Spine: 1.625” Atoll m thaen iangfeo rymouatri mono ynoeuy wneiseedly Personal Finance Small Business Estate Planning Planning2Retirement ndMutual Funds Stocks, Bonds, andEdiInvesting Essentialstio a HomenBuying and Selling Debt Management Saving Money Making Everything EasieMr!™ a na g e m22nendd E nEdditiitoitonn M o n ey in one great guide Open the book and find: M LTohoisk ainll-gin to-o enxep raensdo uyrocuer i sk nthoew tloeodlg yeo ouf nmeoende. Fyr moman daegaelmingen wt?it h (cid:127) Hmoewet t yoo mura gnoagales your money to AL on For Canadia ns debt and setting financial goals to starting a small business L (cid:127) Budget tips to help you save more - F e and planning your estate, this indispensable desk reference is IN o y bemxuaprnsetaritgnseg om wffeeitnrh tt hsdoeeu cinnissdiiog fnhinst. aynocuia nl eaeddv ifcoer. mOaukr iCnagn fairdsti-acnla fsisn amnocniael y- (cid:127)(cid:127) H Epxeoprwfee rtctot t rhiepodsm uocene b tuhyei tnagx eyso uyor u pay -ONE r Ca M A L L - I N - O N E D E S K R E F E R E N C E D a n (cid:127) Setting financial goals — determine your money personality and set (cid:127) The best investments for your ES a n a financial course that works for you personality and goals K d a R (cid:127) Getting yourself out of debt — tackle credit problems and expense (cid:127) How to build a diversified portfolio E i g issues to set yourself on the right path F a (cid:127) The scoop on how much you’ll E e n (cid:127) Buying and selling a home — get the home of your dreams for the need to retire comfortably R E s m best price and sell your house easily and profitably (cid:127) Essential information on estate N C (cid:127) Understanding investing essentials — explore your options to make planning e E the most of your money n (cid:127) What you need to succeed in small (cid:127) Building wealth through stocks, bonds, and mutual funds — buy the business t most profitable investment vehicles no matter what the economic 8 climate BOOKS Go to 1 (cid:127) Planning your retirement — build your RRSPs to enjoy a comfortable dummies.com IN ® retirement free from money worries for more! (cid:127) Readying your estate — ensure that your estate is properly man- aged and safe from taxes (cid:127) Saving Money (cid:127) Starting a small business — set out on an entrepreneurial (cid:127) Debt Management adventure with everything you need to be successful (cid:127) Buying and Selling a Home (cid:127) Investing Essentials “An indispensable reference guide.” (cid:127) Stocks, Bonds, and Mutual Funds —Mike Gillespie, Canwest News Service (cid:127) Retirement Planning (cid:127) Estate Planning (cid:127) Small Business $44.99 CN Andrew Bell is a host on Business News Network. Andrew Dagys and Andrew Bell ISBN 978-0-470-15428-1 Paul Mladjenovic co-wrote Stock Investing For Canadians For Dummies. Andrew Dagys and Paul Mladjenovic Tony Ioannou and Heather Ball co-wrote Buying and Selling a Home For Tony Ioannou with Heather Ball Canadians For Dummies. Margaret Kerr and JoAnn Kurtz are lawyers Margaret Kerr and JoAnn Kurtz Ball, Bell, Dagys, Ioannou, and entrepreneurs. John Lawrence Reynolds is a best-selling author. John Lawrence Reynolds Kerr, Kurtz, Mladjenovic, Kathleen Sindell is a professor and consultant. Kathleen Sindell Reynolds, Sindell 01_154281-ffirs.qxp 7/30/08 9:09 AM Page i Money Management For Canadians ALL-IN-ONE DESK REFERENCE FOR DUMmIES ‰ 2 ND EDITION 01_154281-ffirs.qxp 7/30/08 9:09 AM Page ii 01_154281-ffirs.qxp 7/30/08 9:09 AM Page iii Money Management For Canadians ALL-IN-ONE DESK REFERENCE FOR DUMmIES ‰ 2 ND EDITION by Heather Ball,Andrew Bell, Andrew Dagys,Tony Ioannou, Margaret Kerr,JoAnn Kurtz, Paul Mladjenovic,John L.Reynolds,and Kathleen Sindell 01_154281-ffirs.qxp 7/30/08 9:09 AM Page iv Money Management For Canadians All-in-One Desk Reference For Dummies®, 2nd Edition Published by John Wiley & Sons Canada, Ltd. 6045 Freemont Boulevard Mississauga, ON L5R 4J3 www.wiley.ca Copyright © 2008 by John Wiley & Sons Canada, Ltd. All rights reserved. No part of this book, including interior design, cover design, and icons, may be reproduced or transmitted in any form, by any means (electronic, photo- copying, recording, or otherwise) without the prior written permission of the publisher. Library and Archives Canada Cataloguing in Publication Data Money management for Canadians all-in-one desk reference for dummies / Heather Ball ... [et al.]. — 2nd ed. Includes index. First. ed. published 2003 under title: Money management for Canadians all-in-one desk reference for dummies. ISBN 978-0-470-15428-1 1. Finance, Personal—Canada. 2. Investments—Canada. 3. Retirement—Canada—Planning. 4. Estate plan- ning—Canada. 5. Small business—Canada—Planning. I. Ball, Heather II. Title: Money management for Canadians all-in-one desk reference for dummies. HG179.M653 2008 332.02400971 C2008-902112-6 Printed in Canada 1 2 3 4 5 TRI 12 11 10 09 08 Distributed in Canada by John Wiley & Sons Canada, Ltd. 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LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE CONTENTS OF THIS WORK ARE INTENDED TO FUR- THER GENERAL SCIENTIFIC RESEARCH, UNDERSTANDING, AND DISCUSSION ONLY AND ARE NOT INTENDED AND SHOULD NOT BE RELIED UPON AS RECOMMENDING OR PROMOTING A SPECIFIC METHOD, DIAGNOSIS, OR TREATMENT BY PHYSICIANS FOR ANY PARTICULAR PATIENT. THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITA- TION ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. 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NO WARRANTY MAY BE CREATED OR EXTENDED BY ANY PROMOTIONAL STATEMENTS FOR THIS WORK. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR ANY DAMAGES ARISING HEREFROM. Trademarks:Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com and related trade dress are trade- marks or registered trademarks of John Wiley & Sons, Inc., and/or its affiliates in the United States, Canada and other countries, and may not be used without written permission. All other trademarks are the property of their respective owners. Wiley Publishing, Inc., is not associated with any product or vendor mentioned in this book. 01_154281-ffirs.qxp 8/8/08 12:59 PM Page v About the Authors Heather Ballis a writer and editor. She has worked on book projects covering topics such as genealogy, cooking, and small business Internet technology. She’s also the author of two non-fiction books for children. Andrew Bellwas an investment reporter and editor with the Globe and Mail for 12 years. He joined the Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He lives in Toronto. Andrew Dagysis a bestselling author who has written and co-authored several books, including Investing Online For Canadians For Dummiesand Stock Investing For Canadians For Dummies. He has appeared on Canada AM and several CBC broadcasts to offer his opinions on the Canadian and world investment landscape. He lives in Toronto with his wife, Dawn-Ava, and three children — Brendan, Megan, and Jordan. Andrew looks forward to your com- ments, and can be reached at aj@@[email protected]. Tony Ioannouis a senior associate and manager with Dexter Associates Realty. Tony obtained his real estate licence in 1984, and has consistently been a top producing salesperson with NRS Block Bros., and with Dexter Associates Realty since 1990. In 1990 he obtained his agents (brokers) licence, but contin- ues to enjoy working as a residential real estate sales person primarily on the West Side of Vancouver. He has also worked as a division director for the Real Estate Board of Greater Vancouver. Tony was born and raised in Sydney, Australia, and immigrated with his family to Vancouver in 1973. He has lived in Vancouver’s Kitsilano neighbourhood for over 25 years and is an avid mountain biker, motorcyclist, and golfer. Margaret Kerr and JoAnn Kurtzare lawyers, and they are also both entrepreneurs — and they have the bumps, bruises, and scars to prove it. Occasionally, they find they have a minute of free time here and there, and that’s how they came to be the authors of, among other books, Canadian Small Business Kit For Dummiesand Wills and Estates Planning Kit For Canadians For Dummies. Paul Mladjenovic has over 22 years’ experience writing and teaching about common stocks and related investments. He maintains a financial database for his readers and students at www.supermoneylinks.com. 01_154281-ffirs.qxp 7/30/08 9:09 AM Page vi John Lawrence Reynoldsis a native of Hamilton, Ontario, and a graduate of McMaster University. He has won several awards for his writing, including two Arthur Ellis awards for Best Mystery Novel. His book Free Rider: How a Bay Street Whiz Kid Stole and Spent $20 Millionwon the 2002 National Business Book Award. Mr. Reynolds lives in Burlington, Ontario. Kathleen Sindellis an instructor at the John Hopkins University MBA Program and is the founder of a firm that provides consulting and authoritative publi- cations about management, finance, and real estate in the e-commerce environment. 01_154281-ffirs.qxp 7/30/08 9:09 AM Page vii About the Technical Editor Christopher Cottier, BSc, MBA,is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty- five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of The Best Is Yet to Come: Enjoying a Financially Secure Retirement,a pioneering Canadian book on financial planning. Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth II Golden Jubilee Medal. 01_154281-ffirs.qxp 7/30/08 9:09 AM Page viii Publisher’s Acknowledgements We’re proud of this book; please send us your comments at [email protected]. Some of the people who helped bring this book to market include the following: Acquisitions, Editorial, and Media Composition Services Development Vice President Publishing Services: Editor: Robert Hickey Karen Bryan Copy Editor: Kelli Howey Project Manager: Elizabeth McCurdy Cover Photos:©istock/Felix Möckel Project Coordinators: Lynsey Stanford, Pamela Vokey Cartoons: Rich Tennant (www.the5thwave.com) Layout and Graphics:Stacie Brooks, Carl Byers, Reuben W. Davis, Joyce Haughey, Melissa K. Jester, Erin Zeltner Proofreaders: Laura L. Bowman, David Faust, Caitie Kelly Indexer: Cheryl Duksta John Wiley & Sons Canada, Ltd. Bill Zerter,Chief Operating Officer Jennifer Smith, Vice-President and Publisher, Professional and Trade Division Publishing and Editorial for Consumer Dummies Diane Graves Steele, Vice President and Publisher, Consumer Dummies Joyce Pepple, Acquisitions Director, Consumer Dummies Kristin A. Cocks, Product Development Director, Consumer Dummies Michael Spring, Vice President and Publisher, Travel Kelly Regan,Editorial Director, Travel Publishing for Technology Dummies Andy Cummings,Vice President and Publisher, Dummies Technology/General User Composition Services Gerry Fahey,Vice President of Production Services Debbie Stailey,Director of Composition Services 02_154281-ftoc.qxp 7/30/08 9:07 AM Page ix Contents at a Glance Introduction.................................................................1 Book I: Taking Stock of Your Financial Situation.............7 Chapter 1:Your Financial Snapshot.................................................................................9 Chapter 2:Setting Financial Goals..................................................................................23 Chapter 3:Distinguishing Needs from Wants...............................................................33 Chapter 4:Saving Smartly...............................................................................................43 Chapter 5:Spending Wisely............................................................................................49 Book II: Money Management Basics.............................59 Chapter 1:Getting Credit (Where Credit Is Due)..........................................................61 Chapter 2:Getting Into Debt...........................................................................................69 Chapter 3:Getting Out of Debt.......................................................................................85 Chapter 4:Budgeting and Record Keeping.................................................................113 Chapter 5:Planning for the Inevitable: Taxes.............................................................137 Book III: Home Sweet, Home Free..............................145 Chapter 1:Deciding to Buy...........................................................................................147 Chapter 2:Discovering Your Perfect Home................................................................173 Chapter 3:Getting the Home You Want.......................................................................201 Chapter 4:Deciding to Sell............................................................................................221 Chapter 5:Preparing to Sell Your Home......................................................................243 Chapter 6:Sealing the Deal...........................................................................................261 Book IV: Investment Fundamentals............................289 Chapter 1:Setting Realistic Goals and Expectations.................................................291 Chapter 2:Your Savings Choices: Savings Accounts, Tiered Accounts, and GICs.........................................................................................299 Chapter 3:Stocks, Bonds, Mutual Funds, and Real Estate........................................305 Chapter 4: Monitoring Your Progress..........................................................................327 Chapter 5: Becoming an Effective Investor.................................................................337 Book V: Making Your Investments Work for You..........345 Chapter 1: Buying Mutual Funds..................................................................................347 Chapter 2:Types of Mutual Funds...............................................................................373 Chapter 3: The Essentials of Stock Investing..............................................................395