Sometimes even the wisest people among us forget the very basics upon which wisdom is built.  One of the most powerful aspects of the study of economics is the mobility of labor.  The Canadian nation is built on this very principle – the principle of immigration.  All over the world people follow this rule – that is why they leave their place of birth and move across the world.  But once people move to Canada, they become stuck and their mobility evaporates.  What’s behind this phenomenon?

In recent years the number of ETFs in the market has increased considerably.  People are investing in them, but do they really understand what it is that they are buyiing into?  As I sit down with prospects, I find that the answer to that question is mostly "No".

What is an ETF? An ETF is basically an open-ended mutual fund, in the sense that it is a basket of securities purchased by the ETF sponsoring financial institution.  The basket is divided into ETF units, and each unit is representative of the basket, in the same manner that mutual fund units are representative of the investment positions of the mutual fund.

Image: stockvault.net

If you listen to Warren Buffett then the best holding period for stocks is forever.  Plan to invest in them early.  Plan to use only the dividend income for consumption.  Plan to leave them in your estate.  You could go a step further and leave them in a trust!

The problem with most of us these days is that we start too late, and therefore we have no choice but to consume our savings.  If we left our investments alone for the most part, they would grow to a size that would be able to accomodate consumption and still grow.  It's all in the percentage growth versus the percentage consumed. 

I think it is a reflection on our times that a rap video posted on YouTube has invoked more awareness and debate about modern economic theory among the masses compared to countless serious debate forums and books.

Boiling it down to the basics, Keynesian economics calls for intervention by the government and the use of government spending and money market operations as a tool for controlling the direction of the economy.  In the process, it allows for inflation as an acceptable cost for the greater purpose of economic growth and prosperity.

By Patricia Garner, Oak View Law Group

Credit card debt can accrue due to mismanagement of your credit cards. Although we know this pretty well, still we tend to misuse our credit cards so much so that we become unable to repay the amount and need to rush to the professional debt relief companies. When you seek help of the professional debt relief companies like the credit card consolidation firms, you have to pay the service charges and the fees but if you can take certain steps on your own, it is most likely that you can save a considerable amount of your dollars. However, despite the sufficient savings, most debtors opt for professional debt help as you get expert help. Here are some of the different debt relief options that you can take resort to when you seek professional help.

By Zehra Mahoon, Investment Advisor, BMO Nesbitt Burns
Printed in the Local Experts Newsletter on Aug 15, 2012

I’m sure you’re thinking: “there’s got to be more than six!”, you’re right.  We women make countless mistakes with love that affect life, and definitely money!  There are six mistakes that I see repeated as an investment advisor.  My purpose here is to create an awareness of what these mistakes are so that if you are guilty of one of them or if you see a friend or a family member who may be subject to them, you can make a difference.  I repeat: you can make a difference.

Let me tell you the story of Jane. Jane and Paul attended one of my seminars. I did not know at the time, but Paul had been diagnosed with terminal cancer, and had an undetermined amount of time on planet Earth.  I found out later that he had come to the seminar with the express intent of introducing Jane to an advisor who might be able to help her manage her finances once he was gone – you see she had never paid attention to these things in their 36 years of marriage. She was timid, and scared even to ask questions. 

As I work with my clients I find that sometimes having to change financial advisors or investment advisors is the hardest thing for them to do.  Mostly because they are emotionally invested in the relationship or scared that they might end up making a mistake.  However, there are situations where a changes is warranted.  I find that most people pay attention to it when they are approaching retirement or already retired.  Here are a few red flags that get missed most of the times.

1.       Your advisor hasn’t called you in over 3 months, and you haven’t had a face-to-face meeting in over 12 months.

Translation:

a.       Your advisor is too busy for you.  Like doctors, advisors like to grow their clientele, and many times they over extend themselves.
b.      They have more important clients compared to you and you are probably getting B, C, or D grade service from them.
c.       Perhaps your advisor is going through a major life event – it may be your turn to pick up the phone and find out.

How would you rate your advisor on service, on being there when you need them, on making you feel that they are actively taking care of your financial needs.  Rate your advisor on a scale of 1 to 10.  Ten being excellent. ________

Did you invest in the Facebook IPO?  That one was an iffy, but here’s one that will be a winner.  Visalus Health Sciences the company that markets the weight loss program called Body by Vi has filed for an IPO to raise $175 million.

I am going to hazard a guess that the IPO will be hugely subscribed to by the company’s own sales organisation.

I have been looking at various multilevel marketing (MLM) companies for many years, because I probably have a client or two or three that represent each one of the major players in that space, and I have to say that I am quite impressed by the way Visalus is run.

Here are six things I think anyone who is three to five years away from retirement must do.  These are based on my experience in working with my clients, and do not include the traditional replies including up-dating your financial plan and your wills and power of attorney. 

1.  Renegotiate your mortgage (if you have one) and get the biggest unsecured line of credit the banks will give you.
It is common knowledge that over 50% of retirees have mortgages or credit lines secured against their homes.  That’s just the way it is – we wish it wasn’t but wishing doesn’t make it go away.

I recommend all retires increase their access to credit before they retire.  Don’t mis-understand me.  I don’t mean for you to actually use the facilities and get into debt if you don’t have any or further into debt if you have some.  I mean that you should have the option to borrow if the need arises.  That’s what a credit line is – it is an option to borrow.  If you did not use the credit line, there would be nothing to pay back.  

I had a client call me last night - she wanted me to advise her about listing her property, should she do it now or should she wait for spring?  She was worried that she may not get what she wanted for her house because everyone is talking about a slow down in the housing market.

I thought I would share our discussion, because I am sure it is relevant to many people who are wondering about the same thing.