By Allison McDonald-Sordo, Investment Advisor TD Waterhouse, Private Investment Advice

Another investment option that provides exposure to each of the three basic asset classes: cash, bonds and stocks, are mutual funds.

Unlike bonds where the investor is a lender, or equities where the investor is an owner, a mutual fund is a pool of money accumulated from thousands of investors. Investors receive a proportionate share in the pool through shares or units. A mutual fund manager will then take the pool of money and decide what securities (bonds or equities) to buy and sell within the mutual fund on behalf of the individual investors. These decisions are made with the assistance of high quality investment research and are made by experienced investment professionals.

Like cash, bonds or equities, mutual funds can provide different investment options based on an investor’s goals or risk tolerance.

Investors with limited investment budget may find it difficult to create an adequately diversified portfolio. This fact alone can explain why mutual funds have been increasing in popularity. Buying mutual funds can provide investors with an inexpensive source of diversification.

Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated. It’s difficult to predict which asset class, region, investment style etc. will outperform at any given time. With comprehensive diversification, your portfolio is better protected from volatility in the market while benefiting from all the investment and market growth opportunities that may exist.

Since Portfolio Return does not depend on the performance of one investment or asset class, adding securities that are not perfectly correlated to each other will actually reduce your overall risk, eliminating company-specific risk.

Patient investors with long term horizons and well-diversified portfolios generally manage to recoup any temporary “on paper only” losses, and turn them into positive returns over the long haul.

My objective for this article was to provide an overview of what mutual funds are and how they can be used by certain investors as a means of providing proper diversification to one’s portfolio. In our next discussion we will look at market volatility and how we can manage volatility in our portfolios.

By Allison McDonald-Sordo, Investment Advisor TD Waterhouse, Private Investment Advice

When you think of it – there are basically 3 places to put your money:  Cash, bonds and stocks.

Cash includes money market investments such as T-Bills, Commercial Paper, and Bankers Acceptances.  These are very liquid investments with short-term maturity dates (less than one year), as such they are often called cash equivalents due to the fact they are easily liquidated.  Cash is often considered the place to park money until attractive equity or fixed income investments are found.

Fixed Income includes bonds, debentures, Mortgage-Backed Securities, Asset-Backed Securities among others.  Typically fixed income assets are held in portfolios along with equities, as they serve to reduce the volatility for many portfolios.

Equities include stocks, income trusts, equity-linked notes and exchange traded funds, to name a few.  Investors usually buy stocks for two reasons:  higher return potential and preferential tax treatment of capital gains and dividends. Remember, there are no guarantees that you will receive income from your investments or obtain a higher price when you sell them.  However, few investments offer greater potential for appreciation than stocks.

As an investor, generally speaking, you can either be a lender or an owner.

You are a lender when you purchase a bond.  You make a loan to the issuer, for example to the government when purchasing Canada Savings Bonds and in exchange for the use of your money, the government promises to repay the principal (face value) upon maturity as well as pay a fixed amount of interest every 6 months.

You are an owner whenever you buy an investment that has potential to generate a profit.  Each share of a security that you purchase represents part ownership in the company.  Ultimately, you hope to share in the profits of the company through dividends, as well as an increase in the stock price.

There are three basic objectives to investing:  preservation of capital, income generation, and capital appreciation. These three basic goals correspond to cash, fixed income and equities respectively. Each asset class has a different level of risk and expected return associated with it.

My objective for this article was to provide you with a basic understanding of cash, bonds and stocks. Next we will review mutual funds which provide exposure to each of the above mentioned asset classes under one roof.

By Kelly Drennan of Fashion Takes Action

Just what is eco fashion anyway? How many times do you read about it or hear about it and have no clue what it really means? Sure it’s good for the planet but it usually comes with a higher price tag. So how do you justify that extra expense?

Eco fashion, also known as sustainable or green fashion, is indeed better for the planet and for many people who inhabit it, including you and I. Here’s why:

Cotton:

One conventional cotton t-shirt requires 17 tsp of synthetic fertilizers and 1 tsp of highly toxic pesticides. Organic cotton is grown without any chemicals!

What does this mean? It means that cotton farmers in Asia are dying of cancer because of their exposure to these highly toxic chemicals – many of which were originally developed for WWII as nerve gases. It also means that these chemicals linger in our clothing, worn so close to our body’s largest organ – our skin!!  So when you buy an organic cotton t-shirt, dress, underwear or leggings you are not only saving the ecosystem but you are saving human lives.

Dyes:

The traditional dyes used in fashion are synthetic and made from coal tar – a carcinogenic substance. Dye processes also discharge toxic chemicals into the environment, creating dead zones in rivers and streams and affecting overall climate change. Natural dyes are derived from plants and thus have no harmful impact on the environment.

Why is this so important? Choosing to buy a piece of clothing that was dyed naturally, not only saves the fish and other life forms that thrive in our rivers, streams, lakes and oceans, but it also helps in the fight for the much larger global water crisis we are facing today.

Fair Trade:

Clothing that is made unfairly (which happens all over the world and not just in Asia contrary to what most people believe) usually means making a profit – at any cost. It means the people making the clothes are not paid enough (or at all), they are not working in safe and healthy environments, and it means they are underage, and/or work extremely long days. 

Fair trade fashion is about the people. It is about empowering marginalized communities, helping them to escape poverty and to promote sustainability. In the factory, it means paying them fair wages and providing them with benefits and safe working conditions.

But it goes far beyond that. Fair trade promotes a more sustainable economy for these communities. It promotes agricultural development, builds schools, and provides them with many of the freedoms that we take for granted on a daily basis.

Eco fashion comes in all shapes and sizes. It can be worn to the gym or the office, a night out with the girls or as your wedding dress. Technology is working around the clock to produce new eco-friendly fabrics. The selection is growing year after year, and it’s only going to continue to grow, making it much easier for you to shop with a conscience!

Until then I hope that this article was able to shed some light so that you can make an informed decision the next time you visit your favourite retailer!

Would you be willing to invest a little more money on eco fashions?

Kelly Drennan founder of Fashion Takes Action is a true social entrepreneur, devoted to making change within an industry known for its many social and environmental challenges: energy use, solid waste disposal, release of chemicals in waste water, fair trade and fair labour, and the use of toxic chemicals that harm human health and the environment.

By Laura Branson

The cup holder in my husband’s car once lay home to numerous sensuously polished river rocks. After a brief inquiry I found out they were given to him by his young nephew. These found objects have now made their way into our home and onto our coffee table. They have morphed from a geological function into an aesthetic element. These rocks are not only a thing of beauty but are a constant reminder of family bonds. Life is a process of unearthing. Our dwellings should bear witness to our discoveries.

Good style is ultimately a found style that is stumbled upon. It is discovered and collected over a period of time.  Displaying your organic finds opens up conversation. They tell a story about your journeys.  This is not to say that a found style is a vintage or even an eclectic look. For example, a displayed piece of dried driftwood can soften a modern home.

Found objects come to you. Here are a few simple suggestions to get you thinking:

Dried driftwood: tack it over an entranceway, or display it on a coffee table.

Rocks: stack them on coffee table books, use them as a paperweight or cluster them to create a candleholder.

Use found objects for function. Lots of things can become vases.

Children’s art: make a room come alive by exhibiting colourful figurative crayon art with a modern frame.

Cluster collections of items. Items that tickle your fancy create chapters of your personal history.

Take a walk down a country road and you will find old bottles, railway ties, rocks, rusted items. Any of these items can become place holders at a dinner party or bookends.

Flower frogs make great pencil holders.

The items we collect on our journeys, the memorabilia of our lives can be integrated into the personal style of our homes.

Do you have any tips on decorating with found objects; have a story to share on how a found object is now adorning your home? Post Here!

By Laura Branson

As a prop and wardrobe stylist I spend my days in and out of every type of store you could possibly imagine.  Shopping as a professional duty is potentially disastrous!  I’ve compiled a few tips on how to get in and out of your favourite store without buying a thing!

1. Getting caught in the heat of the moment

You don’t really need it. Walk away. My rule is, if you keep thinking about it for the next couple of days then consider going back and making the purchase.  If at all possible, sleep on it. Most often our retail attention span is fairly short.

2. There is always tomorrow

This one is really important. Remember, there will always be something next month or next week that you just have to have. Try not to give into your impulse buying every time you “browse” as your whims may cost you a fortune.

3. Trend Report

Beware of investing in trends. Trends are one-season wonders that can challenge our better judgment, giving us false feelings of “must-have”!  Don’t invest.

4. Visualize

Décor items look beautiful when cleverly merchandised. Think about that item outside of its store environment where everything matches it. Is it really that amazing?

5. Starting a Collection?

I have a collection of pretty white things clustered on a shelf. If you are not adding to an existing collection and you already have something similar, ask yourself if you really need it.

6. A Walk in the Park

You can walk into a store and enjoy the scenery. It’s like talking a walk in a park. You do not buy the trees, Canadian geese, manicured flowerbeds – o.k. you might pluck a flower or two. Think of stores as fabricated parks.

7. Try it on for size

One of my small rules is: try it on. If it doesn’t fit or suit you – flee before you see something else! Don’t try to “make it work”.

There are those relationships between clothes or décor items that were meant to be. As the old adage goes…

“If you love something set it fee and if it comes back to you then it was meant to be”.

Johanna Pigeon, Broker

When buying a home there’s always the usual list of “must haves” and the “nice to have” …it’s important to differentiate between the two before you go out and view homes.

Your wish list will not only serve to keep you focused when on the hunt but also be a valuable guide for your real estate professional to find the right fit.  It also opens up discussion if you’re not the sole decision maker…you may be surprised with what your  co-buyer deems essential which may lead to some compromises. Take into account your budget, housing needs and lifestyle!

1. Your price range will be the primary factor of which areas are available to you.
2. Make a list of the typical housing needs; minimum bedrooms/bathrooms, parking, deck/balcony, etc…
3. House or condo? Are you prepared and willing to maintain a home (who’s going to cut the grass!) or is the freedom of condo living more your speed?
4. Are you an “urban, walk out the front door with access to all the conveniences” kind of person…cafes, restaurants, galleries, shops.
5. Are you willing to commute to get that larger home with the great big backyard? Test drive rush hour traffic beforehand …could you handle it daily?
6. Are schools and day care a factor?
7. Need to be close to transit? Check the schedule and try out the bus route.
8. Try on a neighbourhood…hang out for the afternoon and get a good feel for it. Return at night with a friend; would you be comfortable coming home late from work?
9. And how much work are you willing to put into it?  Cosmetic work only, ready for that handyman special or looking for move-in condition?

By Aurea Crotty

Have you ever noticed when you dislike doing something how agonizing doing it becomes? Until recently, that’s how I felt about managing, and discussing, my finances.

For many years I’ve viewed money as a necessary evil.  I’ve been unwilling to calculate numbers in my head (I’m married to the human calculator -so why bother), rejected any kind of “finance talk” (it’s like another language to me), and often felt overwhelmed by the world of finance.

Recently I’ve realized this isn’t such a great thing, especially owning my own business!  I’ve realized that my relationship with money is like any other in my life, it needs fostering, attention and respect.

By developing a better relationship with money I hope to gain more financial empowerment and greater financial prosperity.

Here are some of my insights to a healthier relationship with money:

Money is a state of mind!

A few weeks ago a close friend referred to money as evil and corrupt -he spoke about money as though it was a living entity, having caused corruption and hardship. I was struck by his conviction that money is evil and that having money ultimately makes you evil.

I realized something pivotal in that moment -money is a state of mind and how we view it will define our relationship with it, and it with us. Money itself is not ‘evil’, it’s an inanimate object that we place value upon – it is that value that defines our relationship with money, and whether we use it for good or “evil”.

Our mind defines our state of money!

I read somewhere that how you manage your money reflects how you feel about yourself -wonder what that says about me? (Gulp)

How “worthy” do you feel? Do you feel you bring value to others?

Some of us have trouble needing or receiving financial compensation. Often this can be due to low self-esteem or a worry that others may think we’re greedy or selfish.  Reflecting upon our views of money may reveal a lot about ourselves.  

Money should be respected not obsessed or infatuated upon. The unhealthy love of money or the idea that money equals ultimate success and happiness may lead to a slippery slope of disappointment.

Money does not define us!

In today’s society it can be hard to realize the ultimate truth that money does not define us! The car we drive, the neighborhood we live in, the clothes we wear and the job we hold do not define who we are as humans.

In my opinion, our ultimate ambition should be the pursuit of passion and the best life we can live -the money will follow.

How do you view money? Do you think people define themselves by the money they make? Let us know what you think -Share your insights on the value money holds in society. 

Post Here.

By Johanna Pigeon

Today’s current real estate market conditions may very well present that perfect opportunity for you to move on up!   Love your “starter” home but feel the need for bigger space…getting married, having your first child, craving for that garage parking or simply inching closer to your “dream home”?  With mortgage rates so low you may be pleasantly surprised what you can afford.  By using the equity in your current home, your carrying costs may not be much large than what you’re use to paying! 

Entry level homes are still in demand as first-time buyers are on the prowl… your home may be in their sights!  Depending on where the next home you intend on purchasing is located, that area may have had a more substantial price adjustment over the last few months.  Perfect timing!! 

Sell first or buy first?!  Ah yes…what to do!  Arm yourself with as much information as possible.  Every situation is different! 

Have an in depth conversation with your chosen Real Estate Salesperson to determine the current market value of your existing home (most will be more than pleased to give you a complimentary evaluation). They will also educate you on local market activity and help factor in related costs. 

Contact your bank or mortgage broker and find out how much they will lend you for the next home. Go over different scenarios with them so there are no surprises!  Are you able to carry both properties if your home does not sell in time?  Are there large penalties to be paid in order to discharge the mortgage on closing if you have not yet purchased? 

Being well informed makes for good decision making.

Good luck!

By Aurea Crotty

Negotiation is an integral part of our personal and professional lives. At some point we will all need to negotiate a salary, buying a new home, a car, cell phone etc… Being able to negotiate successfully can make a big difference to our outcomes.

 Taking time to hone your negotiating skills is time worth while.

 Tips

1. Set your mind to it!

• Negotiation takes work, and you have to want to do it! Talking about money is a touchy subject and can be very uncomfortable for many of us. If you are unwilling to talk about money and engage in negotiation, your reluctance will come at a price.

2. It’s not personal -never get emotionally involved -easier said than done…I KNOW!

• A big mistake many of us make is to become too emotionally invested in our end goal. We allow our emotions and ego to get the better of us causing us to lose focus.
• Remember, there is someone else in the picture and both of you want to feel that you are getting something out of the deal! Be friendly and patient (even if the other person is not).

3. First the worst, Second the BEST! -try not to be the first person to name a price!

• By being the first to set your price, you maybe putting yourself at a disadvantage.

4. Ask for more than you expect to get -but be reasonable!

• Even if the price is right ask if they can do better. Be nice, be reasonable. Remember, you never know unless you ask!

5. Create a WIN / WIN situation

• When you look to create a win/win situation, everyone at the negotiating table feels they got something out of it! If someone feels cheated they may not be inclined to fulfill their end of the deal, or not want to do business with you in the future.

Have a negotiating tip or question? Post here.

By Joanna Pigeon

There are fantastic government incentives currently being offered for first-time buyers! 

Most recent are the two rolled out in the Federal Budget this past January. 

First is the First-Time Home Buyer’s Tax Credit, which helps with the related closing costs (lawyer fees, land transfer tax) when purchasing a home.  It is a 15% credit on a maximum of $5,000 of the related costs which means a maximum tax relief of $750 to be claimed in the same taxation year of the home purchase. 

Secondly, you are now eligible to withdraw up to $25,000 from your RRSPs under the Home Buyer’s Plan to buy or build your principal home. The funds must be in an RRSP account 90 days prior to the withdrawal and it is tax free as long as the funds are repaid back into an RRSP account over the next 15 years. 

The largest sums of money due on closing are the Land Transfer Taxes so the following rebates are truly phenomenal! 

You are now eligible to receive a rebate up to $2,000 of the Provincial Land Transfer Tax on both new AND resale homes.  This is the equivalent of the tax payable on a $227,500 property.  If you purchase in the city of Toronto, you may qualify for a rebate of up to $3,725 on the Toronto Land Transfer tax which is the equivalent of the tax payable on a $400,000 home. To find out how the Land Transfer Tax is calculated visit http://torontorealestateboard.com/consumer_info/gov_programs/index.htm . Also on this site are further details on the above incentives and their qualifications of a first-time buyer

Good luck and happy house hunting!

Have a question, comment? Post HERE!