Laura Chanin - Financial Planner

As an investment advisor and Certified financial planner, I encounter people who vary considerably in how they relate to their money. I've seen some people who are very high income earners and have little net worth to show for it. They may look good on the outside, with their nice homes, cars, clothes, vacations but they are actually very much in debt. On the other hand, I've seen clients who had a modest income and worked hard to control their spending and have the results to show for it. They paid off their homes quickly, put their children through university without loans, have lots of savings and no debts. And I've seen everything in between.

I belive that a huge part of how your relate to your money came from what you learned as a child.

One of the best things you can do for your children is to teach them the value of money, ways to make it grow, how to spend and how to save. Teach them how to be wealthy. That has more value that any indulgent gift you could give them because it will last a lifetime and provide them with a sense of control over their money.

Let me know if I can help.

Laura

10 Things

to teach your children about

how to be wealthy

Saving before spending.
Handling a bank account.
Budgeting their lunch money.
Let them experience negative consequences of blowing all their allowance on the wrong things. Don't compensate them for these mistakes. Let them do without.
Match their savings toward a big goal.
Teach your children about credit, in particular credit cards.
Give teens a small amount of money to invest, have them talk to your financial advisor and let them have the experience of making an investment and watching it grow.
Show them how you are managing your wealth, how much goes for their college funds, how much into RRSP/Tax Free Savings Accounts, how much is set aside for holidays, vacations, clothing etc. When they want something, discuss where that money should come from.
With working teens, set up an automatic withdrawal of a percentage of their earnings which goes into long term savings. Show them how quickly it builds up.
Show them the long-term consequences of a frivolous financial lifestyle. Examine what old age looks like without a secure financial base. Young people have trouble imaging themselves old, show them.

Past, Present and Future
Market Thoughts

Today

Given the current state of the economy, I am sending you a review of the current situation and the issues affecting the markets today, a look at history to provide a bit of perspective and some advise on the future.

Currently equity markets are fluctuating with the fallout over the US credit crisis which is affecting the entire globe. Both US and European economies are facing housing bubbles and problems with their financial sectors and so global commodity outlook remains grim. Initially, the Canadian equity market was thought to be immune from such problems, but the sharp declines in commodity prices has taken a toll on our markets after all.

Historically

Bear markets hurt. Each one feels like it's the worst that ever was, but this isn't the case today. This bear market is right on par with historical averages. This bear market began in October of 2007. The average drop in the market is 28% (currently the US is at 40% and Canada is at 38%). The average duration is 13 months, which is where we are right now. The worst bear market in history lasted 31 months and the market declined more than 49%.

What will solve the problem

1. Lowering interest rates will help stimulate the economy, it has been shown to work over time. The rates in the US have dropped by 4.25% so far in this bear market and Canada has cut interest rates totaling 2.25%. Lower interest rates will help stabilize the shaky US housing prices.

2. Resolving the credit crisis is the second thing that must happen. What typically occurs when interest rates drop is that banks then lend more money as the demand for loans increases. Right now, many banks have been holding on to their cash and making it much harder to get business and personal loans. We need the banks to start to lend their excess money out. It is important because credit it like the fuel in the engine of the economy. It is what allows people to start businesses and hire workers. It is what allows people to buy houses or buy a car. And just like a car, take the fuel out of the economy's engine and the engine stops working. Around the world, governments have been working to increase 'liquidity', and we have seen some positive signs suggesting that credit conditions are improving. But it remains a key area of concern.

The future

The governments of the US and European countries who "bailed out" key banks guaranteeing loans and pouring billions of dollars into these institutions was a step that was aimed at unfreezing the banks lending, resuming a normal lending environment with the public as well as other banks.

The election of the opposition party it the US with Democrat President-Elect Barack Obama has buoyed the spirits of the US. He and his government will have a daunting task set out for them when he takes office in the spring. The prediction for the next couple of quarters is to expect a period of contraction as we wait to see what the new government does.

Equity markets will likely remain volatile. However, Warren Buffett has been aggressively buying US equities and making millions of dollars said "If you wait for the robins, spring will be over." There is no doubt that this period of adjustment presents an opportunity to buy "low".

Disclaimer

PLEASE BE ADVISED THAT TRADING INSTRUCTIONS SHOULD NOT BE COMMUNICATED VIA E-MAIL, AND IF RECEIVED, WILL NOT BE ACTED UPON. Without the use of secure encryption, the Internet is not a secure medium and privacy cannot be ensured. Internet e-mail is vulnerable to interception and forging. DundeeWealth Inc. cannot ensure the privacy and authenticity of any information, and will not accept any instructions that you send us over the Internet. DundeeWealth Inc. will not be responsible for any damages you may incur if you communicate confidential information to us over the Internet or if we communicate such information to you at your request.

This newsletter is solely the work of Laura Chanin for the private information of her clients. Although the author is a registered Financial Advisor/Investment Advisor with Dundee Securities Corporation, a DundeeWealth Inc. Company, this is not an official publication of Dundee Securities Corporation and the author is not a Dundee Securities analyst. The views (including any recommendations) expressed in this newsletter are those of the author alone, and they have not been approved by, and are not necessarily those of, Dundee Securities Corporation.