Archive for April, 2010

     Sometime this year, we taxpayers will receive an HST compensation payment,

     This is indeed a very exciting program and I’ll explain it using a Q & A format.

      Q, What is an ‘HST Compensation’ payment?

      A. It is money that the provincial government will send to taxpayers.

     Q. Where will the government get this money?

     A. From taxpayers

     Q. So the government is giving me back my own money?

     A. Only a smidgen of it.

     Q. What is the purpose of this payment?

      A. The plan is for you to use the money to buy a high-definition television set thus     stimulating the economy.

     Q. But isn’t that stimulating the economy of China?

     A. Shut up.

 Below is some helpful advice on how to help the economy by spending your HST Compensation cheque wisely.

•  If you spend the stimulus money at Wal-Mart the money will go to China or Sri Lanka 
• If you spend it on gasoline it will go to the Arabs
• If you purchase a computer, it will go to India, Taiwan or China 
• If you purchase fruit and vegetables, it will go to Mexico, Honduras or Guatemala
• If you buy an efficient car, it will go to Japan or Korea
• If you purchase useless stuff, it will go to Taiwan
• If you pay your credit cards off, or buy stock, it will go to management bonuses and they will hide it offshore.

       Instead, keep the money in Canada by: 

1. Spending it at yard sales, or 
2. Going to hockey games, or
3. Spending it on prostitutes, or
4. Beer, or
5. Tattoos

(These are the only Canadian businesses still operating in Canada)

 Conclussion:

Go to a hockey game with a tattooed prostitute whom you met at a yard sale and drink beer all day!

 Anonymous

     This little piece was sent to me by a friend with a great sense of humour. Unfortunately, it rings true except perhaps for the oil which is largely our own from Alberta and the beer which is largely owned by Japanese and European companies operating here.

     It illustrates quite clearly how interdependent all the world’s economies have become on one another to maintain our way of life. Is this a good thing or a bad one? That seems to be where the “One Hundred Mile Diet” idea has come from. The fear that we are at risk by depending on transportation of goods freely over long distances is grounded in fact.

      A couple weeks back a gentleman named Mike Nickerson came to speak at our Rotary Club. He has written a most interesting book which challenges many of our ideas. It is called Life, Money and Illusion , Living on Earth as if we want to stay. You can read my book review as well to guide you to a thoughtful discussion of sustainability.

     But, getting back to the subject above, in his book Mr. Nickerson, talks about money and the real cause of economic problems. The G7 and G20 countries have been in the mode for the last three to four hundred years, give or take, of constant economic growth. This has always been and is accomplished today by some very strange ideas.

     Back in 1971, Richard Nixon declared that the world no longer needed to peg currency to gold (something real) but could and should use the American dollar as it’s standard for value. It used to be that you were guaranteed that if you took an American dollar to the bank you had the right to demand an equal amount of gold. All that is very well because despite current problems, the American economy is the largest in the world and even though China and India are becoming middle-class consumers, they have a very, very long way to go to catch up to the North American standard of living. So, money no longer has a real value, it is only notional.

     I can hear you thinking “So what?”. Well, most of us have had the experience of going to a bank or other lender and getting a loan or a mortgage. Think about that transaction. You come in with some or even no money and go out with a cheque to pay the seller (or the lender gives the cheque to the seller without your aid). What just happened? The lender “created” money. It wasn’t printed by the government. It wasn’t recycled from somewhere else. It just “appeared” because of a signature on a piece of paper.

     How much of our economies are a result of “created” money? Many people in North America are financing their living standards on debt. Debt means no money to afford what we consume. Yet we are bombarded on all sides by new and wonderful gadgets which we are convinced by print and voice media that we can’t live without. How many of them are really improvements to our life?

     Who will eventually pay off those credit cards and loans and mortgages? Do we care? Are we leaving the debt to our children and grandchildren? And, of course, we won’t be around to pay the piper. Does it matter if we leave others in debt on our behalf?

Mary Lister and Theodore Von Bȕnger (pronounced fon Benger) got married in Saarbrucken on one of the many bridges which span the river Saar. The year was 1885 and the day dawned rainy and cool. As they exchanged their vows the sun burst out from behind the clouds and everyone said that it was a sign of blessing on the unusual ceremony. They were well-bred, well-educated but definitely minor gentry, quite middle class individuals despite aspirations to be much grander.

A dark haired, dark-eyed beauty, Mary was very petite. It was the style of her day that women should have very small waists and so she wore strong whalebone garments under her fine clothes which made her stand very erect. As a result she was not very athletic because she really was unable to bend over. Of course, the fashionable long gowns with bustles and bows on the back might have had something to do with it too. Mary was quite artistic. She sang, painted her own pottery, dabbled at oil painting and taught piano to help bring in some money to the family. Mary was a very practical English lady and could stretch a Pound note a very long way, which was a great help to family survival.

Theodore on the other hand was tall and willow thin with a great shock of blonde hair which fell on his forehead covering up his hazel eyes which shone with mischief and fun. Theodore was the second son of a Baron from what was then called Saarbrucken, a little place on the border between France and Germany. They were constantly overtaken by one or the other country as there was a great coal basin with iron ore. The industrious burghers managed to make other things such as sugar, beer, pottery and machinery.

There were two main problems with the marriage. The first was that Theodore was a second son and he inherited nothing except what was considered a good education in French, German, Latin and English. The second was that Mary didn’t come from a wealthy family and this meant that they had to find a way to make a living.

The newly-weds made a decision to live in Croyden in southern England where he opened a book store for students from the nearby university and she taught music to their younger brothers and sisters. It was a great idea except that Theodore liked to take off and watch horse races and spend time on farms painting watercolours of the Hunter horses which were highly rated by their owners who loved to ride to foxes and hounds. So Mary ended up doing her bit and also spending a lot of time in the book store. The store became the centre of their lives as they lived in a walk-up above the shop.

Things went well for the first while. In 1888 they were blessed with twin daughters, Elsie Annie and Dorothea. The girls were followed by a son, Theodore, in 1891, twin boys, William and Arthur in 1893 and finally a daughter Grace on Dec. 31 1900.

It turned out that the turn of the century would be the last of the “easy “ years for Mary and Theodore. With the arrival of the new hundred years, there had begun to be some bad feelings against those of German decent. Trouble arrived throughout Europe and the bogey men were all Germanic.

The expensive glass window in the front of their shop had the name Von Bȕnger’s Books in large gold letters on it. The local Wits began coming by most nights and using paint to block out the Von and change the sir-name to Bugger’s so that the sign red “Bugger’s Books” After this happened a few times, Theodore gathered his family together and announced the momentous decision that he would change the whole family’s name to Von Binger so that they would be more “English”. He asserted that getting rid of the offending umlauts in their name would do the trick. Because he was the head of the family, no one argued with him. Of course, the Wits never slowed down at all even when the change was made.

Within five years of 1900 they began looking about for somewhere else to live to get away from the persecution of the German-sounding folks. Mary had a cousin named Joseph who had a surgeon at the Glasgow Royal Infirmary. He gained some fame and became a Baron because he discovered and worked out how to administer antiseptics during surgeries – the ability to have painless surgery with patients who were not fighting against the pain changed the medical world. Joseph had colleges in the city of Montreal in Canada. Through his assistance Mary and Theodore sold up most everything they owned to get passage for themselves and the six children to the faraway New World.

They made a surprising discovery. All that “wasted” time Theodore had spent with his watercolours were actually prized and the owners of the horses depicted were willing to pay huge sums for their favourites.

They arrived in the spring of 1905 and spent the next 5 years learning to speak colloquial French. They drank in the high society of the European style city which was then the hub of business for the young Dominion. Theodore supported the family by painting and teaching others about art while Mary continued teaching young people how to sing and play the piano.

Later, just before the start of the First World War, the War to End All Wars, they found their way to Toronto to join Mary’s brother who was working at a hospital there. The main impetus was that Dorothea was very sick. She was thought to have TB and so they wanted to get out of the city and find a quieter more rural place for her. Shortly after the move, young Theo went to war and returned a broken man after breathing in mustard gas in the trenches in Belgium. He was never the same. Young Bill and Art grew up to become engineers and builders in their newly adopted home. And little Grace grew up to take her Mother’s teaching art at the University of Toronto in oil painting, porcelain pottery, calligraphy, and drawing. Oh, yes, and every one of them changed their names to just plain Binger which Theodore never understood.

Mary and Theodore spent their senior years living in a fifth story apartment above a store on University Avenue, in the heart of the city. They entertained their children and grandchildren with tales of the world they had left behind and encouraged them to see, feel, taste and hear the world around them. Always and every day they talked about learning and opening themselves to new things. The best day of their lives was the day they celebrated their fortieth wedding anniversary with fond memories of Saarbrucken, London, Montreal and Toronto.

Within the year, Mary passed away a spent and tired lady and Theodore followed her in less than a week. He said before he passed away that he couldn’t get by without his Mary. Today the children, grandchildren and great grandchildren know the story of Mary and Theodore, a love story which was blessed by the sun on a cool morning in 1885.

As Canadians approach and enter retirement, most of us arrange our finances carefully so that

we’ll have a stable income from month to month once we stop working. Typically we receive

income from several sources including personal savings, company pension plans and government

programs. However, although we’ve taken care to ensure we have a stable retirement income,

we often don’t fully prepare for the fact that we probably won’t have stable retirement expenses.

In other words, we don’t build in enough financial flexibility.

Why is financial flexibility important?

Retirement brings with it a host of unpredicted financial needs – both good, such as an opportunity to travel or help a family member buy a home and bad, such as unplanned medical expenses or a car that expires prematurely. An inflexible monthly income can make it difficult to address these financial needs as they arise. Luckily, many retirees are sitting on (or in) a significant asset they didn’t take into account when planning their retirement income – their home.

Your home can provide you with tremendous flexibility

For most of us, our home is one of our largest assets. In some cases it may even be worth more than the retirement  savings we’ve managed to accumulate. It may make sense, then, to take this asset into account when planning our retirement income. This doesn’t necessarily mean systematically drawing down our home equity as income but rather,  imply gaining access to that equity so that our financial ups and downs have less impact on our retirement lifestyle.

Add flexibility to your retirement income with Manulife one

Manulife one is an all-in-one borrowing, savings and chequing account that is secured by your home. Often, if your income meets or exceeds your expenses, your account may be in a positive balance and your money will earn a competitive rate of interest. And, if an unexpected expense comes along, you can easily access your home equity, up to your borrowing limit (typically 50% to 80% of the value of your home). Because Manulife one acts asyour day-to-day account, accessing your money is as simple as writing a cheque, making a debit purchase or transferring money electronically. A stable income can be very important in retirement. And, as the following section describes, financial flexibility may be just as important.

Reduce the impact of temporary market downturns

Many Canadians rely on investments such as stocks and mutual funds to provide a portion of their investment income. However selling these investments when their value has declined could have a significant negative impact on how long these investments will last. When the value of your investments has declined, it may make sense to temporarily take income from your Manulife one account and leave your investments intact.  Then, when the value of your investments has recovered, you can again use these investments to supplement your income and repay any debt you’ve accumulated. Your financial advisor can help you determine if this strategy is right for you.

Manulife one can provide financial flexibility in retirement

Smooth out your monthly cash flow

Even if your retirement income matches or exceeds your expenses over the long-term, there’s no guarantee you’ll have a surplus every month. Manulife one acts as a buffer to help smooth out your monthly cash flow. In lower-expense months, the extra money can stay in your account, either reducing your debt or, if you have a positive balance, earning a competitive rate of return. In higher-expense months, you’re able to access your accumulated savings and your line of credit, up to your borrowing limit.

Prepare for the “what-ifs?”

Aside from the regular month-to-month fluctuations in retirement expenses, you may also encounter larger onetime expenses. These are sometimes called “what-if” events: “What if I have unexpected medical expenses? What if I need to help out the kids? What if the house needs major repairs?” If you haven’t planned for these, you may have limited or unattractive options when the time comes. The best time to prepare for a “what-if” event is now, before the event has taken place. By giving you access to 50% to 80% of the value of your home, Manulife one can provide you with an immediate option for addressing the expense and may give you the time you need to restructure your finances to reflect your new circumstances.

Help out your children or grandchildren

One of the benefits of a lifetime of hard work and saving is the ability to give your children or grandchildren a leg-up by helping them with larger expenses, such as a down-payment on a home or tuition for post-secondary education. However, if this help comes from your retirement savings, it could derail your financial plans, particularly if your investments have recently declined in value. With Manulife one, you can tap into your home equity to help your children or grandchildren and keep your retirement  savings intact. Plus, if you’d prefer to loan the money rather than gift it, you can track the debt repayment and interest separately in a sub-account.

Supplement your retirement income

In some cases, it may make sense to supplement your retirement income by making temporary or longer-term systematic withdrawals from your Manulife one account. If this option is of interest to you, your financial advisor can review your individual situation and help you determine what withdrawal amount is sustainable.

Convenient and easy to use

Manulife one simplifies your financial life by allowing all of your retirement income and expenses to flow through a single account. Consolidating your income and expenses in a single account makes it easier to manage and keep track of your day-to-day cash flow.

Easy to access

You can access your money at any time in a number of ways such as:

• Debit card

• ABM transactions

• Cheque writing

• Telephone and internet transfers

Flexible borrowing and repayment

With Manulife one, unlike some home-equity products targeting seniors, you’re not required to borrow money. If you don’t come across a need to borrow, you can simply enjoy the flexibility of the account and a competitive interest rate on positive balances. If you do choose to borrow, you have a tremendous amount of flexibility: • You can repay any variable-rate debt without penalty simply by making a deposit

• If you would like to track a portion of your debt separately, such as a loan to one of your children, you can do so in a variable-rate sub-account.

You can even choose to lock in a portion of your debt at a fixed rate

Comprehensive reporting

Each month, you’ll receive a comprehensive statement that shows the change in your balance, lists each transaction that took place during the month and shows you the interest earned or charged on your main account and any sub-accounts you may have. In addition, you can access information about your account at any time through online or automated telephone banking