Toronto is doing fine

This quote is from Warren Buffett in 1979. The world’s most successful investor sums up the simple reason why 1% of the world controls over 50% of the wealth. It is that 1% that moves boldly when others sit on their hands, worrying about what could go wrong.

Honestly, the constant barrage of negative media attention with regards to real estate and equities has become absurd. Nowadays, there is too much media, an endless void that needs to be filled by vacuous talking heads. It is hard for regular people to gain perspective with the constant media backed threat of bubbles and crashes. I have been at this for 23 years and I have seen 3, perhaps 4, recessions of one kind or another and I can tell you with certainty that never before has there been so much media time devoted to this subject, and it is not due to any fundamentals; it is due to the need to fill air time. They have to talk about something.

The time to buy anything is when people are selling; the time to sell anything is when people are buying. These two simple laws are how one can create great wealth, following them is another thing. The other factor that is vital is time, and patience.

I am amused by the idiotic reporting I’ve seen lately in the local and national newspapers. The Toronto Life magazine recently published a “Bubble Trouble” feature on the cover, and of course BNN has been hammering home misleading facts and statistics about the national and local level real estate markets for months.

The truth sells less ad space and reduces circulation because it is less catastrophic. Does anyone really believe Toronto’s real estate market is due for a large correction? This is the most patently absurd theory I’ve heard in 10 years. Why, after a debilitating, horrific 9 month economic meltdown did our local market bounce back so fast? And why now would it collapse? Those of you sitting on the sidelines are going to miss the boat again, as you have for the last 19 years. I suggest you wait until you get a clear sign that you should buy; however, you may be interrupted in the meantime by death. How sad, putting a hold on one of life’s best experiences; owning a home, to wait for a clear sign from above that now would be the right time to buy.

As for the recent misleading stats and facts, I’ve been witnessing for months now, I will summarize what I believe to be true. Many properties are selling for more than the asking price, most for full price. For July 2010, the average central Toronto sold price to asking price ratio was 98%. It was 98% for August as well. In July, the time to sell was 33 days, and 36 days for August. If you listed your condominium this summer for $250,000, it was very likely that it sold for $245,000 in one month. C’mon people, does that sound like a problem? The volume of MLS sales in July 2010 may be down 34% over July 2009, but this needs to be kept in perspective. July 2009 was the best July on record, beating the previous best July by 11%. If we based all of 2010 on July’s 6564 sales, we would have 78, 768 sales, or the 7th best year on record and August numbers were similar. Of course, that won’t happen because this summer, like virtually every other summer was slower than the spring and it will be slower than the fall. I expect 2010 to finish up with 88,000 sales. Only 2007 will go down as a better year overall.

The new development market is still very busy and will likely stay busy for the foreseeable future as we struggle to find a way to deliver the required 50,000 homes per year to keep up with the real population growth.

Our city is in great shape. Our real estate market is in great shape. The media is filled with journalists trying to put bums in seats. Scary economic news sells. We are through the worst and if anything, expect prices to rise for the next several years in Toronto.

Source: Brad J Lamb | torontocondos.com

Avoid being a horrible investor

1. Do little or no research before buying a stock.
Would you trust a stranger to take care of your kids or drive your car? Then why would you entrust your portfolio, your hard-earned money, to the hands of management teams and businesses that you hardly know?

If you want to make blind bets, head to Vegas. It’s more fun losing money in a casino than in front of your computer. While you’re at it, you could do a little research on casino stocks, and you’ll see that the house always wins — especially when companies like MGM Mirage (NYSE: MGM), Las Vegas Sands (NYSE: LVS), and Wynn Resorts (Nasdaq: WYNN) dodge their financial problems for an amazing 2009.

Remember, every time you buy a stock, there’s someone on the other side of the trade. Consider these other people the “house.” If they know more than you about the stock, you’re at a disadvantage.

2. Buy stocks based on tips and rumors.
In my life, I’ve gotten two tips that could be construed as insider information, which I declined to act on. Both tips were of the “I have a friend, who knows a guy, whose cousin” variety. Anyways, I checked out the tickers about a year after hearing the tips, and both had plummeted.

3. Be an envious investor.
Charlie Munger often states that the worst of the seven deadly sins is envy, because other sins, like lust or gluttony, provide the sinner with pleasure. Envy, on the other hand, has no pleasurable aspect whatsoever.

I blame envy for a lot of things. I think envious investors bid stocks like eBay (Nasdaq: EBAY) and Yahoo (Nasdaq: YHOO) up to amazing heights during the tech boom, and Crocs (Nasdaq: CROX) to over $75 a share two years ago. I think envy drove Shaq and Kobe apart and effectively dismantled the Lakers dynasty — at least temporarily. I also think envy causes the average investor to get swept up into bull markets and decimated in the subsequent crashes.

4. Invest with low conviction.
Doing a lot of research doesn’t help much if you don’t stick around to reap the benefits. I think investing without conviction is like marrying someone you just met a week ago. After the initial honeymoon phase, failure awaits after the first set of speed-bumps.

When investing in stocks, I can almost guarantee you won’t catch the bottom. There are just too many random factors involved in the collective buying and selling activities of millions of people around the globe.

In fact, I think investing without conviction almost guarantees failure. Let’s say you were smart enough to figure out that Apple (Nasdaq: AAPL) was a bargain back in 2001, and bought in the $10-12 range. The stock had cratered more than 70%, so investors could reasonably think that was the bottom of the barrel.

Unfortunately, everyone who invested in Apple’s stock in 2001 would’ve seen their investment fall around 20%-30% over the next year. They’d also have to wait nearly two years just to get back to breakeven. Many investors would not have the conviction to ride out this storm, and would have bailed out at a loss. However, those with conviction who held on would be sitting on a 20-bagger, with the stock currently above $210 per share.

5. Fail to separate price from value.
Oddly enough, we have no problem distinguishing between price and value at the mall. We don’t say, this Gucci handbag is worth $3,000. We say, wow, that handbag costs $3,000. What a rip. At the mall, we know that the price people want us to pay, and the value we receive, can be two very different things.

The same rules apply to the stock market. For most companies, share prices move around a lot more than intrinsic value. Sometimes the two move together, sometimes they don’t — but they’re two very different things.

The investor who fails to discriminate between price and value fares no better than the tone-deaf contestant in American Idol. Both lack vital ingredients for success.

Final thoughts
So there are a couple of examples of what not to do. If you eliminate as many bad investing habits as possible, you might just turn into a great investor.

Source: Fool.com

Best business opportunities today

1.Fast food franchises
Fast food is such a integral part of many people’s diets that they will continue purchasing it no matter what. Others who usually don’t buy it will turn to fast food as a kind of comfort food in uncertain times. Old established fast food chains especially will profit from this kind of food nostalgia. Pick the right fast food franchise in the right place and this business opportunity could be a real money-maker.

2. Repair businesses
One obvious way that people save money is to make do rather than buying new, which makes businesses specializing in repairs excellent business opportunities. Auto repair and shoe repair are two examples of repair businesses that I speak of in Best Small Business Ideas for Tough Times. But they’re certainly not the only possibilities. What about furniture refinishing, furniture reupholstering and sewing and mending?

3. Collection agencies
When times get tough, more people have a tough time paying what they owe. Businesses hire collection agencies to help them get the money that’s owed them. If you don’t have any experience in collection yourself, the best way to get in on this best business opportunity is to hire experienced collectors to work in your agency. (Note that in Canada, all collection agencies have to be licensed and bonded according to legislation.)

4. Medical supplies
With our aging demographic, medical equipment and supplies are necessities for growing numbers of people, making providing medical supplies one of the best business opportunities around. Besides products that provide increased mobility such as scooters, wheelchairs, and walkers, bathroom safety products such as special toilet seats and bath lifts will be in increased demand.

5. Motivational speakers
What do people need more than anything else in tough times? Hope. That’s what the best motivational speakers provide and that’s why they’re going to be in demand in 2010. The most popular speaking topics will be those that speak to people’s concerns and offer them possible solutions such as getting more out of less. People who have personally overcome adversity will also be popular speakers.

6. Cleaning businesses
Remember what I said about necessity. Good times or bad, things get dirty and need to be cleaned providing a good business opportunity for those willing and able to do the cleaning. Residential cleaning services may drop a bit depending on employment rates but the demand for commercial cleaning will continue to be steady as institutions and businesses just need to get it done.

7. Discount/surplus stores
Throughout 2009 consumers will be looking for bargains, making discount and surplus stores a natural business opportunity. Obviously I’m not the only one who thinks so as discount stores are springing up all over. The best way to get in on this business opportunity is by buying into a franchise. Buck or Two and the Great Canadian Dollar Store are just two discount store franchises you may want to investigate.

8. Sports equipment
Selling sports equipment will continue to be a good business opportunity. Sports devotees will continue to do what they love to do as long as they can and will continue to be willing to pay for the equipment they need to do it. So skis, boards, skates and mountain bikes will all continue to sell. There will, however, be increased interest in used sports equipment, an interesting business idea in itself.

9. Senior care
On the list last year, this makes the list of best business opportunities again this year because of ever-growing demand. Business opportunities in senior care range from opening your own senior care home through providing in-home care or home services such as preparing meals, housekeeping or running errands. Senior care franchises are another option for getting in on this business opportunity.

10. Chocolate
The lure of chocolate is irresistible at the best of times and in uncertain times, people will eat even more of it. And that’s a lot of chocolate. In 2005, Canadians consumed 3.90 kgs per person, while Americans polished off even more – 5.58 kgs per person. While the market is dominated by the big manufacturers such as Hershey and Mars, there is still room for small businesses to specialize in producing premium gourmet chocolates. Of course, you’ll need to find an experienced chocolatier to turn this business opportunity into a viable business – or become one yourself.

Why Are These the Best Business Opportunities?

Because these are business opportunities that have legs. Taking into account the economy, consumer and business trends, these are businesses that should be profitable not just for 2010, but for years to come.

But not every business opportunity is right for everyone. You always need to do your homework; writing a business plan is a good (and safe) way to find out if the small business opportunity you’re considering is worth investing your time and money in.

Source: about.com

Top 2 Stocks For Cashing In On Obama’s Stimulus Plan

While the politics behind President Obama’s stimulus plan are debatable…

The potential for making money from this rare $787 billion investment in America is undeniable.

Because unlike the nebulous “bailout plans” that are propping up the U.S. automakers and floundering financial institutions like Citigroup and Bank of America, this stimulus plan isn’t a bailout.

It’s a massive investment that will hand billions of dollars’ worth of projects to healthy, competitive businesses. (Like the companies you’ll discover just ahead…)

And this may be your one-time chance to invest in the companies that could see their revenues soar once the stimulus money rolls in…

But a quick word of warning — not all stocks will go up in the months and years ahead. There will be some big names that never recover from this downturn…

Just as the brutal bear market of 1973-74 sounded the death knell for many darling stocks of the day, like Bethlehem Steel and Johns-Mansville…

At the same time that it set the stage for historic run-ups by a handful of companies like Radio Shack (a gain of 1,557% between 1978 and 1983!) and Wal-Mart (a 1,900% surge from 1973 to 1983!).

The bottom line in all this: You can make a very profitable decision right now. By striking at this rare historical moment, you could build for yourself and your family a comfortable lining of wealth.

Of course, you need an edge. A trusted, independent resource. And that’s where The Motley Fool comes in!

Because while a lot of so-called experts are picking “Obama stocks” that might jump up a little bit in the months ahead…

The Motley Fool’s Inside Value investment advisory service team of researchers dug deeper…

They scoured the world of undervalued stocks… looking for those rare investments that change lives. The stocks that will be talked about decades from now…

And the only stocks that can deliver that kind of long-term performance are the ones with pristine balance sheets and high intrinsic values that sit smack-dab in the slipstream created by a monster trend — the multibillion-dollar trend of Obama’s epic investment in America!

So let’s dive right in… and take a look at the one company that’s in a prime position to cash in on the coming Internet expansion boom…

And take a look at our next investment… it’s a rock-solid company that’s in the sector the U.S. Department of Labor estimates will generate 3 million new jobs by 2016.

And by 2010, Americans will be faithfully handing over $2.6 trillion each year to companies in this industry. Discover how you can profit from this phenomenon…

Overhauling The U.S. Healthcare System

How about a quick quiz to test your healthcare know-how? Pencils, everyone:

1. Approximately what percentage of the U.S. population is uninsured?
1. 1%
2. 5%
3. 15%

Answer: C. The Census Bureau estimates that some 46 million Americans were uninsured in 2007.

2. In 2004 (the year for which the most recent data are available), which location had the lowest infant mortality rate?
1. Cuba
2. Detroit, Mich.
3. Russia

Answer: A. Cuba’s infant mortality rate was 5.8 per 1,000 births, compared with Russia’s 11.5 and Detroit’s 15.5.

3. Which product does Starbucks [Nasdaq: SBUX] spend more money on?
1. Coffee beans
2. Health insurance for employees

Answer: B.

You don’t have to be a neurosurgeon to realize that something seems awry here. When a nation spends more than $2 trillion a year (roughly 16% of the gross domestic product) on health expenditures yet has a healthcare system ranked 37th in performance in the world, according to the World Health Organization, or when “a doctor… can get more data on the starting third baseman on his fantasy baseball team than on the effectiveness of life-and-death medical procedures” — as stated in a New York Times op-ed — something certainly needs revamping.

To bring America’s health care up to speed, the government is investing more than $140 billion into the sector. Some of the money will update the industry’s technological capabilities, some will fund research, and the remainder will increase Medicare and Medicaid budgets. One company clearly stands to benefit: UnitedHealth Group [NYSE: UNH], the country’s largest provider of health care services.

UnitedHealth operates with four divisions, but the bulk of its business ($75.9 billion, out of $81.2 billion in revenue during 2008) comes from its health care services segment. It provides both fee-based and traditional risk-based coverage to small and midsize companies as well as to families and individuals. Under the fee-based plans, UnitedHealth simply acts as an intermediary, collecting fees for administering the plan and leaving insurers with the potential risks of higher costs. With risk-based coverage, UnitedHealth collects monthly premiums that are ideally 15% to 20% higher than the costs it will pay out in claims.

Government-sponsored health plans like Medicare and Medicaid also fall into this division. For these, UnitedHealth bids on contracts from the government and manages the program with the government’s funds. The size of UnitedHealth’s network gives it a competitive edge when bidding for these plans, meaning it’s likely to receive the bulk of the money coming from the stimulus plan.

And then there’s Obama’s campaign promise of universal health care. Bruce Berkowitz, founder of Fairholme Capital Management and manager of the Fairholme Fund [FAIRX], which owns nearly 1.5% of UnitedHealth’s outstanding shares, believes that if this promise comes to fruition, the government could only accomplish it in one way: by using the managed health care companies, of which UnitedHealth is the largest.

Its current share price more than accounts for the possible risks, meaning we believe there is significant value to be found, with high potential reward. This investment is exactly what the doctor ordered.

Our next company is smack-dab in the momentous effort to rebuild America’s transportation infrastructure. Find out the name of the company that’s in the perfect position to cash in…

Rebuilding America’s Highways

Any driver knows that our roads could use some TLC. But just how bad are they?

According to the American Society of Civil Engineers, more than a quarter of our nation’s bridges “are either structurally deficient or functionally obsolete.” As for our roads, we “spend 4.2 billion hours a year stuck in traffic,” sucking some $78 billion out of our economy. Not only does this cause unnecessary damage to our cars, but these road conditions lead to 14,000 deaths a year.

Over the past two decades, as government spending skyrocketed to historic highs, infrastructure spending has plummeted to record lows.

So to bring our roads up to speed, the stimulus plan is slated to invest nearly $30 billion in our highways and bridges, which alone should help create more than 500,000 new jobs. It should also fuel economic growth because, as Gov. Arnold Schwarzenegger of California recently put it, “The faster we can move people and goods, the stronger our economy is.” Some have estimated that every $1 invested into highways generates $5.40 in economic benefits.

Vulcan Materials [NYSE: VMC] is one company whose products will see a significant spike in demand as our roads are revamped. According to company data, Vulcan is the nation’s largest producer of aggregates (think crushed stone, sand, and gravel), a top-five asphalt producer, and a top-10 concrete producer, operating with a strategically significant coast-to-coast distribution network.

About 20% of the company’s revenue comes from the residential market. Growth here will likely stay slow until the housing market recovers — but the overwhelming majority of Vulcan’s revenue comes from public projects such as highways, so the increased demand in this area should more than compensate for the residential slowdown.

This company has an enormously wide moat, with assets that are not easy to come by, making Vulcan a dominant player in a high-demand industry today. It’s trading more than 40% below our estimated intrinsic value, with a 3.8% dividend — now is as good a time as any to buy stock.

Next up is the smartest way to cash in on the coming “Green Energy” boom. Find out its name and ticker symbol…

The Smart Way to Invest in Green Energy

We’re willing to bet the phrase “energy-independent America” was one of the most-used taglines of both Senator McCain’s and President Obama’s campaigns. But it hasn’t disappeared — it just made an appearance in the economic stimulus plan, with nearly $79 billion allocated to this initiative in the form of tax credits, grants, and dedicated research.

Despite many experts claiming to know whether it will be specifically wind power or biofuels that ignite a green revolution, there is simply too much uncertainty and too many unknown variables to discern which technology will emerge as the most profitable. Not to mention that no green energy company has yet to dig a wide moat — heck, many aren’t even profitable at all.

But that’s not to say you should avoid this emerging sector in its entirety.

Rather, we think that if you want exposure, it makes the most sense to not put all your green eggs in one basket. That’s why we think an inexpensive ETF like PowerShares WilderHill Clean Energy [NYSE: PBW] is the smartest way to go if you want to profit from green technology.

This ETF has positions in roughly 50 clean-energy names with business models ranging from manufacturing green-friendly auto parts to manufacturing solar energy equipment. Most of its positions are in small caps, with the weighted average market capitalization clocking in at just $2.3 billion. Even though the portfolio is relatively diverse, an investment in this ETF will likely be volatile. We certainly wouldn’t recommend overweighting your allocation here, but long term it’s sure to be a winner.

But if all this government spending has you worried about inflation, discover an investment that will help you protect your nest egg…

Inflation-Proof Your Portfolio

The stimulus plan’s passage brings the total price tag of the government’s intervention to an astonishing $9.7 trillion. Two Bloomberg columnists calculated that that’s would be enough to pay off more than 90% of America’s mortgages.

That many dollars added into the economic system, coupled with rock-bottom interest rates, means one thing is certain: Inflation is a-comin’.

Knowing that it’s inevitable, we have one final investment recommendation that will counteract the effect inflation could have on your portfolio over the long term: Vanguard Inflation-Protected Securities [VIPSX].

This mutual fund is a cheap and easy way to get access to Treasury Inflation-Protected Securities, or TIPS as they’re known in the bond world. The principal on TIPS is adjusted upward as inflation rises (likewise, it falls during deflationary periods), so your interest payments similarly rise with inflation (or fall with deflation). With inflation on the horizon, this is a smart way to ensure that a portion of your portfolio will keep up with it. It makes sense to have a significant portion of your bond allocation in TIPS, especially if you’re in or nearing retirement, and this Vanguard fund is the cheapest one out there to help you do so.
What to Do Now

There you have it — our five best ideas for how to profit from this momentous economic stimulus package, all arising from our in-depth analysis and independent research.

Truth be told, the same holds true for all the stocks recommended in Motley Fool Inside Value, the investment advisory service behind our top picks: Sprint Nextel, UnitedHealth Group, and Vulcan Materials.

But it doesn’t have to stop there. The Motley Fool just put the finishing touches on its brand new premium report highlighting the very best small-cap stocks, selected for you by some of the nation’s top independent equity analysts.

Source: fool.com

If you want to make money investing in real estate, you have to begin with a plan. Here are some ways to get started investing in real estate. Choose a plan that works for you.

If you don’t currently own your own home, that’s the best place to start. Many people never buy a home because they think they have to have perfect credit or a lot of money down. Talk to a mortgage loan officer. You may be surprised that you can buy a home with little money down.

Homeowners Are Real Estate Investors

Any home owner in reality becomes a real estate investor. Whether home owners want to stay in their home for life or just a few years, their home should make them money. Many families only own one home at a time, but they keep moving up. Some of these families have made money from their homes by taking out the equity to pay bills. Other families bought more expensive homes, which went up in value more than the first home. For instance, a family bought a home for $105,000, sold the home for $230,000 and then bought a home for $300,000. The more expensive home went up in value the next year more than the first home. You can build your real estate wealth just by owning one home.

However, if you split your mortgage payments with other people, you don’t have to pay for all this equity on your own. Your tenants will help you make the payments and over time can actually buy the property for you!

How to Begin Real Estate Investing

Many investors start with a home to live in and then save money for a down payment for their first investment property. Here are some ways to skip the savings years, which most people never accomplish:

1. Refinance. If your home has gone up in value, refinance your home and use the equity for a down payment on an investment house. You must have sufficient monthly income to pay any negative between the rental income and the new mortgage payment. Some home owners have been able to purchase more than one investment house from one refinance transaction.

2. Move. Another way beginning real estate investors get their first investment is to buy a new home and rent out their first home. If you have great credit, you don’t need to put a down payment into a new home to live in.

3. Sell and Move. You can sell your home and buy two houses. Use your equity to put more down on the investment house than your personal home.

4. Buy a vacation or second home. Our cabin tripled in value in three years. We refinanced the cabin to buy more houses and also kept funds to pay for the mortgage, twice. The cabin pays us to enjoy it!

You can make money investing in real estate. Make a plan of action and get started real estate investing.

Source: doghousetodollhouse.com

Investing Lessons from the Poker Table

I hate to disappoint, but I’m not going to stick my neck in the middle of that debate.

But whether we agree that investing and gambling are similar, there are some general ideas from the game of poker that can be adapted quite well for investing. And, heck, if there’s the possibility that it’ll make you a better investor, is it worth fretting about the source?

Lesson 1: You don’t have to play every hand
One of the quickest ways to make your chip stack disappear in poker is to blindly play every hand dealt to you. In a 10-player Texas Hold ‘em game, you’re only forced to bet 20% of the time, and even then they’re only small bets. You can throw away every other hand that’s dealt to you if you want, and it won’t cost you a dime.

But why would you throw away any cards? Well, a two of diamonds and a six of clubs can theoretically become a full house, but you start out with the odds stacked heavily against you when you play a hand like that. Waiting for something like a pair of kings or a queen and jack of spades gives you a much better chance of seeing a return on the money that you’re wagering.

The same holds true for investing. There’s a possibility that CIT Group (NYSE: CIT) could magically avoid bankruptcy and return a bonanza for shareholders. Or Sirius XM Radio (Nasdaq: SIRI) could finally prove the critics wrong, start posting huge profits, and watch its stock fly. But let’s face it, both are long shots, and if you’re looking for solid, predictable returns to build a retirement nest egg, throwing piles of money at either stock is probably not the best idea.

On the flip side, companies like Pfizer (NYSE: PFE) and Honeywell (NYSE: HON) positively ooze predictability and solid returns over the long run. Investing in companies like these — assuming you’re paying a fair price — simply gives shareholders a much higher probability of seeing returns from their investment. And, heck, investors don’t even have to wait for rewards since both currently pay dividends that exceed the yield on 10-year U.S. Treasuries.

Lesson 2: Play your cards right
Kenny Rogers immortalized yet another lesson that we can take from poker when he sang: “You got to know when to hold ‘em / know when to fold ‘em / know when to walk away / and know when to run.”

In both poker and investing, you’re faced with continually changing information. The best poker players and investors are those who not only make the most accurate analysis of the available information, but use that analysis to drive good decision making, whether that’s — in investing — buying, selling, or just sitting tight.

IBM (NYSE: IBM) is a great example of the constantly changing tides that investors can take advantage of. The company had one of the truly great growth stocks in its early years and delivered impressive gains. But not all that long ago it faced some major challenges as the PC market commoditized and its bread-and-butter mainframe market turned into a sleepy niche.

More recently, IBM has found a new life in transitioning to offering higher-margin software and services. Just like recognizing when you have a possible straight flush developing and betting accordingly, investors who figured out what was going on at IBM and invested accordingly have been handsomely rewarded. Over the past five years, its stock has substantially outperformed the S&P index.

Lesson 3: Be choosy with your “all-in” moments
It’s certainly exciting to watch a poker pro push all of his chips into the middle of the table and call “all in.” But it’s important to remember that top-notch players have run through a bunch of mental math to determine that the odds are heavily in their favor when they make a call like that.

Having all of your money invested at all times can be one of the easiest ways to go about investing, but it can also put you at a disadvantage. Not only will you absorb the full brunt of declines such as the one we’ve been living through, but it also leaves you with very little dry powder to invest when stocks do fall. However, with just a little more activity and attention, investors can keep an eye on stock valuations and adjust how much they have invested based on how pricey the market is.

If your all-in moments are restricted to times when the market is trading near or below its long-term average valuation, then you can shift the odds of market-beating returns further in your favor. Fortunately, there are many great tools available for tracking the overall market’s valuation, including my favorite, professor Robert Shiller’s 10-year average P/E spreadsheet.

When it comes to individual stocks, though, the picture is a little bit different. Although elite investors like Berkshire Hathaway’s (NYSE: BRK-A) Warren Buffett can make comments about being willing to go all in on Wells Fargo (NYSE: WFC), most mere mortals are best served by avoiding an all-in call — having their entire portfolio — on a single stock.

Putting away the cards
While having a working knowledge of poker might help bring some of the lessons above to life, you don’t have to ever play a single hand to put them to work. To review, here are three of the investing lessons that we can take from the poker table:

1. Wait for the best investment opportunities — there’s no harm in passing on a stock if you aren’t convinced that it’s a worthwhile investment.
2. Always be on top of new information and be willing to take action when necessary.
3. Going “all in” in your portfolio should be reserved for when market factors are highly attractive.

You can take these three lessons and start putting them to use right now.

Source: Fool.com

What’s your immediate, knee-jerk reaction? I’m going to guess you think it’s a bad idea.

Even so, thousands upon thousands of Harley-Davidson (NYSE: HOG) owners have done it — it’s one of the oldest and most popular brands-as-permanent-affiliation. And they aren’t alone.

So what’s the difference between the company you thought of and Harley-Davidson? And why should it matter to your investing?

4 ways to get ahead
There are lots of things that make a great company: strong financials, excellent management, well-produced products or services. But however great a company is, it won’t last unless it has some kind of competitive advantage, some way to protect its market share and grab more.

Competitive advantages come in many forms:
••• Economies of scale, which allow bigger companies to offer products for less. Think Wal-Mart (NYSE: WMT), which can use its mammoth size to bargain for better rates.
••• Network effects, which make the value of the service increase the more people use it. eBay (Nasdaq: EBAY), for example, is the place to buy and sell oddments because of the sheer number of buyers and sellers who congregate there.
••• Intellectual property, such as patents. Drug companies like Merck (NYSE: MRK), for example, are dependent on drug patent protection to recoup the costs of research and development as well as ensure a steady stream of customers.
••• High switching costs, which make it difficult for customers to trade one company in for another. Microsoft‘s (Nasdaq: MSFT) Windows operating platform, for example, is so ubiquitous and so well-known that it’s unlikely PC users will suddenly switch to Linux.

But not every company can avail itself of these gold-standard competitive advantages. Other than economies of scale, those competitive advantages are largely predicated on industry membership.

Everyday retailers don’t have intellectual property rights, nor are they likely to have network effects or high switching costs. What they do have is brand.

Standing out in the crowd
A brand is the conglomeration of all of those “soft” associations customers have with a company or a product, the totality of the experiential and psychological aspects of their interactions.

Brand may be difficult to measure with any confidence, but it points toward something important: the customer’s attachment to this particular product as opposed to all of the other options he or she could pursue.

Think about Nike (NYSE: NKE) — people pay hundreds of dollars for athletic shoes that get far more wear on the street than they do on the court. Abercrombie & Fitch can sell a T-shirt for $50 simply because it has the Abercrombie logo on it, while an identical shirt minus the logo would fetch a fraction as much.

But brand loyalty on the basis of style fads aren’t sustainable over the long term; remember when Gap was the brand of choice?

The strongest retail brands are the ones that express people’s identities — and continue to do so no matter what happens in their lives. Harley-Davidson clearly has it; if you’re a Hog lover, you aren’t going to accept a Honda.

Are you sure you don’t want that tattoo?
Every company will claim it has a strong brand, but the real test of a brand is how well it holds up through the slings and arrows of an outrageous economy. Many food and household products, for example, have excellent name recognition and substantial customer loyalty, but nearly 60% of Americans are currently forgoing their favorite brands for store brands.

Even in the worst economy since the Great Depression, however, Apple (NYSE: AAPL) has continued to hit it out of the park with the iPhone, based largely on the way its sleek design and continued innovation feed into an identity people want to claim, and it’s up 73% since the turn of the year.

It’s that kind of market performance that demonstrates the importance of a strong brand to a great investment — no matter what the economy.

You may not want to tattoo a company’s logo on your body, but if you can’t imagine trading its products in for those of its competitors, then that’s a company worth investigating further.

Source: Fool.com

Proven ways to make money

1. Pay yourself first
This is the single best money tip of them all and it’s easy. Just set up an automatic payroll deduction that will whisk away 5% to 10% of your paycheque before you ever see it, and deposit that amount in a good, low-cost mutual fund. Soon, with no effort on your part, you’ll have a healthy nest egg. Why does this trick work so well? Because most people find it hard to save money by sticking to a budget — it’s just too tempting to spend what’s left over. But if you make saving an automatic first priority, you quickly adjust to living on the cash that remains.

2. Mark it down
Use the calendar to your advantage, says Barb Garbens, a fee-only financial planner at BL Garbens Associates Inc. in Toronto. By contributing to your RRSPs at the beginning of the year rather than at the end, you can enjoy an extra year of tax-free compounding. And by paying your mortgage weekly or bi-weekly instead of monthly, you can pay off your mortgage years faster than someone who sticks to a monthly schedule.

3. Get real
About your expectations, that is. Advertisements depict a world in which everyone makes a six-figure salary, retires at 55 and earns 15% a year on their investments. The reality is different. Most Canadians make under $50,000 a year. The typical man retires at 63, the typical woman at 60. The median return of balanced mutual funds over the past five years has been a meagre 5%. What do all these numbers mean? That you shouldn’t stress if you’re not on track to retire in your mid-fifties — and that you should be very suspicious of fast-talking brokers who promise you 20% annual returns.

4. Think twice
Before hiring someone to take care of a job you could do yourself. Why? Because you earn money in pre-tax dollars, but you pay bills in after-tax dollars. Thus, many middle-class earners will discover that paying an $800 landscaper’s bill (in after-tax dollars) really costs them nearly $1,500 in before-tax salary. Think about it: if you do the landscaping yourself, you’re giving yourself the equivalent of a $1,500 raise.

5. Pick a date
New Year’s Day, for instance, or Canada Day — and draw up a net worth statement on that day every year. Begin by listing your assets at their current value. This includes your house, your car, your RRSPs, and anything else you own. Then subtract your liabilities — the amount you have left owing on your mortgage, your credit card and other loans. What remains is your net worth. If it’s going up every year, that’s great. If not, start asking questions.

6. Repeat after us: time is money
Literally. Every dollar that you invest now will double in 12 years, assuming a 6% annual return. So even if you don’t feel particularly wealthy in your 20s and 30s, try to put away what you can, either by investing or by paying down your mortgage and other debts. You’ll be pleased you did when you look at your net worth in your 40s and 50s.

7. Learn the virtues of standing still
The biggest single mistake that people make in trying to build their wealth is being too active — they flip in and out of investments and chase yesterday’s hot mutual funds or stocks. Problem is, yesterday’s winners are often tomorrow’s losers. What’s more, the transaction costs of jumping in and out of investments can eat up profits. So avoid frequent trading. Never buy an investment — whether it’s a house,a stock or a fund — if you’re not prepared to hold it for the next 10 years.

8. Spend less than you make
This is still the only way to build wealth — and it’s easier than you may think. Just promise yourself not to increase your spending when you get a raise at work or a windfall of some other type. Instead, bump up your automatic payroll deductions by the after-tax amount of the raise, and soon you’ll be soaking away barrels of cash, without having to give up anything you currently enjoy.

9. Distinguish between bad debt and good debt
Bad debt is money you borrow to purchase something that quickly declines in value — a vacation, clothes, restaurant meals. Good debt is money you borrow to buy things that can go up in value or increase your earnings potential: an education, stocks, bonds, mutual funds, a house.

10. Pay it off
Pay off your credit cards and mortgage before beginning to invest. Chances are you’ll earn a higher rate of return from erasing loans than from playing the stock market. Paying down your credit card, for instance, guarantees you a risk-free after-tax return of about 18%. To achieve a similar return through investing, you would have to earn more than 25% before tax and you would have to take on risk.

11. Attack debt
Attack debt systematically rather than trying to pay the same amount to everyone. Start by paying off your highest-interest debt — credit card debt is usually the worst.Then move on to car loans and your mortgage. If you’re carrying a lot of high interest rate debt, talk to your bank about the possibility of taking out a lower cost consolidation loan, backed by your home, and use that money to pay off your most expensive debt.

12. Forget the fees
No one should pay a fee to use a credit card when there are better cards out there for free. For instance, the TD Gold Select Visa offers purchase protection, extended warranties, travel accident and car rental insurance, emergency travel assistance and preferred rates at Budget — all for an annual fee of zippo. If you want rewards, the Citi Enrich MasterCard and Capital One 1% Cash Rebate Platinum MasterCard give you 1% of your money back, the TD GM Visa card gives you up to 3% back towards a GM vehicle, and the President’s Choice Financial MasterCard hands you a break on groceries. Best of all, none charge an annual fee.

13. Don’t lease cars
When you lease, you’re paying a premium to drive a new vehicle, plus you’re essentially financing almost the entire cost of your new car. That’s fine if you absolutely must have a new car every three years, but not a great strategy otherwise. You’ll almost always save money by buying a car and driving it for five to 10 years.

14. Hire a fee-only financial adviser
For a truly unbiased look at your finances, hire a fee-only financial adviser that you pay by the hour. These folks don’t have a conflict of interest. In contrast, most conventional advisers earn their incomes from selling you mutual funds and other products and have a built-in bias as a result. While fee-only advisers charge $200 to $300 an hour, they can be cheaper in the long run than conventional advisers. And they’re certainly more objective.

15. Negotiate
Never accept your bank’s first offer without asking if a better deal is available. Whether you’re buying a GIC or negotiating a mortgage, bank reps usually have a bit of room to negotiate. If you’re a good customer, point out that fact — and suggest you’ll look elsewhere if you can’t get a slightly higher interest rate on your GIC or a lower rate on your mortgage.

16. Use professionals
Use mortgage brokers and insurance brokers to help you shop for the best deal in their respective areas. Unlike salespeople who represent just a single bank or insurance company, brokers can show you products from several firms and steer you to the best deal. An insurance broker can compare features of policies from competing companies; similarly, a mortgage broker can offer you deals from dozens of small lenders that you would otherwise have missed.

17. Open a president’s choice or ING account
Both these banks operate primarily through websites and over the phone with only a limited number of ATMs and physical locations. The benefit is that they offer higher interest rates on your savings and lower fees than the Big Five banks. What’s not to like about that?

18. Know when to renew
Pass up your adviser’s pitch for expensive whole-life and universal-life policies and buy a renewable term-life policy instead. Such a policy typically covers you for either 10 or 20 years and is far cheaper than the alternatives. When the policy expires, you’re guaranteed to be able to renew it, so you can extend your coverage if you wish.

19. Compare policies
Term-life policies can vary hugely in cost, so check out quotes from rival firms at Term.ca or Term4sale.com before you buy. An insurance broker can help steer you through the competing choices.

20. Increase deductibles
Raise the deductible on your car or home insurance and your premiums will plunge by as much as 40%. For instance, simply raising the deductible on your home insurance from $500 to $5,000 could cut the insurance bill for a three-bedroom Toronto home to $420 from $700. While you’re at it, find out how much you could save by insuring both your car and your house with the same company. Most insurers offer a discount to people who give them all their business.

21. Don’t buy life insurance you don’t need
The only good reason to purchase a policy is if someone will suffer financial distress from your death. So if you’re single, you probably don’t need insurance. And if you’re married with kids, you don’t need policies on your kids’ lives. (If — heaven forbid — anything were to happen to your children, you would be grief-stricken, but you wouldn’t suffer a financial loss, would you?)

22. Put extra money toward your mortgage
Your return will beat anything you could get on a GIC or mutual fund. For instance, if you have a $250,000 25-year mortgage at 5% and you pay $200 a month on top of your regular payments, you’ll save $40,000 in interest and pay off your home five years sooner, says Andy MacDonald, president of MortgageBroker Inc. in Mississauga, Ont.

23. Consider Manulife One
A product which merges your mortgage with a line of credit and a chequing account. Any cash you deposit immediately reduces your mortgage total; any cheque you write adds to your total owing. Result? You never have idle cash lying around.

24. Become a landlord
If you’re sending junior off to university, consider buying him a house. That’s right — if you buy a home at the right price, and your teenager acts as the property manager and rents out rooms to other students, you can often turn a profit when you sell the house upon your child’s graduation. Even if home prices don’t go up, you can usually count on housing your offspring for free for four years.

25. Negotiate fees with your agent
Insist on a better deal from your real estate agent when it comes time to sell your home. Especially if you’re listing a pricey property in a hot market, ask your agent to discount the standard 6% commission. Alan Silverstein, a Toronto real estate lawyer, says you can often get an agent down to 4% or lower if he or she thinks your house will sell quickly. Saving a couple of percentage points will mean $6,000 more in your pocket on the sale of a $300,000 home.

26. Keep receipts
Take advantage of the small stuff, says Lee Bernstein, a tax accountant in Toronto. You can write off the cost of a safety deposit box, for instance. Two-income families can also deduct the cost of kids’ after-school lessons and summer camp if those expenses allow the parents to work and earn money. Moving expenses incurred to take a job elsewhere in Canada are deductible; as are tax preparation fees in some cases. And don’t forget medical and dental expenses — you can miss out if you don’t keep receipts.

27. Invest right to avoid taxes
The key is to remember that capital gains and stock dividends enjoy tax breaks, while interest payments from bonds and GICs don’t. So keep any bonds or GICs you own in your RRSP. If you run out of contribution room, your stocks and stock-based mutual funds can remain outside your RRSP without inflicting too much tax damage.

28. Contribute to your RRSP
The biggest, best tax loophole is contributing to an RRSP. Yep, we know it sounds mundane — but it’s also true. So stop whining and make that contribution.

29. Beat the taxman by re-arranging debt
In general, interest on money you borrow to invest is tax deductible, but interest on money you borrow to spend isn’t. So rather than using your savings to buy stocks and borrowing to buy furniture, switch it around: by borrowing cash to buy stocks and using savings for the sofa, you turn the interest into a tax deduction.

30. Get help
If you find a tax accountant you like, stick with her — she can suggest ways to minimize your taxes. Software can also make your return a snap. QuickTax, TaxWiz and UFile each cost less than $50, but save you hours of tedium.

31. Split income with your spouse, both now and in retirement
By making your incomes as equal as possible, you’ll minimize the overall tax that both of you will pay. One strategy is for a high-earning spouse to contribute to a spousal RRSP for his or her stay-at-home partner. If you run your own business, you can cut your family’s overall tax bill by employing your lower earning spouse — or kids — to perform some tasks you would otherwise have to do yourself.

32. Diversify
You’ll be glad you did. Holding a varied portfolio ensures that no single disaster can blow a hole in your nest egg; it also guarantees you’ll have a part of any good news going. To ensure you’re diversified, make sure that your holdings include both stocks and bonds. Your stocks should span several industries, rather than being concentrated in a single sector. They should also be geographically diversified, with Canadian, U.S. and international firms in the mix.

33. Think in terms of your portfolio, not individual stocks or funds
About 90% of the difference between the returns of different portfolios comes down to broad decisions about which types of assets to buy, rather than narrow decisions about which specific stocks, bonds or mutual funds to hold. The classic blend is to put 60% of your holdings in stocks and 40% in bonds. Conservative investors may want to reverse those proportions, while aggressive investors may want to drop the bond component to 20%.

34. Steal other people’s ideas
Unlike students writing a university essay, investors get rewarded in their portfolios for copying the work of the smartest people they know. One of our favorite sites is Gurufocus.com, which tracks the commentary and holdings of more than 25 great investors, including Warren Buffett.

35. Follow our couch potato strategy
It beats 80% of the money managed by professionals over the long term and requires only 15 minutes of your time each year. For step-by-step instructions on how to become a Couch Potato, click here.

36. Cut your costs
This is the single best way to juice your returns. Despite what you may think, paying more for money management doesn’t improve results. So look at low-cost index funds or exchange-traded funds (ETFs). If you truly want an active manager, pick a fund with a below-median management expense ratio to ensure profits stay in your pocket.

37. Be realistic
About how much you can withdraw from your retirement portfolio each year. Many new retirees assume they can spend 7% to 10% of their nest egg every year.That’s fine in a rising stock market, but if the market slumps and you keep taking out that much, you’ll quickly run down your savings. Studies agree that to make your money last you should count on withdrawing only about 4% a year.

38. Count on a government pension
Most of us will get more from Ottawa than we think. A married couple with no savings or company pension can expect $24,000 a year from all government sources when they retire; the average combined payout from just the Canada Pension Plan and Old Age Security is now almost $11,000 per retired person a year.

39. Protect yourself
Protect yourself from stock market slumps in retirement by keeping five years’ worth of living expenses invested in a “ladder” of safe bonds, with one fifth of your holdings maturing each year. That way you can live off the money from your maturing bonds during a market downturn, and you won’t end up decimating your portfolio by cashing in stocks when they’re down.

40. Make a will
Making a will doesn’t take a lot of time, it doesn’t cost much, and it can save your heirs thousands in taxes and legal fees as well as legal squabbles. If you can avoid all that by hiring a lawyer to draft a will for $200 to $300,why wouldn’t you?

41. Talking about wills
Our advice is to talk about wills. Most feuds over wills come about because parents don’t communicate their decisions to their kids while they’re alive. When the will is read, heirs are surprised, feelings are bruised, and nastiness ensues as sibling turns on sibling. So, before you make a will, talk it over with everyone involved. Then, after you have the will, keep on talking — the best will is one that surprises no one when it comes time to use it.

42. Make use of registered education savings plans (RESPs)
After you open one of these plans at your local bank, you can contribute up to $4,000 a year per child to a lifetime limit of $42,000. The money grows tax-free until it’s withdrawn for your child’s education. But here’s the even niftier part: the federal government gives you an immediate top up for each contribution. The amount of the grant varies according to your family income, but it’s worth a minimum of 20% of the first $2,000 per child you contribute — in other words, $400 a year for free. Sounds like a deal to us.

43. Live closer to work
Many of us underestimate the true cost of commuting, both in terms of stress and in terms of dollars. Case in point: The Canadian Automobile Association calculates a husband and wife can spend $140,000 over five years making the one-hour commute from Hamilton, Ont., to Toronto in separate Chevy Cavaliers.

44. Money isn’t everything
Switching to a new job where you have more trust in management brings you as much happiness as a 36% pay raise, according to a recent study by economists John Helliwell and Haifang Huang at the University of British Columbia. Switching to a job that offers more variety is like getting a 21% pay raise, and getting a position that requires a high level of skill is worth a 19% raise.

45. Give your kids part of their inheritance while you’re still alive
A bit of cash when your kids are in their 30s could save them a fortune in mortgage interest — and you’ll enjoy being around to see the difference your money makes.

Source: canadianbusiness.ca

While you’ll hear some talking heads on TV tell you this is a “once-in-a-lifetime” event, the fact of the matter is that these returns resemble what we saw year-to-date around this time in 2002 … just six years ago. Take a look:

Despite all the talk of financial calamity, most of us are still ahead of where we were six years ago. That’s not good, of course, but it’s also not the end of the world. Incidentally, if you’ve owned Brazil and China for the long term, you’ve improved your lot in life quite a bit.

What this means for you
There are two lessons to take from these tables. The first is that the safest time to buy stocks is not when the market is optimistic, but when it’s extraordinarily pessimistic. That was the case in December 2002, and if you bought then, you got in at such low valuations that the current crisis — a crisis that has cost trillions in wealth, taken down several major investment banks, and garnered extra-large headlines around the world — has merely returned you to your original cost basis.

The second lesson is that it’s important to diversify globally, because different countries are driven by different forces and will offer different returns — and different valuations — over time.

That’s not to say we’re taking these events lightly here at The Motley Fool. Instead, our goal is to help more individual investors understand that this is not the time to run terrified into cash, but actually an attractive time to put money to work around the world.

The key, however, is to know your facts.

Source: Fool.com

We feel your pain. So let us reassure you. Despite what you may think, there is a lot of good news about retirement. We’ve talked to a wide-ranging selection of financial experts and we’ve come away with one conclusion — you’re doing far better than you think you are. Join us as we reveal 10 things that most people don’t know about retirement, but should.

1. You’re not behind at all
The ads make it sound as if 55 is a reasonable retirement age. In fact, for most of us it’s not. The median retirement age in Canada is 62 for men and 61 for women, according to Statistics Canada. Who does retire early? By and large, federal government employees, who ditch work at a median age of 58. You can credit their early departures to generous pensions that are indexed for inflation. But even public-sector employees aren’t hanging up their work clothes at 55.

If you look at the math behind retirement, you can see why most of us stick around the office a bit longer than we might like. For every year early that you retire, you pay three penalties: you lose a year of potential savings, you lose a year of growth for your retirement savings, and you gain one more year of retirement expenses.

Consider a woman who hits 55 in good financial shape, with a paid-off condo and $100,000 in savings. She can count on her savings to produce $4,000 or $5,000 a year in returns, but she’s too young to start collecting Old Age Security or Canada Pension Plan. Unless she resorts to desperate measures, such as selling her condo or burning through her savings, retirement is impractical.

But look at what a difference five years can make. If she buckles down and contributes $10,000 a year to her retirement fund during that period, and achieves a 7% annual average return, her savings double to $200,000. That bankroll can generate $8,000 to $10,000 a year in income as long as she lives. At 60, she can also start collecting Canada Pension Plan. If she combines those sources of income with part-time work, a phased-in retirement becomes quite practical.

2. You’ll live longer than you expect
When we’re doing our retirement planning, many of us figure that we’ll live to 80, the average lifespan in Canada. But that average is misleading. It reflects what a newborn baby can expect in the way of lifespan and is dragged down by all the unfortunate people who die relatively young.

If you’ve managed to reach 65 without suffering a terminal illness, you’ll probably live considerably beyond 80. According to StatsCan, a 65-year-old man can expect to live to 83; a 65-year-old woman can look forward to blowing out the candles on her 86th birthday.

And remember — those are averages. Half of retirees live longer, some much longer. Moshe Milevsky, an associate professor of finance at Toronto’s Schulich School of Business at York University, says there is a 41% chance that at least one member of a 65-year-old couple will live to 90. So even if you don’t quit work until 65, there’s a good chance that your retirement could still wind up spanning a quarter or more of your life.

3. You’ll see more of your partner — a lot more
Sure, you love your spouse, but let’s do a little math here. Chances are, for most of your married life at least one of you has worked outside the home. Subtract sleep, travel time and other away time and you’ve seen your beloved for — at most — six hours a day.

In retirement, that figure can easily double. And continued exposure can cause even happy couples to bicker. Fred and Janet Barnes (not their real names) retired to Dickey Lake, Ont., to renovate a cottage after living in and around Toronto for most of their lives. “His perfectionism drove me a little crazy,” says Janet. “My slapdash methods were hard for Fred to take.” The Barneses eventually figured out ways to divide the work so they wouldn’t get on each other’s nerves.

Other retired couples strike different bargains — maybe the kitchen becomes her territory, while the garage becomes his — but whatever the specifics of the deal may be, the important point is to realize that retirement is not just a financial journey. It’s also an emotional odyssey and you should plan ahead to make the most of it.

Beginning in your 50s, you should start thinking about the activities that will fill your day in retirement. “You’re going to need to stay connected,” says Dr. Randy Swedburg, chair of the applied human sciences department at Concordia University in Montreal. Your many options include going back to school, giving your time to charity, or starting your own business.

4. A part-time job is worth $400,000 in the bank
If your retirement savings are a bit smaller than you had hoped, take heart — a part-time job in retirement can go a long way toward making up for an undersized portfolio.

Let’s say that you can make $20,000 a year from your part-time job. That is about what you could reasonably expect a $400,000 investment portfolio to generate in retirement, says Terry Greene, a fee-only planner with MSC Financial Services Ltd. in North Vancouver. So your part-time job is the financial equal of a $400,000 portfolio. Especially if your part-time job consists of doing work you enjoy, you may find that you never want to fully retire.

5. Your employer really does love you
The first wave of baby boomers has already hit 60. Millions more will soon hit retirement age. And there are not that many people coming up behind them. “The demographic trends are suggesting that over the next 10 to 15 years, we’re not going to replace the workforce that currently exists,” says Ted Emond, a senior consultant with Hewitt Associates, a human resources consulting firm in Toronto.

The likely result of Canada’s aging society is a potential labor shortage that will make skilled help more and more valuable with each passing year. HSBC Bank Canada, is already attempting to keep older employees in the workforce by letting them work part-time while collecting pensions. Wal-Mart Canada allows its retirees to come back as consultants or to mentor current employees. Count on more employers to do the same as demographics makes skilled employees tougher to find.

6. Government is more generous than you think
The financial planning industry likes to cast doubt on the future of Canada Pension Plan. In fact, CPP is on solid financial ground after the reforms of a decade ago, according to the federal government’s chief actuary. CPP (or Quebec Pension Plan in the case of Quebecers), combined with Old Age Security, will provide you with an average of $11,500 a year if you’ve worked in Canada your entire life and retire at 65. The maximum you could qualify for is about $16,600 a year.

Don’t forget, too, that you’re eligible for a Guaranteed Income Supplement if you’re a low-income retiree. “For low-income [earners], government programs are going to provide you withthe standard of living you’ve always been used to,” says Malcolm Hamilton, a consulting actuary with Mercer, a benefits consulting firm in Toronto.

7. You may be missing free money
A Sun Life Financial survey found nearly 40% of us have access to savings programs in which our employer kicks in money to supplement what we contribute. But one in five of us who are eligible for such plans doesn’t participate. As a result, we lose guaranteed returns of 25% or more.

You should inquire with your human resources department to make sure you’re not missing out. Many publicly traded companies offer employee stock ownership plans with an employer match. If you buy $80 of your company’s stock each month through such a plan, your employer kicks in an additional $20 a month — an instant investment return of 25%. Other companies offer retirement plans in which the company matches your contribution dollar for dollar — a guaranteed return of 100%. In either case, the money is free and you should grab it.

8. You don’t need a million bucks
Financial planners like to say you’ll need 70% of your current income in retirement. To hit that goal, a middle-class couple will need to amass a million dollars or more in savings. But is the 70% figure truly a good estimate of what you need in retirement?

Probably not. Brian FitzGerald, co-author of The Pension Puzzle and chief executive officer of Capital G Consulting in Toronto, says you have many more costs while you’re working than while you’re retired, so your need for cash in retirement is considerably less than the 70% figure suggests. “There’s a bunch of expenses you don’t have to incur in retirement,” he says. For instance, most retirees no longer have to worry about paying off a house, funding their kids’ education, making RRSP contributions or commuting to work. And they pay substantially less in income tax because they’re earning less.

So how much of your current income do you really need to maintain your standard of living in retirement? “I’m pretty confident that 50% will do the job for most people,” says Hamilton, the actuary. Of course, if you want to live lavishly and travel constantly, you will need more, but if you’re happy to go on living much as you always have, replacing half of your working income should do the job.

9. RRSPs aren’t always the answer
Canada has five seasons: winter, spring, summer, fall, and RRSP time. But while we’re annually bombarded with ads telling us to stuff money into our RRSPs, don’t think of those four-letter contraptions as your only option in retirement planning.

RRSPs are not your best strategy if you have high-interest debt, such as a credit card balance. Given the 18% or more you’re probably paying on your credit card debt, you should first devote every available dollar to paying down that costly debt. RRSPs may also not be your best option if you’re a low-income earner, since the tax savings that result from making an RRSP contribution aren’t worth much if you don’t pay much tax to start with.

If the federal government goes ahead with its proposal to introduce tax-free savings accounts next year, RRSPs will have an additional competitor for your attention. Ottawa’s proposal, as it now stands, would allow each of us to put up to $5,000 a year into a tax-free savings account, or TFSA. You won’t get any tax deduction for doing so, but your money will grow tax-free. And you will be able to withdraw the TFSA money without paying any taxes. While the math gets complicated, “I would think people with below-average incomes are better with TFSAs,” says Hamilton, the actuary.

10. There’s a world of possibilities
One option that can instantly multiply your retirement spending power is to leave Canada behind. Mexico, Costa Rica, Malaysia and Panama all enjoy far better weather than we do, and much lower costs of living. “Overall, there is no question you can live here on one-half to one-third what you could in any Canadian city and have a good lifestyle,” says Tom Dawson, 54, who with his wife, Donna, moved to Panama City nearly two years ago from St. Albert, Alta. The 1,800-sq.-ft. condominium they bought overlooks the Pacific Ocean and the Panama Canal, and cost them less than $200,000. Medical care is excellent, locally grown produce is cheap and foreigners who retire to Panama with a pension can qualify for several tempting tax breaks, including an exemption from property taxes.

The federal government offers primers on retiring abroad (click on www.voyage.gc.ca and search “Retirement Abroad”). Another useful source of information is The Canadian Snowbird Guide by Douglas Gray. But no book or website can fully convey the day-to-day reality of a foreign country. Try out a destination before making any permanent decisions. Rent a home for a year and see what daily life is like. If it matches or exceeds your expectations, you may be able to afford the retirement of your dreams on far less money than you expected.

Source: CanadianBusiness.com