Hot Off the Web
In WSJ’s “Some retirement assistance at no charge”  Glenn Fuffenach leads the reader to a number of good free web resources retirement planning and living. A couple of notable ones are: (1) T. Rowe Price Family Records Organizer , (2) Women’s Retirement Initiatives
In a first of two articles (the second next week) on the subject, Jamie Golombek in the Financial Post’s “A splitting headache over pensions” explains the ins and outs of the new pensions splitting opportunity for this Canadian tax season and the differences between the treatments of pension derived from CPP/OAS, employment (DB pension) and RRSP sourced income.
In “Crisis of age requires cure”  Lauren Foster articulates the already current, and the even larger looming crisis resulting from the lack of doctors specialized or even with some training in the need of the elderly. It is a call for action for government and private sources of funding, even though “older people and ageing are not seen as sexy topics”. A 2002 study warned of a shortfall of 36,000 geriatricians in the U.S.; today there are about 7,000- which is one per about 2500 people over 75 and the trends in supply and demand are moving in the wrong direction. (I don’t have the Canadian figures, though there is little reason to expect a rosier picture.)
There is sensible advice from the Financial Times’ John Authers in “Think the worst and then prepare your strategy” . He suggests that investors should be doing a worst case analysis the likely worst case scenario that you should prepare for is not a replay of the 30s, but perhaps U.S./Europe in the 70s and Japan in the 90’s, i.e. returns on cash and bonds below inflation and further declines in the stock markets before a recovery. His solution is not property or structured products (with expensive principal protection). He suggests that if your asset allocation made sense before, in most cases you should hold the course (unless you are an imminent retiree). Commodities, he suggests that with the high current prices and a likely coming recession, may turn out looking less of a good diversifier, especially if overdone in the portfolio.
Jon Chevreau in Financial Post indicates that “ETFs grabbing attention” with Barclays’s new ad campaign. He not only includes the mandatory discussion about Canada’s mutual funds being one of the world’s most expensive, but also covers more subtle points of the debate related to the value of financial advice (that an investor may or should receive from an advisor who collects fees directly or indirectly from the investor) versus the value of active security selection. (The answer to this question is in!… and there is potential value in the former, while very little accessible value in the latter). The (good) trend according to John De Goey is toward fee-based compensation model for advisors (i.e. advisor gets paid only by the investor, perhaps as a percent of assets under management (0.7-1.0%). (I should also add that there is also a trend to fee-only, i.e. like doctors and lawyers getting paid for time/services provided, and do-it-yourself model; and both of these would be more rewarding for investors).
Peter Brieger’s “Regulator probes $23M offshore trading ‘scheme’”  (or more accurately scam) reports in the Financial Post how the elderly, hungry for high interest, ended up losing much of their retirement savings. This is one more example which shows that “if it looks too good to be true, then it probably is!”
Jon Clements’s in his last WSJ column, “Parting shot: What I learned from writing 1,008 columns” , after spending almost 15 years writing personal finance columns on how to save and invests, has decided to list three benefits of acquiring wealth over a lifetime (…no, it not to spend the next 30 years in the tedium of leisure…perhaps a few months of leisure, but not a lifetime). He adds that “…you can enjoy this trio of benefits even if you don’t have great wads of cash. A fat portfolio just makes it all a little easier.” Here is what money can buy you: (1) “don’t have to worry about it” (as much) – though he wisely points out that financial control is achieved by living below your means (and having a diversified portfolio of low cost index funds), (2) “freedom to pursue your passions” (opportunity for self-actualization) without worrying about a pay check – doing things you are good at, that you enjoy and doing good. Learning new things, that perhaps you wanted to learn but never had time to, (3) “time with friends and family” – if unhappy, he suggests skipping the mall and spending more time with friends. How could you argue with this!
Kelly Greene in WSJ’s “Retirement worries increase”  reports a significant drop in confidence among U.S. workers. The bad news is that those confident about having adequate resources for retirement dropped to 18% from last year’s 27%. Ms. Greene finds the silver lining in that they finally are also “realizing that they shouldn’t be optimistic anymore”, thus leading to action hopefully. The other piece of bad news is the dropping percentage of those who can expect employer (defined benefit) pensions and health insurance in retirement. (Of course Americans over 65 do have Medicare and the Social Security benefits are considered by many to be superior to Canada’s CPP – though perhaps less sustainable than Canada’s on the current track).
And finally, Richard Morrison in Financial Post’s “Use Yahoo screener to find best ETFs”  recommends the use Yahoo Finance ETF screener to get info on 600+ ETFs. He also discusses various ETF options for consideration by Canadian investors. Worth a read, though care should be taken with some of the recommendations.

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