Hot Topics: Looking Past the Headlines and Focusing on the Fundamentals

Financial Planning: 4 Things to Consider Before Taking the Plunge

Investment Solutions: Managed Solutions – Part II

Expert’s Corner: Important Tax Strategies for the Coming Year

In this issue

Welcome to the second edition of Words on Wealth, an exclusive quarterly newsletter for valued Meridian Members like you. I’m proud to announce that the inaugural edition was a big success!

As your trusted Meridian Wealth Advisor and dedicated partner in your wealth journey, I am here to help you realize the lifestyle you deserve. To get you there, I will continue to provide straightforward advice that makes wealth planning easier to understand and that always puts your interests first.

I also want to ensure you have the best-possible ideas and insights for helping you make better-informed decisions. In this newsletter, experts from Meridian and our partners share tips and strategies about investment, tax and estate, and retirement planning – the key components of your wealth plan.

If you would like an electronic version of Words on Wealth sent to you via email, please sign up at: meridiancu.ca/wordsonwealth

Words on Wealth

Putting Your Interests First

Meridian

NeWSLeTTer SPrINg 2012

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Words on Wealth2

Looking Past the Headlines and Focusing on the Fundamentals By Helmut Pastrick

reason for continued concern

or if we are actually right now

experiencing economic growth.

The global economic recovery has been mixed but trending upward

The global economy is in its

third year of recovery and it

still appears to be moving in

a positive direction. As you

remember, the downturn

that started in 2008 was

the result of excessive real

estate lending in the U.S., and

was further exacerbated by

inadequate safeguards and too

much financial leverage. The

repercussions of these negative

circumstances continue to

influence global economic

policymakers, the wider

economy, and financial markets.

The heightened uncertainty and

market volatility of the past few

years have largely stemmed

from european sovereign debt

and banking issues, China’s

slowing economy, and rising

oil prices. Although the media

continues to report any number

of dire outcomes, is this bleak

outlook really correct?

Sometimes it’s worthwhile to

step back from the daily barrage

of bad news and instead look

at the fundamental forces that

are at work in the Canadian

and global economies.

This approach can help us

determine if there is indeed

europe is currently dealing

with a weak economy, as well

as a complex institutional and

political structure. That region’s

economic prospects in the

near term are unclear, and

europe’s economy will likely

continue to struggle without

substantial structural reforms

to help increase competition,

lower the costs of production,

and encourage investment.

China’s economy appears to

be slowing, but continues to

move in a positive direction.

This continued economic

growth has been driven by

China’s rapidly growing middle

class. Concerns about a “hard

landing” (meaning China’s

economic growth will come to

an abrupt standstill and begin

to contract) appear overstated,

HOT TOPICS

The global economy at a glance

• Chinaandemergingmarkets are a positive long-term growth story

• TheU.S.ispoisedforimproved growth

• Europeisworkingthrough difficulties

• Lowinterestratesshouldcontinue in 2012

• Highercommoditypricesover the long term

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Words on Wealth 3

HOT TOPICS

as China’s policymakers still

have a considerable number

of tools available to stimulate

the economy. Monetary and

fiscal measures may also be

administered to ensure the

government’s growth targets

can be met.

The U.S. economy appears

to be gaining strength.

While the country is dealing

with historically high levels

of debt, the private sector

is recovering, with the U.S.

labour market, consumer

and investment spending,

and incomes all beginning to

move higher. Many economic

commentators believe the

nation’s growth prospects

could improve even further in

the coming year.

Canada and commodities in focus

Simply put, an improved U.S.

economic outlook is beneficial

to Canada. Although the high

Canadian dollar has had a

negative impact on exports,

low interest rates and firm

commodity prices will likely

contribute to Canada’s growth

prospects in the medium

term. Fiscal austerity, such as

cuts in government spending,

may be less restrictive than in

the U.S. and europe.

recent comments made by

Mark Carney, governor of

the Bank of Canada, suggest

interest rates will likely remain

low for the remainder of

2012. rates may rise in 2013

if strong economic growth

begins to stimulate labour

and production costs. As the

economy grows, commodity

prices may also rise as a result

of increased demand, the

scarcity of commodities, and

rising environmental costs.

Focus on what you can control

Navigating through – and

succeeding during – periods

of financial market volatility is

everyone’s goal. While there

are never any performance

guarantees, your chances

for success are significantly

better with a sound wealth

management plan. Your

optimal portfolio will

vary depending on your

circumstances, risk tolerance,

and objectives.

Your Meridian Wealth Advisor

can help you define your

goals and create a sound

wealth management plan.

Although no one can predict

the future, having a reasoned,

structured, and disciplined

investment plan based on

Helmut Pastrick is the Chief Economist for Central 1 Credit Union, the central financial facility and trade association for the credit union systems in British Columbia and Ontario. The system has approximately 2.7 million credit union Members and assets under administration of over $65 billion.

your unique needs is your

best defense during volatile

markets… and your best

offence in rising markets.

As your trusted Meridian Wealth Advisor, I will work with you to create a long-term wealth plan that meets your needs during times of market strength and volatility, and helps you stay on course to meet your financial goals.

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Words on Wealth4

FINANCIAL PLANNINg

Owning a cottage by the lake or condo on the beach is a dream many people share. With today’s low mortgage rates, now may be a good time for us to sit down and plan to turn that dream into reality. There are many things to consider before buying a second property; from tax and estate issues to location and carrying costs.

1. Consider the costs

A broken water pipe, a cracked window, or a small leak in the roof can cost a lot more money to fix if you are not there to notice and repair the damage immediately after it occurs. If you are thinking about buying a vacation property, it’s important to have a rainy day fund that you can use to cover any unexpected repairs.

If you don’t yet have a rainy day fund, I can help you set one up so you will be prepared for any surprise repairs required to your vacation home.

2. Tax and estate 101

A vacation property is taxed differently than a primary residence. Since a vacation home is normally considered a second property, you will not benefit from the Principal residence exemption, and will have to pay capital gains (if any) when you sell your vacation home.

It’s never too early to start thinking about a succession plan to ensure a smooth transition of your vacation property to another person.

Call me to discuss tax and estate planning strategies that may include owning your vacation property in a trust, which can help solve many tax and estate issues you may face down the road.

3. Thinking about the U.S.?

The relatively strong Canadian dollar combined with the struggling U.S. housing market has made real estate south of the border irresistible for a number of people. If you are considering an investment in real estate in the U.S., there are many things to consider including health insurance, which gets more expensive as you get older; other insurance

4 Things to Consider Before Taking the Plunge

costs (including travel and home insurance); and the legal bills you may incur to close the deal. U.S. property ownership also creates unique income tax and estate issues that you should be aware of before buying that second home south of the border.

4. Seek advice

Having a place where you and your family can relax and share vacation memories is a dream many people cherish. My goal is to ensure you are fully aware of all the financial implications of owning a vacation property, and to help you enjoy your “home away from home” stress-free.

regardless of the type and location of the property you are considering, it is important that you are in a fairly strong financial position before you buy. I want to help you get there.

Know what you’re getting into before you buy a vacation property

Quick questions to think about:

Q: Is a time share an option?

Q: How far are you willing to commute?

Q: How much can you save before you buy?

Q: How long will you keep the property?

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Words on Wealth

negative news headlines about the economy and financial markets. All this negative news can result in an investor believing his or her best move is to chase good returns and run from poor returns.

Managed Solutions help you maintain your investment focus. They are automatically rebalanced to meet your risk profile, and this helps you stay on the right path to meet your short- and long-term financial goals.

5

In my previous Words on Wealth newsletter, I introduced you to Managed Solutions, which are diversified portfolios of investment pools, mutual funds*, and/or separately managed accounts. Managed Solutions are created by leading investment experts and managed by some of Canada’s largest and most respected money managers including Fidelity Investments, Franklin Templeton Investments, Mackenzie Financial, and AgF Funds.

This article provides three key benefits of investing in Managed Solutions:

Improved diversification

Diversification can help lower your investments’ volatility and possibly increase your investment returns. When markets are volatile, having your investments spread across many asset classes – e.g., holding both equities and bonds, Canadian and global equities, government- and corporate-issued bonds, and cash – can help safeguard your portfolio against significant losses.

When markets are strong, diversification can help ensure you have some exposure to the asset classes that are outperforming the wider financial markets.

Affordability and choice

Members are increasingly looking for high-quality investment options at a fair price. I can help you find these options. regardless of the size of your nest egg and what you are saving for – from an amazing vacation to a comfortable retirement – Meridian has a Managed Solution to help you achieve your goals.

Investment focus

One of the greatest challenges for any investor these days is avoiding the barrage of

INVeSTMeNT SOLUTIONS

Managed Solutions – Part II

Contact me to learn more about simplifying your life with Managed Solutions or any of our other investment products.

An in-depth look at how Managed Solutions can help you reach your financial goals

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Words on Wealth6

eXPerT’S COrNer

Important Tax Strategies for the Coming YearFour tips to help you stay on top of your taxes

1Split your pension income with your

spouse or common-law partner

Pension income splitting can

result in significant tax savings

for you and your family. If you

receive pension income in

2012 that is eligible for the

pension income tax credit,

you can allocate up to half of

that income to your spouse or

common-law partner on their

tax return.

Are you doing everything you can to reduce your tax burden? Here are some suggestions you may want to consider to help you keep more of your hard-earned money in the year ahead.

Carol e. Bezaire PFPC, TeP, CLU

Vice President,

Tax & estate Planning

at Mackenzie Financial

Corporation

Pension income that qualifies

for this treatment depends

on your age and the type of

pension income you receive.

Income from a company

pension plan is eligible for

pension income splitting

regardless of your age. Some

forms of pension income, such

as income from a registered

retirement Income Fund or

from a locked-in income plan

(Life Income Fund or Locked-in

retirement Income Fund), are

eligible for income splitting only

if you – as the pensioner – are

over 65 years of age.

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Words on Wealth 7

2 3 Share your dividends with your

spouse or common-law partner

generally speaking,

investment income must be

reported by the individual

who earned the income and

cannot be reported by a

spouse without a proper (and

sometimes complicated) plan.

Special rules exist, however,

that will allow dividends

to be reported by either

spouse without negative tax

consequences. Therefore,

dividends earned by each

spouse can be combined

and claimed on the return of

either spouse or partner. This

is beneficial if one spouse or

partner is the sole income

earner and the other has little

or no income.

Maximize your capital losses

If your investment portfolio has

capital losses over 2012, you

can put these losses to use

and possibly reduce the tax

you pay the next time you file.

Capital losses are reported on

Schedule 3 of the T1 personal

tax return, and will be first

applied against any taxable

capital gains you achieve in

2012. If your capital losses

exceed your capital gains

in 2012, you may carry your

losses back to 2011, 2010, or

2009, respectively, and apply

these losses against any capital

gains reported in those years.

Doing so allows you to recover

the taxes you paid in previous

years.

eXPerT’S COrNer

4 File your children’s tax return

Children often do not have an

income tax liability because

few earn enough income to

be taxable (meaning income

above the basic personal tax

exemption). As a result, many

parents may choose not to file

a tax return on their children’s

behalf. A child who generates an

income, however, may benefit

from you filing a tax return

on their behalf, even when

his or her reported income is

below the basic personal tax

exemption. Doing so allows the

child to recover any income

taxes, overpaid Canada

Pension Plan, or employment

Insurance premiums withheld

by their employer; receive

certain provincial credits;

and accumulate registered

retirement Savings Plan

contribution room. Filing a tax

return will also begin to establish

Tax Free Savings Account

contribution room for children

who are over 18 years of age.

Contact me today to

review these and other

tax-saving opportunities.

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™Trademarks of Meridian Credit Union Limited. 4/12

meridiancu.ca

It means: Trust. Advice. Planning.

As your trusted Meridian Wealth Advisor, I take the time to build a strong relationship for the long term, as well as to understand your unique needs. My goal is to translate your life goals into an effective and achievable roadmap and to find the right investment solutions to help you save, protect, and grow your financial assets.

Here is how I look forward to building our relationship and your trust:

✔ I provide an unbiased, honest perspective, and my decisions are based only on your best interests. I have no bias toward any particular solution apart from the one that most effectively meets your objectives

✔ I ensure you clearly understand your wealth planning options and align your portfolio with the right solutions to help you reach your goals. We will review your financial plan together on a regular basis, and I will keep you well informed so you always feel knowledgeable and comfortable

As a Meridian Wealth Advisor and your neighbour, I am committed to working with you to create and build the right approach for your family’s financial security that is tailored to your needs, your objectives, and your values.

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* Meridian funds are offered through Credential Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments and the use of an asset allocation service. Before investing, please read the prospectus of the mutual funds in which investment may be made under the asset allocation service. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed. Their values change frequently and past performance may not be repeated.

WHY MerIDIAN WeALTH?

What does wealth management mean at Meridian?

Words to Ponder

“Someone’s sitting in the

shade today because

someone planted a tree

a long time ago.” Warren Buffett