On Tuesday June 15th, 2010 The Moir Team hosted a conference call. This call was designed to provide insight into capital markets and information about protecting your lifestyle and your assets.

Agenda
1) Introduction – Bev Moir
2) High Level Performance Report (Lifepoints Portfolios, Russell Investments) Lindsey Hall, Regional Director, Private Client Group, Russell Investments
3) Insight into the Capital Markets – Bev Moir
4) Protecting Your Lifestyle and Your Savings: Guest Speaker: Maddy Marchese, Advisor, Insurance Solutions ScotiaMcLeod
5) Conclusion – Bev Moir

You can benefit from the insights of the conference call by dialing in to listen to the INSTANT REPLAY. It is available untill July 15th, 2010

1) Instant replay: Dial-in number(s): 416-695-5800 / 800-408-3053, Pass code: 4443038 #, Prompts: Your Full Name

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2 ) You can access the presentation material by opening the Bev Moir Conference Call Presentation (pdf).

Thanks for your interest. If you have questions or concerns, please feel free to be in touch. If you have friends or colleagues who you think will benefit from this service, please feel free to pass along. Thank you.

Best regards,
Bev Moir, MHSA, FCSI, CIMA, Sr. Wealth Advisor

Bev wrote this article for the May issue of Ontario Dentist

It’s no surprise recent dental school graduates are eager to kiss their student budgets goodbye and reward themselves after years of intense study. With a much-improved cash flow, thanks to steady employment, they’re ready to spend their hard-earned money. But, graduates, beware. Some sound advice may be just what’s needed before reaping those well-deserved rewards.

Mary’s Story
Mary Brown recently graduated from the University of Toronto’s Faculty of Dentistry and has begun working in an established dental practice near her downtown Toronto condo, which she rents from her parents. After years of hard work and studying, she has a guaranteed salary — and many wants. To start with, she wants to buy a $30,000 Toyota Prius, and she also wants to take a trip to Mexico.

The balance that Mary needs to find is to enjoy the fruits of her chosen career now, while saving for future goals.

However, Mary owes her parents $25,000 in education-related expenses. Fortunately, for her, her parents are only charging her one percent interest on the student loans, and they expect “interest only” to be paid monthly, similar to bank practice. However, if Mary were to have borrowed the $25,000 from a bank, typically she would be charged prime (currently at 2.25 percent) plus the secured rate of one percent, or prime plus the unsecured rate of 4.99 percent. Should she wish to eliminate this student debt, Mary would need to make payments to her parents of principal and interest.

Mary also plans to buy the condo she rents from her parents. According to her realtor, the condo has a resale value of $225,000, which means she needs a minimum down payment of 20 percent of the resale value to qualify for a conventional mortgage. It’s to Mary’s advantage to save the 20 percent down payment ($45,000) to qualify for a conventional mortgage, as this type of mortgage does not need to be insured by a federal regulator. In contrast, a high ratio mortgage, where less than a 20 percent down payment is made, must be insured, adding an additional one percent to the total carrying cost of the mortgage. High ratio mortgages are more expensive to carry, and the total cost of the mortgage over its entire duration is increased because of this additional insurance.

A quick tally of the initial financial expenditures that Mary is contemplating is about $100,000. How will she handle this? What is her plan of attack?

Our First Piece of Advice: Mary Needs a Financial Plan
Dentists are in the enviable position of being able to earn significant incomes from the beginning of their careers and they have the potential to build substantial wealth over their lifetime. In a recent Workopolis survey, the typical base salary for a dentist in Ontario ranges from $80,000 to $124,000. Contrast that with the typical salary range for a high-school teacher — from $40,000 to $60,000, or a new electrician — $38,000 to $53,000. One of the best pieces of advice we can give to recent graduates, such as Mary, is to work with a personal financial planner. By going through the financial planning process, she will gain a better understanding of her current situation, including the amount and details of her debt, and she’ll clarify and prioritize her financial and other life goals over time via this roadmap.

There are several ways Mary can find an appropriate personal financial planner. One of the best ways is through a referral. She can ask her parents who they work with, or she can speak to her bank manager for a referral. Another option is to ask work colleagues for a recommendation. If Mary gets several names, she should book introductory meetings with each to assess his or her credentials, his or her experience in working with someone such as herself, her comfort level with the planner, whether he or she offers a financial plan as part of the service and how the planner gets paid.

The financial planning process identified several financial goals for Mary, including student debt-reduction, saving the down payment to buy the condo, buying the new car and being in a position to buy a dental practice in five years. A financial plan developed various funding strategies and alternatives for her goals and, more importantly, showed Mary where those goals may have to be compromised. For instance, Mary cannot afford to buy an expensive new car. The plan showed her that by delaying a car purchase and using urban transit (and occasional car rentals, if necessary), she could pay off her student debt in two and a half years and save the down payment for her condo purchase in four and a half years — as opposed to seven years, if she bought her Toyota this year.

This is an exciting time in Mary’s life as she begins her career and looks forward to its rewards. However, the financial plan, to be comprehensive, must also factor in the potential for unplanned and unexpected events, such as critical illness, disability and premature death. It needs to encompass strategies to protect Mary’s savings and enable her to maintain her lifestyle. Critical illness insurance provides a lump sum tax-free benefit if one is diagnosed with a critical illness. For Mary, who, at age 30, is a healthy non-smoker, the cost for a $100,000 benefit could be as low as $50 a month.

Term life insurance is also relatively cheap at this point in her life. She has no dependents, and needs to only cover the cost of debts and a funeral, should she die early. A death benefit of $300,000 would cost about $160 annually, as an example. Disability insurance is necessary—but expensive. Mary should explore what’s available as an employee of the practice. Additionally, she should investigate the cost and features of buying private disability insurance with the help of her financial planner or insurance specialist. While the cost of disability insurance may be similar, putting in place her own private disability insurance will offer better features, including tax-free monthly income, should she become disabled and “own-occupation” coverage in the event she can be rehabilitated. Mary needs to know most group plans pay taxable benefits until the disabled individual can be rehabilitated sufficiently to assume any job.

A financial plan is not a static document. Mary needs to review it regularly and update it as her needs and priorities change and the complexity and sophistication of her situation evolves. If Mary is working with a financial planner, many offer this planning service as part of their overall service, and there is no additional charge to have the plan revisited and revised. There are some advisors who only offer financial plans for a fee. In this case, she needs to be aware of this upfront to decide on the value for the cost. Most banks have staff who will provide a simple plan for no fee.

Our Second Piece of Advice: Stay Out of “Bad” Debt
The second best tip we can give to Mary is, stay out of “bad” debt. There is “good” debt, where she is borrowing to get ahead, such as when one borrows to buy a dental practice. “Bad” debt is the high-cost consumer debt that funds lifestyle activities, such as dining at restaurants, buying clothing and jewelery, or using a credit card to pay for trips. If she is disciplined enough to pay off the monthly charges on time each month, then she’s fine. Problems arise when the monthly balances aren’t paid off and interest charges accumulate on items that have already been consumed and enjoyed. Typically, credit cards charge an annual interest rate of 18 percent to 19.50 percent on unpaid monthly balances. The monthly minimum payment is mostly interest payments and, if one only makes the minimum payment each month, it can take years to pay off that debt.

Here’s an example. Let’s say Mary buys $990 worth of clothes. If Mary’s interest rate is 18 percent and she makes only the minimum payment each month on the $990 charge, it will take her 152 payments — or nearly 13 years — to pay off the balance due. That’s a lot of interest!

Managing one’s cash flow is a fairly simple proposition. If Mary spends more than she earns, she’ll never stay out of debt and, more importantly, she’ll compromise her opportunity as a high-income professional to achieve her financial goals. The balance that Mary needs to find is to enjoy the fruits of her chosen career now, while having for future goals. For instance, in addition to her goal of home ownership, Mary likely wants to build savings to support her lifestyle during retirement.

Mary needs to understand her cash flow to know what’s coming in as income and what’s going out in the form of fixed expenses (such as rent or mortgage, heat, taxes, telephone) and variable expenses (such as food, entertainment, clothing, trips). Anything left over is available to help her get ahead and achieve her financial goals.

Our Third Piece of Advice: Establish Relationships with Trusted Professional Advisors
The third piece of advice we offer Mary is the importance of establishing relationships early in her career with professional advisors. Here, we’re thinking of the value brought to Mary through a banking relationship, an accountant, a lawyer and a financial planner. All of these professionals will be in a position to help educate Mary about important financial, legal and tax matters and will help to guide her as she grows in her career and as her financial and other needs evolve. Finding competent advisors is critical.

Mary’s Opportunity
With careful planning, some money management discipline and a strong salary that grows with her experience and client base, Mary will not only eliminate her student debt, but she will also be on the road to home ownership, a new car and be in a stronger financial position to buy a dental practice in several years.

About 73% of Canadians in the Scotiabank survey said the recession hadn’t affected retirement plans. The number of Canadians who don’t fully plan to retire has dropped by half to 5% in 2009 from 10% in 2008, it found.

“To achieve their retirement goals, Canadian investors need to ensure they have a balanced portfolio,” said Beverley Moir, ScotiaMcLeod senior wealth advisor. “Many investors are sitting on the sidelines in cash, bonds or GICs, however the current historic low interest rates will not provide the growth needed for many to reach their set retirement goals.”

Listen to Bev Moir speak about the survey on Toronto radio 680 news.

Inside This Issue
Team Update ………………….page 1
A Quick Recap of 2009 … ..…page 1
Outlook for 2010……………. page 2
Quotes for Thought………… page 3

The Moir Team Rosedale Branch Newsletter January 2010 Outlook

Living Benefits
Critical Illness Insurance
One of the great advantages of modern technology is that it’s allowing more people to survive once fatal medical conditions. However, the unfortunate reality is that many survivors must bear a heavy financial burden for things like medical treatment outside Canada, or ongoing care at home or in a facility. What can prevent depletion of your savings if you should fall ill? Critical Illness (CI) insurance can stop loss and protect your assets. Critical Illness Insurance (pdf)

Living Care
You work hard, save and invest to reach your financial goals. You want to retire without financial worries, control your own future and never burden your loved ones. Maybe take a dream trip. Spend more time with family and friends. A summer home. An inheritance for your loved ones … But life is unpredictable. Some of those dreams may have to change if you develop serious health concerns. Manulife’s LivingCare long term care insurance can help you prepare for the unexpected. LivingCare helps preserve your savings and investments and gives you choice about the type of care you receive. It lets you live all of your life your way. Living Care Guide (pdf)

Long-Term Care Insurance
The good news you ask? Positive lifestyle changes and medical advances over the last few decades have resulted in people living longer. The bad news? Living longer increases the chances of developing chronic medical conditions and the costs associated with caring for these conditions can be astronomical. Fortunately, an insurance product exists that can provide financial support required, should there be a need for long-term care in the future. Long-Term Care Insurance Overview (pdf)

Estate Planning
Estate Bond
Would you like to give more to your family and less to the government? If your answer is “yes,” you might want to consider an Estate Bond®.
Estate Bond (pdf)

The Estate Reallocation Strategy
The key to effective estate planning is to minimize estate tax and maximize the amount of wealth that is transferred to the next generation. But how? Life insurance offers a unique strategy. The Estate Reallocation Strategy (pdf)

A Quick Recap of our 2009 Strategy
Although global markets were falling into the abyss a year ago, we adopted a glass-half-full strategy for 2009, as we felt markets were pricing apocalyptic scenarios. With risk premia near record highs, the equity risk reward outlook was indeed very compelling a year ago. Getting confidence from our ISM model, we recommended investors add risky assets (equities, emerging markets, corporate bonds) and overweight cyclical sectors as ISM indices and employment data went from worse to bad. The worst of the global recession came in the first quarter of 2009 and economic activity has been improving since then. Our cyclical bias was maximized in June following the S&P 500 “golden cross” (50-day MA crossing the 200-day line). 2009 was a horrible year for the global economy, but equity markets managed to post solid performances, further illustrating how markets feed off anticipation, not what is written in the daily newspapers.

Read the full research report outlining portfolio strategy for 2010

This article appeared in the Fall 2009 Registered Nurses’ Foundation of Ontario Newsletter
Charitable giving is a growing priority for many Canadians. We see this in recent statistics showing a substantial increase in donations. This kind of support for charity is unprecedented in our history. While generosity and belief in community are primary motivators, the greatest enabler is a series of new tax incentives that began in 1996.

Introduction of Federal Tax Incentives
In introducing these charitable giving incentives, the Federal government has given taxpayers a choice. It’s a choice about how individuals wish to support society and the amount of tax they wish to pay. With these new tax incentives, it’s now possible to eliminate tax on 75% of income, except in the year of death and the year prior to death, when this figure jumps to 100%. Everyone must contribute to society via the tax system, but the decision about where the contribution goes can now be directed by the individual taxpayer.

What makes the tax incentives distinct is that they focus on gifts of assets (stocks, bonds, mutual funds, real estate, RRSPs/RRIFs) and business interests. These aren’t the gifts we typically make. Most are familiar with annual gifts by cheque to our favourite charities. The Federal tax incentives enable exceptional gifts that stand out for their size and level of commitment. These are gifts that are planned ahead of time and often realized through estate plans.

Meaningful Charitable Planning
A good financial and estate plan that includes charitable giving can be difficult to implement on its own and professional advice is recommended. Personal and family needs are at the centre of the planning process, and then charitable giving is considered. The goal is to integrate charitable giving into your financial and estate plan in a way that reflects both your values and your desire to minimize taxes.

At lower amounts, the individual’s will typically designates one or more charities to receive specific amounts or a percentage of the final estate value. At higher levels of gifting, an intermediary charitable entity – either a donor-advised fund, which is a charitable giving vehicle administered by a third party such as a mutual fund company and created to manage charitable donations on behalf of an organization, family, or individual, or a private family foundation – is set up to receive assets over a number of years. The intermediary “container” can be filled at your own pace, in increments or in one large instalment, often when a business is sold or at the time of death. This “container” represents a piece of your legacy, an ongoing entity in your family’s name.

Typically, these larger gifted assets are endowed, which means the capital is invested and only the income is gifted annually. Both advised funds and private foundations give ongoing control to the donors and their families to choose the charitable recipient annually. It’s a vehicle that allows donors and their families to be involved over time in enacting your legacy.

Example 1
Mary, a 70 year old retired nurse, is an example of someone who wants to donate to the RNFOO. She arranges to contribute $50,000 over five years to a donor-advised fund available from a mutual fund company. Working with her advisor, she invests the money conservatively to ensure that the principal remains intact and the annual income of about 3% to 5% is donated to the RNFOO each year into perpetuity.

Example 2
In another example, Joanna, a Registered Nurse, and her spouse John want to make significant contributions to several charities. On their passing, their son will inherit sufficient assets to enable his career and lifestyle while simultaneously keeping him motivated to continue working. Joanna and John want to impart their charitable values to their son, his children and grandchildren. To do so, they set up a private family foundation with an initial investment of $250,000. On their passing, they have designated their private foundation as the beneficiary of a $500,000 joint, last-to-die life insurance policy. With the investment strategy designed to preserve the capital, the annual income can be distributed to their charities of choice.

The approach to planning described above separates the process of planning the gift from the support of individual charities. You can plan to give a large amount to charity over a number of years as part of an integrated plan. The contributions happen on your timetable and not when fundraisers come calling. Gifts to individual charities occur as part of a controlled, thoughtful process that preserves maximum flexibility and allows ones’ philanthropic values to be implemented over time. If you would like to learn more about this planning opportunity, please contact the RNFOO office.

Bev is a Senior Investment Executive and Financial Planner with ScotiaMcLeod and highly respected in her industry. She is a Certified Investment Management Analyst and a Fellow of the Canadian Securities Institute. Bev has served as Gala Fundraising Chair, and from October 1998 to October 2004 she served on the Executive Team of RNFOO. At the Gala in May 2006, Beverley Moir was presented with an Honourary Life Membership in recognition of her leadership and commitment to the Registered Nurses Foundation of Ontario.

® Registered trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF. This article is for information purposes only. All performance data represents past performance and is not indicative of future performance. It is recommended that individuals consult with their Wealth Advisor before acting on any information contained in this article. ScotiaMcLeod does not offer tax advice, but working with our team of experts we are able to provide a suite of financial services for clients. The opinions stated are not necessarily those of Scotia Capital Inc. or The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF. All insurance products are sold through ScotiaMcLeod Financial Services Inc., the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank Group. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Underwriters (Financial Security Advisors in Quebec) representing ScotiaMcLeod Financial Services Inc.

Emily Chiu, Bev Moir and Ingrid Sojka consult in the Moir Team office

“In the business world, the rearview mirror is always clearer than the windshield.”
Warren Buffett