Artificial Interest Rates are the crack Cocaine of Real Estate

One of the best quotes I've seen this year: "... artificially low interest rates are the crack cocaine driving the real estate market." (Garth Turner).

The Real Estate "Spring" Market came late this year but it did arrive and sales are on pace to match last year.

The "Spring" Market for 2010 is facing a One Two Punch - a probable rise in the Bank of Canada Borrowing Rate in April and, the introduction of the Harmonized Sales Tax in July. These two factors will dramatically lessen affordability which seems likely to drive down both prices and sales.

This means that the next 6 to 9 months may be both the best time to buy and the best time to sell.

For many buyers it's all about affordability and it hasn't been this good in a long, long time.

For sellers looking to capture the capital value of their homes (downsizers, whether by choice or circumstance) this is likely about as good as it's going to get ... prices have risen for 13 years in a row. And you can make a case that the peak in 2009 may be very much like the peak in 1989 when prices fell for the next 7 years and didn't return to 1989 levels for almost 13 years.

I work with a number of realtors in helping their downsizing clients achieve their goals with respect to retirement income and I'd like to share some of what I've learned.

I am pleased to invite you to attend my upcoming seminar - Downsizing: The Next Wave in Real Estate

In this seminar I will review the latest stats on sales levels and pricing for the GTA Real Estate market and discuss where I think the market is heading next year

I will also present several case studies to illustrate how downsizers may best achieve their financial goals by acting now. For example, at age 55 Carol downsized and 10 years later she had grown her initial $200,000 to more than $315,000 but, even more important, she had secured lifetime income of more than $22,000 per year ... with income tax at a rate of less than 5%.

With more people than ever looking to downsize it’s never been more important for realtors to be able to offer them options which may help them optimize their income needs. The benefits are numerous: clients achieve their goals; clients feel more comfortable in setting a realistic market price; clients tell their friends and family how well their downsizing move worked for them.

Isn't it worth 90 minutes of your time to learn about an option which may help you become one of the realtors of choice for the fastest growing market segment?

10:00am Friday September 11th

Homewood Suites by Hilton, Oakville

RSVP to David Pylyp at 647 218 2414 or email david@davidpylyp.com

I look forward to meeting you.

Best regards,
Warren J. Huntley
Retirement Income Specialist
Braley Winton Financial Group
Office: 905.815.1035
Cellular: 416.500.4064
Toll Free: 877.372.9022

Worried about your Pension Plan?

Are you worried about the stability of your company-sponsored pension plan? You’re far from alone – but just how worried should you be and is there anything you can do about it? Here are some answers that may allow you to look forward to retirement with the assurance that it can be exactly what you’ve always dreamed.

What is causing the current concern about pension plans? A series of factors that some experts have dubbed the perfect storm: An aging population is increasing the need for pension plan payouts during this time of low interest rates and a stock market downturn. At the same time, companies are being squeezed by shrinking sales, markets and margins, making it more difficult for many of them to maintain employer pension plan contributions at previous levels and/or to set aside enough money to fund future obligations.

What does this mean for me? It really depends on the relative health of your company’s pension plan. Companies are required by law to honour pension agreements as long as they remain in business. But even if your company should fail, all funds remaining in the pension fund are distributed to eligible employees in a manner that the Court determines is fair.

What about the Canada Pension Plan (CPP)? It’s in good order, according to a report earlier this year from the federal, provincial and territorial Ministers of Finance who are joint stewards of the plan. This triennial review found that CPP remains on sound financial footing and is well positioned to weather the current market turbulence.*

Changes to the plan will be phased in beginning in 2011 that will provide greater flexibility for those choosing to receive CPP benefits before age 65 by allowing them to continue working while receiving the benefit and to continue participating in CPP to increase it.

What can I do? First, try not to do what many people have done during this economic downturn – and that is, take a short term view and act too quickly. Instead, you should make every effort to boost your personal pension plan contributions – especially inside your tax-saving, tax-deferred, Registered Retirement Savings Plan where compound growth works to your best advantage, even in sluggish markets -- and to stay the course with your other investments. Remember, you haven’t actually lost any money on your registered or non-registered investments unless you lose focus on your long term financial objectives and cash them out when the market is at a low ebb instead of waiting for the inevitable upward cycle that history tells us usually comes to the market.

When you prepare adequately for the long term and maintain an investment portfolio that fits your appetite for risk and life goals, you’ll get where you want to go, even in the face of pension plan and other economic storms. Your professional advisor can help you navigate to calm waters and a clear future.

John Scholl B. Mathematics, CGA,

Consultant - Investors Group Financial Services Inc.

Wealth Management & Financial Planning

(905) 450-2891 (866) 799-2223 Cell(416) 731-3660

* Finance Canada News Release: Finance Ministers Indicate Canada Pension Plan is Financially Sound, www.fin.gc.ca/n08/09-51-eng.asp

PAC your RRSP – the easy way to save and grow

It’s RRSP crunch time again. That time of year when you search the nooks and crannies of your finances for the money you need to fill up your RRSP contribution room. And that is absolutely the right thing to do: An RRSP is the best tax-saving, income-building investment for most Canadians.

But it’s also tough to come up with a lump sum any time, and especially right after holiday season – miss out and you’ll also miss out on some immediate tax savings. Leaving your RRSP top-up to the last minute also means you have lost out on all that tax-sheltered, compounded growth you could have benefited from through the year.

So here’s your best solution for maximizing future RRSP growth: PAC your RRSP. PAC stands for Pre-Authorized Contribution Program and it’s such an easy way to invest, you’ll hardly know you’re doing it.

Here’s what PAC-ing your RRSP can do to deliver a much more comfortable retirement:
By automatically investing, say $250 regularly each month at a compound annual return of 8%, you’ll have $354,230 in your retirement nest egg 30 years from now.* But, if you wait until the end of each year to invest a $3,000 lump sum, you’ll have only $339,850. By investing monthly, you’ve added $14,380 at retirement without an extra penny of cost. That’s just one example of the considerable value of paying yourself first with PAC.

Tie your PAC strategy to a comprehensive financial plan. Decide what you want to do in retirement and it’ll be much easier to achieve your goal. And by PAC-ing your RRSP, you’ll enjoy the double benefit of working towards your goal and saving on taxes.

As time passes, your income changes and your life changes – so your PAC should change too. Reset your PAC annually by a lump sum dollar amount or by a designated percentage. That way, you’ll keep your RRSP contributions and other investing in line with inflation and personal wage increases.

And by the way, when you PAC year round, you’ll never again have to fear RRSP crunch time … you’ll never have to search for elusive top-up dollars at this time of year … and you’ll significantly improve your financial future – that’s a win-win-win any way you look at it.

Of course, PAC-ing your RRSP is just one (really good!) element in a total financial plan aimed at achieving financial independence on your own terms. Your professional advisor can help you put a complete package together that is absolutely right for your life today and tomorrow.
*The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to indicate future returns on investment.

John Scholl B. Mathematics, CGA, Wealth Management & Financial Planning
Investors Group 200 - 24 Queen Street East, Brampton, Ontario L6V 1A3
Tel. (905) 450-2891 X529 Cell: (416) 731-3660 john.scholl@investorsgroup.com