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January/February 2014

Commentary - Hans H. Mathisen

HAPPY NEW YEAR! I trust you and your families enjoyed the Holidays and that you are charged up to make 2014 an even better year for yourself and your loved ones.

"Itís going to rainĒ Ė is the topic of LIFE LETTER for January. Are we as effective in planning for a financial storm as we are preparing for rain?

"Financial to-do list for 2014" - Situations can change. Here are a few things to think about as we enter into the new year.

LIFE LETTER MATURE

ďAdvice to a future widowĒ is found in LIFE LETTER MATURE for January. How to prepare for widowhood is something that can and should be done now.

LIFE LETTER MATURE for February looks at "10 things you can do to live longer".

THE STOCK MARKETS - As of December 31, 2013, the S&P TSX was up 9.6%. The Dow Jones Index gained 29.65%. In Europe, Germanyís DAX grew 25.48%; Francesís CAC advanced 17.43%; and Englandís FTSE 100 was up 14.33%. In Asia, Japanís NIKKEI grew 56.72% ;and Hong Kongís HANG SENG was up 2.50%.00.

Itís worth noting that, while the S&PTSX Index was up 9.6% in 2013, clients of Mathisen Financial, Inc. did better: The average yield of 5 Canadian equity funds our clients are invested in was 18.96%.

Canadaís stock market picked up steam in the fourt quarter of 2013. Letís have a look at how 2014 looks for the major economies:

Canadaís economy will grow faster in the new year, and the S&P TSX Index is forecast to post a gain in the high single digits even without a major recovery in the resource sector. Thereís even a chance we might outperform the S&P 500, something we have not done since 2010.

The U.S., the worldís largest economy, is forecast to grow by 2.4% in 2014, according to the Federal Reserve Bank of Philadelphia. Job creation is still a major problem in the U.S., and it remains to be seen how the Fedís tapering of the QE3 will affect the markets.

Chinaís growth forecast for the new year is still at 7.3%, according to the IMF.

ÖEuropeís economy is growing, and as this is being written, the European Central Bank considers lowering the interest rate even further in order to stimulate the economy.

Japanís decades of battling deflation and stagnation appears to be over, which is demonstrated by the NIKKEI Index going up 56.72% in 2013. Continued growth can be expected in 2014.

The Global Economy is forecast to grow 3.6% in 2014. There is increasing economic activity in several regions of the world, so all the growth does not have to come from the BRIC countries.

As investors, we are looking forward to a year in which we experience good health, happiness and decent growth in our portfolios.

HAPPY INVESTING!
Sincerely,
Hans Mathisen


 

 

 

LIFE LETTER

It's going to rain

Most people check the weather forecast every day before leaving home in case they have to protect themselves from possible weather conditions. So, if rain is forecast they can bring an umbrella or raincoat with them. Sadly, most people are not prepared for the financial storms that will attack.

If it makes sense to protect a few hundred dollarsí worth of clothes and your body from the elements, doesnít it also make sense to be prepared for an attack on your lifestyle?

Emergency Fund - This is probably the cornerstone of financial preparedness. It is recommended that you have at least three to six months income set aside for this. If a need arises to use some of the funds, they should be replenished as soon as possible. Some of the reasons for access may include:

  • Temporary period of unemployment.
  • Cash needs during the waiting period for disability insurance benefits.
  • Legal fees required to deal with an unexpected problem or conflict.
  • The deductible for vehicle or home insurance at claim time.
  • Medical costs not covered by Provincial Health Care or health insurance.
  • Accommodation costs if the need arises to evacuate your home. Remember the flooding in Southern Alberta in June 2013?
  • Vehicle rental costs if your vehicle is awaiting repair or replacement.

Some of these may be reimbursed at a later date and these proceeds should be put back in the fund.

Accident & Sickness Insurance - Can you take a six-month vacation right now? If you became sick or hurt and couldnít work for that length of time, what would happen to your lifestyle if your income suddenly stopped? What if it was even longer? Many mistakenly believe that their group benefits will take care of them. Review your benefits with your financial advisor to make sure they are adequate, actually in effect and that the definitions donít increase the possibility of non-payment when a disability does occur.

How would your lifestyle be affected if you experienced a serious illness, like cancer, heart attack or stroke, and made changes to your work schedule to help the healing process? What if you couldnít return to you usual work position?

Life Insurance - Life insurance provides cash at the exact time it will be needed most after someone dies. The proceeds can be used to pay-off debts, pay for expenses that arise on death, and replace an income for those that rely on it.

Property & Casualty Insurance - Vehicle and home insurance is generally required by law or by a lender that financed the large purchase. Review this coverage regularly to make sure it is adequate and that the deductible fits with your ability to pay it.

Retirement Savings - You probably donít want to work for the rest of your life. If you donít send some dollars ahead for your retirement income, you may be forced to make a serious lifestyle change to get by on the relatively meagre government benefits.

Be prepared for rain – because it’s the responsble thing to do.

Call Hans Mathisen today at (306)242-7042.
or email -
hans@mathisen.ca

Copyright © 2014 Life Letter. All rights reserved

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LIFE LETTER

Financial to-do list for 2014

Review your Will. Only about 40% of Canadians have prepared their Wills and many of them are not up to date. Situations and families change and your Will should be updated to cover those changes. If you don't have a Will, get one. Have a lawyer prepare your Will for you. Avoid do-it-yourself Will kits. They may state they are legal (which just means they don't break any laws), but they also contain a disclaimer that states they are not liable for the validity of the Will you prepare yourself. An invalid or poorly prepared Will can cause delays and may cost your family thousands of dollars in avoidable fees and expenses.

Review your beneficiary designations. You named a beneficiary on your life insurance policies and RRSP plans. Has anything changed? If you have named a beneficiary who has trouble handling money, you can stipulate that any proceeds be used to provide an income only. If all your children are adults, consider naming them as secondary beneficiaries.

Review your life insurance needs. Interest rates remain at historic lows and show no signs of increasing significantly any time soon. As we age, our needs change from estate creation to estate conservation. Your plans should be updated to make sure your estate goals can be met. The basics for determining life insurance needs are Immediate Cash Needs plus Capitalized Income Needs minus Assets to be Liquidated at Death and Life Insurance. Your needs should be reviewed regularly and adjusted as your situation changes.

Protect yourself from fraud and identity theft. Fraud and identity theft are the fastest growing crimes crimes today. According to the Canadian Anti-Fraud Centre, 12,891 victims lost over $53.7 million in 2012. To protect yourself:

  • Cover the keypad while entering the PIN when using your debit or credit card.
  • Be aware of anyone around you using a cellular phone when you are using your debit or credit card. They may be photographing your transaction
  • Shred old credit card and bank statements. Just ripping them up is not enough to prevent a fraudster from piecing them back together.
  • NEVER give personal or account information to anyone who contacts you, even if it appears to be from a company or bank you deal with. They should have this information already.

Control lifestyle expenses. According to Calgary bankruptcy trustee Barry Nykyforuk, the most common cause of personal bankruptcy is letting consumer debt get out of control. Credit is so easy to get and some lenders even target those who have had debt problems in the past. When you use credit cards, pay off the balance each month. If you carry a balance, be aware that any new purchases are charged full interest from the time they are made. Don't fall into the trap of buying things you don't really need with money you donít even have to impress people you don't even like.

Get critical illness insurance. If you survive a critical illness like cancer, heart attack or stroke, your finances will be affected. Even if you have disability insurance, it may not be enough to cover additional expenses that arise. Critical illness insurance pays a benefit that can help you get on with your life and maintain the lifestyle you had before you got sick.

Take care of your finances – because it’s the responsible thing to do.

Call Hans Mathisen today at (306)242-7042.
or email -
hans@mathisen.ca

Copyright © 2014 Life Letter. All rights reserved

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Mathisen Financial, Inc.
335 Redberry Road
Saskatoon, Saskatchewan S7K 4W5
Bus. (306) 242-7042 Fax. (306) 242-4314
Email:
hans@mathisen.ca