Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 28, 2012, Winnipeg, Manitoba C M Y K PAGE B5 R ETIREMENT planning is one of those things that's probably better to start earlier rather than later. But how late is too late? It's arguably never too late, as making small changes today can yield big returns in the future. But what's the key change someone can make if they're approaching retirement carrying debt or with minimal retirement savings? There are five main variables that individuals have a degree of control over in their retirement planning: life expectancy, assets, liabilities, income and expenses. Mike Baldwin did a great retirement planning cartoon about life expectancy. A man is sitting with his financial planner, who is typing away on her computer. She looks up and says, " If you're alive this time next week, you'll be living beyond your means." OK, so there's not much you can do about your life expectancy. You can try to increase the return on your assets and this is commonly the primary focus of the financial industry. Typically, increased returns can only be earned over the long run by taking on greater risk, though other strategies such as tax planning or wise investment decisions can also help increase returns. Liabilities are a drag on retirement planning and reducing interest charges by restructuring debt ( or avoiding it as much as possible) can help in retirement planning. Increasing income is easier said than done. Most employees are limited in terms of salary increases or bonus potential, but they can always get a part- time job or start a side business. The self- employed can always work more to increase their income. Last but not least, pre- retirees ( or everyone, for that matter) have a strong degree of control over their expenses. Expenses are the variable people have the most control over. It can be a lot more empowering to choose to cut your expenses in advance of retirement rather than being forced to do so in response to a shortfall while in retirement. Surprisingly, small changes make a big difference. Consider two small changes most people could easily make to their budget: their home phone and eating out. The base monthly cost of one national home phone provider is $ 58.61. That's more than $ 700 a year and seems unnecessary given most of us also have cellphones. What about eating out? Assuming someone spends $ 7.50 a day for lunch from Monday to Friday and they take four weeks a year of vacation, that's $ 1,800 a year. If they brownbagged their lunch, they could probably keep their costs around $ 2.50 a day or $ 600 a year. That's another $ 1,200 of potential savings. What impact would these two changes have for a 45- year- old? Assuming they make the two changes and put those savings toward either paying down a debt at six per cent interest or investing them at a six per cent return ( ignoring tax refunds from RRSP contributions), they will enter retirement at 65 with a net worth $ 84,356 higher. What does this mean in the long run? That retiree will be able to spend an extra $ 6,207 a year for 20 years ( indexed to inflation). That's the equivalent of about $ 4,177 in today's dollars, which could be a significant increase in one's retirement budget. Retirement planning is all about costs and benefits. People have to weigh today's costs in order to place a value on tomorrow's benefits. Jason Heath is a fee- only certified financial planner and income tax professional for Objective Financial Partners Inc. in Toronto. winnipegfreepress. com BUSINESS WINNIPEG FREE PRESS, THURSDAY, JUNE 28, 2012 B 5 Sign up for a no fee bank account and receive a coupon for a free 946 mL tub of President's Choice Ice Cream Shop Flavours ice cream. Offer valid from June 15 to September 7, 2012. � PC, President's Choice, PC Financial and President's Choice Financial are registered trademarks of Loblaws Inc. CIBC is a licensee of the marks. ? President's Choice Financial personal banking services are provided by the direct banking division of CIBC. Treat yourself to free daily banking. We'll ? treat you to free ice cream. Visit an in- store pavilion today! pcfinancial. ca/ nofee 1- 866- 747- 8126 GOLD stocks and the exchange- traded funds that track them are back to their losing ways after a brief respite in May and early June and the losses are expected to continue before improving again near the latter half of the year. " Gold equity ETFs are on their way to testing recent lows 10 to 15 per cent below current levels," said Pat Chiefalo, director of derivatives and structured products at National Bank Financial, in a note to clients. " The recent rebound in these names is faltering." The S& P/ TSX Global Gold Index, which includes top- tier gold stocks such as Barrick Gold Corp., Newmont Mining Corp. and Goldcorp Inc., rallied more than 25 per cent between May 15 and June 5. Boosted by rising gold prices, the index looked set to break out of an eight- month slump that had pushed the index as much as 40 per cent below its September 2011 peak. Chiefalo said gold stocks are vulnerable in the near term to a technical pullback now that many of them are retreating below their 50- day moving average. The technical profile of bullion is also weak and the yellow metal could potentially drop as low as US$ 1,320 an ounce, he said. He recommended investors reduce exposure to gold equities and he has sell ratings on four popular gold stock ETFs including: iShares S& P/ TSX Global Gold ETF ( XGD/ TSX); Market Vectors Gold Miners ETF ( GDX/ NYSEARCA); Junior Gold Miners ETF ( GDXJ/ NYSEARCA); and BMO Junior Gold Index ETF ( ZJG/ TSX). While the next few weeks could be grim, several analysts are confident gold stocks can make up for lost ground as gold prices stabilize in the longer term. Greg Barnes, an analyst at TD Securities, expects gold prices to average US$ 1,648 per ounce in 2012 and US$ 1,750 an ounce in 2013. Haywood Securities analyst Joe Mazumdar, meanwhile, predicts gold prices will average US$ 1,650 per ounce over the next three years before dropping to an average of US$ 1,550 an ounce in 2015. " The net speculative position has trended down since February 2012 and presents another opportunity to push prices higher on positive gold- related news, such as another round of quantitative easing," Mazumdar said in a note to clients. If gold price forecasts prove true, gold stocks may eventually end up rallying higher from current levels, said a report from RBC Capital Markets' precious metals and minerals team. " On average, our North American Tier I gold companies appear to be pricing in US$ 1,500/ oz. long term, with North American Tier II gold equities slightly cheaper and pricing in US$ 1,460/ oz., in our view," RBC said. " This represents a four per cent and seven per cent discount respectively to the current spot price." The producers with the highest leverage to gold prices, the report said, are Newmont, Barrick, Agnico- Eagle Mines Ltd., and Kinross Gold Corp. Yamana Gold Inc. has the lowest leverage among peers due to its higher exposure to copper. - Financial Post Rebound in gold stocks, ETFs falters after spring respite Shares vulnerable as drop in price of bullion forecast By David Pett Brown- bagging could fund your retirement Stop eating money now to avoid going hungry later By Jason Heath SAN FRANCISCO - Google will sell a small tablet computer bearing its brand in a challenge to Amazon's Kindle Fire. The Nexus 7 is designed specifically for Google Play, the online store that sells movies, music, books, apps and other content - the things Amazon. com Inc. also sells for its tablet computer. Both tablets have screens that measure 7 inches diagonally, smaller than the nearly 10 inches on Apple Inc.' s popular iPad. The Nexus 7 will also be light - at about 0.75 pound, compared with the Kindle Fire's 0.9 pound. The iPad weighs 1.44 pounds. The Nexus 7 will ship in mid- July starting at $ 199 - the same price as the Kindle Fire. By contrast, iPads start at $ 499. Customers can start ordering it through Google on Wednesday, initially in the U. S., Canada and Australia. Andrew Rassweiler, an analyst with IHS iSuppli, said he suspects Google will be subsidizing the tablet to sell it starting at $ 199. The Nexus 7 has more features than the Kindle, including a front- facing camera. The Kindle is believed to be roughly break even at that price. Samsung Electronics Co. sells a tablet similar to Google's for $ 250. The Nexus 7 will run the next version of Google Inc.' s Android operating system, called Jelly Bean. Google also announced a home- entertainment device called Nexus Q. It sends content from your personal collection or YouTube to your existing TV and speaker systems. You control it through a separate Android phone or tablet. The Nexus Q, which Google is calling the world's first " social- streaming device," will be available in July in the U. S. initially and sell for $ 299. Google made the announcements during a keynote to open its annual conference in San Francisco for computer programmers. Google also demonstrated its futuristic, Internet- connected glasses by having parachutists jump out of a blimp hovering about 7,000 feet above San Francisco. The audience got live video feeds from their glasses as they descended to land on the roof of the Moscone Center. Google is making prototypes of the device, known as Project Glass, available to test. - The Associated Press BARCLAYS PLC and its subsidiaries will pay about US$ 453 million to settle charges they tried to manipulate interest rates that can affect how much people pay for loans to attend college or buy a house. Britain's Barclays is one of several major banks reportedly under investigation for such violations. The incidents occurred between 2005 and 2009 and sometimes took place daily, the U. S. Commodity Futures Trading Commission said Wednesday in announcing the settlement. A $ 200- million civil penalty levied against Barclays is the largest in the CFTC's history. Barclays also agreed to pay $ 160 million as part of an agreement with the Justice Department's criminal division on a related matter. It will also pay nearly $ 93 million to British regulators. The Justice Department said its related criminal investigation continues. The CFTC said Barclays' senior management and multiple traders tried to manipulate data used to determine the London interbank offered rate - known as LIBOR- and Euribor rates. The LIBOR is an average rate set by banks each morning that measures how much they're going to charge each other for loans. That rate, in turn, affects rates on many loans for consumers and businesses. There was no evidence Barclays succeeded in manipulating the published rate, a person with direct knowledge of the case said on condition of anonymity. - The Associated Press Google introduces tablet to compete with Kindle Fire By Michael Liedtke Barclays to pay $ 453M for interest- rate racket THE ASSOCIATED PRESS Google's new Nexus 7 tablet B_ 05_ Jun- 28- 12_ FP_ 01. indd B5 6/ 27/ 12 7: 43: 18 PM ;