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Losing sleep? Don't stash your money under the mattress advises TD Waterhouse

5 minute read
By TD Bank Group
• Feb. 4, 2009
- TD Waterhouse RSP Poll reveals Canadians' spending and investment behaviour - TORONTO, Feb. 4 /CNW/ - Under the mattress? In the freezer? In the cookie jar? Canadian investors report they are anxious about finances, but stashing money in different places throughout the house is never the best investment strategy. Although the 8th annual TD Waterhouse RSP Poll showed that only 2% of Canadian investors have considered keeping their money under the mattress, many respondents have lost confidence in their ability to manage their own investments over the past year, with 24% of investors agreeing with that statement in 2008 versus 9% in 2007. "With 2008 being one of the most stressful trading years in history, we know that investors have more financial worries than ever," says Patricia Lovett-Reid, Senior Vice-President, TD Waterhouse. "People shouldn't let market volatility dictate their long-term financial planning and they should speak with an advisor who can help keep their retirement plan on track." Financial Worries When it comes to how Canadians are feeling, approximately one half admit to having enough anxiety about their finances to keep them up at night (at least occasionally) and nearly 90% of investors acknowledge having at least some financial worries. Topping the list of financial worries is their declining value of investments (22%) followed by paying bills and managing day-to-day expenses (19%), and saving money for retirement (14%). Women (54%) are more frequently kept up at night by financial worries than men (41%). Women are more likely to worry about meeting and managing day-to-day expenses than men (24% versus 14%). Men, on the other hand, are slightly more likely than women to worry about the declining value of their investments (23% versus 21%). Forty per cent of Canadians aged 65-69 are kept up at night by financial worries, compared to 51% of people aged 35-49. People 50 years of age and older are more concerned with the declining value of their investments (34%) than those aged 18-49 (11%). Spending and Investing Behaviour What Canadian investors have done due to the recent financial downturn is alter their spending and investing habits (49%). The most cited spending and investment behaviour changes include postponing major purchases such as a house, car or furniture (52%), charging less on credit (45%) and still making non-essential purchases but spending less on them (39%). Nearly an equal number of Canadians (38%) are completely cutting out spending on non-essential purchases. Women have changed their spending behaviour more than men. Nearly 50% of women have completely cut out spending on non-essential purchases, whereas only 29% of men have made the same decision. Older investors are more likely to have switched to less risky investments like GICs (36% of 65-69 year olds versus 16% of 35-49 year olds). Recommendations from Patricia Lovett-Reid "I encourage people to try and find a happy medium with their spending habits. Don't save until it hurts but don't spend like there is no tomorrow," says Patricia Lovett-Reid, Senior Vice-President, TD Waterhouse. "Even when times are tough, there are ways to ensure that you are empowered and in control of your financial future." One way that people can take control of their financial future is to maximize their RRSP contribution. Contributing the maximum amount possible into an RRSP may significantly reduce an individual's income tax payment for that year. Also, inside the RRSP, the investment has the potential to enjoy tax deferred growth over the years. Lovett-Reid suggests that investors short of funds could consider borrowing money to contribute to their RRSP and then paying down the loan with their tax refund. "Some Canadians may be tempted to store their money 'under their mattress' in this volatile economy, but in fact hardly any Canadians follow through with it," says Lovett-Reid. "Of those few Canadian investors who have actually considered keeping their money in unconventional places, 3% have stuffed it under their mattress, 3% have let it cool off in their freezer and 2% have hid it amongst the treats in their cookie jar." Canadians tempted to keep money "under the mattress", are neglecting the long-term impact of inflation on their purchasing power. For example, 10 years from now $1,000 will only be worth $820 at a 2% average annual rate of inflation. Investors with longer time horizons should consider focusing more on long-term investment return potential rather than short-term volatility risk. Working with an advisor to set the right asset allocation for a portfolio can optimize its potential returns without exposing it to inappropriate levels of market risk. About the 2008 TD Waterhouse RSP Poll Since 2000, TD Bank Financial Group has conducted an annual survey to measure issues related to Canadians' investment intentions and investor confidence. From December 11th to December 18th, 2008, TNS Canadian Facts conducted an online survey among a randomly selected, representative sample of 1006 Canadian investors between the ages of 18 and 69. To qualify for the survey, respondents had to be responsible for household financial planning or investment decisions, hold any savings or investments products, either inside or outside of registered savings plans, and meet an occupation screen. Respondents were members of TNS Canadian Facts' Interactive Panel. About TD Bank Financial Group The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. TD Bank Financial Group is the sixth largest bank in North America by branches and serves approximately 17 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Insurance; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking through TD Banknorth and TD Bank, America's Most Convenient Bank; and Wholesale Banking, including TD Securities. TD Bank Financial Group also ranks among the world's leading on-line financial services firms, with more than 5.5 million on-line customers. TD Bank Financial Group had CDN$563 billion in assets as of October 31, 2008. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto Stock Exchange and New York Stock Exchange. /NOTE TO PHOTO EDITORS: A photo accompanying this release is available on the CNW Photo Network and archived at http://photos.newswire.ca. Additional archived images are also available on the CNW Photo Archive website at http://photos.newswire.ca. Images are free to accredited members of the media/ For further information: Carolyn Abbass, Jennifer Meneses, Paradigm Public Relations, (416) 203-2223, jmeneses@paradigmpr.ca; Barbara Timmins, TD Bank Financial Group, (416) 307-6498, barbara.timmins@td.com

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