The Below is an excerpt from a recent cbc.ca article that has the former Bank of Canada governor suggesting Canadians should save more money for retirement even if they have a company pension.  I think this is surprising sound advice from a bureaucrat which comes as a bit of a shock.  Too often companies cut their pension to employees leaving them high and dry for retirement.  I have a feeling if you work for the government your pension will be just fine.

Canadians need to rely far more on personal savings if they want to retire comfortably, David Dodge, former governor of the Bank of Canada, said Thursday.  In a study done for the C.D. Howe Institute, Dodge said even those who think they have great company pension plans and solid RRSPs should re-examine their assumptions.

David Dodge says even Canadians who think they have great company pension plans and solid RRSPs should rethink how much they should save. (Canadian Press)

He said that in order to maintain the same standard of living after they retire, Canadians need to set aside between 10 and 21 per cent of their pre-tax earnings every year, starting from the time they’re 30.

Read more: http://www.cbc.ca/money/story/2010/03/18/david-dodge-retirement-saving.html#ixzz0itTVvxrc

The finance minister said he heard “a lot of positive views about the Canadian financial sector. The fact that we weathered the storm without having to put any taxpayers’ money into the financial system or any of our financial institutions impresses a lot of people.”

Canada’s relatively low debt ratio, now the best among G7 nations, has led investors to snap up Canadian bonds and drive up the value of the loonie, which some economists forecast will pass the U.S. dollar by mid-year.

Read more: http://www.cbc.ca/world/story/2010/03/15/flaherty-ny-speech.html#ixzz0iIwW1QYk

Being a Canadian I obviously keep a close eye on the financial scene here in Canada.  The RRSP deadline is fast approaching tomorrow March 1, 2010.  This deadline means you must have your registered investments purchased by end of day if you want to claim them against the 2009 tax year.  This is quite a hectic day for mutal fund advisiors and pretty much any financial planner that offers some type of registered investment.

Many Canadians will just speak with their personal financial planner or go to a bank and purchase whatever mutal fund they are currently promoting.  Many of these funds have very little upside wich is offset by high fees.   they may not tell you about these fees unless you ask.  Since the fees are taken from your balance after you purchase the finds you generally do not notice them missing.  So yes,  you can be starting your investment down 1-3% regardless of market conditions.  Each year these fees will be deducted from your account once again.  These fees can eat you alive while they destroy any possible gains and can significantly decrease your retirement potential when calculating the year over year expense.

Combined with a heavy taxation rate when withdrawing this money during your retirement may cause many people to rethink their savings strategy.  Some of the reason I mentioned are why the folks at the Divident Growth site refuse to be sold mutal funds.

Dump Your Funds

dividendgrowth.ca

Check out these links and ensure you are educated.  Everyones situation is different so make sure you make choices that are right for you.

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Not too long ago when you wanted a safe investment you could invest your money into bank stocks and sleep fairly well at night. In the past year or so things have changed. Big banks around the world were and some still are on the edge of bankruptcy. Amongst the ashes Canadian banks arose looking strong and stable.

The chart below lists the write down the major global banks took in 2009. The top four all all Canadian banks. A couple more like Royal Bank of Canada and CIBC are also listed a but further down.

Many people may think the Canadian banks are too conservative and take small risks. Those people would be correct. Profits for the big 5 Canadian Banks (TD, RBC, CIBC, BMO and Scotiabank) are smaller than what you would expect from most majors banks mostly because their exposure to risk is much less. This great ability to manage risk is done in a country that does not have a required reserve ratio on deposits. Kinda strange since the US banks have a 10% reserve ratio and nearly collapsed a year ago.

If not for the stock price and security alone you may want to look at the Big 5 dividend history.

Here are some excerpts from a few of the sites regarding their dividend history.

Scotiabank

Scotiabank’s practice has been to relate dividends to the trend earnings, while ensuring that capital levels are sufficient for both growth and depositor protection. This practice, coupled with the Bank’s strong earnings growth, has led to dividend increases in 37 of the last 39 years – one of the most consistent records for dividend growth among major Canadian corporations.

BMO

Dividends are generally increased in line with long-term trends in earnings per share growth, while sufficient profits are retained to support anticipated business growth, fund strategic investments and provide continued support for depositors. BMO’s policy is to maintain a dividend payout ratio of 45% to 55%, over time.

CIBC

CIBC has not missed a regular dividend since its first dividend payment in 1868.

Remaining two banks. RBC TD

To honor this post I present the great Canadian Silver Maple Leaf 1 oz coin.

With most mutal funds and RRSP investments going nowhere these days you should consider getting into DRIP’s or SPP’s. Here is a link to a great list of Canadian DRIP’s and SPP’s.

I plan to write a more detailed article in the future regarding how these two investment vehicles have done in the past few years.

This is a huge 1600 km pipeline that was not supposed to be ready until this July.  The Canadian oil giant Suncor has agreed to use this pipeline to ship oil from the Alberta oilsands to Wisconsin.

Despite what anyone in the media says, Canada is a major exporter of oil to the US.  Currently The US imports almost twice as much oil from Canada then the next country on the list.  See for yourself.

US Crude Oil and Total Petroleum Imports Top 15 Countries

Enbridge’s Alberta Clipper pipeline set to come into service ahead of schedule – Winnipeg Free Press