MUTUAL FUNDS

What is a mutual fund?

Investing in mutual funds involves taking some of your money and putting it in a larger pool of funds managed by a team of professional money managers. Because of the large amount of money in the pool, your mutual funds can diversify your portfolio more widely than you may be able to do when investing on your own. Overall, investing in mutual funds is an easy way to start building a sensibly managed and highly diversified financial portfolio.

How does it work?

Once you’re ready to discuss mutual funds in greater detail, Mike will work with you to determine your risk tolerance, objectives and financial goals to determine which mutual funds fit your investment profile.  He will meet with you on a regular basis to determine if your risk tolerance or investment objectives have changed over time. If that’s the case, he can help you rebalance your portfolio accordingly.

How will it benefit me?

Professionally managed portfolios | Mutual funds give investors access to a well-managed and highly diversified portfolio of equities and fixed income securities.

Diversification | Choosing to invest in a single company or industry may be very risky. Mutual funds allow investors to diversify their portfolios, helping them accommodate changes in the market.

Liquidity | Typically, mutual fund units can be redeemed – or “cashed out” – at any time. (The redemption value will depend on the unit value on the day of redemption, which may be lower or higher than the purchase price.)

Cost-effectiveness | Mutual funds are one of the most cost-effective ways to own a diversified, professionally managed portfolio. That’s because a mutual fund allows you to invest in several different companies at a fraction of the cost – a cost that’s shared with other investors.

TAX-FREE SAVINGS ACCOUNT (TFSA)

Canadian residents age 18 and over, can save up to $6,000 a year in a TFSA. Contributions are not tax-deductible, but investment returns (i.e. capital gains, interest and dividends) earned in a TFSA are not taxed, even when they are withdrawn. Withdrawals are tax-free and funds can be used for any purpose. Unused contribution room can be carried forward indefinitely and any amount withdrawn from a TFSA can be re-contributed in a future year without requiring new contribution room.

RETIREMENT SAVINGS PLAN (RSP)

A registered Retirement Savings Plan (RSP) is a savings plan that is registered with the Canadian government. Contributions to your RSP reduce your taxable income, which allows you to pay less tax now and potentially build a larger retirement fund for the future. You only pay tax on the amount you withdraw. Contributions can only be made by individuals with “earned income” that is taxable in Canada. You can also contribute to an RSP in the name of your spouse or common-law partner.

REGISTERED EDUCATION SAVINGS PLAN (RESP)

A Registered Education Savings Plan (RESP) is a tax-sheltered plan registered with the Canada Revenue Agency (CRA) that can help families save for their children’s post-secondary education. Contributions made to an RESP grow tax-free until the funds are withdrawn to pay when the beneficiary is registered at a qualifying educational program.

EXCHANGE TRADED FUNDS (ETFs)

What are exchange traded funds?

Exchange traded funds (ETFs) offer investors an alternative solution to enhance portfolio diversification, flexibility and liquidity.

ETFs can be bought and sold on an exchange like individual stocks. They can contain a portfolio of securities designed to track a specific index, market sector or even cover the broad market.

Features of ETFs

Diversification | By aiming to replicate a specific basket of securities, such as an index, an ETF aims to incorporate all, or a representative sample of, the securities that make up that basket.

Liquidity | ETF shares trade like common stocks on the stock exchange.

Flexibility | Similar to stocks, ETFs can be bought and sold throughout the trading day on a stock exchange at market determined prices.

Working Together

Most of us are too busy managing a business, working or raising a family. Let us help you now to start planning for how to pay for your child's post-secondary education and saving for your retirement. Set up a meeting today to get started.