September 25, 2008

The Market Crisis:
How Concerned Should Invested Clients Be?

What do the collapse of Lehman Brothers and other market turmoil mean to investors?

The current credit crisis (it's not over yet) is about the strength of issuers and investors should have less faith in credit ratings. In Canada, the banking and brokerage system is much less exposed to the international credit crisis than those in the U.S. That's the good news. The bad news is that pension funds are taking huge hits and commodities, always a strong part of a Canadian fund or portfolio, continue to drop. That said, remember that regulations of securities for brokerage firms have ensured that individuals have not lost their capital. In the meantime, if you can't value an investment instrument, leave it alone and stick with what you know.

What should your customers do, if anything?

Most experts say the time for action is already over. However, your customers who proactively invest should meet with their advisors if they haven't already. The key action is to understand clearly what is in your portfolio and, if possible, reduce risk. If there is no need for income from the portfolio and you have a long term perspective (reasonably diversified and have a proper asset allocation), consensus is to hold on and the market is more likely to work out for you. With a properly managed portfolio, sit tight and hold on for a three to five year period. This is not the time to bet on specific sectors; be proactive and reassess, reducing exposure.

IPBC Website Posting to Members

Here is a good reminder to get the credentials of any business you choose to associate with. This is a recent posting to members through the IPBC website.

"Hi Gordon,

Just wanted you to pass on some information to the members of IPBC.

We have had numerous people over the past year that phone us regarding buying our accounting software. They have signed themselves up with a company, usually from the USA or the UK, that states that they are going to send them bookkeeping work that they can do at home.

The people are to go out and purchase BS1 and Quickbooks from a storefront. The company sends out a cheque or money order to these people "to cover expenses" and the people are then to send back a cheque for the amount that they don't use. This can be as much as $500-$5000.

It is a scam as the money order eventually bounces (can take up to a month because it is out of country) and the person is out of pocket the $500- $5000. "

Taysha
DBSOnline.com

Tip of the Week

Bank Deposits

How do you handle your bank deposits? An easy way to record your daily deposit is a deposit book. These books generally come with a white (original) copy and yellow (duplicate) copy in books of 50 forms. For a small business, an order of 200 duplicate deposit slips could last 2 years unless you make deposits every day. As you write each deposit slip, it is a good idea to remove the white copy to give to the bank and leave the duplicate (yellow) in your book. That way, nothing gets lost. Remember - when your deposit book is full or at year end - don't throw it away - you must store it with any other business records for 6 years. And speaking of deposits, get into the habit of depositing all cash immediately at your bank or credit union. This ensures that all income will be properly recorded, particularly if you remember to use your deposit book to record the deposit details.