April 3rd, 2014


Money will not change how healthy you are, or how many people love you.

I have recently seen too many people become ill or unhealthy to the point they are unable to enjoy their wealth.  The adage of “Live for Today” seems to become more relevant and important to me as I get older.

I’ll take care of your money, and you take care of your health and living life to the fullest every day! Here are 3 interesting new ideas for investing money:

CI Guaranteed Retirement Cash Flow Series, G5/20: Guarantee is backed by Bank of Montreal .to distribute annual cash flow amounting to 5% of the Guaranteed Asset Value for 20 years while keeping exposure to equities for growth potential.

Suitable for investors near retirement who are converting their RRSP’s to RRIF’s and want the security of guaranteed annual income.

PIMCO Monthly Income Fund (Canada):  PIMCO manages the largest amount of Bonds in the world, at $1.8 Trillion.  This product targets their best risk adjusted income generating ideas around the world.  Seeks to maximize monthly income potential with preservation of capital and prudent investment management.  Pays a 4% annual yield that is fully taxable as earned income.

Suitable for investors who need/want Bonds in their portfolio, and monthly income, yet recognize the risk to capital of owning medium to long term bonds as interest rates rise.

TD Retirement Conservative Portfolio: Historically this has been an institutional product for TD, and recently they made it available to retail investors.  Fund seeks to generate a moderate level of income with some potential for capital growth while also seeking lower volatility.  They do this by owning Bonds, and using their risk reduction pool (buying puts and selling call options) to offset risk and improve returns.  This product has a low risk rating and the T series pays 5% annual income in a tax efficient manner.

Suitable for conservative investors who want steady, predictable income with low volatility.

(As an interesting note, this product has been available to retail investors since September 2013 and TD has sold over $700 Million.  A very popular product.)

Our investing theme remains focused on obtaining income, and striving for a total return in the range of 6% to 8% per year.

We have been actively fine tuning portfolios to include a component in the U.S. Equity Markets, in some cases up to 25%.  In May, 2013 the S&P 500 finally broke through and exceeded the all-time high, and it has carried on upwards to make another new high a few days ago.

Janet Yellen, current Chair of the U.S.  Federal Reserve recently said interest rates will remain low for a prolonged period of time as the economic recovery is not as robust as desired, and unemployment has not recovered at the pace expected.

Corporations are able to use cheap capital and employ it in their businesses where the return on equity is often double digits, leading to increased profits.  In addition to more profit, the stock markets are also now applying a higher multiple which further contributes to share price appreciation.

Another factor contributing to strong stock market performance is the lack of opportunity in Bonds.  Investors who have new capital to invest, or alternately, who may have Bonds maturing are not too interested in a 10 year bond with a 3% coupon, that will likely go down in value 10% when interest rates go up 1%.

These fixed income investors are searching for alternatives, and those include the 3 products described at the beginning of this letter, and also, income paying securities which include preferred and common shares.

If you are interested in more details on these types of solutions please give us a call.

We continue to enjoy strong support for our Investment Lending Strategy.  It is suitable for investors who may have the following needs:

- To accumulate more money to fund retirement income.
- To implement a strategy that will pay off non tax deductible debt in a shorter period of time.
- To increase personal monthly income.

The essence of our program is to borrow money at 4%, and invest the proceeds to obtain 8% annual income.  The income is paid in a tax favored manner, such that only 25% of the income is taxable, and it is taxed as eligible Canadian Dividends.

Real life examples include clients who have implemented plans to achieve the following:

- Accumulate $1 Million of additional investments in 9 years.
- Pay off a home mortgage in 4 years instead of 10.
- Increase monthly income by $3,200.

These strategies are not suitable for everyone, and involves risk.  If you are interested in more details to determine if it may be suitable for you, please give me a call.

Thank you for the privilege of managing your wealth.  If we can do more for you, or you have questions please don’t hesitate to call.


Sincerely yours,


Fred Banwell