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Merry Christmas
and a Happy New Year!!

November/December - 2008

THANK YOU VERY MUCH! Your continuing support, and your referrals, have made 2008 another stellar year for Mathisen Financial, Inc. It is important for me to thank you for your
business.

Because this communication is to thank you and to wish you a MERRY CHRISTMAS AND A HAPPY NEW YEAR, I'm enclosing the current issues of LIFE LETTER and LIFE LETTER MATURE without my regular commentary.

LIFE LETTER

LIFE LETTER MATURE

THE STOCK MARKETS - We already know that all the major indexes have taken a severe beating, and it is little comfort to report that, as of November 30, 2008, the S&P TSX Index has declined less than any of the other major indexes I
always refer to in this bi-monthly communication. It is also noteworthy that, during the last 6 trading days of November, 2008, the S&P TSX Index gained 20.00%! Maybe we have reached the bottom of this downturn and the market is on the way up again?


THE ANNUAL REVIEW CHECK LIST: Please don't forget to let me know what has changed in your life during the past year. This is your Annual Reminder. You can complete the Annual Review Check List on our web site, print the page off, complete it and forward it back to me.

If you're not on the internet, please call me and I'll personally get the Annual Review Check List to you.

Please, allow me to say it once more: MERRY CHRISTMAS AND A HAPPY NEW YEAR TO YOU AND YOUR LOVED ONES.

HAPPY INVESTING!
Sincerely,
Hans Mathisen



 

LIFE LETTER

Cooler heads will prevail

The newspaper headlines read: "Roller coaster stock markets have investors feeling queasy" (The Globe and Mail); "The stock market crash: History repeating itself?" (The Calgary Herald); "Uncertainty continues to pummel stock markets" (Sudbury Star); "The next market boom may be a lifetime away" (Financial Times). Interestingly enough, these headlines are from November 2002. One year later, the S&P/TSX Equity Index was up 20.8%; and
two years later had soared by 40.7%.

It's important at times like this not to fall for the sensational headlines. Consider that the September 30, 2008 edition of the Edmonton Journal had a front page story, above the fold, titled "Biggest market drop since 1987". The article was accompanied by a picture of a securities trader with a facial expression that could only come from getting his kneecaps broken and learning that
his dog ran away. Scary, yes. But the reality is that, as a number, it was large. As a percentage of the current index, however, it was tiny compared to Black Monday in October 1987.

The October 1, 2008 issue of the same paper buried the fact, deep in its Business section, that the same market had experienced, the previous day, one of its largest single day gains in years. Trading on human fear must be a great way to sell newspapers.

A large part of the current market slide may be attributed to many investors over-reacting to the news and headlines by panic selling. When investment fund managers receive an order to sell, they may be forced to liquidate securities to meet the request if they do not hold enough cash. Enough orders can force them to sell at prices far below true value. This then feeds the market slides and may cause more panic selling. And so on and so on.

Imagine for just a moment that when you woke up this morning and stepped outside, you had not read or heard any financial news for the last few months. Does it look like things have really changed? Parents are still driving their children to school before they head off to whatever it
is they do with their day; long line-ups still rule at the drive-thru windows at Tim Hortons and other fast food chains; and large truck and trailer units are still delivering goods to our favorite retail outlets.

Warren Buffet, one of the world's richest men, acquired his wealth by investing. He didn't become wealthy by accident. Buffet says, "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." He also says, "I haven't the faintest idea
as to whether stocks will be higher or lower a month - or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

While it may be tempting to get out of investment funds now because of recent market drops, how will you know when it's time to get back in? Don't forget that securities being sold at low prices are being bought by someone. It's always a good time to invest; right now just may be the greatest time to do so.

Copyright 2008 Life Letter. All rights reserved

Want help with your Financial Plans?
Call Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca

 

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LIFE LETTER

More overlooked RRSP Tricks

More than 65 of Canadians have made deposits to Registered Retirement Savings Plans (RRSPs). Many do so just for the tax savings, but here are some often overlooked tricks you should be aware of:

RRSP loan at the dip - Those who use investment funds for their RRSPs should be well aware of the strategy of "buying low and selling high." As unnerving as it may feel, one of the best times to make a lump sum deposit is after there has been a substantial stock market correction. If you don't have the cash on hand, an RRSP loan, paid back monthly, is an attractive way to come up with a larger deposit.

Use refunds wisely - Many RRSP contributors receive tax refunds each year. All too often, the refund gets blown on consumer items. Why not endorse the cheque directly over to your RRSP carrier and get a head start on next year's contribution? How about a deposit to an RESP for your child or grandchild that would be eligible for the 20 Canadian Education Savings Grant (CESG)? Have you thought about using it to pay down credit card or other high interest consumer debt?

Don't wait for your RRSP tax break - If you are making regular deposits to your RRSP (e.g. monthly PAC deposits), you can complete and file a TD1 or T1213 to reduce the taxes withheld from your paycheque. This allows your employer to deduct your RRSP contribution amount from your income before income taxes are calculated, giving you an instant tax deduction. Why let the government use your money interest free?

Delay the deduction - A few weeks after you file your tax return, you receive an Income Tax Assessment from Canada Revenue Agency (CRA). It summarizes your income and deductions, and also tallies your RRSP contribution room. If you come into a windfall, you can deposit up to your contribution room from it into an RRSP. You are not required to take the full deduction on your next tax return. It can make a difference to wait until a later year when you reach a higher tax bracket so you can benefit from a larger tax savings. In the mean time, your RRSP deposit can grow tax deferred.

Name a beneficiary - If you don't name a person (or persons) as a beneficiary for your RRSP account, the funds will be paid into your estate on death. A spouse may lose the opportunity to elect a tax-free rollover into their RRSP or RRIF. Also, the funds then become subject to the costs and delays of having them settled through your estate. It makes sense to review your designations regularly and make changes when necessary.

Use up a deceased's Contribution Room - Jessica, as a new widow, completed and filed a terminal tax return for her husband, Andrew. She received his life insurance proceeds and he had lots of unused RRSP contribution room. Andrew had earned about $60,000 in salary in the year of
his death. Jessica was able to make a large contribution to her spousal RRSP with Andrew as the contributor. As she was able to reduce his taxes to zero, all the income taxes withheld during the year were refunded. She then deposited the refund into her own RRSP.

Copyright 2003 Life Letter. All rights reserved

Want help with your estate planning?

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

 

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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