Managed Money Reporter Newsletter Editors: Carl Spiess & Allan McGlade

Issue 183 May 2002

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Featured Articles

• Transitioning Your Investments for Retirement
• April 2002 - A tough month in the markets
• Five More Great Reasons to Invest in 2002
• Online Account Access
• Fund News
• Recommended Site of the Month - CCRA
   

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Transitioning Your Investment Accounts At Retirement

Over the last few months, Allan and I have been meeting with many clients who are transitioning to retirement.  We are pleased to provide comprehensive planning for that major event.

For most of our clients, the biggest question at or near retirement is: "How will I generate an income from my investments?" With registered accounts, it depends on whether a self-directed option such as a RRIF/LRIF or an annuity is best.  Next month's MFR will review how to get an income stream from a registered account.

Many clients are fortunate enough to also have investments in non-registered accounts.  It is a relatively simple matter to convert a portfolio of non-registered investments into a stable income stream. This article outlines an innovation in this area.  

We have a number of tools available to help structure an income stream from your non-registered assets.  From preferred shares, GICs, bonds, income trusts and systematic withdrawal plans (SWP), there are many ways to draw an income from your investments, without concern that you are drawing down on your capital.

Recently, Fidelity and Mackenzie have launched T-SWP or T-Series funds.  These are the next generation of funds, and with their set distribution payments, and highly tax efficient nature, they are worth considering. 

If you are seeking regular monthly cash-flow to supplement your current earnings or retirement income, consider a T-SWP - a unique investment vehicle that enables you to receive monthly cash-flow in a tax-efficient manner.  It is ideal if you want to:

• Enjoy a high level of monthly cash-flow, 
• Reduce your short-term tax bill, and 
• Participate in the long term growth of mutual funds. 

When compared to traditional SWPs and other income-producing options, a T-SWP offers you many tax advantages:

• Enjoy more available cash in hand today
• Plan when to trigger capital gains tax liability. 
• Draw down less of your investment in order to meet your cash-flow needs
• Simplify the accounting for your SWP fund's cost base
• Potentially reduce your tax bill, if your tax bracket decreases or the government continues to lower taxes

Click the links for more information on Fidelity T-SWP and Mackenzie T-Series

Note that the investments we tend to recommend for income are very conservative.  Recently, there have been a number of covered call writing income trusts that have had to reduce their expected income and distributions.  While it is unlikely you hold such investments with us, we would be pleased to review any investments held elsewhere as part of an overall account review.

April - A Tough Month for Funds and Markets

Most funds were down last month, and the typical fund lost 1.7% of its value in April.  That made April the worst month since last September.  The declines were fairly broad in scope as 3 out of 4 funds declined.  Naturally, we encourage a longer term view, although we recognize that as we enter a period where markets are essentially unchanged in 2 years, it is tempting to watch the short term numbers. Remember to stay focused on your long term objective.  The "5 More Great Reasons" article, below, may help.

View longer term performance of your favorite funds.

Five More Great Reasons To Invest In 2002

To help you focus on the longer term, we offer a follow up to Templeton's 5 Great Reasons To Invest In 2002.  Named: 5 MORE Great Reasons To Invest In 2002, this follow up document should help to keep us all optimistic, despite the dramatic headlines we read daily.  Visit our Market Watch page for more information and other commentaries.

Online account access

• Would you like to be able to check the value of your ScotiaMcLeod accounts, any time of the day, from anywhere in the world?
• Do you already have a "ScotiaCard"?
• Could you ever foresee a day when you may want to make a last minute RSP contribution from your Visa account or personal line of credit at Scotia?
• Would you like to access our award winning stock research and get mutual fund information online?

If the answer is yes, you want Scotia Online account access.  Click here to sign up.

Fund News

Our clients holding Elliott & Page Balanced Fund and Elliott & Page Equity Fund were recently mailed a letter regarding new recommendations for those positions.  If you have any questions about those recommendations, please contact our office.

CI Funds has announced that it has entered into an agreement to acquire Spectrum Investment Management Limited, the mutual fund subsidiary of Sun Life Financial and Clarica.  As with past fund company mergers (eg. the CI purchase of BPI) we expect that several funds will be merged, and unique funds will be retained to offer even more choice for investors, under one fund umbrella.

Mutual Fund Reporter Recommended Website of the Month 

Tax time is behind us.  Find out the status of your refund at: http://www.cra-arc.gc.ca