The Coming Bear Market

For those of you who attended McClelland University earlier this month, this will be a refresher.  President and founder of The McClelland Financial Group, Rob McClelland, opened the event with his presentation entitled, "How to survive the coming bear market".  By the end of the presentation, the general feeling was "I need to embrace the coming bear market".

It is not a surprise that the term "bear market" frightens investors.  What should I do to prepare for the market drop? What can I do to ensure my portfolio weathers the storm? These common questions should be met with the same mundane answer...nothing.

Changes initiated by speculation only do damage to the long term performance of a portfolio.  Investors are better off leaving their portfolios untouched, riding the volatility and rebalancing their portfolio as necessary.  According to Boston research firm Dalbar Inc., the average investor in stock mutual funds achieved a 3.8% annualized rate of return over the past 30 years vs. the S&P500's average of 11.1% for the same time period.  The difference in return is attributed to investors buying and selling their funds at all the wrong times.

Buy and hold may sound cliché, but the fact remains, this is the right way to INVEST.  An investor would be better served by working with their advisor to build an investment portfolio that accurately reflects their true risk tolerance.  An appropriate mix of stocks and bonds will allow for upside capture and protection on the downside. 

Volatility is the only certainty in the market.  Use it to your advantage by rebalancing to your target asset mix.  What is rebalancing?  Simply put, it is an unemotional way to buying low and selling high.  Emotion is your worst enemy when it comes to investing.  Take it out of the equation and bear markets will be something cheered instead of feared.

Carlo Cansino, FMA, FCSI, CFP
Senior Financial Planning Advisor
Assante Capital Management Ltd.

Community Involvement

Tax highlights from the 2015 federal budget

Finance Minister Joe Oliver tabled the 2015 federal budget on April 21, 2015. The budget projects a deficit of $2 billion for the recently completed 2014-2015 fiscal year and, as promised, forecasts a small surplus of $1.4 billion for the 2015-2016 fiscal year. This is considerably less than the $6.4 billion surplus projected for 2015-2016 in last year's budget as a result of certain personal tax initiatives announced on October 30, 2014. The initiatives include the introduction of the family tax cut, the expansion of the universal child care benefit, and an increase to the child care expense deduction.

The budget forecasts continuing surpluses, projecting a $1.7 billion surplus for the 2016-2017 fiscal year growing to a $4.8 billion surplus in the 2019-2020 fiscal year. The budget or Economic Action Plan 2015 as it is referred to by the government, focuses on the four following areas:

• balancing the budget;
• supporting jobs and growth;
• helping families and communities prosper; and
• ensuring the security of Canadians.

Read full article

The Latest

First-time Buyers across the Country

A survey launched by Canada's largest private mortgage insurer, Genworth MI Canada Inc. paints a picture of first-time buyers across the country. 1,800 first-time buyers were surveyed with the bulk of the reporting looking to the Toronto, Vancouver and Calgary markets while taking the country's numbers as a whole into account.

The survey demonstrated that the typical first-time buyers were university-educated couples in their 30's purchasing detached homes. The average purchase price across the country was $293,000 with an average down payment of $34,000 or 12%.

Buyers in Toronto paid the most for their homes with an average purchase price of $425,000 and an average down payment of $90,000. In Vancouver the average purchase price was $420,000 with an average down payment of $75,000.

Detached home purchases represented 29% of the Toronto market, 25% of the Vancouver market and 50% of the market in Calgary. Condos were purchased by 17% of the first-time buyers overall, with that number rising to 39% in Toronto and almost 50% in Vancouver.

More than a quarter of first-time buyers received a gift or a loan from their families. These numbers were the highest in Toronto and Vancouver representing 35% and 40% respectively.

Over half of the buyers in Toronto and Vancouver felt it was important to be able to rent-out parts of their homes to pay their mortgages. Buyers in the same cities were most likely to say that they bought their house as an investment and wanted to take advantage of rising prices. Buyers from Calgary were more likely to be investors buying their homes to rent them out.

Despite the high costs facing first-time buyers across the country, 25% said they expected to pay off their mortgage faster than the typical 25 year amortization. While 50% of them said they could afford to pay their bills while still saving extra on the side.

Should you wish to learn more about mortgage solutions, please let us know and we would be happy to put you in touch with mortgage brokers within our professional network.

Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd.

*Please note that a live recording is taken at each Lunch and Learn or McClelland University session. Consent will be obtained, should you be captured in the video, at the time of your RSVP for the event.

Services and products may be provided by an Assante Advisor or through affiliated or non-affiliated third parties.

**All personal information will only be used in accordance with your consent.

Let's keep communicating. We value our relationship with you and want to stay in touch, whether it's regarding events or newsletters. In brief, The McClelland Financial Group aims to provide you with information that is relevant to you. As you are likely aware, on July 1, 2014 Canada's Anti-Spam Legislation (CASL) comes into force which requires your consent to receive electronic communications.

If we do not receive an email from you we will continue e-communications under the implied consent provisions under CASL. **