Safe you Finance

You’re paying your bills, but your landlord isn’t. And you’re the one holding the eviction notice. What should you do if you have such a notice or believe one is coming?

"Don’t panic or stick your head in the sand," says Robert Baker with Housing and Credit Counseling Inc. in Kansas. Here are some actions you should consider taking:

— Call the sheriff’s department. Find out how long the foreclosure process takes. Is it 60 days or 90? Then you’ll have a timeline.

— Get on the Internet. The U.S. Department of Housing and Urban Development outlines tenant rights by state on its website, www.hud.gov. Some states, including California and Illinois, allow grace periods.
— Contact the lender or the lender’s attorney on the eviction notice. Find out if you can sign a new lease or if the bank is offering cash assistance for moving out.

— Contact a local nonprofit housing counseling agency for help no teletrack payday loan. HUD’s website lists agencies by state, or you can call its toll-free number 1-800-569-4287.

— Find out about your landlord’s financial situation. Go to the county courthouse or its website and do a rudimentary background check. Or, contact your local Better Business Bureau.

— Check to see if your landlord isn’t making repairs; maybe it’s because he can’t pay for them.

— In the meantime, save your money for a rainy-day fund.

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How is your money protected when you open an account with an investment adviser?

It’s good to ask questions right at the beginning of a relationship.

Pushed to do so by governments, the investment industry has set up compensation funds to reimburse clients in case of corporate failures.

Unfortunately, these funds can’t help when investments go down in value. Nothing protects you from losses – except time and patience – when stock markets drop.

First question: Which investment firm are you dealing with? What is the corporate name that appears on the letterhead?

Let’s look at RBC, Canada’s largest bank, which has many operating divisions that sell investments.

You might do business with RBC Dominion Securities Inc. (a full-service broker), RBC Direct Investing Inc. (a discount broker) or Royal Mutual Funds Inc. (a mutual fund dealer).

There’s also RBC Insurance Services Inc., which sells insured investments called segregated funds.

You need to know the full company name – RBC or Royal Bank is not enough – because that’s the only way you can find out which compensation fund covers you if the company goes under.

RBC Dominion and RBC Direct Investing are both members of the Investment Industry Regulatory Organization of Canada (IIROC). If you’re a client, your investments are covered by the Canadian Investor Protection Fund.

Royal Mutual Funds belongs to the Mutual Fund Dealers Association. Investments are covered by MFDA Investor Protection Corp.

Finally, RBC Insurance Services is a member of Assuris, which is funded by the life insurance industry and covers your investments if the company fails.

The role of these protection funds is to transfer assets from an insolvent company to a solvent company. They do it quite seamlessly without clients even knowing what is going on behind the scenes.

CIPF is the oldest fund health insurance quote. Since being started in 1969, it has seen 17 members become insolvent. All eligible customers had their assets returned to them.

Thomson Kernaghan, which collapsed in 2002, was the last investment dealer whose losses were covered by the fund.

"Others have wound up their businesses since then, but didn’t require CIPF protection," says chief executive Rozanne Reszel.

Clients of member firms are covered for up to $1 million in cash and securities (such as GICs, mutual funds, stocks, bonds, commodities and futures contracts).

U.S. dollar cash and securities and other foreign account balances are also eligible for coverage.

If you have two separate accounts with the same dealer – an RRSP/RRIF account and a non-registered account – each qualifies for up to $1 million coverage.

The MFDA Investor Protection Corp. is similar to CIPF in what it covers and the amount of coverage (up to $1 million).

Customers who have accounts in Quebec are not covered; MFDA is not recognized as a self-regulatory organization in the province.

The Investor Protection Fund has had no claims against it since inception in July 2005, says chief executive Joni Alexander.

Mutual fund dealers rarely go bankrupt. But mutual fund management companies have gone under in a couple of recent cases, leaving investors unprotected.

There are no laws yet requiring mutual fund managers to set up funds to compensate customers in an insolvency.

Assuris was set up in 1990. If you have money on deposit, you are covered for up to $100,000.

Rules for segregated funds are complex. Check www.assuris.ca.

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It’s rare for Anheuser-Busch to sell one of its company-owned beer distributorships. It’s rarer still for the company to sell to an outsider, someone who is not already involved in carrying A-B’s beer.

But sell it will. The St. Louis-based unit of Belgian brewer Anheuser-Busch InBev will sell its Western Beverage Co., a huge wholesale operation based in Eugene, Ore., to Todd Epsten.

Epsten is the CEO of Major Brands Inc., a massive Missouri wine and liquor operation based near the Maplewood exit off Interstate 44.

Now, Epsten is forming a new company called Major Eagle Inc. to buy Western Beverage, which churns out an estimated 6 million to 7 million case equivalents per year and reportedly ranks among A-B’s top 25 distributorships.

Major Eagle will purchase A-B’s 56 percent stake in Western Beverage as well as the 44 percent stake held by other shareholders. The deal is expected to close by the end of the year. Financial terms were not disclosed.

Epsten said he was excited about the prospect of being "in the beer business in an even larger way, and being part of the A-B network no fax pay day loans."

Anheuser-Busch has traditionally liked to own a few distributorships to give the company a better sense of how things are going in the market.

In a statement, Tony Short, Anheuser-Busch’s vice president of business and wholesaler development, stressed that the transaction "was under consideration for several months prior to the close of the A-B InBev merger."

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Manulife Financial Corp. expects to report a $1.5-billion loss for the fourth quarter, the first time it has ever failed to book a profit since going public, and plans to issue new common shares to bolster its capital position.

The global insurance and financial-services group (TSX: MFC) said today it will issue $2.1 billion in new common shares to bolster its capital position.

The new stock is priced at $19.40 per share, and shares in the company were trading at $19.57 – down 89 cents – in the morning. Manulife shares have 52-week high and low of $42.14 and $16.28.

The firm said that eight institutional investors will buy $1.125 billion worth of shares in a private placement, and $1 billion worth of stock will be issued to the public through a bought deal with an underwriting syndicate.

Manulife is scheduled to report fourth-quarter results on Feb. 12, and it will be the first quarterly loss since its initial public offering in 1999.

Manulife also said that, assuming no further massive stock-market carnage, it expects to report net income of $900 million for 2008 – a "poor performance," CEO Dominic D'Alessandro characterized it, and far below analyst expectations of more than $3 billion.

"It is primarily due to the unprecedented decline in worldwide equity markets," he added.

"However, our business fundamentals continue to be very solid, as evidenced by our strong insurance sales and new business embedded value growth."

The early disclosure of expected losses was likely done as part of the requirements for the share offering memorandum, suggested Chris Blumas of Morningstar.

Even with the latest disclosure, there's still another month left in the current quarter, which means that projected losses could potentially deepen.

"Things have just gotten worse and worse over the last year and a half" on the markets, Blumas said. "When it'll stop, nobody knows."

"In the end it's still a great company with a strong core franchise, it's just that this decline in the equity markets was a risk they were willing to accept that they didn't hedge, and that's kind of bit them in the butt," he added credit report.

At the same time, Manulife said it will reduce a credit facility arranged last month with Canadian banks to $2 billion from $3 billion.

"This issue of common shares along with the renegotiated credit facilities will noticeably bolster our already strong capital position" stated D'Alessandro.

"These transactions provide us with the flexibility to absorb the accounting impact of future volatility in financial markets and, as importantly, will allow us to take advantage of acquisition opportunities that are emerging out of the current industry environment."

Reserves for variable annuity guarantees are expected to total $5 billion at year-end, up from $526 million at the beginning of the year. These reserves cover possible payments seven to 30 years in the future, but setting aside the money now is largely blamed for the anticipated fourth-quarter loss.

"It is important to note that the increase in reserves represents a non-cash charge which has been estimated as if the equity market deterioration was permanent," D'Alessandro stated.

"Should markets recover, as one would normally expect, these reserves would be released into income."

Meanwhile, Manulife said, the stock sales are expected to close Dec. 11 and will raise its consolidated capital ratio – assets relative to regulatory risk-weighted requirements – to 235 per cent, “one of the highest in the company's history."

The underwriters have an overallotment option on $150 million of additional stock at the same $19.40-per-share price.

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The Conference Board of Canada says its consumer confidence index fell again this month, losing 2.9 points to 71.

The think-tank’s latest poll, conducted between Nov. 6 and Nov. 13, found the largest one-month decline on record for consumer sentiment in the Prairie region. Confidence also sagged in British Columbia, Ontario and Quebec, but edged up slightly in Atlantic Canada.

Conference Board economist Paul Darby says consumer sentiment "has fallen to depths previously reached only in 1982 and 1990, which were both periods of recession in Canada."

Darby notes that "ongoing troubles in equity markets undoubtedly had a negative effect on consumers’ view of their family financial situations and future job prospects in their communities businesscards."

He did find one area of optimism: 25.9 per cent of those polled said now is a good time to make a major purchase, up slightly from October, which Darby said "may indicate that the slide in the index is bottoming out."

The Conference Board poll claims a 95 per cent likelihood of being accurate within 2.2 percentage points.

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When applying for a credit card, you have to sign a contract that’s crammed with legalese and fine-print footnotes.

It’s time for a fresh approach to communication.

Companies should make it clear regarding what comes with your credit card besides reward points or cash rebates.

This week, the Financial Consumer Agency of Canada and MasterCard Canada released a model plain-language credit card application form.

When asked to test the redesigned form, consumers had the same reaction, says FCAC commissioner Ursula Menke: "Oh, my goodness, I didn’t understand this before."

People who had used credit cards for years said they were willing, and even eager, to seek out additional information.

What would you see if companies tried to educate you about your rights?

Here’s a guide to what’s in the model application.

• The annual interest rates.

  Right on top of the first page, you find out all the rates you will be charged (such as 18 per cent for purchases, 20 per cent for cash advances, 4.9 per cent for balance transfers for six months and 20 per cent after six months).

• The interest-free period for new purchases.

  There’s no interest charged only if you pay this month’s balance in full by the due date and you’ve also paid last month’s balance in full by the due date. (This two-month method of calculating interest on new purchases has been adopted by most credit card issuers.)

• The interest rate for balance transfers.

  There’s no interest-free period for balance transfers. Say you transferred $5,000 to a new credit card on June 2. The interest on the balance transfer will be calculated from June 2 – even if the bill arrives July 15.

• The interest rate for cash advances.

  There’s no interest-free period and the interest is calculated from the day you get the cash advance free credit score.

• Other fees that apply to your credit card.

  Getting a cash advance will cost you $2 inside Canada and $4 outside Canada (in addition to interest paid).

  A bounced cheque costs you $25; an extra copy of your monthly statement is $2; going over your credit limit is $20; and for transactions made outside Canada, you pay an extra 2.5 per cent of the amount in Canadian dollars.

• A privacy statement.

  The bank will give access to your personal information to other organizations, such as credit reporting agencies, bank affiliates and selected service providers.

For me, the privacy statement was the real eye-opener.

I didn’t realize how much latitude they had to share your personal information with companies selling unrelated products – and, of course, to profit by doing so.

Menke said she hoped credit card issuers would adopt a plain-language application. "It’s in the companies’ financial interest that people know what they’re getting into."

I disagree. Credit card issuers make their contracts almost unreadable for a reason – they’re happier if you don’t know what you’re getting into.

By communicating with customers at a Grade 5 level and disclosing all the ways they can make money at your expense, they’re opening themselves up to questions about how their businesses work.

Of course, I’d like to be proven wrong by seeing a bank adopt this model application right away.

Ellen Roseman’s column appears Wednesday, Saturday and Sunday. Email eroseman@thestar.ca.

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OTTAWA–Tourism generated $19.7 billion of revenue for governments in Canada in 2007, boosted 4.3 per cent over 2006 by domestic travel.

Statistics Canada reports government revenue from domestic tourism rose 6.1 per cent to just over $14.5 billion last year, while revenue from international visitors dropped 0.6 per cent to $5.1 billion.

The agency says the share of government revenue from international visitors declined to about a quarter last year from just over a third in 2000.

Taxes on products, such as the goods-and-services tax and provincial sales taxes, were the single largest source of tourism revenue for the federal, provincial and territorial governments.

These taxes accounted for $4.7 billion for the federal government in 2007, half its revenue from tourism.

Provincial and territorial governments collected $5 payday advance services.5 billion from taxes, 60 per cent of their tourism revenue.

These tax revenues rose just 2.7 per cent in 2007, the second straight year of weak gains, largely due to one-percentage-point drop in the GST that took effect in July 2006.

Taxes on employment income and business profits were the second most important source of tourism revenue for both the federal and provincial and territorial governments.

Income taxes directly attributable to tourism rose 9.4 per cent in 2007, reflecting gains in both personal and corporate incomes and associated taxes.

These taxes brought in $3 billion for the federal government and another $1.9 billion for provincial and territorial governments.

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Microsoft Corp. plans to invest $60 million in South Korea over the next three years, President Lee Myung-bak’s office said Monday.

In a statement, the presidential Blue House said Microsoft (MSFT, Fortune 500) CEO Steve Ballmer spoke of the plan during a meeting with Lee at the president’s office.

The money will be invested in areas including training and new business cultivation, the statement said.

Korean-language press materials released by Microsoft mentioned the projects but made no mention of the investment amount.

Separately, Microsoft, South Korea’s Hyundai-Kia Automotive Group and South Korea’s Institute for Information Technology Advancement opened a center to develop information technology products and services focused on automobiles.

The opening of the Automotive IT Innovation Center follows an agreement in May by Microsoft and the world’s fifth-largest automotive group to cooperate in developing next-generation in-car information and entertainment systems, Kia Motors Corp cash till payday. said in a press release.

"Microsoft and Hyundai-Kia Automotive Group share a similar vision for the role that information technology will play in connecting people to information, communications and entertainment while they are in their cars," Ballmer said, according to the release.

Also, Ballmer and Nam Yong, CEO of LG Electronics Inc., signed a memorandum of understanding aimed at strategic collaboration in the area of mobile convergence, LG said. 

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Mutual fund company AIC Ltd., buffeted by the worldwide financial crisis, has trimmed its workforce by 20 per cent to keep costs down and better position itself in a tough economic environment.

The privately owned company, which has suffered a large number of redemptions since the market meltdown began, laid off 53 out of some 290 employees on Thursday, spokesperson Terri Oswald said.

"The areas that were affected were mostly marketing and information technology," said Oswald, adding that some employees on the investment side and in sales were also let go.

There were no layoffs of fund managers, but three analysts were cut.

"The key reason for the reduction is simply that the market conditions are so difficult right now," she said.

The company doesn’t see any more financial problems down the road and no more pink slips are contemplated, Oswald added.

"We’re trying to keep our cost structure so that we can continue to remain profitable through this storm that every other company is experiencing internet pay day loans."

AIC, which is controlled by billionaire Michael Lee-Chin, has been suffering from net redemptions for several years. Some of its stock portfolios were hit hard because of holdings in the battered financial sector.

Canadian investors redeemed a record $4.5 billion in mutual funds last month, making September the worst month for outflows since the Investment Funds Institute of Canada started collecting data in 1990.

AIC, Canada’s 19th largest fund company, saw net outflows of $86 million in September.

The downturn is expected to spur consolidation but AIC has said it is not up for sale.

The Canadian Press

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NEW YORK — Investors who are getting beaten up in the stock market often look to bonds as a safe place to stash their money. But they need to make their moves deliberately, not out of panic, or they can end up losing money rather than stabilizing a portfolio.

Common mistakes investors are likely to make in the current climate include moving too quickly and not paying enough attention to the kinds of bonds they’re buying.

The idea of moving toward safety is more complex these days because some of the chaos in the financial markets stems from bonds — including those tied to risky mortgages that since have gone into default. The multiplication in recent years of the types of fixed-income investments means that not all bonds are the same; while the government provides safe investments, there also are bonds that bring in higher returns but take more chances to do so.

Rich Berg, chief executive and co-founder of Performance Trust Capital Partners, said investors need to know what they’re getting into. If they’re lured by exotic names like collateralized debt obligations or collateralized loan obligations, they need to understand that the more complex the investment, the more likely it is to spell trouble.
"These aren’t mom and dad’s bonds," he said. "When people think they’re going into bonds for safety they might actually be exacerbating their risk."

He said investors also need to consider how much they’re willing to sacrifice in investment returns in order to safeguard their money by putting it into bonds. That’s important these days because interest rates are low, limiting what many bonds pay.

"Right now, if people are OK with a long-term return of between 3 and 4 percent, go put your money in government bonds. But don’t expect 6 to 8. It can’t happen," he said.

They might want to consider that professional investors have been stashing cash into 3-month Treasury bills, sometimes earning almost nothing, but secure knowing that their principal will remain intact.

The average investor doesn’t need to look for such short-term investments, but that kind of safety is what makes government debt of all maturities so attractive.

Stuart Ritter, an assistant vice president and certified financial planner at T (instant payday loans). Rowe Price Associates Inc., said investors who want to make money shouldn’t simply scout around for the highest returns because market forces can shift what is in favor — and those returns could then head south.

"If you start making investment decisions based on what happened in the recent past and try to forecast the near future, you’re no longer investing, you’re fortune telling," he said.

And he warned that investors who move too much money into bonds might risk earning so little they can’t keep pace with inflation.

"As people go to something that is ’safe’ from short-term volatility, by definition they are in something that gives them much higher exposure to the risks of inflation," he said.

Consider an example of how two investors with $1 million portfolios at the start of 2001 would have fared by taking two different paths, according to T. Rowe Price research.

The first investor who panicked and shifted from stocks to cash during the downturn after the tech-stock boom and the Sept. 11, 2001 terror attacks would have ended up five years later with about $700,000, while the investor who stayed in stocks and rode the ups and downs would have come out with about $1.25 million.

"You didn’t see the decline coming, you’re not likely to see any recovery that’s to come. The only way to participate in the recovery is to stay in," Ritter said.

But before putting money into bonds or bond funds, investors should remember, again, that those paying higher yields likely are taking on more risk. And a conservative approach can be in order for investors who soon will need the money.

Michael Cuggino, president and portfolio manager at Pacific Heights Asset Management, said the company’s bond funds didn’t extract the returns that some other funds did in recent years because they didn’t wade into more exotic investments that now have run into trouble.

"We’ve never pretended that we should chase every last basis point of yield and take on unnecessary risk to do so," he said.

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