Real Estate Bits

This article was featured in August 2006 but we are re-running it in light of the current strength of the Canadian dollar.

If you hold U.S. stocks or mutual funds, you know what the rising loonie can mean to your portfolio. Although U.S. equity markets advanced in 2005, when those gains were converted back into Canadian dollars, you may have actually lost money. In contrast, those who travel to the U.S. have seen the positive effects of a stronger Canadian dollar, as their trips have become more affordable.
The following are some ways to protect your portfolio against currency fluctuations, and to read about other implications of a strong Canadian dollar:

Who Benefits - Who Faces Challenges?

The stronger Canadian dollar is a positive development for consumers of U.S. goods and services. Companies that purchase machinery, equipment, and technology from U.S. companies have been able to do so at much more attractive prices.
Individual consumers also benefit. Snowbirds and other travelers to the U.S. are obvious winners, as are cross-border shoppers. But even those making smaller transactions have been reaping the rewards. If you're renewing a subscription to a U.S. magazine or buying U.S. goods online, for example, your Canadian dollars will go farther.
On the other hand, companies that export to the U.S. have been facing considerable challenges, as consumers of Canadian goods and services are now facing higher costs. The manufacturing heartland of central Canada has been particularly hard hit. With many analysts pointing to continued strength in the loonie, the challenges facing exporters may continue.
Even smaller companies and consultants that get paid in U.S. dollars will notice that their greenbacks don’t go as far when converted back into Canadian dollars.

How Your Investments are Affected

When investing outside Canada, currency movements can affect your short-term returns. When you buy a U.S. or Japanese mutual fund, for instance, you are hoping that the country’s markets will advance and that its currency will rise - which would lead to enhanced returns when translated into Canadian dollars.

But the opposite is also the case. For instance, U.S. equity markets posted decent returns in the past few years, but the U.S. greenback also declined against our loonie. So, for Canadian investors, the positive U.S. market returns were diminished by the currency losses.

What Should You Be Doing

So, should you make changes to your portfolio based on currency movements? For most of us, the answer is no. Although currency markets can be extremely volatile in the short term, currency movements have tended to be more modest over the longer term. Here are some strategies that you can discuss with your financial advisor.

Ensure You're Adequately Diversified

Diversifying internationally - outside of Canada and the U.S. - is good advice in any investment climate, and even more so today. A global mutual fund, for instance, will invest in a number of countries and gain exposure to a basket of currencies. This can help to protect your portfolio against currency fluctuations. Some fund managers may even take special measures to lessen the impact of currency movements on their portfolios.

Consider Currency-Neutral Funds

If your time horizon is short, say five years or less, and you want to add U.S. investments to your portfolio, currency-neutral funds are one option. These funds attempt to lessen the impact of currency fluctuations, so that if your U.S. mutual fund earns 6%, that’s the return you receive.

Open a U.S. Dollar Account

If you travel frequently to the U.S., or make or receive payments in U.S. dollars, exchange rates and commissions can affect your currency transactions. Snowbirds, frequent business travelers, or investors looking to diversify their short-term savings, can benefit from opening a U.S. dollar savings account. Some of these accounts may allow you some commission-free transactions in U.S. dollars. And when you're not using those greenbacks, they collect interest for you.

Depending on your investment objectives and risk tolerance, now may be a good time to review the role that foreign investments, including U.S. stocks or mutual funds, can play in your portfolio. Your financial advisor is a good sounding board.

Regards,

Nino.

As we all know “issues” are the psychological benchmark of the day. We all seem to have them and most of us would be a lot happier if they disappeared from our lives. We have issues with our jobs, spouses, bosses, cars, neighbours, schools, the corner grocery store owner & even with ourselves! Sound familiar?

Well it turns out that houses have their “issues” too and I’d like to thank S.C. for his keen insight into this matter. With this in mind I thought I’d mention a few “issues” that many of us forget when we’re looking at houses to buy, or when we’re improving the ones we already own. So keep this list in mind – you’ll be happy that you did.

I could go on and on but this is a great start. You’ll never be sorry that you tackled the “issues” that your house has - now if I could just get some therapy …

Hello, I am Leane Besky and have recently opened a State Farm® office in the office in the GTA, Providing Insurance and Financial Services. I would like to take this opportunity to introduce myself to you.

My team and I are committed to caring about the people and the Small businesses we service – protecting them from life’s uncertainties and helping them secure their financial future. We Would be pleased to offer you insurance information, guidance and/ or a free no obligation quote for any of the products State Farm Offers.

I am a University of Toronto graduate as well as a Chartered Insurance Professional. Prior to opening my agency in August 2006 I worked at State Farm for 10 years where I gained a vast amount of industry experience. I have also lived in the beach community for 5 years with my husband and 3 year old daughter.

You may contact me or my team members by calling 416-690-7900 e-mailing me at leane@leanebesky.com or visiting us in person at our office in the Beach. Our office hours are Monday to Friday 9AM to 6PM, Saturdays from 10AM to 2PM and after hours by appointment.

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