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Municipal Investment Plan

Municipal Investment Plan. Agenda. Saving for Retirement . What Me Save? Guide. Understanding Your Group Plan. Developing Your Investment Strategy. Monitoring Your Investments. Saving For Retirement. Where Retirees Get Their Income. Retirement income. Personal RRSP, MFA Group RRSP.

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Municipal Investment Plan

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  1. Municipal Investment Plan

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

  3. Saving For Retirement

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

  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

  8. Making the mostof your plan

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

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

  11. Tax benefits of payroll deductions It only costs you $30 to contribute $50 Contribute $50 Save $20 Pay $30

  12. Management Fees Compared

  13. Years to retirement 5 years 10 years 20 years 30 years 1% return 6% more 12% more 22% more 35% more 2% return 12% more 22% more 49% more 81% more 1/2% return 3% more 6% more 14% more 16% more Lower Fees Make a Big Difference Canadian average outside a group plan is 2.50% - 3.00% The Municipal Investment Plan’s fees range between 1.20% - 2.40%

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

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

  16. Spousal Income Member Income Taxes Net Tax Rate Paid @ retirement @ retirement Earnings $2500 40% $1000 $1500 $1250 $1250 (26%) (26%) $650 $1850 Based upon: $30,000 annual retirement income Total tax savings = $350 RRSP Spousal Account = Income Splitting Reasons for spousal account • Your spouse is in lower tax rate • Your spouse has no retirement savings • You will pay less tax if you have two smaller incomes instead of one large income

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

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

  19. Developing YourInvestment Strategy

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

  21. Inflation Bonds T-bills S&P TSX Composite $55.65 $37.67 $20.69 $6.66 Growth of $1(1960 - 2003) Risk Versus Return

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

  23. 1999 4.7% -1.1% 31.6% 2000 5.5% 10.3% 7.4% 2001 4.7% 8.1% -12.6% 2002 2.5% 8.7% -12.4% 2003 2.9% 6.7% 26.7% Timing the Market

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

  25. Value / Long Term Oriented • 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

  26. Growth Oriented • 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

  27. Specialty Funds • Beutel Goodman Small Cap

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

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

  30. Investment Risk Questionnaire • Hardcopy or online

  31. Choosing and Monitoringyour investments

  32. 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 So, how do you choose? Pre-defined asset mixes Do it yourself approach

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

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

  35. Customer Care Centre 1-866-733-8613 Account balances Rates of return Transfer between funds Market information Enrolment assistance Over 150 languages Account Access Tools Internet Access www.sunlife.ca • Account balances • Lump sum deposits • Transfer between funds • what? me save? guide • Asset allocation • Secure e-mail • 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) 380-0432 ext 225, or an investment specialist at the Customer Care Centre at 1-866-733-8613

  37. Questions?

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