Solutions A How to build a better RSP

Solutions
I d e a s
&
s t r a t e g ies
f o r
f i n a n c i a l
WINTER 2011
su c c ess
How to build a better RSP
Canadians are living longer and enjoying
more years in retirement.
It’s easier than you think. Start good RSP saving habits today.
A
registered Retirement Savings Plan
monthly amounts, rather than making one large
advantage of a wide range of investment
(RSP) is an investment in your future:
contribution each year. See the story, “Make it
opportunities, both global and domestic,
It can help provide the savings you
automatic and boost your savings,” on Page 2
while at the same time, managing risk by
to see how quickly your money can grow.
not putting all of your money in one type of
need to get the most from your retirement
years. And your RSP also comes with other
Diversify your RSP. How you invest your
investment. It’s a good idea to review your
benefits: Your contributions to your RSP
RSP dollars can also make a difference in the
investment mix at least once a year with your
help reduce the taxes you pay today while
retirement wealth you accumulate. One of
Mutual Funds Representative and make any
the money in your plan grows tax-free until
the keys to RSP success is having a balanced
necessary adjustments, as changing market
you are ready to withdraw it down the road.
mix of investments that suits your goals and
conditions may alter the balance in your plan.
At that point, you will probably be in a lower
your tolerance for investment risk.
tax bracket, saving you even more money.
With Canadians living longer and enjoying
Define your retirement dream. One
Balancing your portfolio means spreading
— or diversifying — your RSP across different
more retirement years, getting the most out of
types of investments and geographic regions.
your RSP has become even more important.
Typically, these include growth investments
Here are a few easy ways to build a better RSP.
such as equities or equity mutual funds,
Make it a habit. Taking the simple step of
bond mutual funds and “cash” investments
best moves you can make. You may find it easier
such as money market funds.
Two ways to benefit
with dividend funds
2
This balanced approach lets you take
China, India and other emerging
markets are powering ahead
Continued on Page 2
TD Asset Management Inc.
was named the Morningstar®©
Fixed Income Fund Manager of
the Year at the 2010 Canadian
Investment Awards Gala.
fixed-income investments such as bonds or
contributing regularly to your RSP is one of the
to set up an automatic savings plan with small
of the fun parts of retirement planning is
3
What’s ahead for the
economy in 2011?
4
Spotlight
How to build a better RSP
Continued from Page 1
Make it automatic and boost your savings
thinking about how you want to spend your
For the 2010 taxation year, you can
“golden years.” This will influence how
contribute up to 18% of your 2009
much money you’ll need for retirement and
earned income to your RSP, to a maximum
the amount you’ll need to save today to
of $22,000, plus or minus any pension
reach your goals.
adjustments. Your Notice of Assessment
For instance, if your dream retirement
is gardening and spending time with your
grandkids, you may not need as much
$49,193
But don’t wait until the March 1,
extensively. That’s why you should start
contribution. By contributing sooner,
thinking now about how you want to
you’ll avoid the rush and your money
spend your retirement.
will have more time to grow.
$94,870
Compound growth
available contribution room.
money as someone who wants to travel
Get started. A TD Personal
Your contributions
from your 2009 tax return will show your
2011 deadline to make your RSP
Assessment1
Watch your money grow
$27,931
15 yrs
That’s where an automatic savings
20 yrs
30 yrs
can help you create a clear picture of
plan — where you contribute a set
your current financial situation and start
amount each month — can help. As the
your plan for a successful retirement
chart shows, the sooner you start, the
savings strategy. Arrange for a TD Personal
better. You can try different senarios for
Assessment with your local TD Canada Trust
yourself using the RSP calculator at
Plan for your RSP, visit your TD Canada Trust
branch or visit www.tdretirement.com
www.tdgetsaving.com
branch or call 1-866-222-3456 to speak with
for more information. n
To set up a Pre-Authorized Purchase
Assumes a $100 monthly investment in a
balanced fund2, earning a 6% rate of return,
compounding tax-free in an RSP.
a Mutual Funds Representative.
Mutual Funds
Two ways to benefit with dividend funds
These funds can help you invest with confidence
paying shares — and the mutual
W
earned to unit
holders through
— have the potential to rise in
receive regular dividend income from the
regular dividend
price, along with the market. So
fund, and your original investment has the
distributions.
you have the potential not just
hen you invest in dividend funds, you
funds that hold these shares
may benefit in two ways. You could
potential to rise in price.
Dividend funds could provide
income and capital gains.
for income, but also for capital
Dividend funds explained
The tax
advantage
These funds focus on shares of companies
Dividend distributions also come with an
dividend income and potential capital
that pay dividends. Dividends are a portion of
important tax advantage. Like eligible
appreciation, a fund such as the
company profits that are paid to shareholders,
dividends from Canadian corporations,
TD Dividend Growth Fund could be a good
usually every quarter. Many established blue-
eligible mutual fund dividend distributions
choice for your portfolio. For more information,
chip companies have a long track record of
qualify for the dividend income tax credit,
visit your TD Canada Trust branch or call
regular dividend payments.
which reduces the taxes you pay on those
1-866-222-3456 to speak with a Mutual
earned dividends.
Funds Representative. n
Mutual funds pass along any dividends
2
Like all stocks, dividend-
gains on your investment.
If you’re looking for both
solutio n s | Winter 2011
Investment Strategy
Investment Planning
China, India and other emerging
markets are powering ahead
Not sure how
to invest?
Start with a
TD Personal
Assessment
How you can benefit from this growth
L
ately, the news has been full of stories
It’s a big investment world, with lots
about slowing economies — in the
to consider. Financial markets are
United States, Europe and Canada. But
constantly changing, and there is a
there’s a big part of the world where
huge selection of investments to
economies are growing rapidly.
choose from. When it comes to investing,
it’s easy to feel overwhelmed.
Exciting growth ahead
For example, should you invest in
Economies are booming in what are known
mutual funds? Or do you need the
as emerging markets — such as China,
security of Guaranteed Investment
India, Brazil and many others. By investing
Certificates? How can you earn investment
in companies that profit from this growth,
returns that will help you meet today’s
you too could benefit from the opportunity
financial needs and save for a
to participate in some of the world’s
comfortable retirement?
fastest-growing economies.
Where do you stand today?
Businesses headquartered in emerging
nations are increasing sales and profits by
catering to a large and growing middle
A growing middle class spells opportunity
in emerging markets.
We can help make sense of it all. Start
the process with our complimentary
class. Large multinational companies are
TD Personal Assessment. It can show
also tapping into this potential by selling
you where your finances stand today
goods and services to a growing number
That’s because emerging economies, being
and help you take control of your
of middle-class consumers in emerging
at an earlier stage of economic development,
investment future.
countries.
are often subject to greater fluctuations than
Other companies are benefiting from
economies of developed countries.
the huge investment in infrastructure —
As part of your TD Personal Assessment,
a branch representative will work with you
to develop a clear picture of your current
roads, airports, factories, water treatment
A conservative option
financial situation. You’ll also discover how
plants, power grids — that is taking place
Investing in a mutual fund, such as the
much you should be saving for retirement.
in emerging economies.
TD Global Dividend Fund or TD Global
And they will help you choose the right
Multi-Cap Fund — which are also included
investment solutions for your needs.
Diversifying your investments
in TD Comfort Portfolios — may be a good
For all of these reasons, you might consider
way to gain exposure to emerging markets,
The advice you need to succeed
adding some exposure to emerging markets
but in a more conservative way, since
At the end of your TD Personal Assessment,
in your investment portfolio.
they reflect a disciplined approach to
you will receive advice, recommendations
investing.
and the next steps to help meet your
By investing abroad, you’ll gain exposure
to companies and even entire industries
®
These funds hold many large, multinational
unique financial and retirement needs.
that may not be widely represented in
companies that are selling their products to
Canada. This can help diversify your
emerging market consumers. So you can
and ask for your TD Personal Assessment.
investments and minimize the impact of
take part in this exciting growth potential,
You can also prepare for your TD Personal
ups and downs in your portfolio.
but gain a measure of safety from investing
Assessment by completing the questionnaire
in established companies that you are
at www.tdretirement.com/
familiar with. n
pictureyourdreams.aspx
However, it’s a good idea to proceed
carefully when it comes to emerging markets.
solutio n s | Winter 2011 Visit a TD Canada Trust branch today
3
Economic Update
What’s ahead for the economy
in 2011?
Craig Alexander, Senior Vice President
& Chief Economist, TD Bank Group,
gives his views.
Canada’s economy should grow by 2% in 2011.
Q
What are the major economic
U.S. growth over the next couple of years of
themes for 2011?
around 2%. Our forecast for Canada is similar,
The dominant economic story is that the
around 2% for 2011, which is in line with
global economic recovery continues to
long-term averages.
unfold, but in an unusual way. Emerging
markets are extremely strong.
Meanwhile, it is a completely different
Q
Q
What does all of this mean
for investors?
Modest economic growth in developed
countries doesn’t mean there aren’t attractive
investment opportunities. Some parts of the
What are the greatest risks
economy will do better than others. And some
to the economy?
parts of the developed world will do better.
We worry about two things: the potential
Many companies do much of their business
developed countries are experiencing fragile
for renewed fiscal problems in European
outside the countries in which they are head-
and tentative recoveries. Europe will be hard
countries and the possibility that the
quartered, so they aren’t necessarily levered to
pressed to grow by more than 1.5% a year
U.S. economic recovery will prove to be
domestic economies. Those businesses benefit
over the next couple of years.
unsustainable. The biggest risk to Canada
from growth elsewhere, including emerging
is if the U.S. economy falters. However, we
markets. (See the article “China, India and
don’t expect a double-dip recession.
other emerging markets,” on Page 3.) n
story in the industrialized world. Many
The U.S. is gradually recovering, but with
emphasis on the word “gradual.” We expect
Questions? Discover the solutions that you need
Whether you have questions about your mutual fund investments or would like more advice on services or strategies described in Solutions, we’re here to help.
Just visit your TD Canada Trust branch or contact a Mutual Funds Representative at 1-866-222-3456. For your convenience, you can also get up-to-date,
secure information about your TD Mutual Funds® accounts online with EasyWeb® — 24 hours a day, seven days a week. Let’s figure it out!
1 The TD Personal Assessment is provided by TD Canada Trust.
2 A balanced fund will invest in both stocks and bonds, generally investing in a
range between 40/60 and 60/40 within these asset classes, depending on
the fund you select and your risk tolerance.
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