Every investment advisor teaches new investors the meaning of having a “diversified” portfolio. This is a way we hedge against a particular sector being hit too hard and wiping out our savings. It involved looking at how risky you are willing to get and then balancing your portfolio to ensure a proper distribution between growth funds, income funds, sector funds, bond funds and any others you may want to be invested in.
I myself started my RRSP when I got my first full time job because I read a great book called The Wealthy Barber
If you held a big percentage of your savings in Income Trusts or if your financial advisor had you do so, then shame on you and shame on him or her. You should have been better diversified.
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It is amazing how people lose sight of the basics when motivated by greed. And somehow the government is to be blamed for it all. What a joke.
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I find it amazing how the left as well as Garth are blaming Stephen Harper for them supposedly losing money. I would imagine that some of the dippers are even blaming George Bush!
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It had to happen eventually, and most with a modicum of knowledge about these matters would agree.
BUT (and it is a big but, snicker snicker) those same people would also have known this at the same time the opportunistic Conservatives, Harper included, made an absolute commitment that a “Conservative government would never tax an income trust”. Either he and the rest of the party have absolutely no understanding of the world of finance, investment and taxation (perhaps, as Harper never worked a real private sector job), or plain and simple he lied and did so knowlingly and in the hope that it would help get him elected.
Don’t get me wrong, it IS doing the right thing, but dig deep down and ask youselves if you were not die hard “Harper is infallible” Conservative partisans, or if the evil hated Liberals did this in this way after a firm promise less than a year ago, whether you would view it the same way.
Face it, if the Libs did this, you would be writing avout it for the next several years.
How about a little intellectual honesty?
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Alberta Girl (#2) Actually, the Dippers are supportive of this decision.
torywatcher (#3) – You may be right in that I would be crying foul if the Liberals made this promise and broke it, but it still doesn’t detract from the fact that diversification in a portfolio is the key to hedging against this kind of situation no matter who makes the decision.
I wonder how many billions the market would have lost had this decision been made in three years?
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If Harper sticks by what he says he is an “inflexible ideolog”. If he sees the error/stupidity/weakness of his past stated position and adopts a new position that does the right thing for the country he is “breaking his promise”. Let’s face it – he can’t win. As I used to counsel a fellow corporate inmate – “You know you are going to be punished. You might as get punished for doing the right thing as the wrong one.” In this case it might even be better politics once the fuss is past.
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One thing to keep in mind is that the trust sector greatly outperformed the market in the last few years. Unless people bought heavily into trusts right before the decision, they are probably sitting on fairly impressive gains. Much of those gains were basically due to the capitalization of the tax savings into the share price.
Curiously, everyone is making noises about how unfair it was to end this special treatment, but no one ever suggests that these investors compensate taxpayers for the huge investment gains they made as a result of not paying tax. Those gains were made at taxpayers’ expense.