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How the Credit Crisis Effects Canadians

Garry Marr and Jonathan Chevreau teamed up to write an interesting article on how Canadians will be effected by the global credit crunch.

Although I don’t agree with everything they said, I can’t help but feel that this is a great article for any Canadian to read.  Throughout the article, Marr and Chevreau answer the question “How does the credit crunch effect me?” but get specific to such topics as your mortgage, the value of your home, a new car, your mutual funds, your pension, your credit or loan, and your savings.

Your Take-Away: Knowledge is power.  Period.  Some of us feel invinceable and aren’t worried about the credit crunch, and to some, that is okay.  My suggestion is to stay abreast of what is happening in the markets, both domestic and foreign.  There is no way to know 100% what the future holds for us as Canadians, but at the end of the day, the more you know the more opportunity you have to come to your own conclusion.

My conclusion is that we will continue to see somewhat of a down turn moving into 2008, but I am confident that by the end of 2008 we will be back in the black overall.  TD Waterhouse released a report saying that 2008 will be the 6th straight year that we see the markets perform well overall.  At least that’s something positive to hold on too!

Until next time, have a Magnificent Monday!

Chris

Do You Own BCE Shares? (Part 2)

In our last post, we discussed the potential implications that BCE shareholders would be forced to deal with in 2008. We also promised that we would provide three key strategies that could be used to compensate for the potential tax implications that may arise.

Your Take-Away: The first strategy you could implement is to decrease the income drawn from your other investments during 2008.  This could help to counteract the large income that you will need to report based on the sale of your shares assuming a growth on your investment. The second strategy is to take advantage of any capital losses incurred throughout 2008 and any capital losses that may have been carried forward from previous years. The third potential strategy you can take advantage of is to donate your BCE shares in-kind to a registered charity.  In this case, you would not be accountable for any capital gains tax on the shares you choose to donate AND you would receive a tax receipt for their market value.  in the end, both you and your charity of choice would win.

If you own BCE shares at all, you have hopefully experienced some very positive growth over the years which unfortunatley comes with a tax burden.  At the end of the day however, you’re only paying tax because you made a profit, and I can’t help but think that that is still better then claiming a capital loss!

Until next time, have a Fantastic Friday!

Chris

Do You Own BCE Shares? (Part 1)

The Ontario Teachers’ Pension Plan Board is in the process of purchasing all outstanding BCE shares.

This deal was approved by a majority of the common and preferred shareholders on September 21st, 2008 and it is expected to be finalized sometime in 2008. If you own BCE shares, you could feel the effects of this decision in any number of ways throughout 2008. In Part 1 of this post, we will address some of the major implications that BCE shareholders will be forced to deal with.  In Part 2, we will address three key strategies that shareholders can use to properly handle their own situation in as favorable a way as possible.

Your Take-Away: The first implication is that most individuals who own BCE shares will be forced to deal with a potentially large capital gain or  capital loss over the course of 2008. The size of this potential gain or loss will be based on the shareholders average purchase price of the BCE shares, and the length of time these shares have been owned. The second implication is that this taxable event could negatively effect a shareholders government benefits such as available tax credits, OAS and the GST credit to name a few.  The third implication is that a shareholder relying on the dividend income produced by their BCE shares will have to find additional ways to compensate for the loss of dividends paid as a result of their BCE shares.

Tomorrow we will look at three specific ways that BCE shareholders can effectively plan for and address the possible issues they will face in 2008. 

Until next time, have a Terrific Tuesday.

Chris

The Prime Rate is Down Again

The Bank of Canada just lowered the overnight lending rate, but what does that mean for you?

The most important news of late is the fact that the Bank of Canada reduced their overnight lending rate to 4.25%.  In turn, mortgage lenders have also decreased their prime lending rate to 6.00%. How does this affect the average borrower? Well, if you have a fixed rate then it does absolutely nothing. If you have a variable rate, then you should see a reduction to your interest rate by .25%.

Your Take-Away: If you will be closing a mortgage over the next four months, you should seriously be considering a variable rate product since there is indication from the Bank of Canada that further rate reductions may be needed early in the New Year.  The increased pressure to continue to reduce rates comes from the hope that Canada will be able to minimize the damage that the higher Canadian dollar and the U.S. credit crunch have had on the economy.

We’ve said it before, and we’ll say it again, don’t just assume a fixed rate is the only way to go.  Talk to a Professional and determine if you are a candidate for a variable rate, it may save you $100’s if not $1,000’s of dollars over the next few years!

Until next time, have a Magnificent Monday.

Elisseos & Chris