Stephan Dion, leader of the federal Liberal Party of Canada, promised today to roll back the tax on income trusts. Income trusts became very popular because they let companies payout a lot of their profits as taxable income to investors, allowing them to pay little corporate tax. In an attempt to stop companies from all converting to income trusts in Canada, the Conservative Party of Canada, lead by Steven Harper, introduced the tax on income trusts. The Conservatives were fearing that the Canadian treasury would be in jeparody if the trend continued.

Income trusts are scheduled to have a 31.5% tax which will not actually be introduced until the year 2011 in Canada. If the Liberals win the election in October we could see a huge rise in stocks like Telus Inc (Ticker Symbol, T.TO). Telus is one of the biggest telecommunications companies in Canada along with BCE Inc (Ticker Symbol, BCE.TO). Telus and BCE had originally decided to convert to an income trust but when the Conservatives introduced the new tax they quickly changed their mind.
Telus stock saw a one day gain of 20% when the idea of turning into an income trust became public. Could we see a mass shift in Canadian stocks back into income trusts?

Oil companies in the “Alberta Oil Sands” which pay large amounts of corporate tax could easily reduce their taxes to nill if they adopted this idea. Looking to create a higher cashflow portfolio to recession proof your portfolio a little more? Watch that Canadian election!

Kelly Parks
www.wealthforinvestors.com

In todays up and down market we need to hedge against risk in our stock portfolios, especially with all this media talk of recession. Recessions and bear markets can make you great returns just as a bull market can without constantly looking for stocks to short; you just need to know how to properly “Recession Proof” your stock portfolio.
3 tips that can help you make returns in these recession bear markets are:

1. PLAY THE DIVIDENDS

Large Cap Value Stocks with high paying dividends can pay off huge in times of reccession. Pepsico.inc (Ticker Symbol, PEP) or Procter & Gamble (Ticker Symbol, PG) are excellent stocks to start with. Pepsi has increased their dividend 4 times in the past 5 years! Like they always say, it’s the small things that count. Keep your dividends money in cash and don’t reinvest it right away. When you have a cash not invested it always gives you that option of picking up some excellent stock on the dips in these kinds of markets. REIT’s and income trusts are not a bad choice either as long as you are watching them closely. Income trusts and REIT’s bring in excellent cashflow, especailly REIT’s where distributions rather than dividends are taxed more favorably.

2. LOOK TO INVEST OUTSIDE OF THE USA

When I say look over seas I don’t mean newer markets that are coming into their own but rather stable markets such as european exchanges or Canada. Newer markets bring on a whole different set of rules. While things were falling apart in the US Economy we saw excellent gains in the TSX in Canada but be sure to keep your eyes open to world markets. Companies like Potash Inc (ticker Symbol, POT) is an excellent play on the agricultural industry which will be booming for quite a while; we all have to eat even in a recession don’t we?

3. GOLD

In the past few years we have seen gold shoot to all time highs and it is still a great play. Gold is an excellent hedge against the US dollar. Even though some people are stock investors only keeping an eye on the currency market and the value of the dollar is an excellent idea. Gold is easier than ever to invest in since ETF’s and gold funds started coming around. I think it’s a lot harder to invest in solid gold bars because it’s not liquid! Look for those gold shares and again keep a small amount of cash to get into these on a whim. SPDR GOLD SHARES (Ticker Symbol, GLD) is an excellent one again to have on your investing radar.

And, always have a plan and never stop investing.

Kelly Parks
www.wealthforinvestors.com

I still remember being 18 years old and walking into a bank i have decided not to mention to purchase some mutual funds.
I was standing in the wrong line at the bank and when I got to the front of the line the teller looked me up and down and rolled her eyes and pointed to another line.
Frusturated I walked to the other line where I waited for 20 minutes until I was called into a small office.
The man before me was in his late 20’s maybe and was wearing a suit.
‘What can I do for you?’ He asked as he stared down at me like I was going to rob the joint.
‘I’m here to dollar cost average a few funds’ I responded
-note(These were the days when I was still stupid enough to buy these)
He went on to ask me my income,age,martial status and then plugged it all into a computer.
A printer went off and he pulled out a peice of paper and said
‘Here you go these are the funds you need to invest in!’
I looked over the paper he had handed me it had some neat little charts and numbers on it.
‘These funds are terrible! Not only are they full of garbage but they have barley covered inflation on their best years!’
I just wanted the funds that I had studied and decided that good.
‘What is the MER on these funds?’ I queryed
(For those of you that don’t know, MER is Management Expense Ratio the management fee to invest in the funds in this case)
‘3.5% which is very standard you can’t get much lower than that’ he stated
I mean this guy is wearing a tie! Here I’am this 18 year old kid arguing with him.
‘Are you even a TDWATERHOUSE customer?’ he said
‘Why yes I’am I trade quite often’ I replied
At that moment he got up and left the office. Out of the blinds in the office windows I could make out his lips explaining something to another older man also in a suit.
The older man in a suit walked into the office and said
‘Mr Parks this is what you want?’
‘yes’
He stamped a few papers and I was on my way.
Now I always thought to myself what if i hadn’t been educated enough to look at what he printed out and just signed on the dotted line and off I went?
What if this was going to be my only means of retirement these funds he was handing me?
What made any of these people more qualified to tell me what to do with my money?
How many people are investing in things they have no idea about only to learn on the day they need there nest egg money the most that they have been sold a peice of junk?
I know this is happening all the time, always keep yourself educated.
Kelly Parks

www.wealthforinvestors.com

“‘Til Debt Do Us Part?” – Smart Financial Advice?

Lately it seems that financial shows are all focusing on how to get out of debt. There always seems to be stories about people getting deeper and deeper into debt and most everyone on some level can relate. On ‘Til Debt Do Us Part”, Gail Vaz-Oxlade gives financial counseling to couples carrying debt loads ranging from $10, 000 to $250, 000. What Gail does is create a financial plan and gives challenges for these couples to get out of debt. Sounds good right? Even better when she states something like this, “If you put away $100.00 a month in an RRSP savings account for the next 45 years, when you are ready to retire you will have 1.65 million dollars.” Wow, 1.65 million dollars, who wouldn’t want that? Just one problem – you have to wait 45 years by the time you retire? Instead of working hard, saving your money why not invest some of that money? Don’t get me wrong, working hard and saving your money is a noble aspiration, just if you are willing to wait 45 years and retirement to get 1.65 million dollars. And there are other factors that can eat up the cost of the money you put aside. What about inflation? What about those unforeseen costs like medical bills or contributing to a grandchild’s education? What about taxes? The thing about retirement is people have no income so you are never contributing to this amount. But, as these shows are about debt the likely answer proposed by these financial experts just focuses on how to get out of debt, not how you can invest your money. And, when people need more income on the show what Gail suggests is to go out and get a second job! Who wants to work more than they have to? By investing your money wisely this won’t have to happen.

It’s great that people are trying to take control of their finances; but, by getting a second job, working long hours and saving money that may be eaten up by other costs, this doesn’t seem like the right answer. It’d be refreshing to see one of these shows educate people on how else they can achieve their financial dreams in other ways besides saving. That way, instead of 45 years and retirement, you may hear something like this, “If you invest your money wisely, create passive income and get out of the rat race, in a number of years you will be able to retire.” Now, who wouldn’t want that?

Julia Crawford
www.wealthforinvestors.com

In this up and down economy that we are having these days people seem a little short of cash. Your buddy is in a total jam and he needs your help, should you lend him the cash he needs? The Answer is not always as clear as it seems. I’m not talking about 30 dollars for concert tickets but hundreds or thousands of dollars which you might actually need. Borrwing or lending your relationship with your friends or family is not the same kind of relationship that you have with your bank.

If you are in need of cash go use that line of credit you have for emergencies responsibly. If you are lending out money to friends or family don’t expect it back, money is a touchy subject and everyone acts different about it. You can always draft up some sort of contract clause but this is pretty formal and can make things akward between you and the other party. If you end up giving away large sums of money treat that money as money well spent and gone, don’t pester people for it. Sometimes you might have a business venture where you need some start up capital loaned to you; instead, look for investors not handouts! If you have friends or family invest make sure to tell them that it’s an investment and that they might not see a return at all. As long as both parties always know the risks associated with the investment you should be okay. Always pay back your investors and be a credible person; if people trust you, you are ahead of the game! Lending or borrowing money can strain friendships and who wants to be a lonley person with a lot of money?

Kelly Parks
www.wealthforinvestors.com