““Six Mistakes RetireesSix Mistakes Retirees Make With Their Make With Their

Finances”Finances”

22

NAMENAME

COMPANYCOMPANYADDRESSADDRESS

33

Six MistakesSix Mistakes– Not understanding or covering your risksNot understanding or covering your risks

– Wrong time horizonWrong time horizon

– Failure to understand stock market Failure to understand stock market

– Failure to understand investment feesFailure to understand investment fees

– RRIF owner mistakesRRIF owner mistakes

– Bond funds – should you own them?Bond funds – should you own them?

44

StatisticsStatistics

Canada is trying to get a handle on our Canada is trying to get a handle on our aging populationaging population

Today, 4.7 million Canadian’s are over age 65Today, 4.7 million Canadian’s are over age 65

The 80 plus age group will double in 20 years and The 80 plus age group will double in 20 years and triple in 40 yearstriple in 40 years

55©2002 NF Communications4

The Rising Tide

Source: U.S. National Center For Health Statistics, National VitSource: U.S. National Center For Health Statistics, National Vital al Statistics Report, Vol 47. No. 13, 12/24/98Statistics Report, Vol 47. No. 13, 12/24/98

Life Expectancy1900-1997

Life Expectancy

Increasing by 1 month per

Year354555657585

AGE

66

Risks in Your Chance of Are You Life Occurrence Insured

House 1 in 240 Yes Burning

Car Accident 1 in 8 Yes

Medical Yearly? Yes Problem

Long Term Almost 1 in 2 NO! Health

77

““Who will take care of me…?”Who will take care of me…?”

Your SpouseYour Spouse

Your ChildrenYour Children

Your Close FriendsYour Close Friends

Your CommunityYour Community

Are they qualified?Are they qualified?

Do they want the job?Do they want the job?

Will the strain of care-giving Will the strain of care-giving

change your relationship?change your relationship?

88

Why LTC Insurance?Why LTC Insurance?1.1. Burden of health care is shifting to the individualBurden of health care is shifting to the individual

2.2. Long Term Care costs can quickly erode a lifetime Long Term Care costs can quickly erode a lifetime of savingsof savings

3.3. Tax-free benefits can save estate from these costsTax-free benefits can save estate from these costs

4.4. Allows you to remain in own home or in a facility Allows you to remain in own home or in a facility of your choiceof your choice

5.5. Disengages the governmentDisengages the government

99

Return of PremiumReturn of PremiumNursing Home Policy 70 Year Old MaleNursing Home Policy 70 Year Old Male

• Policy pays $100/day for 750 daysPolicy pays $100/day for 750 days

• Cost Of Basic CoverageCost Of Basic Coverage $176/month$176/month

• Return of Premium Option $211/monthReturn of Premium Option $211/month

• Money Returned at Death $78,940Money Returned at Death $78,940

• Financial Return on the Return of Financial Return on the Return of Premium Option = 7% per year Premium Option = 7% per year

1010

Are Are YouYou Prepared? Prepared?

We can all pay the We can all pay the actualactual costs costs

tomorrowtomorrow

or or

the premium todaythe premium today

1111

Emotions of the Stock MarketEmotions of the Stock Market

1212

Emotions of the Stock MarketEmotions of the Stock Market

1313

S&P 500 S&P 500 ONE YEAR HOLDING PERIODSONE YEAR HOLDING PERIODS

-60

-40

-20

0

20

40

60

80

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73

S&P500 ONE Year Rolling 1930 to 2005

1414

S&P 500 S&P 500 FIVE YEAR HOLDING PERIODSFIVE YEAR HOLDING PERIODS

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70

S&P500 5-YR Rolling 1935 to 2005

1515

S&P 500 S&P 500 TEN YEAR HOLDING PERIODSTEN YEAR HOLDING PERIODS

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64

S&P500 10-YR Rolling from 1940 to 2005

1616

S&P 500 S&P 500 FIFTEEN YEAR HOLDING PERIODSFIFTEEN YEAR HOLDING PERIODS

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1 3 5 7 9 11 13 15 17 19 21 2 2 2 2 31 3 3 3 3 41 4 4 4 4 51 5 55 57 5 61

S&P500 15-YR Rolling from 1945 to 2005

1717

The stocks which make up the Dow 30The stocks which make up the Dow 30 (as of Dec 2006)(as of Dec 2006)

• PfizerPfizer• Verizon Verizon • AltriaAltria• AT&TAT&T• CitigroupCitigroup• MerckMerck• General MotorsGeneral Motors• DuPontDuPont• General ElectricGeneral Electric• JP Morgan ChaseJP Morgan Chase• Coca-ColaCoca-Cola• Minnesota Mining & ManufMinnesota Mining & Manuf• Johnson & JohnsonJohnson & Johnson• McDonald'sMcDonald's• Home DepotHome Depot

• HoneywellHoneywell• AlcoaAlcoa• IntelIntel• Caterpillar Caterpillar • Procter & GambleProcter & Gamble• United TechnologiesUnited Technologies• Exxon MobilExxon Mobil• BoeingBoeing• Wal-MartWal-Mart• MicrosoftMicrosoft• International Business International Business

MachinesMachines• American ExpressAmerican Express• American International American International

GroupGroup• DisneyDisney• Hewlett-PackardHewlett-Packard

1818

Note 1: All total returns are calculated using reinvested dividends.Note 2: The effects of commissions/loads are not included.Note 3: All data is believed to be from reliable sources.Note 4: Past performance is in no way a guarantee of future results.Note 5: The above listed mutual funds were selected for comparison due to the fact that

they are among the largest U.S. domestic growth equity funds.Note 6: All Data from the Dogs of the Dow™ website

1919

Compare:Compare:

1 Year 3 Year 5 Year 10 Year 15 Year

Dogs of the Dow 30.30% 9.90% 9.90% 8.80% 13.30%

Small Dogs of the Dow 42.00% 18.00% 13.30% 10.40% 15.90%

Dow Jones Industrial Average 19.10% 8.70% 7.90% 9.90% 13.00%

S&P 500 15.80% 10.50% 7.60% 10.00% 12.00%

Fidelity Magellan 7.20% 7.00% 4.50% 8.50% 10.90%

Vanguard Index 500 15.60% 10.40% 7.50% 9.90% 11.90%

2020

An Investor’s Worst EnemyAn Investor’s Worst Enemy Cumulative return Jan. 1, 1984 through March 31, 1996Cumulative return Jan. 1, 1984 through March 31, 1996

A new study concludes that individual A new study concludes that individual investors are their own worst enemies. investors are their own worst enemies.

A look at cumulative returns shows A look at cumulative returns shows the Standard & Poor’s 500-stock the Standard & Poor’s 500-stock

index was up almost 500 percent over index was up almost 500 percent over a 12-year period. But the return for a 12-year period. But the return for

equity funds sold either through banks equity funds sold either through banks or brokers or directly to investors via or brokers or directly to investors via

telephone was much lower. The telephone was much lower. The reason: Investors were moving in and reason: Investors were moving in and

out of these funds, missing market out of these funds, missing market growth periods.growth periods.

491%

113% 97%

2121

Disappointing FundsDisappointing FundsExample from12/31/95-12/31/96 Money Magazine ArticleExample from12/31/95-12/31/96 Money Magazine Article

The fund columns shows the annualized return reported by the fund. The shareholder column shows the shareholder average return. The difference results because the average investor invests once the fund has risen (near the top) and then gets out when the fund declines. This is not always the case and is merely an example of what occurred in these funds as reported by Money Magazine during this period. Source: Money Magazine April 1997. Comparison of fund reported results 12/31/95 to 12/31/96 vs. average investor results (investor results as measured by actual investor accounts in these funds during this period and then averaged). Hancock Discovery B is now Hancock large cap growth B

2222

Should You Buy Based on Should You Buy Based on Last Year’s Performance?Last Year’s Performance?

Mackenzie Cundill Value

13%

14%

35%

13%

13%

10%

CI Harbour Fund

7% -1%

11%

16%

24%

15%

Fidelity Canadian Asset Allocation

-1%

-6%

14%

11%

14%

12%

2323

Should You Buy Based on Should You Buy Based on Last Year’s Performance?Last Year’s Performance?

Funds 2001

2002

2003

2004

2005

2006

Mackenzie Universal Global Future

-23%

-26%

8% 1% 6% 20%

AGF Aggressive Growth

-38%

-30%

18%

11%

5% 4%

CI Global Science and Tech

-38%

-37%

27%

-1% -8% 11%

2424

Avoid “Hot” FundsAvoid “Hot” Funds

Of the Funds that Ranked #1 in performance Of the Funds that Ranked #1 in performance rankings over the past 15 years:rankings over the past 15 years:

““Over the subsequent three, five, Over the subsequent three, five, and 10-year periods, a whopping 80 and 10-year periods, a whopping 80

percent of these ‘star’ funds percent of these ‘star’ funds performed worse than the average performed worse than the average

similar fund.”similar fund.”

2525

Avoid “Hot” FundsAvoid “Hot” Funds

““Since 1987, the least popular funds have Since 1987, the least popular funds have outperformed 90% of the most popular outperformed 90% of the most popular funds over the following three years”funds over the following three years”

Data from Morningstar Principia Pro Data from Morningstar Principia Pro CommentaryCommentary

““Buying Unloved Funds” 2/21/01Buying Unloved Funds” 2/21/01

2626

Even the Experts Struggle:Even the Experts Struggle:

1995 mutual fund selection guide:1995 mutual fund selection guide:

– 81 funds recommended in 199581 funds recommended in 1995

– Look at the returns to June 30, 2004 (10 years later):Look at the returns to June 30, 2004 (10 years later):

• 34 of the funds didn’t exist anymore34 of the funds didn’t exist anymore

• 32 of the funds 32 of the funds underunderperformed their benchmarkperformed their benchmark

• 15 outperformed15 outperformed

• BUT less than 20% of selected funds outperformedBUT less than 20% of selected funds outperformed

2727

3 Good thing we didn’t

wait!

4Brilliant! At this price,

let’s buy more!

5We should hold.

Only the people who sell lose money!

7I know this looks really

bad ,But these are only paper

losses..

9Good thing we

soldeverything!

10 Told you

so.

12 More crazies who are going to

get taken to

the cleaners

!

Life of a fund…

1 Look at the rack record

on this HOT fund

2The trend is

holding.We should

buy!!

6Once this goes up, we are selling out!!

11I don’t know what is going on. Let’s watch it.

13Let’s buy in again.

8Enough! Let’s cut our losses and

move to XX fund that is really HOT NOW.

2828

Investment ExecutiveInvestment Executive

2929

The Secret ViceThe Secret Vice

The Hidden CostsThe Hidden Costs

InIn

Mutual FundsMutual Funds

3030

Management Expense RatiosManagement Expense Ratios

Fund 10 Year Return Expense Ratio

Median Labour Sponsored Venture Capital

-2.80% 5.50%

CI Global Boomernomics GIF Class A

-0.50% 5.06%

CI Signature Canadian Balanced Seg I

5.70% 4.44%

Avg. Global Equity-Seg 1.20% 3.52%

Avg. U.S. Equity-Seg 2.90% 3.30%

Avg. Global Bal & Asset Alloc-Seg

-1.50% 3.26%

3131

Management Expense Ratios of Index FundsManagement Expense Ratios of Index Funds

Fund 10 Year Return Expense Ratio

Acuity Pooled Canadian Balanced

13.20% 0.18%

Montrusco Bolton Enterprise

12.50% 0.13%

Acuity Pooled Fixed Income

11.00% 0.10%

Acuity Pooled Conservative Asset Alloc

14.70% 0.10%

Acuity Pooled High Income 15.90% 0.10%

3232

The Hidden CostThe Hidden Cost

INVESTMENT STYLE TYPICAL TRADING COSTINVESTMENT STYLE TYPICAL TRADING COST

Large-Cap ValueLarge-Cap Value 0.65%0.65%Large-Cap GrowthLarge-Cap Growth 1.59%1.59%Passive (Index Fund)Passive (Index Fund) 1.38%1.38%Small-Cap ValueSmall-Cap Value 1.60%1.60%Small-Cap GrowthSmall-Cap Growth 3.12%3.12%

3333

Trading ExpensesTrading Expenses

Fund TER Cost of Ownership

AGF Dividend Income 2.10% 3.72%

AGF Aggressive Growth 2.56% 4.08%

AGF Aggressive Global Stock

3.25% 4.70%

Talvest China Plus Fund 3.20% 4.27%

3434

Common Mistakes in Buying FundsCommon Mistakes in Buying Funds

•Buying Hot FundsBuying Hot Funds

•Not Knowing about Fund FeesNot Knowing about Fund Fees

•Paying Excessive TaxesPaying Excessive Taxes

•Failing to Understand Differences in Fund Failing to Understand Differences in Fund Types and risk profilesTypes and risk profiles

•A Better Way to Select FundsA Better Way to Select Funds

3535

A Study of Investor ExperiencesA Study of Investor Experiences

Dalbar Study from 1984 to 2003 Findings

Avg. Equity Fund

Investor Experience

3%

Average Equity Fund

10%

S&P 500 Return

12.2%

The mistakes that advisors make:

Fund selection & unnecessary administration rather than the allocation of resources around your objectives.

Not having a roadmap to highlight the steps to reach your objectives

No system to maintain accountability of all parties involved: the investment managers, administrators and advisor.

3636

Common Mistakes in Buying InvestmentsCommon Mistakes in Buying Investments

How to Help AvoidHow to Help Avoid

Buying at the Top of the MarketBuying at the Top of the Market

How to Help Avoid Selling at the Bottom of the Market

3737

3838

3939

Taxes At DeathTaxes At Death

Earned IncomeEarned Income– Taxation on RRSPs or RRIFsTaxation on RRSPs or RRIFs

included as income on final returnincluded as income on final return

– Capital Gains on rental property, cottage or non-Capital Gains on rental property, cottage or non-registered investments.registered investments.

ResultResult – Generally in the Highest Tax – Generally in the Highest Tax BracketBracket

Example:Example: $500,000 RRIF$500,000 RRIF

Tax Tax Liability on RIF Liability on RIF $232,000$232,000

4040

Total Tax Liability on RIF at DeathTotal Tax Liability on RIF at Death

$232,000$232,000

SOLUTIONS?SOLUTIONS?

4141

Pre-Paid Taxes ProgramPre-Paid Taxes Program

Sample based on: Sample based on: • Male age 66 and Female age 65Male age 66 and Female age 65• RRIF is $500,000 earning 5%RRIF is $500,000 earning 5%• RRIF is paying out $2,083 / monthRRIF is paying out $2,083 / month• Use $356 / month to pay for pre-paid Use $356 / month to pay for pre-paid

taxes program = $232,000taxes program = $232,000

4242

Results of Pre-Paid Taxes ProgramResults of Pre-Paid Taxes Program

If 2If 2ndnd death occurred 1 yr later death occurred 1 yr later

– Total spent on program $4,272Total spent on program $4,272..

If 2If 2ndnd death occurred 10 years later death occurred 10 years later

– Total spent on program $42,720Total spent on program $42,720

Total Pre-Paid Taxes $232,000Total Pre-Paid Taxes $232,000

Total RIF Paid to Beneficiaries $500,000Total RIF Paid to Beneficiaries $500,000

4343

Should you Own Bond Should you Own Bond Funds?Funds?Basket of Bonds:Basket of Bonds:Gov’t of Canada Gov’t of Canada $50,000 4.9% - $50,000 4.9% -

20272027Gov’t of P.E.I. $50,000 5.6% - Gov’t of P.E.I. $50,000 5.6% -

20112011Rogers Comm.Rogers Comm. $50,000 6% - $50,000 6% -

2011 2011

Bond Fund:Bond Fund:• There is no single maturity There is no single maturity

datedate

4444

Evaluation SheetEvaluation Sheet

Today’s Date:____________________Today’s Date:____________________ Location _____________________________Location _____________________________

What topic did you most enjoy or get value from ? What topic did you most enjoy or get value from ? ______________________________________________________________________________________________________________________________________________________________________________

What is your greatest financial concern? What is your greatest financial concern? ______________________________________________________________________________________________________________________________________________________________________________

AN OPPORTUNITY TO TAKE ACTIONAN OPPORTUNITY TO TAKE ACTIONI want to ensure that I have sufficient assets and make them last. I want to protect the assets I have accumulated.I want to ensure that I have sufficient assets and make them last. I want to protect the assets I have accumulated.

I would like a free consultation at your office to have a personal review:I would like a free consultation at your office to have a personal review:Select a day:Select a day: Monday, January 22Monday, January 22 Monday, January 29 Monday, January 29 Tuesday, January 23Tuesday, January 23 Tuesday, January 30 Tuesday, January 30

Wednesday, January 24Wednesday, January 24 Wednesday, January 31 Wednesday, January 31 Friday January 26 Friday January 26 Thursday, February 1 Thursday, February 1

Circle a time:Circle a time: 10 10 11 11 2 2 3 3 4 4

PHONE:PHONE: Day ________________________________ Evening ______________________________Day ________________________________ Evening ______________________________Please Print:Please Print: Your NameYour Name _____________________________________________ age _________ _____________________________________________ age _________

Your Spouses NameYour Spouses Name ______________________________________ age _________ ______________________________________ age _________AddressAddress ______________________________________________________________________________ ______________________________________________________________________________City, Province, Postal Code ______________________________________________________________City, Province, Postal Code ______________________________________________________________

4545

People Who Benefit from an People Who Benefit from an AppointmentAppointment

If you are unhappy with your investment performance If you are unhappy with your investment performance – or don’t know what it is– or don’t know what it is

If you want to explore long term care alternativesIf you want to explore long term care alternatives

If you own annuities that have dropped in rate or that If you own annuities that have dropped in rate or that you do not plan to useyou do not plan to use

If you are: If you are: Single with an estate above $1 millionSingle with an estate above $1 millionMarried with an estate above $2 millionMarried with an estate above $2 million

If you have an RRSP or pension plan over $250,000 If you have an RRSP or pension plan over $250,000 and want to reduce taxes on your withdrawalsand want to reduce taxes on your withdrawals