, RRIF, RESP, etc) in compound interest accounts. Why suffer sleepless nights by gambling your hard-earned cash and Registered Savings and Registered Pension Plan funds in stressful high-maintenance costly stocks and mutual funds in which you stand a better chance of losing than winning? Invest, don’t speculate. Simply place your money in a steady growth compound interest investment; then enjoy yourself and let your money grow while you go about living.
OWN YOUR INVESTMENTS INSTEAD OF THEM OWNING YOU!
COMPOUND INTEREST – THE BEST FOR SUCCESSFUL INVESTING!
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