Financial to-do list for 2005

Retirement Planning
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January/February 2005

Commentary - Hans H. Mathisen

Financial to-do list for 2005- Every so often, we need to be reminded about these items. And even though we're a full month into the new year, you may find this message helpful.

How will you pay for Long Term Care?- LIFE LETTER for February points out the essential item underlying Long Term Care: money. During the 1960's, 70's and early 80's, our governments kept telling us, "Don't worry, the government will look after you". But the government has run out of money. The onus is increasingly on us. We have to take care of ourselves.

THE STOCK MARKETS - 2004 will not be remembered for stellar investment returns. The Dow Jones gained 3.15% for the year, while the TSX Composite index grew 12.48%. The major European indexes all earned in the 7% range. Hong Kong's Hang Seng increased 13.15% and Japan's Nikkei gained 7.61%. The first month of 2005 saw the major indexes fall marginally, but with the Middle East situation improving and oil prices on the way down, most analysts are moderately optimistic for market growth in the months ahead.

WALTON INTERNATIONAL - Over the past 25 years, investors in Walton's residential real estate have realized an average annual appreciation of 18%. This means investors' money doubles every 4 years. New properties within the city limits of Calgary will be available by mid March, 2005. Many clients are on the waiting list already. How about you?

Here's my bi-monthly update of my personal investment portfolios; all are conservative, based on my own investment research, experience and risk tolerance. Two new portfolios have been added since my last report:

PORTFOLIO #1: March 7, 2003 to January 31, 2005: the return is 30.16%
PORTFOLIO #2: April 28, 2003 to January 31, 2005: the return is 35.60%
PORTFOLIO #3: Nov. 29, 2004 to January 31, 2005: the return is 4.50%
PORTFOLIO #4: Nov. 29, 2004 to January 31, 2005: the return is 4.25%

It would be my pleasure to share my investment strategy with you. Please feel free to call me for a confidential meetine.

HAPPY INVESTING!
Sincerely,
Hans Mathisen

LIFE LETTER

Financial to-do list for 2005

Review your Will. Only about 40% of Canadians have prepared their Wills and many of them are not up to date. Situations and families change. Your Will should be updated to cover those changes. If you don't have a Will, get one.

Have a lawyer prepare your Will for you. We have all heard the ads for do-it-yourself Will kits. They state that they are legal (which just means they don't break any laws), but the disclaimer in them states they are not liable for the validity of the Will you do yourself. An invalid or poorly prepared Will causes delays and can cost your family thousands of dollars in unnecessary fees and expenses.

Review your beneficiary designations. You named a beneficiary on your life insurance policies and RRSP plans. Has anything changed?

If you have named a beneficiary who has trouble handling money, you can stipulate that the proceeds be used to provide an income only. If all your children are adults, consider naming them as secondary beneficiaries.

Review your life insurance needs. Interest rates have dropped steadily for the last decade or so and show no signs of increasing significantly any time soon. As we age, our needs change from estate creation to estate conservation. Your plans should be updated to make sure your estate goals can be met.
The basics for determining life insurance needs are Immediate Cash Needs plus Capitalized Income Needs minus Assets to be Liquidated at Death and Life Insurance. Your needs should be reviewed regularly and adjusted as your situation changes.

Protect yourself from fraud and identity theft. Fraud and identity theft are the fastest growing crimes today. The Federal Trade Commission (USA) estimates that some ten million people have been victimized in the past five years. To protect yourself:

Cover the keypad with your other hand while entering the PEN when using your debit card.
Be aware of anyone around you using a cellular phone when you are using your debit or credit card. Many are now equipped with digital cameras.
Shred old credit card and bank statements. Just ripping them up is not enough to prevent a fraudster from piecing them back together.
NEVER give personal or account information to anyone who contacts you, even if it appears to be from a company or bank you deal with. They should have this information already.

Control lifestyle expenses. According to Calgary bankruptcy trustee Barry Nykyforuk, the most common cause of personal bankruptcy is letting consumer debt get out of control. Credit is so easy to get and some retailers even target those who have had debt problems in the past.

When you use credit cards, pay off the balance each month. If you carry a balance, be aware that any new purchases are charged full interest from the time they are made. Don't fall into the trap of buying things you don't really need with money you haven't earned yet to impress people you don't even like.

Get critical illness insurance. If you survive a critical illness like cancer, heart attack or stroke, your finances will be affected. Even if you have disability insurance, it may not be enough to cover additional expenses that arise. Critical illness insurance pays a benefit that can help you get on with your life and maintain the lifestyle you had before you got sick.

Want help with your financial resolutions?
Call Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca

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LIFE LETTER

How will you pay for long term care?

John and Ellen, in their early sixties, retired. They were looking forward to traveling and visiting with their grandchildren. Within a few months, Ellen's parents were no longer able to look after themselves and asked John and Ellen for help. They extensively renovated their home, with just a little financial help from Ellen's folks, to accommodate them.

Over a period of less than a year, Ellen's parents needed more and more care. She ended up becoming a full-time care provider to them. John went back to work to help cover some of the additional costs. Their travel and family plans got put on hold. Ellen is not paid for her time nor has she received training. No other family members were willing to help.

Gordon and Anne, in their early seventies, had been retired for over fifteen years. They have traveled extensively and spent lots of quality time with their children, grandchildren and great grandchildren. Over the years, their health has slowly deteriorated. Anne suffers from arthritis and Gordon has developed a cognitive impairment.

They do not want to leave their home, but it is getting more and more difficult for Anne to provide for Gordon's needs. She would like a little more in home help, but provincial health care only provides for a few hours per week. With her own health problems, Anne is close to needing some form of long-term care herself.

In both of these situations, in home care is preferred. It is only a matter of time, though, before they will need facility care of some kind. Ellen's father actually had to be placed in a nursing home less than two years after moving in with them.

The biggest part of the problem is, quite simply, money. There just isn't enough of it. In John and Ellen's case, they are footing a large part of the bill to care for Ellen's parents, putting their own retirement finances in jeopardy. For Gordon and Anne, a little more money each month can go a long way to pay for in home care providers.

According to Statistics Canada, 13% of the population is over age 65. It is estimated that the number will grow to over 20% by 2026. But long term care is not only for seniors. Some 43% of those receiving long term care in the U.S. are under age 65.

The answer can be found in Long Term Care insurance. It pays a tax-free benefit directly to the insured when health or personal care services are required at the order of a physician.

Typically, a policy will pay a benefit if the insured loses the ability to care for himself or herself due to cognitive impairment or the inability to do two or more activities of daily living. The insured must require professional assistance at home or at a long term care facility. Benefits are not paid if an immediate family member provides the services.

Long Term Care insurance allows you to live with dignity and not worry about being a burden on your family or a drain on your financial plans.

Want to know more about Long-Term Care insurance?
Call Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca

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Mathisen Financial, Inc.
335 Redberry Road
Saskatoon, Saskatchewan S7K 4W5
Bus. (306) 242-7042 Fax. (306) 242-4314
Email: hans@mathisen.ca