WELCOME TO MY BLOG!
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(This is a sticky post, please find current news items below) By Sharon Alderson in Welcome |
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Sharon has completed the Collaborative Family Practice courses which provide training in working with lawyers, Mediators and Therapists as a neutral member of the team to help divorcing couples reach a negotiated settlement around financial issues.
By projecting possible financial outcomes of asset division as well as support issues, couples are able to move forward in the decision making process around divorce.
Sharon helps her clients, especially women; achieve financial security by providing education and guidance and by taking the time to get a clear understanding of their goals.
In addition to writing many articles for various publications and web sites such as Women Can do Anything, WINGS (Women in Networking Growing Strong). Sharon has recently written a chapter for a book titled Common Law Relationships Financial Issues, to be published in 2007.
Sharon participates in the annual Relay for life in support of the Canadian Cancer Society and is currently volunteering her financial planning services at My Friends House, a women's shelter and community outreach in Collingwood.
Sharon has proven that women can be successful in a male dominated career by bringing empathy and understanding to her practice.
Like most women who try to do it all she has learned to balance personal and family time. Sharon has been married over 35 years to Tom, has three children and two grandchildren.
Her recipe for success is to be true to your authentic self, live your life with passion and integrity and treat your clients as you want to be treated.
Most importantly follow your heart!
Marriage and life’s other changes require an insurance tune up
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Wednesday, 30 July 08 - 04:50 PM (GMT -05:00) By Sharon Alderson in Asset Protection |
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Are wedding bells about to peal for you? Getting married is one of life's biggest changes and even though “wedding” is often just another word for “frantic”, you should take the time to contemplate one significant change your new life together will bring – the change to your insurance needs.
No, that's not very romantic, but it is absolutely necessary to safeguard your future. In fact, an insurance tune up is vital for anyone whose life has recently changed in any significant way – and there are a lot of us in that broad category. So, here's a brief look at the types of insurance protection you should consider as your life changes.
Family and debt protection. When you're beginning to build a life together, insurance should provide an economical safety net that protects your family. Life insurance accomplishes these goals by providing a lump sum to your beneficiaries in the event of your death. And, as a general rule, you should increase life insurance protection as your family grows and your lifestyle and income change.
Term insurance is usually the most affordable for young families who need a lot of coverage, but premiums increase with each policy renewal and can get very expensive as you age. Permanent insurance – either whole life or universal life – renews automatically for your lifetime, as long as you continue to pay the premiums. Depending on the type of plan you choose, the price of coverage will never go up and you can blend life insurance coverage with an investment program that delivers tax-deferred growth (subject to certain limitations) and usually tax-free benefits to your beneficiaries.
If you have a significant mortgage, you should consider a flexible option of individual renewable term insurance that allows your beneficiaries to pay off some or all of the mortgage and/or other pressing expenses (with proceeds that are usually tax-free).
Lifestyle protection. Your most valuable asset is your ability to earn a living. Disability insurance provides a regular stream of income should you become disabled and unable to work. You may have some disability insurance as part of your benefits package through your employer, but it may be capped or include exclusions or restrictions limiting payment. That's why you should look carefully at supplementing your group plan with a personal plan. And if you're self-employed, disability insurance is an absolute necessity.
As you age, supplemental health insurance plans, such as long-term care insurance and critical illness insurance, become vital. Long-term care insurance guards against the financial burden of a lengthy, debilitating medical condition. Critical illness insurance provides you with a lump sum payment when you are diagnosed with a specified life-altering illness – such as heart attack, stroke or cancer – and you can usually use the payout any way you wish.
When change arrives in your life, it's time to take stock of a lot of important things – including your evolving insurance needs. A financial planning professional can help ensure your insurance program stays in tune through every one of life's changes.
Marketplace on CBC-Mortgage Insurance
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Tuesday, 22 April 08 - 01:53 PM (GMT -05:00) By Sharon Alderson in Asset Protection |
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The Show - - MARKETPLACE (
Mortgage insurance: Not always a sure thing
If you have a mortgage on your home, chances are good you also have mortgage insurance. The idea is that if you should become seriously ill or die before paying off the mortgage, the coverage will pay it off for you. It’s meant to offer peace of mind and to reassure you that your family will be able to stay in your home if anything should happen to you. The reality falls a little short.
“Marketplace” investigated two families who bought coverage from a bank when they got a mortgage, and thought they were protected, only to have their claims denied when they became sick or died. In each case, the insurer said the applicant person had lied on their initial application form. It turns out a routine test at the doctor could be reason to deny your claim if you
Erica Johnson and Marketplace formed a study group and most participants found the forms very confusing. The bank staff selling mortgage insurance are unlicenced and rarely trained to explain the details and legalities of those insurance products. As a result people who pay premiums think they are covered, only to realize later that they are not. The insurance applications and medical records are scrutinized only after a claim is made. In one case investigated, the claim was denied because the claimant alledgedly lied. This gentleman had a medical condition that he was unaware of (high blood pressure), but he was unable to work because he developed cancer, an unrelated illness. Does being unaware of a medical condition constitute lying?
Alberta is the only province in Canada that requires anyone selling credit insurance, including banks, to be licensed. Under the Alberta regulations, banks are required to follow set requirements for training staff and disclosure to customers. When the Alberta Insurance Council first implemented this regulation in 2001, the banks fought back, pursuing the matter all the way to the Supreme Court of Canada. In May 2007 the Supreme Court ruled against the banks and said the province of Alberta was within its rights to regulate the sale of this insurance and protect the consumer. To date, no other province requires banks selling insurance to be licensed.
You should buy individual life insurance from a licensed insurance agent who will explore any medical issues upfront so you can be sure you are protecting your family.
The following are set up to receive complaints and offer advice about banking and insurance issues.
The Canadian Life and Health Insurance OmbudService (CLHIO) is an independent service set up to assist consumers with concerns and complaints about life and health insurance products and services. www.clhio.ca 1-888-295-8112
The Ombudsman for Banking Services was set up to resolve disputes between participating banking services and investment firms and their customers if they can’t solve them on their own.
www.obsi.ca 1-888-422-2865
The Financial Consumer Agency of Canada (FCAC) provides consumers with information about financial products and services, and informs Canadians of their rights and responsibilities when dealing with financial institutions. www.fcac-acfc.gc.ca 1-866-461-3222
An Introduction to Inflation
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Friday, 21 September 07 - 04:01 PM (GMT -05:00) By Sharon Alderson in Inflation |
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Is it Time to Plan for Your Parents?
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Friday, 21 September 07 - 03:57 PM (GMT -05:00) By Sharon Alderson in Boomers |
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Your parents may need to rely on you as you once depended on them. Most of today's Baby Boomers can expect to live healthy lives well into their eighties and beyond. But, as they age, the potential for a stroke, heart attack, or mental illness like senile dementia and Alzheimer’s, increases dramatically. By developing a strong financial plan now, as well as setting in place legal mechanisms for the responsible administration of your parents' finances, you can ensure they'll get the needed and costly medical, home or institutional care without eroding your family finances, especially if they should become unable to make their own decisions.
The key is to begin planning now while your parents are in good health. When a crisis occurs and emotions run high, it's very difficult to make good decisions. So, even if it's difficult to broach the subject, do it now! Here is some information to get you started:
Income – where do your parents derive their income, and do any conditions apply? For example, a deceased spouse's Canada Pension Plan benefits drop by 40 per cent when paid to the survivor, and company pension plans may have limits on the amount and duration of income to a surviving spouse.
Assets – be sure your parents have designated beneficiaries for their registered investments and insurance. When the beneficiary of an RRSP or RRIF is a surviving spouse, it may be possible to defer taxation until the death of the second spouse. If there are other beneficiaries, the estate will likely have to pay taxes. Seek appropriate tax-reduction strategies.
Expenses – identify all your parents' current expenses and determine whether their income will be sufficient to cover projected home or personal care costs that may escalate with age. If you discover shortfalls, investigate strategies for addressing them.
Insurance – do your parents have extended health care plans? If not, should they enroll? Is critical illness or long-term care insurance good options for them?
Will – about 50 per cent of Canadians don't have wills, meaning unnecessary taxes may be payable upon their death, there is an increased potential for contentious litigation, and the very real possibility that their wishes won't be taken into account. Be sure both parents have up-to-date wills.
Executor - designate a Personal Representative or executor in their wills. This is the person (or trust company) who is responsible for winding up their affairs and distributing assets and bequests.
Power of attorney – gives a designated person the power to make financial decisions on each parent's behalf, if that parent becomes incapacitated. Power of attorney for medical care sometimes called a Living will – provides explicit directions about the personal and medical care to be provided.
There are many other financial and estate planning strategies available to your parents as they age. A financial advisor and lawyer can help you sort out the complexities and may also ease the awkwardness by bringing an independent, third-party perspective to your intergenerational discussions.
Canada Pension Splitting
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Friday, 21 September 07 - 12:59 PM (GMT -05:00) By Sharon Alderson in Ask Sharon |
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The Impact of a Critical Illness
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Wednesday, 12 September 07 - 05:02 PM (GMT -05:00) By Sharon Alderson in Asset Protection |
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Real cost at retirement = $224,500. By withdrawing $70,000 to cover treatment expenses, the patient loses tax-deferred growth on that amount of money. Over twenty years, and assuming a 6 per cent compound annual rate of return, the actual loss in value at retirement will be nearly a quarter million dollars
- Sources: Heart and Stroke Foundation 2004; Transplant Financial Services/Mayo Rochester 2005; National Cancer Institute of Canada; Canadian Cancer Statistics 2004.
The correct response: Do nothing
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Friday, 07 September 07 - 03:09 PM (GMT -05:00) By Sharon Alderson in Building Wealth |
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The investor conundrum: buy or sell?
From Friday's Globe and Mail
After more than four brilliant years of returns, the stock markets are plunging. What a relief. Investing in stocks is about making money over the long term, with the up years outweighing the down ones that intrude every now and then. Since early 2003, however, we've only seen the markets soar. Sure, there have been missteps, but stocks have always moved quickly higher again.
This mayhem of the past few weeks is different. It may not signal the arrival of the sort of protracted slump that gets called a bear market, but it does qualify as what investing pros call a correction. In other words, a serious but necessary pullback that smarts.
The correct response is to do nothing, and the word from investment advisers is that most investors seem to understand this. “Some of my colleagues in the office here have had clients call them saying they want to bail out,” said Greg Holohan, an adviser with ScotiaMcLeod in Markham, Ont.
“But the vast majority of people understand this is one of those things that will happen from time to time and that eventually everything will iron itself out.” Not that the short term won't be painful. Yesterday, the benchmark S&P/TSX composite index was down a shocking 585 points, or about 4.5 per cent, before limiting its loss to 1.5 per cent.
While some experts see the markets on the rise again later this year, others see the potential for losses of 20 to 40 per cent from the peak level of 14,646 reached last month. By the end of trading yesterday, the index was down to 12,848.
Falling stocks are really just a symptom of broader problems in global financial markets. It all begins with soured mortgage loans made to Americans with substandard credit ratings. These mortgages were packaged into securities purchased by hedge funds and banks which, it turns out, own a lot of similar investments based on things like credit card and car loan debt.
Concern about the solidity of these investments has created an environment of fear and uncertainty in which it's natural to dump stocks. If you feel the urge to sell, fight it. “Don't sell into a seriously down market,” said Liz Lunney, senior vice-president and portfolio manager at Fiduciary Trust Co. of Canada, a division of the mutual fund company Franklin Templeton Investments.
“Don't realize those losses. If you had an appropriate plan to begin with, then hold to it.” An appropriate plan means a mix of stocks, bonds and cash tailored to your age, risk tolerance and investing goals. Of course, some investors started with a plan and then let it slide as they watched their stock holdings balloon in the past few years.
There's extra reason to be concerned about an over-exposure to stocks if your holdings are heavy on energy and mining stocks. These sectors drove the Canadian market in the past few years, but they've suddenly gone cold as a result of fears that problems in financial markets will somehow lead to slower global economic growth.
Mining stocks as a group have plunged almost 25 per cent in the past month, although they remain up about 500 per cent in total over the past five years. Ms. Lunney said her firm's take is that global growth will remain strong, even if it does taper off a bit. And what if you still want to pare down an overabundance of energy and mining stocks? She suggests you wait until the market stabilizes rather than fleeing at the earliest opportunity.
Enough talk about playing defence. In a falling market, the savvy investor looks for opportunities to buy at cut-rate prices rather than sell. A quick shopping guide for bargain-hunting investors: Look for stocks that pay dividends, especially those like the banks that regularly increase their dividends.
Remember that while pessimism rules the market right now, good companies will prevail. “Ask yourself this,” said Gavin Graham, chief investment officer at Guardian Group of Funds. “Is Royal Bank of
An opportunity to hunt for bargains is just one of the positives to come out of the stock market's decline. The other is that an inevitable correction is finally under way after a very long winning streak. What a relief.
Don’t Let Emotions Make Your Financial Decisions
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Friday, 07 September 07 - 02:58 PM (GMT -05:00) By Sharon Alderson in Building Wealth |
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Most investment decisions are made from greed or fear. If you let these emotions take over, you may make the wrong choices. According to a 2007 Quantitative Investment Behaviour Study (QAIB) of
DALBAR says behavioural factors play a pivotal role in poorly timed sell-offs. Fear heightens the investor “herd mentality”, which will force investors to make decisions that are often against their better judgment. They tend to react impulsively if they are barraged with bad news from the media, and DALBAR says they often copy the behaviour of others even in the face of unfavourable outcomes.
Lisa Kramer, associate professor of finance at the
I also agree with the buy and hold approach the QAIB study advocates. When you experience fluctuations in the market and you listen to the media hype, after all good news doesn’t sell papers, and you have this urge to sell, it makes sense to adopt a true buy-and-hold strategy rather than trying to time the market. As an advisor I like to send articles to help my clients and invite questions at times like we have recently experienced.
See the Globe article titled “Correct Response” in Building Wealth
Another highlight from the QAIB study is the impact dollar-cost averaging can have on investment performance. Investors who use Dollar Cost Averaging versus lump sum deposits will almost always outperform their market-timing peers over the long term. You invest on a regular basis so your average cost is lower. This strategy works best if timed to your pay deposits and treated like any other expense that must be paid.
Don't wait. The time will never be just right.
Napoleon Hill
Financial Planning for Retirement Transition
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Wednesday, 16 May 07 - 07:01 PM (GMT -05:00) By Sharon Alderson in Building Wealth |
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Financial Planning for the Retirement Transition
Retirement sure isn’t what it used to be. These days, retirees live longer and healthier lives and many choose, out of desire or necessity, to take on part-time work, work full-time in a new field, or start their own businesses. Others devote their later years to travel, hobbies, volunteering, or time spent with their grandchildren. Whatever your post-career plans, it’s important to prepare for the changes in your financial life. Following are some things worth considering if you are nearing this time of financial transition:
If you haven’t already, pull out all of your savings and investments statements and records, including, RRSP and investment statements, your company’s pension plan statement, and Canada Pension Plan statement
Your next step is to decide how much money you’ll need to cover living expenses. Sometimes it is automatically assumed that older people will have fewer expenses and fewer financial needs than those still in the workplace. That isn’t always the case. If you plan to travel or to spend every day on the golf links in
What will change when you no longer go to work every day? Transportation costs? Wardrobe costs?
Do you plan to stay in your current home or sell it for a smaller place? Are you considering moving into a retirement community?
Do you hope to leave money to your children or grandchildren when you die? How much?
What percentage of your retirement income will you pay in taxes?
If you are withdrawing money from your retirement savings accounts, you will probably owe a smaller percentage than when you were working full-time.
After you’ve determined your annual living expenses, you need to estimate your life span. Most Canadians are living longer than they ever thought they would, and some run the risk of not having enough money. Don’t let that happen to you. At a minimum, estimate that you will live an additional 25 years after you make the retirement transition. Depending on your health and gender—women generally live longer—you may need to spread your financial resources over 30 or more years. What if your estimated financial resources don’t cover your estimated expenses over that period? There are two solutions: Increase your income, or reduce your expenses.
You can increase your income by taking on post-career work—whether it’s full-time or part-time. Or you can make more aggressive investments. Because aggressive investing is a fairly risky route, you should probably consult a financial professional before you buy those high-growth stocks. A financial professional can figure out how much you can afford to risk.
You may not want to look forward to reducing expenses, but it’s generally easier to accomplish than increasing your income. Consider moving, either to a smaller house, or a less expensive town.
You have several options when it comes to withdrawing money. You may take a lump sum amount (which can have heavy tax consequences) or take smaller instalment payments. Opting for instalment payments will allow you to leave the bulk of your money in investments, where they will continue to grow. Another option is to purchase an annuity with your retirement savings. This means you receive smaller distributions that are guaranteed to cover you for the rest of your life. A good strategy is to purchase an annuity with some of your savings and keep a portion invested for growth. The strategy will depend on your personal situation and comfort level.
If you have never consulted a financial professional, this is the perfect time to do it. Few financial matters are as complicated as retirement.
... More items are available in my News Archive
