Use irrevocable beneficiary for funding education

The beneficiary of a segregated fund contract receives the funds upon death of the annuitant. Here is a way to retain indirect control over the investments by using an irrevocable beneficiary designation. A parent could set up a segregated fund contract with their child as the owner/annuitant and him/herself as the irrevocable beneficiary.

This could help parents with children entering post-secondary education. With the parent as the irrevocable beneficiary he/she would be required to sign for withdrawals; transfers of ownership; and beneficiary changes, ensuring that they remain involved in what happens to the money.

TAX ADVANTAGE: School expenses will likely offset the child’s income from the investment, there would be no attribution of income and the parent can control how much money the child gets. Please ask for our Investor Opportunities Guide for more information about irrevocable beneficiaries at ghughes@nb.aibn.com

Michael J Fox probably thought this wouldn’t have happened to him back in the 1970’s

Being financially secure means you never risk losing the two most treasured items we all have: our home and our lifestyle.(Young people are at greater risk than those who are set.)

Did you know that ...
* 1 in 3 Canadians will develop a life threatening cancer? *
* 91% of the patients who were admitted with a heart attack survive? *
* The death rate from stroke has decreased 50% since 1950? *

People are surviving with these critical illnesses due to medical advances. Your main concern would be ... Can you recover financially from one of these illnesses? With the aging population, the Canadian health care system is under an increasing strain and it’s unlikely that they’ll be able to provide the financial assistance and options you'll desire.

Critical Illness Insurance pays you a lump sum of money up to $2,000,000 if you are stricken by a critical illness and this protection can be purchased for as little as a dollar a day. No conditions are attached to these funds. You’re the one who decides how the money will be spent.

We want to help you secure your financial future by ensuring you have the money to keep your home and lifestyle should you be stricken with one of over 20 Critical Illnesses covered within this plan. Contact us for more information.

Gordon Hughes CFP
tel: (506) 459-2224 or toll free 1-800-471-0411

Understanding Fund Managers and Politicians

Has a fund manager, or an investment banker advise you to get out of their investment fund? Of course not! That would cause a run on their stocks and they don’t want that, now do they?

Do you ever hear political leaders or finance ministers tell you that we are in for a depression real soon? Like that’s ever going to happen! No way! Not until it has already happened, then they talk. It’d alarm people and grind the economy to a halt faster than if they feed you candy coated talk. So you get the sweetened version. It helps them save face and protects the economy from a sudden drop. (supposedly)

There are two common ways to lose money in the markets.

#1 Market timing – that's reacting to daily, weekly or even monthly events in he economic world - most people do it wrong most of the time. (That's short sighted investing– one should focus on the 2 to 5 year range)

#2 Staying invested during a serious prolonged systemic failure in the markets.
When markets drop 50% like they did in 2001 and 2002 it takes about 5 years for funds to get back up to a break even point. Zero returns for 5 years in anything but smart investing! Markets dropped over 50% in 2008 But we knew that would happen back in 2007.

Get out when a systemic failure is coming – and we knew for several years that this downturn was coming – it had to happen. You can’t do really stupid lending and wildly drive up house prices by making ridiculously bad loans all across a country as large as USA and not have it fall apart. CNN has been keeping us informed of this crisis for several years now. Nobody that owns a TV should be surprised by recent declines in markets. Some would have us believe that the recent US bail out means we are at the bottom I don’t agree.

In 2007 I protected my clients by advising them to move 60% to 80% of their investments from mutual funds into daily interest accounts. That was because we knew the mortgage crisis and US real estate market fiasco was going to implode sooner or later. We knew that would cause serious economic repercussions during 2008 and 2009. I predicted a 40% to 60% drop. The TSX was between 14,500 and 15,500 when I was moving my client’s money to safe ground. In Sept 2008 it was now about 12,000 so it is about ½ way down. Again I predicted it would drop to about 8,000 during 2008 and 2009 before it levels out and begins a growth period and I see no reason to change my view now. (Actually it could go even lower)

My clients are happy now because they have been earning interest but more importantly they are in a position to begin buying back into the markets and that will make them a lot more money.

If you’re tired of mutual fund salespeople telling you what the fund managers told them to tell you and you want someone with insight to look after your interests instead of their interests then call me. I’d love to help you. Call me to find out what to do now.


Gordon Hughes FCI, ELP, CFP
York Financial Phone me at York Financial 443-7777 or home office 459-2224 or residence 472-7308
Services Inc. email me at ghughes@nb.aibn.com
Check my website www.smartchoicelife.ca

“Big Rock Candy Mountains”

This song described a place so wonderful, yes even perfect to this kid as it played on the radio decades ago. For those who don’t recall; the song is about a place where “a bum could stay for many a day, and he won’t need any money.” Here's a verse for old time’s sake:

“In the Big Rock Candy Mountains, all the cops have wooden legs, and the bulldogs all have rubber teeth, and the hens lay soft-boiled eggs. The farmer's trees are full of fruit and the barns are full of hay. Oh I'm bound to go where there ain't no snow, where the rain don't fall, the wind don't blow in the Big Rock Candy Mountains”

So why is an investment adviser writing about some old song?

It’s part of our human nature to want an ‘ideal’ place or existence. We hope we live in a safe place where we feel protected. NEWS FLASH! I’m sorry. It ain’t always so.

We live in a wonderful free world. Our government does keep us safe. However, we also live where greed, and the pursuit of frivolous wealth is rampant. To think we live in a land of saints is naive. So when your investments look like “Big Rock Candy Mountains” where the returns just keep piling up - then look out.

Look out for the smart and powerful people who can find ways to skim off excessive profits especially when they don’t deserve them. Ted Turner, the founder of CNN was interviewed on CNN today (Nov 11, 2008) and this is one part of the interview:

CNN interviewer askedTed: “You lost $7 billion when the dot-com bubble burst after the Time Warner-AOL merger. How did you not see the dot-com bubble bursting? How did you not see that that was all built on air?

Ted Turner: Maybe I did, but I was on a board of directors and a founder, and I was concerned about the AOL merger, but we didn't know that the books were cooked. We didn't do enough due diligence.”

We little guys aren’t the only ones to not consider to the whole picture. To be honest I didn’t realize how much the books were cooked either but I was sure the dot.com stocks were built on air. I knew that bubble would burst. Whether it was ‘dot-com’ in 2002, the ‘US mortgage melt-down’ 2008 or ‘Bre-X’ or any number of other stock shocks you’ll usually find a crook or two behind the scenes.

Being gifted with a strong faith to hold me steady in normal times, and a mind that is suspicious enough to keep me wary of snakes in the wood pile has helped me keep my investment customers safe. During the two last market down-turns that saved them a decade or more of savings from being lost. God willing, I plan to keep working for another 10-15 years and hope to keep your investments safe. If you have faith that I will do that then please tell your friends to call me so I can help them also.

“Enhancing lifestyles regardless of what happens in an uncertain world.”

Gordon Hughes CFP 443-7777 or 443-RRSP www.smartchoicelife.com ghughes@nb.aibn.com