Municipal investment plan

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
Primary
Secondary
Supplement
ary
Personal RRSP, MFA Group RRSP
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
65%
80%

6. What? Me Save?

7. Retirement savings worksheet

Hardcopy or online

8. Making the most of 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
Before
Gross pay
$500
$500
$50
Contribution
Less tax
(40%)
After tax
pay
After
RRSP
-$200
$300
Contribute
$50
-$180
Save
$20
$270
Pay
$30

12.

Management Fees
Compared

13. Lower Fees Make a Big Difference

Years to
retirement
5 years
10 years
20 years
30 years
/2%
return
1% return
2% return
3% more
6% more
12% more
6% more
12% more
22% more
14% more
22% more
49% more
16% more
35% more
81% more
1
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. 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
Spousal Income
@ retirement
$1250
Member Income
@ retirement
Tax Rate
Taxes
Paid
Net
Earnings
$2500
40%
$1000
$1500
$1250
(26%) (26%)
$650
$1850
Based upon: $30,000 annual retirement income
Total tax savings = $350

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 Your Investment 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. Growth of $1 (1960 - 2003)

Risk Versus Return
Growth of $1
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00
Inflation
T-bills
(1960 - 2003)
Bonds
S&P TSX Composite
$55.65
$37.67
$20.69
$6.66

22. The Cycle of Market Emotions

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

23. Timing the Market

Year
T-Bills
Bonds
Stocks
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%

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 oth
Technology companies were “growth” stocks over past 5 Sometimes young companies with high potential
Future growth in earnings is expected

27. Specialty Funds

Beutel Goodman Small Cap

28. Russell Lifepoints Funds

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.

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

30. Investment Risk Questionnaire

Hardcopy or online

31. Choosing and Monitoring your investments

32. So, how do you choose?

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

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. Stay Informed – Personal Statements

Semi-Annual
Easy to read
Personal rates of return
Transaction history
Plan information
Bulletin board

35. Account Access Tools

Customer Care Centre
1-866-733-8613
Account balances
Rates of return
Transfer between funds
Market information
Enrolment assistance
Over 150 languages
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?