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INVESTING IN STYLE
Ready to ride amarket recovery?
MK2364E
12/09
TMK794E
f o r f i n a n c i a l p l a n n i n g M a n u l i f e I n v e s t m e n t s
Winter Edition 2010
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cake cake
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Some guaranteed interest products are better than others, and a Manulife Investments GIC (Guaranteed
Interest Contract) offers you more. Enjoy the strength and stability of a trusted insurance company, the
ability to pass your money on tax-free to beneficiaries, plus a very competitive rate in todays market.
Get more than just a return on your investment. Contact your advisor to learn more.
Not all GICs are created equal.
The Manufacturers Life Insurance Company is the issuer of the Manulife Investments Guaranteed Interest Contract (GIC). Manulife and the block designare registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates, including ManulifeFinancial Corporation.
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The persons and situations depicted
in Solut!ons are fictional and theirresemblance to anyone living or dead
is purely coincidental. Solut!ons is
not intended to provide legal,
accounting or financial planning
advice. Readers should not rely solely
on Solut!ons, but should seek the
advice of a qualified professional.
E & O E. No liability is accepted by
Manulife Financial or its officers and
employees for the consequences of
any errors and omissions or for the
nature and content of this or any
other referenced pages.
Copyright in this magazine is held
by The Manufacturers Life Insurance
Company (Manulife Financial). You
are free to make copies of this
magazine (or individual articles) and
to distribute it, either in paper form
or electronically, as long as you
identify the source and do not
change or remove any part of this
work. All other uses are prohibited.
Distributed Winter 2010
While the financial markets continue to exhibit high levels ofvolatility, many investors are now wondering if they missed thechance to participate in the recent recovery in stock markets. If youshare these concerns, this is an ideal time to revisit your financial planwith your advisor to ensure that you make the most of opportunitiesthat may lie ahead.
This edition ofSolut!ons provides a number of ideas on how to do justthat. Todays markets offer a wealth of potential for investors with long-term time horizons to grow their savings by taking a more
comprehensive approach to their finances.
In Investing in style, you will gain more insight into how investment stylessuch as value, growth and growth at a reasonable price tend to perform
throughout a market cycle. You will also learn how each investmentstyle may appeal to different personality types, and why its importantto incorporate diverse approaches into your portfolio to help smoothout investment returns over time.
Ready to ride a market recovery? discusses low-cost Guaranteed InvestmentFund products that offer growth potential and also include addedbenefits of interest to many investors. Could you use more broccoli in yourportfolio? provides an overview of Guaranteed Interest Contracts issuedby insurance companies and how they can provide extra estate planning
features that are unavailable from bank-issued Guaranteed InvestmentCertificates. Finally, Lower your familys tax bill outlines an income-splitting
strategy that can help your household save money.
After reading the articles included in this edition ofSolut!ons magazine,we invite you to speak with your advisor about the financial strategies
that may be right for you.
Sincerely,
J. Roy Firth, Executive Vice President
Individual Wealth Management, Manulife Financial
Are you missing
the recovery?
10%
Cert no. SW-COC-789
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Manulife Investments is the brand name identifying the personal wealth management lines of business offered by The Manufacturers Life Insurance Company (Manulife Financial) and its subsidiariesin Canada. As one of Canadas largest integrated financial services providers, Manulife Investments offers a variety of products and services including segregated fund contracts, mutual funds,annuities and guaranteed interest contracts. Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliatesincluding Manulife Financial Corporation. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value. Commissions, trailingcommissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values changefrequently and past performance may not be repeated. Statistics Canada information is used with the permission of Statistics Canada. Users are forbidden to copy the data and redisseminate, in anoriginal or modified form, for commercial purposes, without permission from Statistics Canada. Information on the availability of the wide range of data from Statistics Canada can be obtained fromStatistics Canadas Regional Offices, its World Wide Web site at www.statcan.gc.ca, and its toll-free access number: 1 800 263 1136.
12 Could you use more broccoliin your portfolio?GICs OFFER PREDICTABLE INVESTMENT RETURNS
AND SOME HAVE INSURANCE BENEFITS TOO
16 Ready to ride a market recovery?GUARANTEED INVESTMENT FUNDS PROVIDE
FLEXIBILITY, GROWTH POTENTIAL AND
VALUABLE ADDITIONAL BENEFITS
20Lower your familys tax bill
HOW TO TAKE ADVANTAGE OF INCOME
SPLITTING USING INTRA-FAMILY LOANS
24 Lights! Camera! Action!IF YOUR LIFE IS A MOVIE, THEN YOURETHE STAR. ARE YOU PREPARED FOR YOUR
NEXT SCENE?
28 Is it time to take the training wheels offyour banking products?
32 RRSP? TFSA? RESP?SORTING THROUGH AN ALPHABET SOUP OF
ACRONYMS TO MAKE THE BEST CHOICE
34 Caught in the middle?STRATEGIES FOR THE SANDWICH GENERATION
38 Fun & food
6Investingin styleLET YOUR INVESTMENT PERSONALITY
SHINE THROUGH
Whats Inside
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6 Solut!ons for financial planning
INVESTING in
STYLE
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7Winter Edition 2010
In everyday life, we often hear the word style used to describe peoples outward
appearance. But style is about more than the shoes we wear, the handbags we covet and
the latest trends from the runways in Paris. Style can be defined as the way we express
ourselves outwardly through our personalities and that includes our thoughts, emotions,
interests and values.
LET YOUR INVESTMENT PERSONALITY
SHINE THROUGH
s strange as it may
sound, it is nodifferent when it
comes to investing.How people approachthe complex world of
finance often reflects their
personality. If you are thinkingabout investing in equity mutualfunds, consider determining whichinvestment style best suits yourown personality and then mix
and match to create a diversified
style all your own.Investment style refers to
the approach that investors
including professional moneymanagers take in selectingindividual investments andassembling portfolios as they seek
to achieve their investment goals.
While there are a great number of
investment styles in the field ofmoney management including
hybrids that combine elements ofdifferent styles in general, thereare three fundamental investmentstyles that dominate the world of
mutual fund investments: value,growth and growth at a reasonableprice (GARP).
VALUE INVESTING
Value investors seek stocks of
companies that they think themarket has undervalued due toshort-term concerns. Manyinvestors believe that the market
can overreact to good and badnews, resulting in stock pricemovements that do not reflect acompanys long-term fundamentals.
The result is an opportunity for
value investors to profit by buyingwhen the price is lower. Value
investors will typically sell astock when its price has climbedto a level where it reflects thecompanys estimated intrinsic
value, allowing other investorsto take on the risk that thecompany will achieve higherrates of growth over time.
On the surface, the concept
behind value investing makes a lot
of sense. Yet it can be very difficultto estimate the intrinsic value of astock with great accuracy. For this
reason, another important idea thatgoes hand in hand with valueinvesting is that of establishing amargin of safety. A margin of safety
simply means that you buy a stock
A
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8 Solut!ons for financial planning
at a considerable discount tothe estimated intrinsic value to
allow some room for error inyour calculations.
Value investors may need toride out periods of volatility inorder to achieve higher returns.There is the threat of value traps,
where a stock is cheap for a goodreason and the price continues tofall. In addition, value investorsmay have to wait for extended
periods of time before a company
recovers, so this approach requiresconsiderable patience.
INVESTING FOR GROWTH
Growth investors look to purchasestocks they believe have superiorgrowth potential. In most cases,
a growth stock is defined as acompany whose earnings areexpected to grow at an above-average rate compared to similar
companies in its industry or themarket as a whole. Those whofollow this strategy tend to invest ina stock even if the share price mayappear expensive in terms of
investment measurements, althoughthere can be considerable variation
in how growth-oriented investorsseek out stocks. For example, more
aggressive growth investors may beinterested in purchasing stocks thathave risen in value substantiallyover a three- to 12-month periodin the belief that there is sufficientmomentum in the stock to pursue
further gains. More conservativegrowth investors may seekcompanies with a history of risingdividends or base their purchase
decisions on a cyclical change in
the underlying economy that maylead to higher rates of growth.Recent examples of sectors that
attracted growth-oriented investors
attention include technology andnatural resources. In the late 1990s,technology stocks posted very highreturns as technology companies
reported exceptional rates ofgrowth. More recently, commoditystocks soared in anticipation ofhigher demand for commodities
from developing countries such asChina. Investors who purchasedshares in these sectors had thepotential to do very well while theeconomy was running at full steam.
But these same investors alsosuffered significant losses duringthe bear markets that followed,
INTRINSIC VALUE IS THE ACTUAL VALUE
OF A COMPANY OR AN ASSET, BASED
ON AN UNDERLYING PERCEPTION OF
ITS TRUE VALUE, INCLUDING ALLASPECTS OF THE BUSINESS AND TAKING
INTO ACCOUNT BOTH TANGIBLE AND
INTANGIBLE FACTORS.
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9Winter Edition 2010
illustrating that growth-orientedinvestors tend to experience morevolatility than value-orientedinvestors. In other words, their
investments tend to rise faster inbull markets and drop moresharply in bear markets.
GROWTH AT A
REASONABLE PRICE (GARP)
GARP is an investment strategy thatcombines growth investingprinciples and value investingtactics to select stocks. By looking
for companies that are somewhatundervalued and have solid growthpotential, GARP investors takeadvantage of the best features of
the growth and value-orientedinvestment styles. In a bear market,one could expect the returns ofGARP investors to be higher thanthose of pure growth investors, but
to trail those of value investors.
WHICH STYLE BEST FITS
YOUR PERSONALITY?
It is easy to understand why certain
personality types may gravitatetowards one investment style morethan another. Some people love theidea of shopping for bargains andtherefore favour mutual funds that
adopt a value-oriented investmentapproach. Other personality typesmay enjoy purchasing cutting-edgeelectronics or new car models
rather than more reasonably pricedalternatives. They may relate betterto the growth model of investing.
Others still tend to avoid eitherextreme and make purchasedecisions based on their perceptionof finding brand names atreasonable prices. Whatever your
personality type, remember thatwhen it comes to achieving yourfinancial goals, diversificationremains the cornerstone of long-term investing success.
MAKE A FASHION
STATEMENT WITH MORETHAN ONE STYLE
Many investors have come tounderstand the importance of
diversifying their investmentsacross the various asset classes stocks, bonds and money marketsecurities to smooth out their
investment returns over time. Asweve already suggested, differentinvestment styles also perform
differently at different times, soholding value, growth and GARPmutual funds in your portfolio can
be an effective diversificationstrategy too.
The chart on the following pageillustrates the historical investment
returns of the S&P 500 Index tohelp demonstrate the importanceof diversifying by investment style.
Lines that appear above the axisin this graph illustrate both thefrequency and degree by whichvalue-oriented stocks outperformedgrowth-oriented stocks since
December 1975. Lines thatfall below the axis indicatethe frequency and degree bywhich growth-oriented stocksoutperformed their value-oriented
peers over the same time period.As you can see, there have been
extended time periods duringwhich one investment style
dominated the other in termsof providing superior returns.
Since it is difficult to predictwhich style will outperform atany point in time, the lesson that
can be learned from this chart isthat it makes sense to diversifyby investment style. Heres why.
We can determine by looking
at the chart that a value-orientedinvestor would have received lowerreturns than a growth-oriented
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10 Solut!ons for financial planning
investor during the late 1990s. Ifyou were a value-oriented investorwho had to sell investments
during this time period to coverunexpected expenses, you wouldlikely have had less capital to turn
to than a growth-oriented investor,since value investments generallyproduced lower returns.
Now fast-forward a few years.If you were a growth-orientedinvestor who had planned to retire
in 2000, the technology sell-offthat followed may have negativelyaffected the value of your portfolio.
The loss of capital that youexperienced due to the downturnmight have meant delaying your
retirement and kept you workinglonger than you planned.
Since no one knows how the
markets will perform over theshort- to mid-term, it only makessense to hedge your bets byincluding a number of mutualfunds that incorporate the value,growth and GARP investment styles
in your portfolio. This should helpyou smooth out your investmentreturns over time.
SPEAK WITH
YOUR ADVISOR
If you are considering
making changes to your
portfolio in the hope ofcapturing the future growth
potential of the financial
markets, begin by speaking
with your advisor. He or she
can point out the various
mutual fund investment
options available to you and
can further discuss the
advantages of each
investment style. In the end,
you may decide that a
particular investment style
best suits your personality,
but dont forget that
diversification remains a key
component of any well-
thought-out financial plan.
THERE HAVE BEEN EXTENDED TIME
PERIODS DURING WHICH ONE
INVESTMENT STYLE DOMINATED
THE OTHER IN TERMS OF PROVIDING
SUPERIOR RETURNS.
40%
30%
20%
10%
0%
10%
20%
30%
40%
Dec-75
Dec-77
Dec-79
Dec-81
Dec-83
Dec-85
Dec-87
Dec-89
Dec-91
Dec-93
Dec-95
Dec-97
Dec-99
Dec-01
Dec-03
Dec-05
Dec-07
For illustrative purposes only. Source: Global Financial Data. Past performance is not indicative of future performance/returns.
Value vs. Growth: 12-month Rolling Returns
(S&P 500/Citigroup Growth and Value Indexes)
Value outperforms
Growth outperforms
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Now that AIC Funds is part of the Manulife fund family, you can look forward to even greater breadth from our world cla
mutual funds. That means more choice and flexibility to help meet your investment needs. And with AICs steadfast approacto investing, well, lets just say its a perfect fit for Manulife. To learn more visit manulifemutualfunds.ca or talk to your advis
Manulife together with AIC Funds.For investment options that fit you even better
Manulife Funds are managed by Manulife Mutual Funds, a division of Elliott & Page Limited. Manulife and the block design are registered service maand trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.
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12 Solut!ons for financial planning
COULD YOU USE
more broccoliin yourportfolio?
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1Winter Edition 2010
hese guaranteedinvestment productsthat earn interest maynot seem as appealing
or exciting asinvesting in an emerging marketmutual fund or commodity index the veritable chili peppers of the
investment world. In fact, to somepeople, they are uninteresting
investments in the same way thatbroccoli can seem uninteresting
when compared to the latestgourmet food trend. We all knowthat broccoli is very good for you,and it is highly recommended bynutritionists everywhere. But, given
the choice between a side of boiledbroccoli and a side of roasted garlic
smashed potatoes, its notunusual to find the better-for-youoption politely left behind.
Nevertheless, with many stock
market indexes reporting negativereturns, a little certainty can go along way towards providing you
with more confidence when savingfor your retirement. And there is alot more to todays insurance GICsthan many people may realize,
making them healthy additions toany well-balanced financial plan.
GICs OFFER PREDICTABLE INVESTMENT RETURNS
AND SOME HAVE INSURANCE BENEFITS TOO
Its a rather strange question to be sure, but after experiencing one of the worst
economic downturns since the Great Depression, many investors are looking for safe
investment products that are capable of producing predictable investment returns. For
many, this means investing in guaranteed investment products, such as Guaranteed
Interest Contracts issued by insurance companies (GICs) or Guaranteed Investment
Certificates issued by banks (bank GICs).
T
GICs CAN BE A GREAT FIT FOR MANY
INVESTORS LOOKING TO ADD MORE
CERTAINTY TO THE FIXED-INCOME
PORTION OF THEIR PORTFOLIO.
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14 Solut!ons for financial planning
GICs A HEALTHY
ADDITION TO EVERY
FINANCIAL PLAN
Diversifying your investmentsamong equities, fixed-income
investments and cash has been the
cornerstone of sound financialplanning strategies for some time.And GICs can be a great fit for
many investors looking to addmore certainty to the fixed-incomeportion of their portfolio.
GICs do offer one very important
advantage when compared to otherfixed-income investments: theyoffer a guaranteed interest rate, nomatter what the financial marketsare doing. This can help to reduce
overall investment risk within yourportfolio while youre saving foryour retirement years.
THE INSURANCE
ADVANTAGE
Many investors realize that youcan purchase bank GICs at yourlocal branch. But did you knowyou can buy similar investment
products offering very competitive
rates from insurance companies?
GICs issued by insurancecompanies offer three distinctfeatures that set them apart frombank GICs: an estate planning
benefit, more extensive potentialprotection from creditors and taxadvantages for non-registered
contracts. The estate planningbenefit means that if you namea beneficiary other than yourestate on the insurance GICcontract at the time of purchase,
the proceeds (including interest)of your investment will bypassyour estate if you pass away. Thisis significant because it meansthat your beneficiaries will receive
the proceeds privately1 and directly,without administrative charges,
while avoiding potential probateand estate fees.
Insurance-based GICs may alsoprotect your personal savings fromprofessional liability. As long as theGIC investment is made before an
individual or business runs intofinancial difficulties, generallythe proceeds of the GIC will beprotected from creditors. This canbe an attractive feature for owners
of small businesses or those in anyother profession where liabilities
1Not applicable in Saskatchewan
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1Winter Edition 2010
have the potential to threaten yourpersonal savings.
For clients age 65 and older,interest from a non-registered
GIC is eligible for the pensionincome tax credit and pensionincome splitting.
WHATS ON THE TABLE?
Todays insurance GICs come with avariety of investment options that
may make them attractive holdingswithin your portfolio. The followingtable provides a brief overview ofthe options that are generally
available in the marketplace.
SAY MORE PLEASE
TO TODAYS GICsIf you are looking for ways to
add more stability to your overallfinancial plan, speak to your
advisor about adding insuranceGICs to the fixed-income portionof your portfolio. Not only areinsurance GICs a healthy addition
to your financial plan, but withoptions that include cashable, non-cashable, laddered, escalating rate
and equity-linked, todays GICs area lot more interesting too.
GIC TYPE FEATURES BENEFITS
Cashable Terms ranging from six months to 10 years
may be available
Simple or compound interest optionsmay be available
Cashable in whole or in part at any time*
Flexible terms may be available
Funds can be accessed at any time*
Non-cashable Terms ranging from six months to 10 years
may be available
May provide higher rates than basic cashable GICs
Simple or compound interest options
may be available
Cannot be cashed until maturity
Flexible terms may be available
Investors have the ability to earn higher rates
of interest
Laddered Distributes investment across multiple term lengths
Typically a portion of the investment matures
each year
Simple or compound interest options
may be available
Cashable in whole or in part at any time*
Provides investors with greater protection
from fluctuating interest rates
Takes advantage of higher long-term rates
Provides a diversified maturity structure
May offer the option to access funds at any time*
Escalating Rate/
Step-up Rate
Terms of three or five years may be available
Increasing rates for each year of the term
Attractive posted rate for last year of the term
Cashable in whole or in part at any time*
Interest rate is guaranteed to increase each year
of the term
You can lock in now for attractive interest rates
in later years May offer the option to access funds at any time*
Equity-linked Links returns to market-based investments
Investment growth is credited as interest
on the maturity date
Principal is 100 per cent guaranteed at maturity
May not be cashable during the term
Investors can participate in the growth of the
markets with a 100 per cent principal guarantee
Allows investors to diversify their GIC investments
May provide higher returns at maturity than a
typical GIC
*May be subject to early redemption charges.
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16 Solut!ons for financial planning
aMARKET
Ready to ride
RECOVERY?
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1Winter Edition 2010
WHAT ARE GUARANTEED
INVESTMENT FUNDS?
Guaranteed Investment
Fund product,otherwise knownas a segregated
fund contract, isan insurance contract offeredthrough an insurance company.These investment vehicles typicallyprovide several investment options
managed by many different fundmanagers in a wide range ofasset classes. In addition,Guaranteed Investment Fundscan deliver a number of features
unavailable through other types
of investment vehicles.Depending on the type of
contract, Guaranteed Investment
Funds can offer benefits includingincome protection from marketdownturns, maturity guarantees andguaranteed death benefits. Investorstypically pay additional fees for
these types of protection features.
Some investors includingyounger investors may not
need these protection features.Fortunately, some insurancecompanies now offer a baseGuaranteed Investment Fund
contract that doesnt include
more expensive guarantees untilthey are needed. Fees are highly
competitive with those chargedby mutual funds but even thebase contracts include someadditional benefits of interest
to many investors.
A
As financial markets begin to look more promising, many people are reviewing their
investments with an eye towards capturing future growth. Many investors are looking for
diversification, a wide range of investment options and professional money management
services all for a reasonable fee. Did you realize that Guaranteed Investment Funds offer
all these features and potentially a lot more at a very competitive price?
A GUARANTEED INVESTMENT FUND
PRODUCT, OTHERWISE KNOWN AS A
SEGREGATED FUND CONTRACT, IS AN
INSURANCE CONTRACT OFFERED
THROUGH AN INSURANCE COMPANY
[WITH] BENEFITS INCLUDING INCOME
PROTECTION FROM MARKET
DOWNTURNS, MATURITY GUARANTEES
AND GUARANTEED DEATH BENEFITS.
GUARANTEED INVESTMENT FUNDS
PROVIDE FLEXIB ILITY, GROWTH PO TENTIAL
AND VALUABLE ADDITIONAL BENEFITS
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18 Solut!ons for financial planning
GETTING DOWN
TO BASICS
The following features are commonto all segregated funds offered by
insurance companies.
ESTATE PLANNING BENEFITS
Death benefit guarantee: In theevent of death, your beneficiariesare guaranteed to receive 75 per
cent of all deposits made (reducedproportionally by withdrawals)even after market downturns.
Bypass of estate: In the event ofdeath, unless you have namedyour estate as beneficiary, the
proceeds of an insurance contractcan pass privately1 and directly
to your designated beneficiaries,without the expense and delay of
settling the estate. That way, theproceeds avoid probate and estateadministration fees, meaning moremoney goes to your beneficiaries
quickly and efficiently.
CREDITOR
PROTECTION BENEFITS
As insurance contracts, Guaranteed
Investment Funds have the potentialto protect an investors assetsfrom creditors. This feature is
ideal for professionals and smallbusiness owners looking to helpshield their personal assets fromprofessional liability.
MORE FLEXIBILITY, MORE
INVESTMENT CHOICE
Another benefit of baseGuaranteed Investment Fund
contracts is the flexibility andvariety of investment choicesthey provide. Depending onthe company you invest with,
many different GuaranteedInvestment Funds may beavailable, representing a rangeof asset classes includingCanadian and global equity
funds. Whats more, you canmove your deposits among anumber of highly respectedasset management firms generally
without triggering switchingcharges or redemption fees.
Additional advantages providedby some companies that offerGuaranteed Investment Funds
include an objective fund managerselection and monitoring processthat helps to ensure that each
fund remains true to its statedinvestment objective. Thesemonitoring processes typically
use stringent criteria to makesure the investment funds availablerepresent the highest-qualityinvestment managers. Youll never
have to second-guess your choiceof investments again.
SPEAK WITH
YOUR ADVISOR
If you are interested in
capturing the growth
potential of the financial
markets and are considering
how to invest, ask your
advisor about Guaranteed
Investment Funds thatinclude a base contract
option. These investments
offer the same growth
potential and flexibility of
many other traditional
investments, but provide
additional features and
benefits that make them an
attractive alternative for
investors looking to grow
their wealth.
1Not applicable in Saskatchewan
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20 Solut!ons for financial planning
Lower your familys
TAX BILL
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2Winter Edition 2010
ncome splitting
involves the transfer ofincome from a high-income earner to afamily member in a
lower tax bracket. The lower-income individual is taxed at alower marginal tax rate, so the
family pays less tax overall.The problem is that the Canada
Revenue Agency (CRA) restrictsmost forms of income splittingthrough the Income Tax Actsattribution rules. An individual
cannot simply give a spouse$100,000 to invest and have thespouse declare the investmentincome on his or her tax return
so the money is taxed at a lowermarginal tax rate. In such asituation, the investment incomewould be attributed back to the
individual and taxed at his or herhigher marginal rate.
There are, however, a fewlegitimate ways to split taxableincome with a spouse or minor
child. In a low interest rate
environment, one of the most
effective strategies is through anintra-family loan to a spouse oranother family member.
WHAT ARE THE
BENEFITS OF AN
INTRA-FAMILY LOAN?
Provided the loan is properlystructured, the recipients of anintra-family loan can invest the
loan proceeds and any investmentincome they earn will be taxed attheir lower marginal rates. Intra-family loans are most commonly
made between spouses, eithermarried or common-law, but thisstrategy can also be effective withminor children.
To ensure the income attributionrules do not apply to investmentincome earned by the loanproceeds, two loan conditionsmust be met:
The loan must charge interestat a rate that is at least equal to
the prescribed rate (updated
quarterly) set by the CRA at the
time the loan is made; if thecommercial loan rate is lowerthan the prescribed rate at thetime the loan is made, this lower
commercial rate can be used
The annual interest owing on
the loan must be paid to thelender no later than 30 daysafter the end of each year
I
People often consider tax-saving strategies on an individual basis, but overlook family
strategies that can save significant tax dollars. One good example is the income splitting
you can achieve by lending money within a family.
HOW TO TAKE ADVANTAGE OF INCOME SPLITTING
USING INTRA-FAMILY LOANS
WHO ARE THE IDEAL
CANDIDATES FOR AN
INTRA-FAMILY LOAN?
Income splitting through
intra-family loans is best
suited for people who have:
A pool of non-registered
capital they are willing
to invest
A spouse or minor
children in a lower
marginal tax bracket
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22 Solut!ons for financial planning
This means that one of the keysto a successful income splittingstrategy is to ensure that investmentreturns are higher than the
interest rate charged on the intra-family loan.
TAKE ADVANTAGEOF TODAYS LOW
INTEREST RATES
If you lend your spouse moneyfor the purpose of income splitting,the prescribed rate (the rateof interest you charge your
spouse) remains fixed for theterm of the loan.
This is a considerable advantagein todays low interest rate
environment. For example, theprescribed rate in the fourthquarter of 2009 is one per cent.
ALREADY HAVE A
PRESCRIBED RATE LOAN?
You can still take advantage oftodays lower interest rate. If youand your spouse implemented thisstrategy in the past, when the
prescribed rate was higher, there
is a way to take advantage of thecurrent lower rate to increase yourtax-saving opportunity.
First, your spouse must repay
the existing loan its not enoughto just re-sign the loan agreement.To do this, your spouse may haveto sell some investments and
this may result in capital gains.However, any gains will be taxed inyour spouses hands, and thereforeless tax will be due than if you
held the investment yourself.You can then enter into a new
loan at the current lower prescribedrate and your spouse can purchasenew investments.
For illustration purposes only.
CASE STUDY: JOHN AND JILL SAVE TAXES WITH AN
INTRA-FAMILY LOAN
Spouses John and Jill are looking for ways to lower their familys taxbill. They are in different tax brackets John at 45 per cent and Jill at
22 per cent. John lends Jill $100,000 at a prescribed rate of one percent.1Jill invests the money and earns four per cent, or $4,000. Shethen pays John $1,000 in loan interest and deducts the same amountas a loan interest expense.
Jill pays $660 in tax on the remaining $3,000, and John pays $450
on his interest income. If John hadnt made the intra-family loan andhad instead invested the $100,000 himself, he would have paid$1,800 in taxes. By lending the money to Jill for the purpose ofincome splitting, the familys tax bill is reduced by approximately
38 per cent to $1,110, representing a savings of $690.
NO LOAN
45 per cent tax
rate (John) ($)
45 per cent tax
rate (John) ($)
22 per cent tax
rate (Jill) ($)Principal loan 100,000 -100,000 100,000
4 per cent investment return 4,000 4,000
1 per cent interest on loan 1,000 -1,000
Net income 4,000 1,000 3,000
Tax payable by each person 1,800 450 660
Total tax payable by the family 1,800 1,110
INTRA-FAMILY LOAN
SPEAK WITH YOUR ADVISOR
To benefit from the income splitting you can achieve using an
intra-family loan, you will need to:
Select investments with expected returns that are higher
than the current prescribed interest rate
Formalize the intra-family loan through a promissory note
If you would like to take advantage of this tax strategy but are
unsure where to start, begin by speaking with your advisor. He or she
can help you choose appropriate investment vehicles that help you
make the most of this income-splitting opportunity without taking on
undue risk.
1For the fourth quarter of 2009 (October 1, 2009 to December 31, 2009), the CRA prescribed rate is one per cent.The prescribed rate is updated quarterly and published at www.cra-arc.gc.ca/tx/fq/ntrst_rts/menu-eng.html.
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Lipper Awards reflect risk-adjusted performance over 1, 3, 5 or 10 years. The performan ce of the Mawer Funds does not mean that the Manulife Mawer Funds will provide the samereturns. Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Please read the prospectus before investing. Mutualfunds are not guaranteed, their values change frequently and past performance may not be repeated. Manulife Funds and Manulife Corporate Classes are managed by Manulife MutualFunds, a division of Elliott & Page Limited. Manulife Investments is the brand name identifying the personal wealth management lines of business offered by the Manufacturers LifeInsurance Company (Manulife Financial) and its subsidiaries in Canada. Manulife and the block design are registered service marks and trademarks of the Manufacturers Life InsuranceCompany and are used by it and its affiliates including Manulife Financial Corporation.
Manulife Growth Opportunities Fund (10 years)
Manulife Monthly High Income Fund (10 years)
Manulife Structured Bond Class (5 years)
Manulife China Opportunities Class (1 year)
Manulife Mutual FundsManaged by MFC Global Investment Management
Best Equity Fund Family
Mawer World Investment Fund (5 years)
Mawer World Investment Fund (10 years)
Mawer Cdn. Balanced Retirement Savings Fund (3 years)
Mawer Cdn. Balanced Retirement Savings Fund (5 years)
Mawer Investment Management Ltd.Manager of Manulife Mawer Funds
When the going gets tough,the tough outperform.
These funds were ecognized at t e prestig ous 2009 Li per Awards for delivering
consistently stro g isk-adjusted performance relative to the r peers. Find out ow yo
ca enefit from he award-winning approach offered throug anulife M tua unds y
contacting you adv sor or v siting ma ulifemutualfunds.ca
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24 Solut!ons for financial planning
Lights!
Camera!Action!
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2Winter Edition 2010
SETTING THE STAGE
o make sure yourfinancial plan follows
your script, you needto set the stage.Determine where you
are in life and what your protectionneeds are not just for today, but
in the future your next scene.You need to consider a number
of risks that could keep you fromreaching your lifetime financial
goals and objectives. Up until now,your primary risk has been loss ofincome how would your family
survive if you were to dieprematurely? As you move into
your later stages (dont worry itsthe best part of any movie), therisks change and you need to shiftyour focus from protecting your
income to protecting your assets.The financial plan you put together
for the first stage probably wontmeet your needs for the second.
The diagram below is called the
Risk Management Framework. It
shows how your needs changethroughout your life from incometo asset protection and it showswhich insurance products can help
protect your changing risk.
ACT 1, SCENE 1
You can see that during youryounger years (roughly ages 30
to 50), the emphasis is on incomeprotection and as you get older,it shifts to asset protection.
Critical illness insurance isprobably one of your most
When actors make a movie, they spend a lot of time rehearsing the next scene. Life is
like that think about how your financial plan is a rehearsal for whats to come. With agood financial plan, youll be prepared for whatever your next scene brings. Without
one, you might find your happily ever after ending lying on the cutting room floor.
If your life is a movie, then youre the star.
Are you prepared for your next scene?
T
Long TermDisability
TermInsurance
PermanentInsurance
Critical Illness
Income Protection Asset Protection
Long TermCare
30 35 40 45 50 55 60 65 70 75 80 85
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26 Solut!ons for financial planning
important priorities, which iswhy it spans both life stages.This important insuranceproduct provides a one-time cash
benefit if you are diagnosed withone of the covered conditions(you also need to survive the
waiting period, which is typically30 days). While you can getplans with over 20 coveredconditions, most plans cover youfor the most common critical
illnesses: cancer, heart attack andstroke. The cash benefit youreceive will help to reduce thefinancial stress you might haveif youre faced with a critical
illness. The money allows you tofocus on recovery because you
dont have to worry as muchabout things like your monthly
mortgage payment and additionalexpenses such as child care ormedical expenses not coveredthrough your health care plan.
Another product thatsimportant at this stage is longterm disability insurance.Disability insurance covers adisability caused by sickness or
an accident. It provides a monthlybenefit to replace your incomeif you are disabled and unable towork. Often people are covered
through their group insurance,but its important to fullyunderstand any limitations ofyour group coverage. Owningpersonal coverage may be a
good decision.Finally at this stage, term
insurance offers a cost-effective
way to provide your family withfinancial protection against anuntimely death.
ACT 2, SCENE 1
As you get older, your needs
change and your priority shiftsto protecting your assets. While
youre working, you will stillneed both critical illness anddisability insurance. But theolder you get, the less important
those risks become and themore important long termcare becomes.
You can think of long termcare insurance as a replacementfor long term disability insuranceduring your retirement. Itprovides money to help pay for
additional expenses when youcan no longer care for yourself.
This insurance provides amonthly benefit if you are unableto do two of the six activities of
daily living or if you suffer froma cognitive impairment. The
amount you receive is based onwhere you receive your care
you get a certain amount if yourcare is at home and more if yourcare is at a facility.
The very last piece added to
this framework is permanentinsurance. In your younger years,term insurance is the mostaffordable life insurance solution.Over time, as you move into
protecting and preserving yourestate, permanent insurancemakes more sense. It offers thelife insurance protection you
need, and some plans allow youto deposit more than the cost ofthe insurance. This extra moneybuilds up over time and is paidto your beneficiaries tax free.
THATS A WRAP!
It probably feels that your life
movie is rolling a little fasterthan youd like. Being prepared
for any scene is key to makingsure that the movie plays outaccording to your script. Becausewhen the final credits roll, youll
want people to sit back and sayNow that was a great movie!
7
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5Puzzlebywebsudoku.com
EXERCISE YOUR
BRAIN! SOLUTIONS(from page 38)
Medium
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6Puzzlebywebsudoku.com
Easy
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Living Benefits products are sold by, Manulife Financial (The ManufacturersLife Insurance Company). Manulife Financial and the block design are registered service marksand trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates includingManulife Financial Corporation.
When it comes to protecting you and your loved ones,
Manulifes got it covered.
Were the only company in Canada to offer you the
full range of Living Benefits products available today:
critical illness, disability, long term care, health & dental and
travel insurance.
And its all backed by Manulife Financial, one of the worlds
most experienced and professional insurance companies.
For more information, contact your advisor or visit
www.manulife.ca
Weve got it covered
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28 Solut!ons for financial planning
Is it timeto take theT R A I N I N G W H E E L
off your banking products?
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2Winter Edition 2010
his approachto banking is
complicated andexpensive. Whenwere young adults,
however, it sometimes makes
sense because:
Were relatively youngand still learning how tobudget effectively
Were just getting started inour careers and have a limitedcapacity to absorb unexpectedexpenses or cost increases
Our credit history is limited
so banks may be hesitant tooffer us more flexible orintegrated banking products
In summary, when were juststarting out, we need bankingproducts that provide us with
structure and cost-certainty. Inother words, we need bankingproducts with training wheels.
Whats surprising, however,
is that many of us continue to
maintain this inefficient andcomplex method of banking long
after weve become skilled atmanaging our money, establishedour careers and built a financialbuffer. By the time we enter our30s or 40s, most of us no longer
need multiple inefficient savingsaccounts or the cost-certaintyprovided by fixed debt payments.However, we continue to maintain
these accounts and lock in our debteach time it comes due simply outof habit or complacency.
Somewhere along the wayweforget to take the training wheels off.
Once weve progressed beyondyoung adulthood, we should beginto expect more from our bank. We
should expect our bank to help usbring our finances together, notsplit them into more and moreone-purpose products. We shouldexpect our bank to make it easy for
us to respond quickly to changingfinancial needs. And we shouldexpect our bank to offer us
products that make all of ourmoney work as efficiently as
possible. In short, we should expectour bank to treat us like adults.
Some banks in Canada havecaught on to this idea and startedoffering next-generation banking
products that allow you to combineyour various debts with yoursavings and chequing accountsand income in a single account
that makes your money workmore efficiently and providesgreater flexibility.
To understand why it makes
sense to review the way you bank,ask yourself these questions:
1WHAT WOULD MY BANK
SAY IF I DECIDED TO REDUCEOR SKIP A DEBT PAYMENT?
Our finances arent always aspredictable as wed like and thepayment amount that made sensesix months ago may not make
sense today. With many traditionalbanking products, changing your
When most of us are starting out as young adults, we look for banking products that
provide us with structure and stability. We choose loans with fixed, predictable
payments. We set aside savings in different accounts for specific purposes. We may even
have more than one chequing account, each with its own set of fees. In other words,
we have a banking product for each need and each need has its own banking product.
T
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30 Solut!ons for financial planning
payment amount isnt an option.However, some next-generationbanking products allow you to
adjust your debt payments, upor down, as your needs change.
This can work for you in a coupleof ways:
Become debt-free sooner. Ifyour finances change for thebetter, you may choose toaccelerate your debt repaymentso you can be debt-free soonerand reduce the amount you
spend on interest costs.
Prepare for job loss. If your
finances take a turn for the
worse, the last thing you wantto do is worry about how youllcover a large, inflexible debt
payment. A more flexible bankingsolution could provide you withtime to find the job you want,rather than just one youneed.
2DO I HAVE A RAINY-DAYSAVINGS ACCOUNT?Most of us have been taught tokeep some money in a rainy-daysavings account three to six
months of income is commonlyrecommended. This seems likegood advice until you considerthat many of us also have debt
and were generally paying moreinterest on our debt than wereearning on our savings. Why dont
we use our savings to reduce ourdebt? Its because, in most cases,if we pay down our debt, well
lose access to our savings. As aresult, we end up paying more
interest than we should.Some new banking products
offer a much more efficient way
to use your money. Specifically,they allow you to use your savingsto reduce your debt and saveinterest, while still giving you
access to that money if you needit again in the future.
3AM I PAYING DIFFERENTINTEREST RATESON DIFFERENT DEBTS?
Most of us have several differentdebts at a variety of interest rates.This makes it difficult to keep trackof how much we owe and ends up
costing us much more thannecessary. The next generation ofbanking products allows you toconsolidate all of your debts at one
low rate. This could save youinterest and make it easier to stay
on top of your financial situation.
4 HOW MANYBANKING PRODUCTSDO I REALLY NEED?
Most of us end up with a differentbanking product for each needbecause thats what our bank has
offered us. Unfortunately, this
makes our banking morecomplicated than it needs to beand ends up costing us more than
it should through multiple feesand inefficient use of our money.
Your bank should make it easyfor you to manage your money andget out of debt more quickly. When
you combine your debts with yoursavings and chequing account,youll have fewer banking productsto manage and youll no longer
need to shuffle money back andforth among accounts. Better still,by addressing multiple needs witha single, efficient product, you
could reduce your banking fees
and make your money work harder.Have a look at the way youre
banking. If you have multiplesavings accounts, chequing
accounts and debts, your banking isprobably much more complicatedand expensive than it needs to be.The next generation of banking
products provides unprecedentedflexibility that allows you tosimplify your banking, make your
money work more efficiently andrespond quickly to your changingfinancial needs.
Your financial situation hasprobably changed a lot sinceyou were just starting out. It may
be time to take off the trainingwheels and start expecting morefrom your bank.
YOUR BANK SHOULD MAKE IT EASY
FOR YOU TO MANAGE YOUR MONEY
AND GET OUT OF DEBT MORE QUICKLY.
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Manulife One is offered through Manulife Bank of Canada. Manulife, Manulife One, the One logo and the block design are registered trademarks of TheManufacturers Life Insurance Company and are used by it and its affiliates including Manulife Bank of Canada. Used with permission.
Give yourself some financialflexibilityIn times of economic uncertainty, it pays to add some flexibility to your finances. Manulife One combines your
mortgage, loans, savings and income into an all-in-one chequing account. If your finances hit a bump in the road,you can access your home equity, up to your borrowing limit, to get you through the rough patch. And, during
normal times, this efficient account can help you save interest and accelerate your debt repayment.
To add some flexibility to your finances, ask your financial advisor for a referral.
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32 Solut!ons for financial planning
ntil 2009, most
Canadians held theirretirement savingsin an RRSP, wherethey could claim a
deduction for their contributionsand then defer tax on withdrawalsuntil retirement. The introductionof TFSAs has provided anotherpowerful savings vehicle that allows
investment growth to accumulateand be withdrawn at any time tax-free. Unlike an RRSP, you cannotclaim a tax deduction for thecontributions you make to a TFSA.
On the plus side, if you need to
withdraw money from your TFSA,you have an opportunity to replacethat money because all TFSA
withdrawals are added back toyour unused contribution roomin the following year.
If you have children or
grandchildren, RESPs are anotherpopular option. The subscriber (or
contributor) makes contributions onbehalf of a beneficiary (the child).
The contributions are not deductibleor taxable on withdrawal. Thegrowth is tax-deferred until
withdrawal, at which time it canbe taxed in the beneficiarys handsif he or she enrolls in a qualifyingeducational program. Contributionsto a childs RESP qualify for the
Canada Education Savings Grant(CESG)1 and, if your familysincome is below certain thresholds,you may also qualify for the Canada
Learning Bond (CLB).
THE RETIREMENT
DILEMMA
If you are saving for retirement,then you may be torn between an
RRSP and a TFSA. Ideally, youwould maximize contributions toboth, but if thats not an optionhere are some thoughts to consider.
Whether the best choice is to
save in an RRSP or a TFSA dependson your savings needs, as well asyour current and expected futurefinancial situation and income level.
Generally, an RRSP is used forsaving for retirement, while aTFSA can be used for both savingfor retirement and other shorter-term purchases. Because TFSA
withdrawals are added back toyour available TFSA contributionroom in the following year, thereis very little downside to usingyour TFSA savings for mid-sized
to large purchases.
If you are in a low tax bracket,saving in a TFSA may be moreadvantageous than saving in an
RRSP since TFSA withdrawals haveno impact on federal income-testedbenefits and credits such as childtax benefits and Old Age Security.
On the other hand, RRSPs may be abetter option if your tax rate at the
U
RRSP? TFSA? RESP?When its time to decide which mix of savings vehicles is right for you, your options can
start looking like a hearty bowl of alphabet soup. There are Registered Retirement
Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs) and Registered Education
Savings Plans (RESPs). Determining which savings plan, or combination of savings plans,
is best depends on your personal situation and your objectives.
TAX CORNER
1Contributions to an RESP for a child under the age of 18 qualify for the CESG, which pays 20 per cent of the annual contributions you
make, up to a maximum of $500 per year, per beneficiary (or a maximum of $1,000 if there is unused grant room from a previous
year), to a lifetime limit of $7,200. You may be entitled to an enhanced CESG if your familys income is below certain thresholds.
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3Winter Edition 2010
RESP RRSP TFSA
Is there an annual
contribution limit?
No annual limit but a
$50,000 lifetime limit1Yes, it is based on
earned income
Yes, a $5,0002 annual
limit but there are
no earning requirements
Can I carry forward unused
contribution room?
Yes Yes Yes
Is there a monthly penaltyon excess contributions?
Yes, calculated at month-end Yes, calculated at month-end Yes, calculated on the highestexcess during the month3
Are my contributions
tax-deductible?
No Yes No
Is my investment growth
tax-deferred or tax-free?
Tax-deferred Tax-deferred Tax-free
Are taxes payable on withdrawals? Withdrawals are fully
taxable except for refund
of contributions4
Withdrawals are fully taxable Withdrawals are tax-free
except for growth after death
if no spouse/successor holder
Are withdrawals added to my
contribution room?
No No Yes, in the following year5
Do withdrawals have an impact on
income-tested benefits/credits?
Yes Yes No
What is the minimum age
to contribute?
None None Age 18
What is the maximum age
to contribute?
None At the end of the 71st year None
If I borrow to invest in thisaccount, can I deduct the interest?
No No No
Can I use assets in this account
as collateral for a loan?
No No Yes
time you contribute is higher thanit will be when you withdraw yoursavings. Youll benefit from a taxdeduction when you make your
contribution and withdrawals willbe taxed at your lower future rate.If the reverse is true, a TFSA can
provide better results.
EDUCATION
SAVINGS CHOICES
If you are saving for your childseducation, then you are probably
weighing the pros and cons of anRESP or a TFSA. For children underage 18, RESPs are the preferred
savings vehicle because of the CESG.For children over age 18, the CESGno longer applies so you may wantto help them start their own TFSAs.
If you want to maintain controlover the funds, then you couldsave for their education in your
own TFSA instead.
2Increases, rounded to the nearest $500, to the yearly contribution limit will be applied as warranted by the consumer price index for years after 2009. 3The Federal government has proposed
that any income attributable to deliberate overcontributions will be taxed at 100 per cent. 4Any withdrawals other than the refund of contributions will be fully taxable to either the beneficiary
(student), if he or she qualifies to receive the payment, or the subscriber (contributor). 5The Federal government has proposed that the withdrawal of amounts in respect of deliberate
overcontributions, prohibited investments, non-qualified investments, asset transfer transactions and income related to those amounts not create additional TFSA contribution room.
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34 Solut!ons for financial planning
Caughtin theM I D D L E ?
STRATEGIES FOR THE SANDWICH GENERATION
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3Winter Edition 2010
If youre in your 40s or 50s and caring for both your children and your parents, welcome
to the sandwich generation. About one-third of middle-aged Canadians are part of this
so-called sandwich generation and more are expected to join their ranks.1
FEELING TIME-CRUNCHED?STRESSED? SANDWICHED?
he juggling actisnt easy. When aU.S. study asked
1,400 social workersabout the sandwich
generation, they said most peoplein this demographic groupunderestimate the financial,
emotional and physical toll of
providing care for aging relatives.2
The good news is that thereare ways to manage sandwich
generation stress. The beststrategies are to know what toexpect, to prepare financiallyand to take care of yourself as
well as your loved ones.
STRATEGIES TO HELP
YOUR PARENTS
WHAT CAN YOU EXPECT?
As your parents get older, they mayneed a range of supportive services.Initially, you may need to do minorhome renovations for example,
installing ramps or additionalrailings to accommodate reducedmobility or physical disability. The
next step may be arranging homecare, which can include visits fromhealth professionals, help withbathing and dressing, meal
preparation and light housekeeping.For those over 65, 43 per cent will,at some point in their remainingyears, require long term care.3 Ifyour parents cant live in their own
home anymore, they may need tomove into a retirement residence or
long term care home.
T
IT USED UP ALL MY TIME AND CUT
INTO MY FINANCES. IT HAD A DRAINING
EFFECT ON ALL FAMILY MEMBERS.
SURVEY RESPONDENT WHO PROVIDED
CARE TO A FAMILY MEMBER.
1Source: Statistics Canada, Sandwich Generation expected to grow, 2004.2New York Academy of Medicine and National Association of Social Workers, Not Ready for Prime Time: The Needs of Sandwich
Generation Women, A National Survey of Social Workers, March 20, 2008, helpstartshere.org/2008SandwichGenerationRelease/
tabid/1016/language/en-US/Default.aspx.3Source:The Council on Aging of Ottawa, 2007.
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36 Solut!ons for financial planning
WHAT WILL IT COST?
Home care costs vary widely,depending on how much support
someone needs. A typical lowlevel of care scenario could costless than $1,000 monthly forweekday meals, meal supervision,
bathing and dressing. A high levelof care scenario could add up to
nearly $5,000 monthly for in-home meal preparation, personal
care, skilled nursing, laundry andhouse cleaning.
Long term care costs vary byprovince. As an example, inOntario, as of July 1, 2008, basic
accommodation cost $1,578.02monthly, while a semi-private roomcost $1,821.35 and a private room
cost $2,125.52. Retirement
residences may be an intermediatestep before someone needs thefull range of care offered in a longterm care home. The provincialaverage cost in Ontario for a
semi-private room is $1,527 to$4,774, or $1,600 to $7,750for a private room.4 See detailedhome care and long term care
cost breakdowns by province atwww.manulife.ca/Canada/ilc2.nsf/Public/lc_cost.
Its important to talk to your
parents to find out if they havethe financial resources to payfor supportive services. Severalproducts can help them prepare
for these costs including criticalillness insurance and long term care
insurance. In addition, developing
a sustainable retirement incomeplan by using Product Allocationcan help add peace of mind thatincome will last throughoutyour parents retirement years.
STRATEGIES TO HELP
YOUR CHILDREN
WHAT CAN YOU EXPECT?
When its time for your childrento head off to post-secondaryeducation, youll probably beproud and a little anxious about
your newly empty nest. Yourpocketbook will also feel the pinchas bills start arriving for tuition,textbooks and (if your children goaway to school) accommodation
and living expenses.
WHAT WILL IT COST?
The Canadian government estimatesthat full-time students paid
$14,500 to cover post-secondaryexpenses in the 20032004academic year or $58,000 to payfor a four-year program. Full-time
tuition alone can cost anywhere
WHAT IS PRODUCT ALLOCATION?
Product Allocation strategies involve finding the right combination of
annuities, products with Guaranteed Minimum Withdrawal Benefits
and products with systematic withdrawal plans to provide sustainable
income for life.
4Manulife Financial, Long Term Care in Ontario 2009, www.manulife.ca/Canada/ilc2.nsf/Public/lc_cost.
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from $2,500 to $8,000, dependingon the CEGEP, trade school, collegeor university.5
Families can prepare to meet
these costs by saving in a RegisteredEducation Savings Plan (RESP)and/or a Tax-Free Savings Account
(TFSA). You may expect yourchildren to pitch in by workingsummers or part-time duringthe school year. Your childrenmay also be eligible for grants,
bursaries, scholarships and loansthat can help to offset costs. Makesure they always have some short-term savings on hand to coverunexpected expenses.
The Education Cost Calculatorat www.canlearn.ca (search for
Education cost calculator) canhelp you work out your childrens
likely post-secondary costs.
STRATEGIES TO HELP YOU
While youre helping your parentsand children, dont neglect yourown needs. After all, you have to
stay healthy and happy in order toprovide care. Here are some tips:
Delegate household duties
explain to family membersyou need them to help out
more while youre taking careof your parents, and considerhiring people to clean, rakeand shovel snow
Ramp down your work hours depending on your employer,
you may be able to arrange towork from home, take sometime off to care for a sick parent
or temporarily switch to part-time hours
Use community resources
your area may have volunteerswho provide companionshipto the elderly and can evenaccompany your parents to
medical appointments
Set aside time each day (it canbe as little as 15 minutes) to dosomething you enjoy forexample, go for a leisurely walk
in a local park or read a magazinefrom beginning to end in a cozycoffee shop
Schedule a weekly date nightwith your spouse so you
have time to reconnect,discuss stressful situationsand unwind together
By balancing your own needswith the needs of your parentsand children, youll be in a betterposition to give loved ones your
full attention and deliver the carethey require.
5Government of Canada, CanLearn website, accessed on August 31, 2009, www.canlearn.ca/eng/postsec/cost/index.shtml.
HOW TO CHOOSE A LONG TERM CARE HOME
Assess the basics, including cost, location, cleanliness, room and
bathroom quality, security for personal items and visiting hours
Observe staff interacting with residents to see if theyre warm,
caring and engaged
Find out how often residents can access health services such as
physiotherapy, occupational therapy and foot care
Collect sample menus and activity calendars and taste a meal or
join in an activity if you can
Ask residents and their families what they like and dont like
about the home
HOW TO CHOOSE A COLLEGE OR UNIVERSITY
Consider the type of program your child wants for example, a
structured program directed towards a specific career or a flexible
program that offers a general education
Decide with your child whether its more appropriate to stay at
home or attend a school in another city
Visit websites of colleges and universities for detailed program
information and admission requirements
Make a short list and, if possible, visit those schools to get a sense
of the academic atmosphere your child may even be able to sit
in on a few classes
Ask about grants, bursaries and scholarships, as well as part-time
job opportunities on campus or in the vicinity, if youre counting
on additional funds to pay for your childs education
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38 Solut!ons for financial planning
Exercise your brain!Sudoku puzzles are a great daily workout for yourbrain. Theyre fun, challenging and addictive and
good for you too! Here are two Sudoku puzzles
one easy and one at a medium level of difficulty.
To solve: Enter digits from 1 to 9 in the blank spaces.
Every row, every column and every 3 x 3 square must
contain one of each digit. Try to do it without peeking,
but if you need help the solutions are on page 26.
Heres a hearty soup thats sure to warm you up
during the chilly winter months!
Chili Soup1 tablespoon (15 mL) extra-virgin olive oil
1 pound (500 g) lean ground beef
1 large onion, chopped
4 garlic cloves, minced
1 large green bell pepper, chopped
1 cups (375 mL) beef stock
2 (540 mL) cans stewed tomatoes with chili
seasonings (undrained), chopped
cup (50 mL) chopped, drained sun-dried
tomatoes (oil-packed)
2 bay leaves
1 (540 mL) can red kidney beans, drained and rinsed
1 (341 mL) can whole kernel corn, drained
Salt and pepper
Light sour cream
Sliced green onion
Grated cheddar cheese
In large heavy pot, heat oil over medium heat. Add
beef, onion and garlic; saut for 7 minutes, breaking
beef up with spoon and stirring frequently. Add bell
pepper; saut for 5 minutes or until beef is no longer
pink, and vegetables are tender. Drain off fat.
Add stock, stewed tomatoes, sun-dried tomatoes and
bay leaves to beef mixture; increase heat to medium-
high and bring to a boil. Reduce heat and simmer for
5 minutes. Add beans and corn; cook for 3 minutes or
until heated through. Discard bay leaves. Add salt and
pepper to taste. Top each serving with a dollop of sour
cream, and a sprinkling of green onion and cheese.
Tip: Substitute 2 (540 mL) cans tomatoes for the
2 (540 mL) cans stewed tomatoes. Add 2 tablespoons
(30 mL) chili powder and 1 teaspoon (5 mL) groundcumin just before adding bell pepper.
Makes 8 servings.
*This recipe is reprinted with permission from Ruth Phelan and Brenda Thompson
from the best soups cookbook, 2008.
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6Puzzle by websudoku.com
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Puzzle by websudoku.com
Easy
Medium
FUN & FOOD
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Your advisor can tailor a Tax-Free Savings Account (TFSA) to fit your familys financial needs, helping your
money work even harder for you. We offer a number of different TFSA investing options including mutual funds,
segregated fund contracts, Manulife Investments Guaranteed Interest Contracts (GICs), and Manulife Bank
Advantage Accounts and GICs. To learn more about TFSAs from Manulife, contact your advisor.
The same solution doesnt work for everyone.We can show you a TFSA thats right for you.
Advantage Accounts and GICs are offered through Manulife Bank of Canada. Manulife Investments is the brand name identifying the personal wealth managementlines of business offered by The Manufacturers Life Insurance Company (Manulife Financial) and its subsidiaries in Canada. Manulife and the block design areregistered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Bank of Canada andManulife Financial Corporation.
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Were big on whats important.At Manulife Financial, we know helping you reachyour financial goals is whats really important.
Its that focus that has allowed Manulife to become
one of Canadas leading providers of wealth
management, group pensions and benefits, banking
and insurance solutions.
Stability As the countrys largest insurance company,
Manulife provides the stability of over 120 years as a
proud Canadian company with proven risk and wealth
management strategies.
Financial Strength With Cdn$437 billion* in
funds under management and diverse global holdings,
we hold some of the highest financial strength ratings
Global Presence With hundreds of investment
professionals in over 22 countries including the U.S.,
Asia and Europe, we offer expertise and insights into
markets around the world.
Innovation We are always at the leading edge with
new products to meet your changing needs.
When you put it all together, you can feel confident
choosing Manulife.For more information, speak with your advisor,
or visit www.manulife.ca
Stability
Innovation
Global Presence
Financial Strength