Building your Bond Portfolio From a bond fund to a laddered bond portfolio - by Richard Croft

Size: px
Start display at page:

Download "Building your Bond Portfolio From a bond fund to a laddered bond portfolio - by Richard Croft"

Transcription

1 Building your Bond Portfolio From a bond fund to a laddered bond portfolio - by Richard Croft The Laddered Approach Structuring a Laddered Portfolio Margin Trading The goal for most professional bond mutual fund managers is to out-perform some fixed income benchmark, the most common being the Scotia Capital Universe Bond Index. The Scotia Capital Universe Bond Index is simply an index that measures a hypothetical portfolio of high-grade short-, medium- and long-term bonds. When looking at fixed income investments, there are two basic alternatives: 1) the domestic bond mutual fund and 2) a selection of individual bonds. With domestic bond mutual funds, the cards are stacked against the individual investor. How come? Timing is one example. There are lengthy delays after a reporting period, before the client can ascertain what the manager did or is contemplating to do. The astute investor in bond mutual funds will carefully review the quarterly (or semi-annual sometimes) statements when they are released eight or so weeks after the period-end. However, quarterly or semi-annual statements only provide a snapshot of where the portfolio has been. There is no way of telling whether the fund manager totally changed the structure of the mutual fund in the meantime. As well, there may be a new fund manager appointed with a different investment philosophy who could have made significant changes to the portfolio without your knowledge. One point to consider is whether stripped bonds are used. Strip bonds eliminate re-investment risk. On the other hand, the bid/ask spread for a strip bond can be quite large. That implies liquidity risk. Finally, what percentage is exposed to currency risk? Currency exposure can do wonders for a bond portfolio's bottom line. It can also cause significant losses should the manager fail to properly predict the ups and downs of the Canadian dollar. And then you have to ask what it is that you want from a bond fund: investment management expertise with the management of your bond portfolio, or a currency play? At the end of the day, most bond funds are destined to be average performers. No one gets it right all the time. And being wrong at any point in time can take years to recover from. So most bond managers accept the premise that you win by not losing. The Laddered Approach So, how do you choose from the myriad of bonds available with any hope of outperforming or even keeping pace with those high powered portfolio managers with their charts, databases and information? Surprisingly, it is not as difficult as you might imagine. Simply, keep in mind two basic principals: 1. There is no annual management fee when managing your own fixed income portfolio. 2. No one really knows where interest rates are going. It is possible to achieve consistent above-average performance in all types of markets through a passive portfolio management approach that, unfortunately, few managers utilize. This portfolio management approach is the "Laddered" or "Staggered Maturity" approach. Laddering simply means spacing the maturities in a fixed income portfolio, such as investing each 10% of your portfolio into 10 individual bonds and staggering the maturity dates of those 10 bonds, so that each bond matures annually for the next ten years. Then, when the first bond matures, it is re-invested into a new ten-year bond and so on. This approach can be used for taxable accounts using interest-bearing bonds or for RRSPs using stripped bonds. Essentially, it means that you always have bonds maturing in all market conditions. That allows you to smooth out income, thus ensuring decent revenue even when yields are low. A laddered portfolio will out-perform 75% of professional fund managers for the following reasons:

2 1. No interest rate guessing. Fund managers and market-timing clients fall behind the eight ball when they make a bad guess. 2. A laddered portfolio is always 100% invested, with short-, mid- and longer-term bonds always in the portfolio. This eliminates the risk of being in the wrong maturities at the wrong time of the cycle. 3. Since the portfolio is not being actively managed, there is no reason to hold Government of Canada bonds since they are the lowest-yielding bonds in the market. By investing in provincial government bonds, clients will earn an extra compounded return per annum, which adds up over time. Corporate bonds often yield a higher return as well. You can also actively manage the portfolio if you feel comfortable about predicting the direction of interest rates. If you fall into this camp, then a modified, laddered approach may have merit. In this case, a specified percentage of the portfolio -- say 50% to 75% -- is laddered with the balance actively managed. This article has been written by and is a publication of an independent third party (the "Third Party Content Provider") and not Scotia Capital Inc. or any affiliate of Scotia Capital Inc.. The Third Party Content Provider is not an employee of Scotia Capital Inc. or affiliated in any way with Scotia Capital Inc., and Scotia Capital Inc. neither endorses nor accepts any responsibility or liability for the content of any of the publications of the Third Party Content Provider displayed herein or otherwise. The display of these publications by Scotia itrade in connection with the Scotia itrade service are for information purposes only. Scotia itrade does not provide financial, legal, tax, or accounting advice, or advice regarding the suitability or profitability of any security or investment or any decision in respect thereof. No reliance may be placed on Scotia itrade for any such advice and Scotia Capital Inc. accepts no liability in respect of any such advice. Any information, data, opinions, or recommendations provided by the Third Party Content Provider or any other third party in this article are solely those of the Third Party Content Provider and not of Scotia Capital Inc. or its affiliates. No endorsement by Scotia Capital Inc. or any of its affiliates of any third party product, service, website or information is expressed or implied by any information, material or content contained in or referred to on the Scotia itrade web site. Scotia itrade is a division of Scotia Capital Inc

3 How to Structure a Laddered Portfolio Eliminate the re-investment risk - by Richard Croft The Laddered Approach Structuring a Laddered Portfolio Margin Trading By laddering, or staggering, the maturities in your bond portfolio, you solve two principal issues; 1) you no longer have to make a guess about where interest rates are going and 2) you reduce re-investment risk. To understand how laddering works, consider an example where you have $100,000 to invest in a bond portfolio. You decide to invest equal dollar amounts at regular intervals along the yield curve. For example, for $100,000, you could purchase ten bonds each with $10,000 face value, maturing annually for 10 consecutive years. Depending on the circumstances, ladders may be of different durations -- that is, of longer or shorter maturities. The average maturity of this portfolio is 6 years. More importantly, the maturities span the length of approximately 2 business cycles. As mentioned, this portfolio will likely outperform 75 percent of professional bond mutual fund managers because: 1) you are not paying annual management fees; 2) you hold no Government of Canada bonds and 3) you are not guessing which way interest rates are going. As one year passes and your first bond matures, you invest it in another ten-year bond that meets your standards, and you continue this cycle, as long as you want to hold domestic fixed income bonds. This approach means that you are never concentrated in one maturity. And that's important when a bond matures and has to be re-invested. There are variations on this theme, of course -- some prefer shorter term ladders, others longer term, some have maturities every second year, others at six month intervals. One can also invest a percentage in foreign pay securities should currency diversification be desirable. As well, some investors may wish to put, say, 75% of their portfolio into a laddered structure and actively manage the balance, investing it where they feel the maximum returns will be obtained. This approach is also important in RRSPs; even though the plan is sheltered, the same principles apply except that you would build a ladder of strips. Since strips can be rolled into a RRIF, there is no compelling need to concentrate maturities at retirement age. It's great to have an example, but let's use a younger example and more accurate numbers (ie, in their mid to late 30s, and the realistic value using strips vs. long-term maturities) This article has been written by and is a publication of an independent third party (the "Third Party Content Provider") and not Scotia Capital Inc. or any affiliate of Scotia Capital Inc.. The Third Party Content Provider is not an employee of Scotia Capital Inc. or affiliated in any way with Scotia Capital Inc., and Scotia Capital Inc. neither endorses nor accepts any responsibility or liability for the content of any of the publications of the Third Party Content Provider displayed herein or otherwise. The display of these publications by Scotia itrade in connection with the Scotia itrade service are for information purposes only. Scotia itrade does not provide financial, legal, tax, or accounting advice, or advice regarding the suitability or profitability of any security or investment or any decision in respect thereof. No reliance may be placed on Scotia itrade for any such advice and Scotia Capital Inc. accepts no liability in respect of any such advice. Any information, data, opinions, or recommendations provided by the Third Party Content Provider or any other third party in this article are solely those of the Third Party Content Provider and not of Scotia Capital Inc. or its affiliates. No endorsement by Scotia Capital Inc. or any of its affiliates of any third party product, service, website or information is expressed or implied by any information, material or content contained in or referred to on the Scotia itrade web site. Scotia itrade is a division of Scotia Capital Inc.

4 Trading Bonds on Margin by Richard Croft The Laddered Approach Structuring a Laddered Portfolio Margin Trading Investors typically gain experience in the markets by first investing in a few stocks. As more money is added to the portfolio, additional stocks are selected to benefit from diversification. (Alternatively, the investor chooses an equity mutual fund for the instant diversification it offers.) Somewhere down the line, the investor will venture into the less familiar world of bonds and debentures, again seeking the diversification offered by this different asset class, as well as the addition of a steady, fixed income to their portfolio. By including bonds in the portfolio, the world sometimes becomes instantly complicated. Familiar with products such as Canada Savings Bonds and Guaranteed Investment Certificates, which do not change in price with interest rate changes, the investor is often surprised and more than a little mystified that bonds and debentures do change in price, and that there is an art to forecasting interest rate changes and future bond prices. To properly diversify a portfolio, then, with some cash, fixed income securities and stocks, it seems the total portfolio value has to be $100,000 or more, well out of reach of many a small investor. Again, this is why many small investors resort to investing through mutual funds. But what if you want to make your own bond selections, perhaps to profit from an anticipated change in interest rates? Investing through a mutual fund will not give you the opportunity to choose your own bonds. The answer lies in what is called margin investing, where the investor can purchase a trading unit of bonds with money borrowed in large part from their brokerage firm. Buying bonds on margin uses the same principle as buying stocks in a margin account. You buy the securities, get a loan from your investment dealer to help pay for the purchase, and hope the securities go up in price. You then sell the securities, use the proceeds to pay off the loan, and any leftover balance is yours to keep. The idea is for you to make money using somebody else's money, in this case the brokerage firm's. That's what is called leverage. The difference with bonds is that the leverage is potentially much greater, because the loan values for bonds are significantly higher than those for stocks. For example, purchasing a stock on margin may mean that you can borrow 20%, 40% or 50% of the purchase price from your broker, depending on the stock, or even as much as 70% for certain high quality stocks. By contrast, a typical loan value for bonds is 90% or 95% of the purchase price. This latter loan value means that an investor could make a $100,000 purchase, borrow 95% of that purchase price from their brokerage firm, or $95,000, and put up only $5000 of his or her own money. A $100,000 bond position could therefore be added to a portfolio for a mere $5000. Adding a fixed income asset class to a portfolio is within reach of virtually every serious small investor. Before we explore this opportunity further, some attention needs to be paid to the lingo of margin investing, and to a few simple calculations of who puts up what percentage of the money. The first important term is the account balance required, which is based on the initial purchase price. For example, suppose an investor purchases $100,000 of a bond at par (or 100% of face value). The account balance required to pay for the purchase is $100,000. Note that this figure really has nothing to do with margin investing; the investor bought $100,000 worth of securities, and therefore needs $100,000 in their account to pay for them. The next bit of terminology is the loan value of the security. This is the percentage of the bond's current market value that the investment dealer can loan you towards your purchase. While the investment dealer would like to loan you the full purchase price, the regulators feel this is not healthy for the capitalization of the investment firm, and so they set limits on how much the dealer is allowed to loan the client. The maximum loan value on a typical corporate bond is 90%, so the investor can borrow, in this example, $90,000 of the $100,000 purchase price paid to the seller. The third important term is the margin requirement, which is the amount the client must put up. This is simply the difference between the purchase price ($100,000) and the current loan value ($90,000), or $10,000 in our example. In this case, then, the investor has added a diversifying $100,000 fixed income component to their portfolio with only $10,000 of their own money. Here's an inside tip on the proper use of this terminology: Many investors and even investment professionals mix up the terms 'margin rate' and 'loan value', speaking as if the margin rate is the amount they can borrow. This is incorrect; margin is the amount that they can't borrow. In the above scenario, for example, the margin rate is 10%, not 90%.

5 Here are some typical maximum loan values for various types of fixed income securities: Security Maximum Loan Value High-grade Corporate bonds 90% Goverment of Canada bonds 95% Provincial bonds 95% Government of Canada Strip bonds 85% A final term is the margin call. Sometimes the investor is required to post additional margin due to price changes in the market after the initial purchase. This extra margin is referred to as the margin call. Margin calls arise because of a peculiarity in the way the margin calculation works: the account balance required is based on the initial value of the transaction back at the time the bonds were purchased, while the maximum loan value is based on the current trading price of the bonds in the market, an amount that can change daily. To the extent that the current trading price has deviated from the initial purchase price, there will be a margin call (if the trading price has dropped below the purchase price) or excess margin (if the trading price has risen above the purchase price). When an investment dealer calls the investor for additional margin, the margin call must be met by the beginning of next day's business at the latest. Suppose, for example, that the bonds in our example have decreased in market value to $98,000. The account balance required is still $100,000, since it is based on the initial transaction. However, the loan value is 90% of the current trading value of $98,000, or $88,200. The margin requirement is now $11,800 ($100,000 minus $88,200). Since the investor has only posted $10,000 and the margin requirement is now $11,800, a margin call will go out to the investor for an additional $1,800 in funds, which must be deposited before the opening of business next day. Also note that the loan value is still 90%, but that the investor's responsibility or margin rate is now greater than 10%. That's because the two rates have different bases. Initial Transaction After Price Change Account Balance Required $100,000 $100,000 Less: Maximum Loan Value (90%) $90,000 $88,200 Equals: Margin Requirement $10,000 $11,800 Less: Client Deposit $10,000 $10,000 Equals: Margin Call $0 $1,800 Margin investing involves leverage, or investing a small amount to cover a proportionately much larger position. Essentially, this means buying something you can't really afford. And therein lies a major advantage, and disadvantage, to margin investing: it's great if the price of the underlying security rises, but not so wonderful if the price drops. If interest rates fall, for example, and the bonds rise in price to $110,000, the investor would have made a profit of $10,000 on an investment of $10,000, for a return of 100%. On the other hand, if the bonds dropped to $90,000, there would be a 100% loss. That's what leverage does: it enhances profits, but it also enhances losses. Good if the bonds rise in price, and bad if they fall. Besides the double-edged sword of leverage, what are some of the other benefits and pitfalls of using margin to invest? First of all, of course, there are the margin calls. Every day that the bond trades in the market, there is a possibility of another margin call. To avoid having to keep running into the brokerage firm every day with another cheque, investors typically deposit a treasury bill or other interest-bearing security to cover any potential margin calls. As long as the security on deposit exceeds the cumulative margin calls, there is no need to deposit additional funds. Another drawback to margin investing is the interest charged on the loan. The investment dealer often charges anywhere from prime plus one percent to prime plus three percent or more on these loans. To offset this somewhat, you are receiving interest payments from the bond being held, albeit only every six months. Therefore, interest charges could rack up for up to six months before you receive interest from the bond to help pay for it. Interest costs on margin loans are deductible for tax purposes against any investment income earned. Buying bonds on margin is one way to add a fixed income component to a portfolio. The inherent leverage can also be beneficial if the price of the underlying bonds goes in the proper direction. On the other hand, there are large risks to this technique as well, and therefore it should only be applied where the investor's objectives, preferences, constraints and risk tolerance make it suitable. It also helps, of course, to make the correct call on the future direction of interest rates This article has been written by and is a publication of an independent third party (the "Third Party Content Provider") and not Scotia Capital Inc. or any affiliate of Scotia Capital Inc.. The Third Party Content Provider is not an employee of Scotia Capital Inc. or affiliated in any way

6 with Scotia Capital Inc., and Scotia Capital Inc. neither endorses nor accepts any responsibility or liability for the content of any of the publications of the Third Party Content Provider displayed herein or otherwise. The display of these publications by Scotia itrade in connection with the Scotia itrade service are for information purposes only. Scotia itrade does not provide financial, legal, tax, or accounting advice, or advice regarding the suitability or profitability of any security or investment or any decision in respect thereof. No reliance may be placed on Scotia itrade for any such advice and Scotia Capital Inc. accepts no liability in respect of any such advice. Any information, data, opinions, or recommendations provided by the Third Party Content Provider or any other third party in this article are solely those of the Third Party Content Provider and not of Scotia Capital Inc. or its affiliates. No endorsement by Scotia Capital Inc. or any of its affiliates of any third party product, service, website or information is expressed or implied by any information, material or content contained in or referred to on the Scotia itrade web site. Scotia itrade is a division of Scotia Capital Inc.

Climb to Profits WITH AN OPTIONS LADDER

Climb to Profits WITH AN OPTIONS LADDER Climb to Profits WITH AN OPTIONS LADDER We believe what matters most is the level of income your portfolio produces... Lattco uses many different factors and criteria to analyze, filter, and identify stocks

More information

RRSP Guide. Help your money grow on your terms through RRSP investing

RRSP Guide. Help your money grow on your terms through RRSP investing RRSP Guide Help your money grow on your terms through RRSP investing 1 What s inside Striking a balance between spending and saving....3 RRSPs....4 Frequently asked questions....5 Your RRSP checklist....7

More information

Getting Started with Closed-End Funds

Getting Started with Closed-End Funds Closed-End Funds Getting Started with Closed-End Funds SECONDARY MARKET INSIGHTS Insights and Best Practices from Successful Advisors Why and how they use closed-end funds (CEFs) in client portfolios Where

More information

Access to this webinar is for educational and informational purposes only. Consult a licensed broker or registered investment advisor before placing

Access to this webinar is for educational and informational purposes only. Consult a licensed broker or registered investment advisor before placing Access to this webinar is for educational and informational purposes only. Consult a licensed broker or registered investment advisor before placing any trade. All securities and orders discussed are tracked

More information

Common Investment Benchmarks

Common Investment Benchmarks Common Investment Benchmarks Investors can select from a wide variety of ready made financial benchmarks for their investment portfolios. An appropriate benchmark should reflect your actual portfolio as

More information

Getting Started. Terminologies

Getting Started. Terminologies Terminologies Getting Started Unless otherwise expressly stated by Scotia itrade, webinars and other educational tools and resources ("Content") are provided by independent third parties unaffiliated with

More information

Alternative Ways to Invest in Bonds

Alternative Ways to Invest in Bonds Taddei, Ludwig & Associates, Inc. Kirk Ludwig, ChFC, CFP Scot Elrod Diane McCracken, ChFC Matt Taddei, CLU, CFP 999 Fifth Ave., Suite 230 San Rafael, CA 94901 scot@tlafinancial.com www.tlafinancial.com

More information

John and Margaret Boomer

John and Margaret Boomer Retirement Lifestyle Plan Using Projected Returns John and Margaret Boomer Prepared by : Sample Advisor Financial Advisor September 17, 2008 Table Of Contents IMPORTANT DISCLOSURE INFORMATION 1-7 Presentation

More information

Using Market Randomness for an Investing Advantage A White Paper on Active Trading vs. Passive Investing

Using Market Randomness for an Investing Advantage A White Paper on Active Trading vs. Passive Investing Using Market Randomness for an Investing Advantage A White Paper on Active Trading vs. Passive Investing Executive Summary Despite the financial industry advising investors for decades to use a buy-and-hold

More information

Oliver Continuing Education Series. Understanding Mutual Funds. Continuing Education Module

Oliver Continuing Education Series. Understanding Mutual Funds. Continuing Education Module Oliver Continuing Education Series Understanding Mutual Funds Continuing Education Module Copyright 2004 Oliver Publishing Inc. All rights reserved. No part of this publication may be reproduced, stored

More information

John and Margaret Boomer

John and Margaret Boomer Retirement Lifestyle Plan Everything but the kitchen sink John and Margaret Boomer Prepared by : Sample Advisor Financial Advisor September 17, 28 Table Of Contents IMPORTANT DISCLOSURE INFORMATION 1-7

More information

an intelligent investment solution

an intelligent investment solution an intelligent investment solution 2 investing money today Investing money has never been easy, but these days it seems especially difficult: Uncertainty - Investment markets don t seem to be behaving

More information

Living today while planning for tomorrow. UTC Employee Savings Plan Enrollment Guide TOTAL REWARDS

Living today while planning for tomorrow. UTC Employee Savings Plan Enrollment Guide TOTAL REWARDS Living today while planning for tomorrow 2018 UTC Employee Savings Plan Enrollment Guide TOTAL REWARDS WHAT S INSIDE Why Save Now?...3 Steps To Getting Started STEP 1: Decide How Much To Save...4 STEP

More information

Best Annuity Rates Report

Best Annuity Rates Report Best Annuity Rates Report Best Annuity Rates Report 2018 Retire Village What is an Annuity? The annuity contract is a legal document that provides specific benefits which are guaranteed in the annuity

More information

Retirement Compensation Arrangement (RCA)

Retirement Compensation Arrangement (RCA) October 7, 2010 Retirement Compensation Arrangement Most business owners and professionals are often left in a state of shock when they see the small percentage of post retirement income provided by their

More information

Plain talk about how ETFs work. Client education

Plain talk about how ETFs work. Client education Plain talk about how ETFs work Client education Contents 2 What are ETFs? 4 How ETFs work 8 Which ETFs are right for you? Exchange-traded funds (ETFs) are attracting evergreater attention from investors.

More information

Active vs. Passive Money Management

Active vs. Passive Money Management Active vs. Passive Money Management Exploring the costs and benefits of two alternative investment approaches By Baird s Advisory Services Research Synopsis Proponents of active and passive investment

More information

TheUltimateAnnuityBuyer sguide. dddd. 7Sure-FireTipsToGeneratingMoreIncome, Growth,AndPreservationOfPrincipal. ProvidedBy:

TheUltimateAnnuityBuyer sguide. dddd. 7Sure-FireTipsToGeneratingMoreIncome, Growth,AndPreservationOfPrincipal. ProvidedBy: TheUltimateAnnuityBuyer sguide dddd 7Sure-FireTipsToGeneratingMoreIncome, Growth,AndPreservationOfPrincipal ProvidedBy: 7 Key Tips For Purchasing Annuities In Today s Market TIP #1 Company Ratings Matter!

More information

Sharper Fund Management

Sharper Fund Management Sharper Fund Management Patrick Burns 17th November 2003 Abstract The current practice of fund management can be altered to improve the lot of both the investor and the fund manager. Tracking error constraints

More information

SHEDDING LIGHT ON LIFE INSURANCE

SHEDDING LIGHT ON LIFE INSURANCE SHEDDING LIGHT ON LIFE INSURANCE A practical guide LEARN MORE ABOUT Safeguarding your loved ones Protecting your future Ensuring your dreams live on Life s brighter under the sun About this guide We ve

More information

Uses of Futures and Index Funds

Uses of Futures and Index Funds Uses of Futures and Index Funds James R.C. Woodlock Managing Director, Quantitative Division Bare/ays Global Investors Limited Implementing a global asset allocation strategy can be accomplished by purchasing

More information

Options Trading Strategies for a Volatile Market

Options Trading Strategies for a Volatile Market Options Trading Strategies for a Volatile Market Five Simple Options Trading Strategies for Consistent Profits in a Volatile Market Table Of Contents Introduction Chapter 1 Overview Chapter 2 Basics of

More information

Active vs. Passive Money Management

Active vs. Passive Money Management Active vs. Passive Money Management Exploring the costs and benefits of two alternative investment approaches By Baird s Advisory Services Research Synopsis Proponents of active and passive investment

More information

General Terms and Conditions. Relationship disclosure

General Terms and Conditions. Relationship disclosure General Terms and Conditions Relationship disclosure Your relationship with us This booklet contains important information about your relationship with National Bank Financial Wealth Management and your

More information

GETTING THE MOST FROM GOVERNMENT SOURCES OF INCOME ADVISOR GUIDE. *Advisor USE ONLY

GETTING THE MOST FROM GOVERNMENT SOURCES OF INCOME ADVISOR GUIDE. *Advisor USE ONLY GETTING THE MOST FROM GOVERNMENT SOURCES OF INCOME ADVISOR GUIDE *Advisor USE ONLY TABLE OF CONTENTS Getting the most from government sources of income......................................1 When should

More information

INFORMATION BOOKLET UNIVERSITY OF THE WITWATERSRAND RETIREMENT FUND (UWRF) MEMBER INVESTMENT CHOICE

INFORMATION BOOKLET UNIVERSITY OF THE WITWATERSRAND RETIREMENT FUND (UWRF) MEMBER INVESTMENT CHOICE INFORMATION BOOKLET UNIVERSITY OF THE WITWATERSRAND RETIREMENT FUND (UWRF) MEMBER INVESTMENT CHOICE GROWTH PORTFOLIO CONSERVATIVE PORTFOLIO CAPITAL PROTECTOR PORTFOLIO SHARI AH PORTFOLIO -2012- INDIVIDUAL

More information

Comparing Exchange Traded Funds to Mutual Funds and Stocks and Bonds

Comparing Exchange Traded Funds to Mutual Funds and Stocks and Bonds ETFs 101 Comparing Exchange Traded Funds to Mutual Funds and Stocks and Bonds In an era when investment options may appear endless, the growing popularity of Exchange Traded Funds (ETFs) has taken the

More information

MMBB Financial Services 2/15/2013

MMBB Financial Services 2/15/2013 MMBB Financial Services Brian J. Doughney, CFP Senior Wealth Manager 475 Riverside Dr Suite 1700 New York, NY 10115 800-986-6222 brian.doughney@mmbb.org Investment Basics 2/15/2013 Page 1 of 20, see disclaimer

More information

Understanding Investment Leverage

Understanding Investment Leverage Understanding Investment Leverage Understanding Investment Leverage What is investment leverage? Each year, more and more Canadians are taking advantage of a simple yet powerful wealthcreation strategy

More information

INVESTMENT FUNDAMENTALS

INVESTMENT FUNDAMENTALS INVESTMENT FUNDAMENTALS WHAT YOU NEED TO KNOW If you re just starting out as an investor, there s a lot of information to absorb. This fact file defines and explores the pros and cons of each asset class,

More information

2015 Performance Report

2015 Performance Report 2015 Performance Report Signals Site -> http://www.forexinvestinglive.com

More information

Fiduciary Focus: Diversifying Risk vs. Stock-Picking

Fiduciary Focus: Diversifying Risk vs. Stock-Picking Fiduciary Focus: Diversifying Risk vs. Stock-Picking W. Scott Simon 04-06-06 The ideal conditions for achieving investment success are created by disciplined application of three major themes found in

More information

Retirement Income Planning

Retirement Income Planning Military Benefit Association mba@militarybenefit.org Retirement Income Planning 11/4/2015 Page 1 of 16, see disclaimer on final page Three Basic Questions As you approach or enter retirement, your mindset

More information

Merrill Lynch Wealth Management

Merrill Lynch Wealth Management Merrill Lynch Wealth Management Preparing for Rising Rates Recorded on June 10, 2013 Please see important information at the end of the program Featuring: Mary Ann Bartels CIO of Portfolio Strategies Merrill

More information

2015 Performance Report Forex End Of Day Signals Set & Forget Forex Signals

2015 Performance Report Forex End Of Day Signals Set & Forget Forex Signals 2015 Performance Report Forex End Of Day Signals Set & Forget Forex Signals Main Site -> http://www.forexinvestinglive.com

More information

ETF shares, Series A shares, Series F shares, Series XA shares and Series XF shares

ETF shares, Series A shares, Series F shares, Series XA shares and Series XF shares No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. PURPOSE FUNDS Simplified Prospectus PURPOSE PREMIUM YIELD FUND ETF shares, Series

More information

First Rule of Successful Investing: Setting Goals

First Rule of Successful Investing: Setting Goals Morgan Keegan The Lynde Group 4400 Post Oak Parkway Suite 2670 Houston, TX 77027 (713)840-3640 hal.lynde@morgankeegan.com hal.lynde.mkadvisor.com First Rule of Successful Investing: Setting Goals Morgan

More information

Nasdaq Chaikin Power US Small Cap Index

Nasdaq Chaikin Power US Small Cap Index Nasdaq Chaikin Power US Small Cap Index A Multi-Factor Approach to Small Cap Introduction Multi-factor investing has become very popular in recent years. The term smart beta has been coined to categorize

More information

Information Circular

Information Circular Information Circular BARRAGE CAPITAL AND THE BARRAGE FUND As provisioned under National Instrument 31-103 respecting registration requirements, exemptions and ongoing registrant obligations ( NI 31-103

More information

To Invest in an RRSP or Not

To Invest in an RRSP or Not October 7, 2010 To Invest in an RRSP or Not The RRSP Conundrum The registered retirement savings plan (RRSP) has long been recognized as an essential retirement planning vehicle. However, the value of

More information

Pinnacle Series (formerly Class A) and Series F units (unless otherwise noted) and Series I and Series M (formerly Manager Class) units where noted.

Pinnacle Series (formerly Class A) and Series F units (unless otherwise noted) and Series I and Series M (formerly Manager Class) units where noted. Scotia Private Pools TM (formerly The Pinnacle Funds) Simplified Prospectus November 19, 2012 2012 Pinnacle Series (formerly Class A) and Series F units (unless otherwise noted) and Series I and Series

More information

How to Use The Morgan Report

How to Use The Morgan Report How to Use The Morgan Report Whether you are a new subscriber or a long-term paid member, the information contained in this report will help maximize the benefits available to you at Silver-Investor.com

More information

Scotia Private Pools. Simplified Prospectus. November 12, 2014

Scotia Private Pools. Simplified Prospectus. November 12, 2014 Scotia Private Pools 2014 Simplified Prospectus November 12, 2014 Money Market Funds Scotia Private Short Term Income Pool (Pinnacle Series and Series F units) Bond Funds Scotia Private Income Pool (Pinnacle

More information

No securities regulatory authority has expressed an opinion about these shares and it is an offence to claim otherwise.

No securities regulatory authority has expressed an opinion about these shares and it is an offence to claim otherwise. No securities regulatory authority has expressed an opinion about these shares and it is an offence to claim otherwise. PURPOSE FUNDS Simplified Prospectus ETF shares, ETF non-currency hedged shares, Series

More information

FUNDAMENTALS OF THE BOND MARKET

FUNDAMENTALS OF THE BOND MARKET FUNDAMENTALS OF THE BOND MARKET Bonds are an important component of any balanced portfolio. To most they represent a conservative investment vehicle. However, investors purchase bonds for a variety of

More information

Investment Progress Toward Goals. Prepared for: Bob and Mary Smith January 19, 2011

Investment Progress Toward Goals. Prepared for: Bob and Mary Smith January 19, 2011 Prepared for: Bob and Mary Smith January 19, 2011 Investment Progress Toward Goals Understanding Your Results Introduction I am pleased to present you with this report that will help you answer what may

More information

MARGIN MONEY To enter into these futures contract you need not put in the entire money. For example, reliance shares trades at Rs 1000 in the share

MARGIN MONEY To enter into these futures contract you need not put in the entire money. For example, reliance shares trades at Rs 1000 in the share MARGIN MONEY To enter into these futures contract you need not put in the entire money. For example, reliance shares trades at Rs 1000 in the share market. If you want to enter into one lot of Reliance

More information

To build your financial future. Ambassador Portfolio Service

To build your financial future. Ambassador Portfolio Service To build your financial future Ambassador Portfolio Service 3 Making investing a priority 4 Because we know you are exclusive! 5 Taking diversification to the next level 8 Preserving the quality of our

More information

Form F4 Information Required in an ETF Facts Document

Form F4 Information Required in an ETF Facts Document General Instructions: General Form 41-101F4 Information Required in an ETF Facts Document (1) This Form describes the disclosure required in an ETF facts document for an ETF. Each Item of this Form outlines

More information

Evaluating Performance

Evaluating Performance Evaluating Performance Evaluating Performance Choosing investments is just the beginning of your work as an investor. As time goes by, you ll need to monitor the performance of these investments to see

More information

Investment Guide for Members

Investment Guide for Members BRITISH AMERICAN TOBACCOUK PENSION FUND Investment Guide for Members This guide is for members who are: in the Defined Contribution Scheme; in the Defined Benefit section of the Fund and pay additional

More information

MYGAs. Multi-Year Guaranteed Annuities. Annuity Product Guides. A safe, guaranteed and tax-deferred way to grow your retirement savings

MYGAs. Multi-Year Guaranteed Annuities. Annuity Product Guides. A safe, guaranteed and tax-deferred way to grow your retirement savings Annuity Product s MYGAs Multi-Year Guaranteed Annuities A safe, guaranteed and tax-deferred way to grow your retirement savings Modernizing retirement security through trust, transparency and by putting

More information

Financial Markets I The Stock, Bond, and Money Markets Every economy must solve the basic problems of production and distribution of goods and

Financial Markets I The Stock, Bond, and Money Markets Every economy must solve the basic problems of production and distribution of goods and Financial Markets I The Stock, Bond, and Money Markets Every economy must solve the basic problems of production and distribution of goods and services. Financial markets perform an important function

More information

Reference Document: THE APPROACH: SERVING THE CLIENT THROUGH NEEDS-BASED SALES PRACTICES

Reference Document: THE APPROACH: SERVING THE CLIENT THROUGH NEEDS-BASED SALES PRACTICES November, 2016 Reference Document: THE APPROACH: SERVING THE CLIENT THROUGH NEEDS-BASED SALES PRACTICES Canadian Life and Health Insurance Association Inc., 2016 Reference Document Introduction Background

More information

The Bull Market: Past Peak Duration?

The Bull Market: Past Peak Duration? March 2017 The Bull Market: Past Peak Duration? BY: ANDREW SPENCE Background The strong performance of market benchmarks and the long duration assets they are built on has made 2016 a difficult year for

More information

Financial Advisor. Understanding Risk. May 15, 2018 Page 1 of 5, see disclaimer on final page

Financial Advisor. Understanding Risk. May 15, 2018 Page 1 of 5, see disclaimer on final page Financial Advisor Understanding Risk Page 1 of 5, see disclaimer on final page Understanding Risk Few terms in personal finance are as important, or used as frequently, as "risk." Nevertheless, few terms

More information

Fixed Annuities. Annuity Product Guides. A safe, guaranteed and tax-deferred way to grow your retirement savings.

Fixed Annuities. Annuity Product Guides. A safe, guaranteed and tax-deferred way to grow your retirement savings. Annuity Product Guides Fixed Annuities A safe, guaranteed and tax-deferred way to grow your retirement savings Modernizing retirement security through trust, transparency and by putting the customer first

More information

What Is Investing? Why invest?

What Is Investing? Why invest? Chuck Brock, PhD, LUTCF, RFC Managing Partner Grace Capital Management Group, LLC Investment Advisor 13450 Parker Commons Blvd. Suite 101 239-481-5550 chuckb@gracecmg.com www.gracecmg.com Investment Basics

More information

THE PROBLEM WITH BUY & HOLD

THE PROBLEM WITH BUY & HOLD RETIREMENT INCOME THE PROBLEM WITH BUY & HOLD WBI does not stand for We Beat Indexes ; it stands for Wealth Builders, Inc. At WBI, we believe preserving capital to unleash the powerful benefits of compounding

More information

RRSP/RRIF Meltdown Strategy Always use caution when deregistering assets

RRSP/RRIF Meltdown Strategy Always use caution when deregistering assets March 11, 2010 RRSP/RRIF Meltdown Strategy Always use caution when deregistering assets This article describes how the RRSP/RRIF meltdown strategy works and highlights some potential risks to consider

More information

If you are over age 50, you get another $5,500 in catch-up contributions. Are you taking advantage of that additional amount?

If you are over age 50, you get another $5,500 in catch-up contributions. Are you taking advantage of that additional amount? Let s start this off with the obvious. I am not a certified financial planner. I am not a certified investment counselor. Anything I know about investing, I ve learned by making mistakes, not by taking

More information

Income for Life #31. Interview With Brad Gibb

Income for Life #31. Interview With Brad Gibb Income for Life #31 Interview With Brad Gibb Here is the transcript of our interview with Income for Life expert, Brad Gibb. Hello, everyone. It s Tim Mittelstaedt, your Wealth Builders Club member liaison.

More information

Where should my money go First? Here s advice from the financial professionals at Schwab.

Where should my money go First? Here s advice from the financial professionals at Schwab. Where should my money go First? Here s advice from the financial professionals at Schwab. Start with the basics. In an ideal world, you d have enough money to pay all your bills and save for retirement

More information

Exchange traded funds. Plain Talk Library

Exchange traded funds. Plain Talk Library Exchange traded funds Plain Talk Library Contents Introducing exchange traded funds 5 What are ETFs? 6 Vanguard s approach to ETFs 9 How can you invest in ETFs? 10 Fees and costs 12 Benefits of ETFs?

More information

BINARY OPTIONS: A SMARTER WAY TO TRADE THE WORLD'S MARKETS NADEX.COM

BINARY OPTIONS: A SMARTER WAY TO TRADE THE WORLD'S MARKETS NADEX.COM BINARY OPTIONS: A SMARTER WAY TO TRADE THE WORLD'S MARKETS NADEX.COM CONTENTS To Be or Not To Be? That s a Binary Question Who Sets a Binary Option's Price? And How? Price Reflects Probability Actually,

More information

Four Suggested Focus Areas to Complete a Prudent Fiduciary Review for the Selection and Monitoring of Target Date Funds

Four Suggested Focus Areas to Complete a Prudent Fiduciary Review for the Selection and Monitoring of Target Date Funds July 2010 Four Suggested Focus Areas to Complete a Prudent Fiduciary Review for the Selection and Monitoring of Target Date Funds Kent Peterson, CFA, FSA, AIF Director of Investment Services Securian Retirement

More information

Access to this webinar is for educational and informational purposes only. Consult a licensed broker or registered investment advisor before placing

Access to this webinar is for educational and informational purposes only. Consult a licensed broker or registered investment advisor before placing Access to this webinar is for educational and informational purposes only. Consult a licensed broker or registered investment advisor before placing any trade. All securities and orders discussed are tracked

More information

Vertex Wealth Management LLC 12/26/2012

Vertex Wealth Management LLC 12/26/2012 Vertex Wealth Management LLC Michael J. Aluotto, CRPC President Private Wealth Manager 1325 Franklin Ave., Ste. 335 Garden City, NY 11530 516-294-8200 mjaluotto@1stallied.com Investment Basics 12/26/2012

More information

October 2006 INVESTMENT PERSPECTIVES. Stock Diversification

October 2006 INVESTMENT PERSPECTIVES. Stock Diversification October 2006 INVESTMENT PERSPECTIVES Stock Diversification Last quarter we addressed Asset Allocation, the process of dividing a portfolio among major asset categories in order to reduce portfolio risk.

More information

Unlocking the potential from your own home. How to leverage your equity to buy an investment property

Unlocking the potential from your own home. How to leverage your equity to buy an investment property Unlocking the potential from your own home How to leverage your equity to buy an investment property Presented by Momentum Wealth Momentum Wealth IP Pty Ltd 2014 Contents 3 5 6 8 10 11 What makes your

More information

Investments at a glance

Investments at a glance Investments at a glance This guide tells you about different kinds of investments and some things to keep in mind when you re considering an investment. The Canadian Securities Administrators (CSA) have

More information

John and Margaret Boomer

John and Margaret Boomer Retirement Lifestyle Plan Includes Insurance and Estate - Using Projected Returns John and Margaret Boomer Prepared by : Sample Report June 06, 2012 Table Of Contents IMPORTANT DISCLOSURE INFORMATION 1-9

More information

Stocks Bonds Cash (1/3 in each)

Stocks Bonds Cash (1/3 in each) THE BENEFITS OF DIVERSIFICATION 1981-2004 Year 100% Stocks 100% Bonds 60%Stocks 40%Bonds Stocks Bonds Cash (1/3 in each) 5 Asset Class Diversified Portfolio* 1981-4.9% 1.9% - 2.0% 4.1% 8.7% 1982 21.4%

More information

Understanding Exchange-Traded Funds (ETFs) A guide to TD Asset Management Inc. s (TDAM) ETF solutions

Understanding Exchange-Traded Funds (ETFs) A guide to TD Asset Management Inc. s (TDAM) ETF solutions Understanding Exchange-Traded Funds (ETFs) A guide to TD Asset Management Inc. s (TDAM) ETF solutions Understanding ETFs Investment in exchange-traded funds (ETFs) has boomed in recent years, with the

More information

The Information in this Guide Is Your Key to Retirement Planning Success:

The Information in this Guide Is Your Key to Retirement Planning Success: Enrollment Guide Dear Staff Member: Unpredictability it s the one thing about the future we can all agree on. But while it s true that none of us can see the future, we can take steps to prepare for it.

More information

Unit 13: Investing and Retirement

Unit 13: Investing and Retirement Investing and Retirement There is no more reading from the textbook or quizzes. The rest of the textbook is covered in the Advanced Family Finance class. However, there are a few things that I like to

More information

Simplified Prospectus

Simplified Prospectus Simplified Prospectus December 21, 2005 Money Market Fund Pinnacle Short Term Income Fund Bond Funds Pinnacle Income Fund Pinnacle High Yield Income Fund Pinnacle American Core-Plus Bond Fund Real Estate

More information

Guide to Additional Voluntary Contributions

Guide to Additional Voluntary Contributions Guide to Additional Voluntary Contributions This guide explains how you can make extra contributions towards your retirement savings and contains further information you should consider in connection with

More information

Identifying a defensive strategy

Identifying a defensive strategy In our previous paper Defensive equity: A defensive strategy to Canadian equity investing, we discussed the merits of employing a defensive mandate within the Canadian equity portfolio for some institutional

More information

MFE8825 Quantitative Management of Bond Portfolios

MFE8825 Quantitative Management of Bond Portfolios MFE8825 Quantitative Management of Bond Portfolios William C. H. Leon Nanyang Business School March 18, 2018 1 / 150 William C. H. Leon MFE8825 Quantitative Management of Bond Portfolios 1 Overview 2 /

More information

MENTOR PROGRAM. The Circle of Wealth System Client Process. (321)

MENTOR PROGRAM. The Circle of Wealth System Client Process.   (321) The Circle of Wealth System Client Process MENTOR PROGRAM SESSION 3 Workbook We are in a belief changing business. Two things will differentiate you from other advisors - what you know & what you can communicate.

More information

Options Strategies in a Neutral Market

Options Strategies in a Neutral Market Class: Options Strategies in a Neutral Market www.888options.com 1.888.678.4667 This document discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this document

More information

ScotiaFunds Simplified Prospectus

ScotiaFunds Simplified Prospectus ScotiaFunds Simplified Prospectus October 9, 2018 1832 AM Investment Grade U.S. Corporate Bond Pool (Series I units) Scotia Private Diversified International Equity Pool (Series I units) Scotia Private

More information

What Works. Our time-tested approach to investing is very straightforward. And we re ready to make it work for you. Three important steps.

What Works. Our time-tested approach to investing is very straightforward. And we re ready to make it work for you. Three important steps. What Works Our time-tested approach to investing is very straightforward. And we re ready to make it work for you. Three important steps. Ten effective principles. Three important steps. Ten effective

More information

How Will You Use The TFSA?

How Will You Use The TFSA? RON GRAHAM AND ASSOCIATES LTD. 10585 111 Street NW, Edmonton, Alberta, T5M 0L7 Telephone (780) 429-6775 Facsimile (780) 424-0004 Email rgraham@rgafinancial.com How Will You Use The TFSA? What is a Tax

More information

WHY TRADE FOREX? hat is Forex? NEW TO FOREX GUIDE

WHY TRADE FOREX? hat is Forex? NEW TO FOREX GUIDE WHY TRADE FOREX? hat is Forex? NEW TO FOREX GUIDE Table of Contents.. What is Forex? And Why Trade It? 1. Why Trade Forex? Putting Your Ideas into Action. The Bulls and the Bears.... Reading a Quote and

More information

AMP Capital Corporate Bond Fund

AMP Capital Corporate Bond Fund AMP Capital Corporate Bond Fund Dated: 24 February 2011 Issued by AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Product Disclosure Statement For investments through a master trust or wrap

More information

TACTICAL DIVIDEND INCOME

TACTICAL DIVIDEND INCOME TACTICAL DIVIDEND INCOME THE PROBLEM WITH BUY & HOLD WBI does not stand for We Beat Indexes ; it stands for Wealth Builders, Inc. At WBI, we believe preserving capital to unleash the powerful benefits

More information

Should You Cash Out Your 401(k) or IRA Early?

Should You Cash Out Your 401(k) or IRA Early? Certified Financial Services, LLC 600 Parsippany Road Suite 200 Parsippany, NJ 07054 December 2015 Richard Aronwald Financial Specialist Should You Cash Out Your 401(k) or IRA Early? As investors educate

More information

Beneficiary Financial Counseling

Beneficiary Financial Counseling Beneficiary Financial Counseling for Your Personal Financial Choices STANDARD INSURANCE COMPANY Table of Contents Making a Well-Planned Start............................ 1 Selecting a Financial Adviser............................

More information

ONEPATH ALTERNATIVES GROWTH FUND

ONEPATH ALTERNATIVES GROWTH FUND INVESTMENT ONEPATH ALTERNATIVES GROWTH FUND Product Disclosure Statement 26 September 2017 Contents 1. About OnePath Funds Management Limited 1 6. How we invest your money 9 2. Hedge Fund Disclosures 2

More information

INVEST IN SOMETHING REAL NOT FOR USE IN OHIO.

INVEST IN SOMETHING REAL NOT FOR USE IN OHIO. TM INVEST IN SOMETHING REAL NOT FOR USE IN OHIO. RISK FACTORS u Past performance is not a guarantee of future results. u Investing in real estate assets entails certain risks, including changes in: the

More information

PACE. The mutual fund program that gives you personalized asset consulting and evaluation

PACE. The mutual fund program that gives you personalized asset consulting and evaluation ab PACE The mutual fund program that gives you personalized asset consulting and evaluation PACE is a non-discretionary mutual fund asset allocation program in which the ongoing advice of your UBS Financial

More information

CHAPTER 4 INTEREST RATES AND PRESENT VALUE

CHAPTER 4 INTEREST RATES AND PRESENT VALUE CHAPTER 4 INTEREST RATES AND PRESENT VALUE CHAPTER OBJECTIVES Once you have read this chapter you will understand what interest rates are, why economists delineate nominal from real interest rates, how

More information

TAX-LOSS HARVESTING EXPECTATIONS

TAX-LOSS HARVESTING EXPECTATIONS PRIVATE WEALTH INVESTMENT SOLUTIONS ALEX EDELMAN, CIMA SENIOR PRODUCT SPECIALIST STRUCTURED EQUITY TAX-LOSS Next to nothing for use. But a crop is a crop, And who s to say where The harvest shall stop?

More information

A guide to investing in hybrid securities

A guide to investing in hybrid securities A guide to investing in hybrid securities Before you make an investment decision, it is important to review your financial situation, investment objectives, risk tolerance, time horizon, diversification

More information

Ken MacDonald & Co Lawyers and Estate Agents Mortgages: A Guide

Ken MacDonald & Co Lawyers and Estate Agents Mortgages: A Guide Ken MacDonald & Co Lawyers and Estate Agents Mortgages: A Guide Introduction A mortgage is a sum of money borrowed from a bank or building society in order to purchase property. The money is then paid

More information

Understanding Leveraged Exchange Traded Funds. An exploration of the risks & benefits

Understanding Leveraged Exchange Traded Funds. An exploration of the risks & benefits Understanding Leveraged Exchange Traded Funds An exploration of the risks & benefits Direxion Shares Leveraged Exchange-Traded Funds (ETFs) are daily funds that provide 300% leverage and the ability for

More information

MARKETI NG T R A I N I N G PRODUCTS. Disbursement Strategies. Training Module

MARKETI NG T R A I N I N G PRODUCTS. Disbursement Strategies. Training Module MARKETI NG T R A I N I N G PRODUCTS Disbursement Strategies Training Module Table of Contents DISBURSEMENT STRATEGIES... 2 1. THE VARIOUS SOURCES OF RETIREMENT INCOME... 3 1.1 FEDERAL OLD AGE SECURITY

More information

Page 1 of 30. Analysis. MSDE Financial Literacy

Page 1 of 30. Analysis. MSDE Financial Literacy Standards MSDE Financial Literacy Stocks in the Future Grade Six STANDARD 1: MAKE INFORMED, FINANCIALLY RESPONSIBLE DECISIONS -- Students will apply financial literacy reasoning in order to make informed,

More information