dreams & money: 4th issue of december 2012
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Dreams & Money: 4th Issue of December 2012TRANSCRIPT
24 DECEMBER 2012WEEKLY
Protect Your Dreams from Pushy Sales People
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Weekly Statistics Canada News 2 4
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Existing home sales in the US rose 5.9% in November to a seasonally adjusted annual rate of 5.04 million, reaching the highest rate since November 2009, the Nat ional Association of Realtors reported.
“Momentum continues to build in the housing market from growing jobs and a bursting out of household forma-tion,” said Lawrence Yun, NAR's chief economist, in a statement.
But the situation in Canada is different today.
According to statistics released by
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Dream Issue2 30
A Tale of Two Countries:and the TodayCanada United States
In its latest report on Canada, the welcomed the introduction of a new IMF appreciated the authorities' gradual round of measures in the second half of tightening of mortgage insurance rules; 2012, which tightened the rules for but urged to take further macro- government-backed mortgage insur-prudential measures if household ance and lending mortgage standards. leverage continues to rise. While it is too early to ascertain the full
impact of the latest round, IMF believes Household debt in relation to income that the cumulative effect of all mea-reached new historical highs in 2012, sures taken since 2008 has slowed the and remains high in relation to assets. growth of household indebtedness and Moreover, staff analysis suggests that the housing sector. However, should the real house prices and residential household debt to income ratio continue investment as a share of GDP remain to rise, additional measures may be above levels consistent with economic needed. Higher down payment require-fundamentals. In this context, IMF
ments (tighter loan-to-value [LTV] limits for first buyers), lower caps on debt-service -to-income ratios, and tighter LTV on refinancing are some of the options suggested by IMF.
Uncertainty about the global economic environment, and in particular the impending “fiscal cliff” in the United States, is likely to constrain growth over the current quarter and the next, according to IMF. A positive resolution of that uncertainty and a strengthening of the U.S and global economy from mid-2013 would boost the Canadian economy through stronger exports and business investment.
The cost of getting a annually, the agency said.Canadian passport is going The new passports will also up significantly from July contain watermarks depicting 2013. iconic images from Canadian
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IMF Favours Further Tightening Of Mortgage Insurance,If There Is No Improvement
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Toronto andGlobal Market
Review
The Canadian Real Estate Association (CREA), na t ional home sa les activityedged back down in November 2012 on a month-over-month basis, returning to where it stood in August. Demand geared down in August in the wake of tighter mortgage lending rules, and has since been running about eight per cent below levels in the first half of the year.
Actual (not seasonally adjusted) activity came in 11.9 per cent below November 2011 levels. Sales were down on a year-over-year basis in three of every four of all local markets in November, including most large urban centres. Calgary stood out as an excep-tion, with activity up 10.6 per cent from a year ago.
“National sales activity has remained fairly steady at lower levels since mortgage rules were changed earlier this year, but that stability masks some real differences in trends among
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Canadian Passport in 2013will Cost More
News & ViewsDigest
local housing markets,” said CREA President Wayne Moen. “As always, all real estate is local, so buyers and sellers should talk to their REALTOR® to understand how the housing market is shaping up where they live or might like to.”
On the other hand, the contribution to in 2014, a pace consistent with a gradual growth from private consumption and absorption of the output gap and a slow housing will likely be lower than in the decline of the unemployment rate past few years, as high leverage is towards its natural rate.expected to contain household spending IMF's advice to the Bank of Canada and residential investment (as a share of is to hold off on monetary tightening GDP) and house prices (in real terms) until the economy performs better. It are projected to fall gradually to more says if the worst does happen, there is sustainable levels. Overall, IMF expects still some space for monetary easing to GDP growth of just below 2 percent in occur — that is for the Bank of Canada 2013, accelerating to around 2¼ percent to lower interest rates even further.
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Interaction between clients and bank staff continues to be largely product-
Retail Branch Client Experience report driven, rather than focused on assessing is based on mystery shoppers conduct-client needs, according to the latest ing 200 unique visits in different survey by Dalbar.branches, both urban and rural, across The Trends & Best Practices in the Ontario. These results were combined with an equal number of objective third party bank branch visits, yielded a data set of 400 unique experiences.
“We encountered a lot of pleasant interactions, but few that truly repre-sented a holistic discussion around a client’s financial plan,” says David Fang, senior research analyst at Dalbar. “Representatives were eager to promote certain products, but it is crucial that these products are appropriate in the spectrum of a client’s investment strategy and portfolio.
The result was a client experience that left the impression of pushy and aggressive sales force.
What’s the takeaway? For the banks, they should probably start training their branch reps to conduct better needs analysis, or at the very least, better communicate how a specific product fits into the client’s financial picture.
“Banks are promoting that their experiences are superior, but the actual conversations are still product-driven, if you really listen to them,” says Anita Lo, Dalbar’s vice-president of Canadian strategy. “Training needs to be more
A Tale of Two Countries... 233,995 in September. Urban starts were down by 10.1% from the October From Pg.1annual rate, singles by 7.6% and The Canada Mortgage and Housing multiple units by 11.4%Corporat ion (CMHC) reported
CMHC also said in a quarterly December 10 that building of new review that the housing market is homes decreased in November for the beginning to slow, with total starts third straight month, with 196,125 units expected to decline in 2013 to 193,600 recorded at a seasonally adjusted annual units from 213,700 this year.rate, against 203,487 in October and
Protect Your Dreams from Pushy Sales People
BANK REPS SEEN AS , SALES FOCUSED“PUSHY”fine-tuned in putting the client first, and score?the product second.” Ÿ TD Bank Financial Group (78.8)
For non-bank advisors, this is an Ÿ BMO Financial Group (75.7)opportunity to differentiate your service
Ÿ Canadian Imperial Bank of offering. Continued focus on needs Commerce (74.2)analysis and holistic financial planning
Ÿ INDUSTRY BENCHMARK (74.1)should result in a more engaging client Ÿ RBC Royal Bank (72.8)experience, rather than the client feeling
they are simply facing a salesperson. Ÿ Scotiabank (69.1)(Source: advisor.ca)So how did Canada’s big five banks
Jacob Friedlander, whose first Friedlander appealed to Tax Court language is Spanish, immigrated to seeking relief. Unfortunately, the Tax Canada in 2000. In 2002, he walked into Court has no jurisdiction to waive the a bank branch where he wished to open over-contribution tax. This can only be up an investment account. He told the done by applying to the CRA. employee he wasn't working, and wasn't Friedlander did apply to the CRA, but earning any income that year. He was a his application was refused on the basis stay-at-home father—with two infant that he “had not shown that the RRSP children—who was also in school. excess contributions arose due to a Nonetheless, the bank employee set him reasonable error.”up an RRSP. The judge disagreed, and encour-
Friedlander deposited a total of aged Friedlander to request a second $11,450 in the account between 2002 impartial review of the (CRA's) and 2006. He never claimed any RRSP decision. The judge also strongly urged deductions for those years since he had the person reviewing that decision to no income from which to take the take into account his comments.deduction. He also had no RRSP The Tax Court does, however, have contribution room. Since Friedlander's the power to cancel the penalties deposits were greater than the amount assessed for failure to file the T1-OVP he was permitted to contribute to an returns, provided a taxpayer exercised RRSP, it resulted in an over-contribution due diligence with respect to the filing tax of 1% per month. requirements.
Friedlander, however, didn't file his The judge, cancelling the penalties, T1-OVP returns until he was notified of concluded Friedlander's failure to file the over-contributions in January 2009 was due to a “reasonable mistake of by way of a letter from the CRA. As soon fact” as to the nature of the account he as he received the letter, he took the opened. If it had been an ordinary necessary steps to file all the T1-OVPs investment account, there would have for the years in question and removed been no requirement to file the T1-OVP his excess contributions from his RRSP. returns.But because the T1-OVP forms were not This matter could've been avoided if filed on time, he was hit not only with the advisor had understood the client's the 1% over-contribution tax for the situation. As a new immigrant with no relevant months but also with penalties earned income—and no RRSP and interest, all of which totalled room—such an account wasn't his best approximately $4,350 on the $11,450 of solution.deposits to his RRSP account.
(Source: advisor.ca)
A true story from as narrated by Advisor.ca Jamie Golombek
By Steven Lamb
GTA REALTORS® RELEASE MID-MONTH RESALE FIGURES
Summary of TorontoMLS Sales and Average Price
December 1 ‐ 14
2012 2011
Sales Average PriceNew
Listings Sales Average PriceNew
Listings
City of Toronto ("416") 879 $489,233 1,155 1,099 $484,611 1,352
Rest of GTA ("905") 1,290 $460,026 1,799 1,475 $437,305 1,767
GTA 2,169 $471,862 2,954 2,574 $457,503 3,119
TorontoMLS Sales & Average Price By Home Type
December 1 ‐ 14, 2012Sales Average Price
416 905 Total 416 905 Total
Detached 304 717 1,021 694,619 554,588 596,282
Yr./Yr. % Change ‐10.9% ‐11.0% ‐11.0% ‐3.1% 4.7% 1.9%
Semi‐Detached 81 142 223 542,385 380,473 439,284
Yr./Yr. % Change ‐33.6% ‐6.0% ‐18.3% 6.9% 4.9% 2.8%
Townhouse 91 256 347 407,885 344,993 361,486
Yr./Yr. % Change ‐14.2% ‐7.6% ‐9.4% 11.2% 4.1% 6.0%
Condo Apartment 392 154 546 340,573 286,994 325,461
Yr./Yr. % Change ‐24.2% ‐19.4% ‐22.9% ‐4.3% 3.0% ‐2.9%
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24 DECEMBER 2012MONEYDREAMS & Housing MarketDEBT
Dreams and Money takes care to present all the information as accurately and efficiently as possible. Any advice or recommendation appearing in the paper is also part of information only. They should not be construed as an expert opinion. Please note that no representation or warranty with respect to the accuracy or the completeness of the information is given. Information always keeps changing. Hence all the information, including advice and recommendations are to be treated as of general nature only. For your specific circumstances, you are always advised to consult an expert before acting on any information.
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TORONTO, December 18, 2012 – dollar purchase price ceiling for Greater Toronto Area REALTORS® government-backed insured mortgages, reported 2,169transactions through the appear to have had the effect desired by TorontoMLS system during the first 14 Finance Minister Jim Flaherty. Some days of December 2012. This number of home buyers have put their home sales was down by 16 per cent in purchase decision on hold," said comparison to the same period in Toronto Real Estate Board (TREB) December 2011. President Ann Hannah.
"Stricter mortgage lending guide- "In the City of Toronto, sales lines, including a reduced maximum declines have been more pronounced as amortization period and a one million the effect of stricter mortgage lending
guidelines has been compounded by the City's additional up front Land Transfer Tax," added Hannah.
The average selling price in the first two weeks of December was $471,862, representing a three per cent annual rate of price growth.
"Even with the dip in sales since the spring, tight market conditions in the low-rise segment of the market have driven year-over-year average price growth," said Jason Mercer, TREB's Senior Manager of Market Analysis.
"While the average price for detached homes in the City of Toronto was down for the first two weeks of December compared to last year, this dip was due to a different mix of homes sold this year compared to last. There were fewer high-end detached homes sold compared to last year," continued Mercer.
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At Dreams & Money, we want to help people lead happy lives. We want to help people reach their dreams. A lot of dreams in the world require financial awareness and proper planning to bring to fruition. To get this financial knowledge can be challenging. We realize this, and want to make this process simpler.
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THE MISSION
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24 DECEMBER 2012MONEYDREAMS & INVESTING
Review of Global markets climate index, rose for a second consec-utive month in December, coming in at a Overall Global markets declined slightly stronger-than-expected 102.4. during the week on after American The index ended a six-month string of House Republicans canceled a vote on declines in November, when it rose to higher taxes for top earners, fueling 101.4.concern budget talks will fail. During
the week market traded volatile, positive trend was supported by optimism that progress is being made in the US on a deal that avoids the fiscal cliff. However, at the end of the week after US House Republican leaders canceled a planned vote that would permit higher taxes amid stalled budget talks weighed on sentiment.
The US economy grew at a 3.1% annual rate in the third quarter, more than previously reported. Purchases of The Bank of Japan announced thatit existing houses increased 5.9% to a 5.04 would add about 10 trillion yen ($119 million annual rate, the most since billion) to its asset-purchase program, November 2009. US President Barack citing "a high degree of uncertainty Obama told a news conference on concerning Japan's economy." The Wednesday that Republicans find it monetary policy committee also voted "very hard" to say yes to him, while a to keep its interest-rate target at 0 to spokesman for House Speaker John 0.1%. Boehner, the top Republican negotiator
Review of Indian marketsin the talks, called the White House
Indian Markets declined during the "irrational."week on weak global cues amid dim-
Singapore's Non-oil domestic ming hopes that US politicians will
exports fell 2.5% from a year earlier, reach a debt deal before the end of the
after a 7.9% gain in October.year. United States is the world's biggest
Fitch Ratings agency forecast economy. Gains fuelled by hopes of new growth of France only 0.3% in 2013, government reforms also subsided as well below the 0.8% the 2013 budget is the winter session of parliament ended built on, and believes the government on Thursday. Sensex fell 0.39% to will not be able to narrow the public 19242 and Nifty fell 0..54% to 5847.70 deficit as by much as it hopes. for the week ended 21 December 2012.
Sweden's central bank cut its main Weekly Outlook – week begins from lending rate, citing a "clear slowdown" 24 December 2012in the Swedish economy driven in large
The market may remain volatile in part by weakness across the neighboring
the forth coming week as traders roll euro zone. The Ifo German business
over positions in the futures & options
are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff, which refers to the possibil-ity of more than $600 billion of auto-matic tax hikes and spending cuts (F&O) segment from the near month kicking in from January 2013 that could December 2012 series to January 2013 throw the US economy back into series. The near-month December 2012 recessionderivatives contracts expire on
Thursday, 27 December 2012. Australian government is unlikely to reach its target of a budget surplus in the Next week is a truncated trading fiscal year ending June 30, 2013.week. The stock market remains closed
on Tuesday, 25 December 2012, on Even in a dynamic market, you can account of Christmas. make money by proper investment
planning. You do not have to be wealthy Indian companies will start unveil-to be an investor. Investing even a small ing Q3 December 2012 results from amount can produce considerable mid-January 2013. Investors and rewards over the long-term, especially if analysts will closely watch the manage-you do it regularly. But you need to ment commentary that would accom-decide about how much you want to pany the result which could cause invest and where. To choose wisely, you revision in their future earnings forecast need to know the investment options of the company for the current year and thoroughly and their relative risk or next year. exposures. We provide real time On the global market front, investors training to become a successful inde-will continue focusing on US fiscal cliff. pendent investorAs a year-end deadline nears, US
President Barack Obama and House of Representatives Speaker John Boehner
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Global Indian Market and Weekly Review - Week Ended 21 December 2012
Uncertainty ContinuesTSX Trend From Dec.17, 2012 to Dec.22, 2012
The Toronto Stock Exchange's S&P/TSX composite index ended at 12,385.70. It gained 0.7 percent for the week.
All eyes are on U.S. "fiscal cliff". The index's materials sector rose slightly. Gold i s h e d g i n g i n t o t h e u n c e r t a i n t y a r o u n d t h e b u d g e t t a l k s .Investors are avoiding economically sensitive Canadian stocks and those most closely tied to the U.S. economy: auto parts manufacturers, forestry companies and resource stocks generally.
Chinese demand is likely to pick up which is still by far the most important export market for Canada.
Source : Yahoo Finance
LOWEST INFLATION IN NOVEMBER
Canadian inflation dropped in November to its lowest annual rate in three years, to 0.8% from an already low 1.2% in October, far below the Bank of Canada's 2% inflation target, Statistics Canada reported Friday.
November was the ninth consecutive month for which inflation in Canada, measured by the Consumer Price Index (CPI) was at or below the Bank of Canada's 2% target following 16 months above it.
UNIMPRESSIVE GDP GROWTH
Real gross domestic product edged up 0.1% in October, following no growth in September and a 0.1% decline in August. The output of service industries advanced 0.1% in October, primarily a result of increases in wholesale and retail trade. The increases outweighed declines in transportation services and in the arts and enter-tainment sector. Goods production was unchanged in October. Increases in mining and oil and gas extraction and utilities were offset by declines in manufacturing and construction.
NON-FARM PAYROLL UP
Average weekly earnings for non-farm payroll employees climbed 0.9% to C$909.00 in October following a 0.5% drop in September, led by accommodation and food services, construction, retail trade and public administration. However, on a year-over-year basis earnings continued their uptrend, rising 2.8%, slowing from September's 3.4% advance.
CONSUMERS SPEND MORE
Canadian consumers remained active in October, for a fourth straight month, increasing their retail purchases by 0.7% to C$39.4 billion from September,
Consumer spending for the year through October was up 3% over the January-October period in 2011.
Weekly Statistics Canada News
WHOLE SALE SALES UP
Wholesale sales rose 0.9% to C$49.2 billion in October from the prior month after sliding 1.5% in September, largely on the solid sales of food and autos, while sales jumped 2.2% compared to October 2011,
HIGH DEMAND FOR CANADIAN BONDS
Foreign investment in Canadian securities increased by C$13.26 billion in October, bringing year-to-date acquisi-tions to C$76.162 billion -- surpassing C$74.210 billion for the same period last year. The activity in October was led primarily by foreigners adding corporate and govern-ment bonds to their portfolios.
In comparison, Canadian investors purchased C$3.188 billion worth of foreign securities in October, down from
C$6.028 billion in October.
Foreign investors bought C$12.516 billion in Canadian debt securities in October, picking up the pace from C$10.627 billion in September and strengthened for the fourth straight month.