The new Tax-Free Savings Account (TFSA), revealed in the Conservative 2008 Budget starts in 2009 and gives Canadians aged 18 and older tax free contribution room of up to $5,000 annually (from their taxable income). The investment income, including capital gains, earned in a TFSA will not be taxed -- even when withdrawn.

The plan also allows an investor to withdraw funds from the TFSA at any time and for any purpose. The withdrawal amount can then be put back at a later date without reducing contribution room for that year. Unused room can be carried forward to future years.

TFSA Good For Retirees

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Why are pelicans always short of cash? - Because they have big bills.
Where do birds invest? - The stork market.

Diversification - Choosing the right mutual fund

Diversification includes investment across geographic regions, industries eg. communication and entertainment, or sectors of the economy. For example, you may have heard the term small cap funds. Small cap companies are companies with capitalization of under $1 billion.

What are some possible future economic trends? Here are two worth watching

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Twenty Questions

This article will cover several popular questions first time investors post. To start, here is question number 1:
How much money is enough to retire/invest? Good question, have ever consider this while thinking how you will reach your financial goals.

• If only i could get a raise, or a better paying position, I could invest.
• If only my spouse could get work.
• If only my spouse could get a better paying job or a raise.
• Maybe I should get a second job.
• Life would be so much easier if I had a bit more money.

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[Full Credit of Sherman's Lagoon, Jim Toomey 2002]

Welcome to DiscussEconomics blog for another investment advice resource designed to help your make intelligent investment decisions. This issue is about investments and their risks. There has been alot of discussion lately about investing and its risks (stemming from the sub-prime scare). Negative returns and unfavorable market conditions have caused many people to conclude that investing is unsafe and unprofitable. Saving, with its guaranteed return is thought to be more sensible.

The examination of the word risk is a good beginning for this article. Risk is the chance of being harmed or being exposed to danger. In its strictest meaning it is incorrect to say investing is risky.


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Here are some excerpts from the comments made by Under Secretary for Domestic Finance Robert K. Steel to the house of Representatives financial services committee.

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What is an option? In the stock market there are a variety of financial instruments that sell not only stock, but 'short or long' positions based on expectations. Put Options are contracts between a writer (seller or issuer) and a holder (buyer or investor). The buyer purchase the right to sell a particular stock to the writer; the writer is obligated to sell at the put price but the buyer is not obligated to sell their put position. These types of contracts can include stock but will generally include commodities, oil, gold, etc., as well. Confused? Here are some examples to help.

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Companies need money to spend but their money comes from more places than just profit. There are a number of methods to raise money to finance activities including the following instruments:

a) Debt Securities (contracts to repay with securities)
- Bonds: secured with assets
- Debentures: unsecured
- Notes: typically short term

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Here is a quick reference chart to help you determine market price and coupon rate of bond trades.

- When a bond trades at par value:
- Market Price = face value
- Coupon Rate = market interest rate

- When a bond trades at a discount:
- Market Price < face value
- Coupon Rate < market interest rate

- When a bond trades at a premium:
- Market Price > face value
- Coupon Rate > market interest rate

Bond Pricing Principles

- Interest rates and bond prices are inversely related.
- The longer the time a bond matures, the more volatile the market value of bond in response to changes in interest rules.
- Lower coupon bonds are more volatile in price than higher coupon bonds when interest rate changes.

- Lower coupon --> greater % in future = volatility

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