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Municipal Investment Plan. Agenda What Me Save? Guide Saving for Retirement Understanding Your Group Plan Developing Your Investment Strategy Monitoring.

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Presentation on theme: "Municipal Investment Plan. Agenda What Me Save? Guide Saving for Retirement Understanding Your Group Plan Developing Your Investment Strategy Monitoring."— Presentation transcript:

1 Municipal Investment Plan

2 Agenda What Me Save? Guide Saving for Retirement Understanding Your Group Plan Developing Your Investment Strategy Monitoring Your Investments

3 Saving For Retirement

4 Where Retirees Get Their Income Retirement income Primary Secondary Supplementary CPP/OAS Home Other Savings, MFA Non-registered Plan Municipal Pension Plan Personal RRSP, MFA Group RRSP

5 How much do you need for retirement? Canadians need 65% to 80% pre-retirement income replacement. Pre-retirement income 100% Retirement income 80%65%

6 What? Me Save?

7 Retirement savings worksheet Hardcopy or online Hardcopy or online

8 Making the most of your plan

9 Relationships MFA, Municipality, Plan Members Sun Life Financial Recordkeeper Investment Managers

10 Ease of payroll deduction Ease of payroll deduction Immediate tax savings (RRSP) Immediate tax savings (RRSP) Lifetime eligibility Lifetime eligibility No front or back-end fees No front or back-end fees No fees to make investment changes No fees to make investment changes Low investment management fees Low investment management fees Benefits

11 Tax benefits of payroll deductions It only costs you $30 to contribute $50 BeforeAfterRRSP Gross pay $500$500 Contribution$50 Less tax (40%) -$200-$180 After tax pay $300$270 Save $20 Contribute $50 Pay $30

12 Management Fees Compared

13 Years to retirement 5 years 10 years 20 years 30 years 1 / 2 % return 3% more 6% more 14% more 16% more 1% return 6% more 12% more 22% more 35% more 2% return 12% more 22% more 49% more 81% more The Municipal Investment Plan’s fees range between 1.20% % Lower Fees Make a Big Difference Canadian average outside a group plan is 2.50% %

14 Useful for employees with no RRSP room Useful for employees with no RRSP room No maximum contribution limits No maximum contribution limits Foreign content limit does not apply Foreign content limit does not apply Not tax-sheltered Not tax-sheltered Taxed on investment earnings each year Taxed on investment earnings each year Non-registered (Savings Plan)

15 You make the contributions You make the contributions You receive the tax deduction You receive the tax deduction Your spouse owns the plan and directs the investments Your spouse owns the plan and directs the investments Money accumulates in your spouse's name Money accumulates in your spouse's name Spousal RRSP

16 RRSP Spousal Account = Income Splitting Reasons for spousal account Your spouse is in lower tax rate Your spouse is in lower tax rate Your spouse has no retirement savings Your spouse has no retirement savings You will pay less tax if you have two smaller incomes instead of one large income You will pay less tax if you have two smaller incomes instead of one large income Spousal retirement Member retirement Tax Rate Taxes Paid Net Earnings $1250 $2500 $ % (26%) (26%) $1000 $650 $1500 $1850 Based upon: $30,000 annual retirement income Total tax savings = $350

17 Things you should know…. Lump Sum Contributions and Transfers In Allowed Lump Sum Contributions and Transfers In Allowed Lifetime eligibility (even if your employment changes) Lifetime eligibility (even if your employment changes) Withdrawals Withdrawals Withholding tax Withholding tax Added to your taxable income Added to your taxable income RRSP first withdrawal free, $25 each additional RRSP first withdrawal free, $25 each additional NREG $25 per withdrawal NREG $25 per withdrawal

18 Payroll deduction (if municipality opts in) Payroll deduction (if municipality opts in) Lump sum payments Lump sum payments Monthly contributions through the MFA Monthly contributions through the MFA Transfer in from other institutions Transfer in from other institutions Ways to Contribute

19 Developing Your Investment Strategy

20 Investment Types (Asset Classes) Equities (Stocks) Ownership in company Ownership in company Share in company profits Share in company profits Canadian or foreign Canadian or foreign Bonds (Fixed Income) Promise to repay debt Promise to repay debt Receives interest Receives interest Government and corporate Government and corporate Money Market/Guaranteed Federal government debt Federal government debt Short term, less than 1 year Short term, less than 1 year

21 Growth of $1 ( ) InflationBonds T-billsS&P TSX Composite $55.65 $37.67 $20.69 $6.66 Risk Versus Return

22 Source: Westcore Funds / Denver Investment Advisers LLC, 1998 “Maybe the markets just aren’t for me.” Point of maximum financial opportunity “Wow, I feel great about this investment.” “Temporary set-back. I’m a long-term investor.” Optimism Excitement Thrill Point of maximum financial risk Euphoria Anxiety Denial Fear Desperation Panic Capitulation Despondency Depression Hope Relief Optimism The Cycle of Market Emotions

23 Timing the Market YearT-BillsBondsStocks %-1.1%31.6% %10.3%7.4% %8.1%-12.6% %8.7%-12.4% %6.7%26.7%

24  Objective to produce returns that replicate a particular index (e.g. S&P 500)  No surprises, consistent with market returns Passive / Market Oriented

25  Value Manager looking for a bargain when buying stocks  May take some time to prove their worth – long term strategy  Tend to outperform during bear markets  Reasonably priced without sacrificing quality  Considered a defensive investment Value / Long Term Oriented

26  Buys stock in companies that tend to grow faster than others  Technology companies were “growth” stocks over past 5-10 years  Sometimes young companies with high potential  Future growth in earnings is expected Growth Oriented

27 Specialty Funds  Beutel Goodman Small Cap

28  Select ONE balanced fund best suited to your objectives  Rebalancing and foreign content monitored for you  Takes the guess-work out of picking funds Russell Lifepoints  Funds

29 Canadian Equity Canadian Bonds Foreign Equity US Equity 52% 20% 14% LONG-TERM GROWTH 20% Bonds / 80% Equities Canadian Equity US Equity Foreign Equity Canadian Bonds 40% 32% 14% BALANCED GROWTH 40% Bonds / 60% Equities Canadian Equity 15% US Equity Canadian Bonds Foreign Equity 65% 10% BALANCED INCOME 65% Bonds / 35% Equities Russell LifePoints ® Conservative Moderate Aggressive

30 Investment Risk Questionnaire  Hardcopy or online

31 Choosing and Monitoring your investments

32 So, how do you choose?  Completely hands-on  Create your own asset mix  Convert your profile into a strategy  Monitor  Rebalance regularly  One stop shopping  Answer risk profile questionnaire  Use individual fund sheets  3 LifePoints ® Funds  Pick the “one” fund that matches your risk profile Do it yourself approach Pre-defined asset mixes

33 Monitor Your Investments Revisit your strategy periodically Will change over time Will change over time Rebalance your portfolio OR choose a balanced fund approach Keeps your asset mix on track Keeps your asset mix on track Sell high, buy low principle Sell high, buy low principle

34 Stay Informed – Personal Statements  Semi-Annual  Easy to read  Personal rates of return  Transaction history  Plan information  Bulletin board

35 Customer Care Centre  Account balances  Rates of return  Transfer between funds  Market information  Enrolment assistance  Over 150 languages Account Access Tools Internet Access  Account balances  Lump sum deposits  Transfer between funds  what? me save? guide  Asset allocation  Secure  Webcast  RRSP receipts  Morningstar

36 Your Next Steps  Complete the Investor Risk Profile - What? Me Save? Guide (Pages 20-23)  Review the Investment Fund Pages in your package  Complete the enclosed application form and forward to the MFA  For further assistance contact Meagan at the MFA at (250) ext 225, or an investment specialist at the Customer Care Centre at

37 Questions?


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