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Wednesday, March 10, 2010
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What Now?? Where is the Smart Money Going??
by Dan Cassar
If you are like most of the investing public, you are undoubtedly haunted
by this question (or more likely, by the lack of it's answer)
With capital markets losing ground for such a prolonged period unprecedented in history many investors (particularly those who require a steady flow of income to meet ongoing lifestyle needs) are generally lost as to which way to turn. Take heart, however, believe it or not, there is still money to be made out there, and not just by large financial investors but people just like you and me!!
One of the fastest growing investment areas over the last few years has been an investment called an income trust. These investments offer a unique alternative to some of the more traditional funds, in that they are designed to generate a fixed monthly income amount on a tax favoured basis.
Because of their structure, they offer a more stable return and have become popular vehicles for seniors who can no longer depend on the rates of return being offered in traditional gic investments.
Not only has this fund sector provided superior returns over many other asset classes, but the income they generate is on an extremely tax favoured basis, because much of the income received, or left inside the fund is treated for tax purposes, as a return of capital. Tax need only be paid, when the fund is sold or the investor dies.
These funds are ideal for those investors concerned with capital preservation while at the same time who wish to generate a stable high quality tax efficient income stream. Many are 100% rrsp and rrif eligible.
With many investor's portfolios reduced to the extent that they are, these investments offer an opportunity to stop taking income and in effect, selling "low" and allow time for their portfolios to recover before taking additional income.
Some of these funds have been performing at superior rates throughout the turbulent market swings we have seen over as many as 5-6 years.
These funds may not be for everyone, and as with all mutual fund investments, sales commissions, service fees and expenses may be associated with these funds. As with all mutual fund investments you should read the prospectus before investing.
For more information, please don't hesitate to contact me or your own financial advisor, you may be glad you did.
Dan has over 20 years experience in the financial services
business with the past 10 years as an independent consultant offering
a wide range of products from some of the largest institutions. You can
reach Dan at
905-373-0226 or email him here.
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