TAKE A FRESH LOOK AT YOUR RRSP

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  Now that RRSP season is behind us, it’s time to pause, catch your breath, and take a long, hard look at your retirement savings portfolio. I hate to say this but if you’re like millions of other Canadians, it’s probably a mess.

There’s a simple reason for this. Most people only think about their RRSP once a year, at the time of their annual contribution. They make an investment decision on the spur of the moment, often in something quick and easy like a GIC, and then forget about it until the following January. The result is an RRSP that has no focus and is probably underachieving, perhaps by a lot.

Here’s a quick and easy test to see how well your own RRSP is doing. In 2005, the S&P/TSX Composite Index gained 22.9%. The Scotia Capital Universe Bond Index gained 6.5%. If the profit in your RRSP didn’t fall within that range (or higher), then it’s time for a rethink.

Start by creating a plan. What are you trying to do with your RRSP? As a general rule, the younger you are the greater the emphasis you should place on growth. As you get older and approach retirement, you should gradually become more conservative. A good mix for someone under 40 would be to hold 60% of the RRSP in stocks or equity mutual funds, 35% in various types of income securities, and 5% in cash-type investments.

Once you have thought through your strategy, take a look at everything in the plan. See how well it fits. If you are under 40 and more than 10% of your RRSP is invested in things like Canada Savings Bonds and GICs, you are short-changing yourself. Those low-risk securities may be suitable when you’re about to retire but returns of 3% or less when you are young (which is what they’re paying these days) are unacceptable.

Most people will find they need to make major changes. A few will even be faced with tearing down their existing RRSP portfolio and starting over. Don’t hesitate! The longer you delay, the longer it will be before your retirement plan starts to produce the kind of returns you’ll need to build a decent nest egg. They say that time is money. In the case of your RRSP, that’s absolutely true. You only have a limited amount of time to build it up. Don’t waste it.

IS IT TIME TO DUMP U.S. STOCKS?

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  The loonie has pulled back from its recent 14-year high but many investors are concerned that it’s only a temporary pause. If it starts heading higher again, that will be bad news for your U.S. dollar securities. So should you sell now? Read my advice at http://www.buildingwealth.ca/News/Featuredetails.cfm?NewsletterID=2486

NEW FREE BONUSES

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  We believe we offer the best investment newsletters in Canada. But we know from experience that some people like to receive free bonuses when they buy something, so we have two for you.

The first is a new report titled 11 Sure-Fire Tips for Stock Market Success. It’s full of practical advice that will help you identify winners and avoid losers when investing in the market. Use these simple winning principles and your profits should soar.

The second bonus is exclusively for those who order through our friendly Customer Service line at 1-888-287-8229. It’s called 9 Ways to Cut Your Family’s Tax Bill. That makes it very timely, with the tax filing deadline less than two months away. If even one tip in this report is applicable to your taxes, it could save you hundreds of dollars.

Both reports are free when you place an order for any of our products or renew an existing subscription. Check out the list of choices at http://www.buildingwealth.ca/Bookstore/index.cfm

IWB SELLS TECK COMINCO FOR 553% PROFIT

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  Members of the Internet Wealth Builder have just scored one of their biggest gains ever. In last weekend’s issue, contributing editor Irwin Michael, who is founder and president of the ABC Funds, advised selling positions in Teck Cominco (TSX: TEK.SV.B) for a whopping gain of 553%, not including dividends.

Irwin originally recommended Teck in August 2002 when it was trading at what we now know was an incredible bargain price of $11.65. He felt it represented great value at that level and it turned out he was right on the mark. The shares have moved steadily higher ever since and the price at the time he advised selling was $76.16. Teck is only one of many winners that Irwin has selected for IWB members. Other recent examples include ShopKo (NYSE: SKO), which was taken over at double our recommended price, and Loews Corp. (NYSE: LTR) which was sold for a 75% gain. We’re still holding some of his other winners such as E-L Financial (TSX: ELF) which has moved up 91% since he recommended it.

If you aren’t a member of the IWB, how much longer are you going to wait? Right now we have a three-month trial offer for only $32.95 plus tax, so why not take advantage of this to see what the IWB is all about? Plus there’s no risk – cancel within the first month and we’ll give you a full refund. Isn’t it about time you started to share in some of these profits?

Go to http://www.buildingwealth.ca/bookstore/productdetail.cfm?product_id=562 for details or call Customer Service at 1-888-287-8229 to order.

NEW SPECIAL REPORT: TD FUNDS 2006

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  If you own any TD mutual funds or are thinking of buying some, you’ll want to read this new special report which I’ve just completed. It contains ratings and reviews for over 50 TD funds, and they are right up to the minute, using returns to Jan. 31. You won’t find a better source of candid, unbiased advice about which TD funds to buy and which to avoid.

This year’s edition contains a new feature: RRSP/RRIF Suitability Ratings for every fund. This is essential information – some funds may be great for taxable accounts but poor choices for registered plans for a variety of reasons. Our RRSP/RRIF Suitability Ratings remove the guesswork.

TD Funds 2006 is only $23.95 plus tax for the downloadable electronic version. Details at http://www.buildingwealth.ca/bookstore/productdetail.cfm?product_id=578

Also, our special report titled The Top 50 Funds for 2006 continues to be very popular with readers. Details at http://www.buildingwealth.ca/bookstore/productdetail.cfm?product_id=571

Special note: Subscribers to our On-Line Buyer’s Guide to Mutual Funds receive these and all other reports at no extra charge. Details at http://www.buildingwealth.ca/bookstore/productdetail.cfm?product_id=72

FLOW-THROUGH SHARES ALERT

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  Now that tax season is here, many people are looking for ways to keep more for themselves and reduce the government’s share. As a result, we’ve received several inquires about flow-through shares and the tax breaks they offer. While it’s true there are some healthy tax deductions, you need to understand the risks before plunging in. Read my article on the subject at: http://www.buildingwealth.ca/News/Featuredetails.cfm?NewsletterID=2487

DECLARING CSB/CPB INTEREST

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  Here’s a question many people won’t be able to answer correctly: do you have to declare interest earned on Canada Savings Bonds (CSBs) and Canada Premium Bonds (CPBs) every year, or can you wait until you cash them in?

The answer is: it depends. If you own CSBs or CPBs and aren’t sure, check out my full response to this question at http://www.buildingwealth.ca/qa.cfm

Other topics covered this week include repaying the Home Buyers’ Plan, giving a cash gift to a daughter, getting money out of locked-in plans, and the length of time you need to keep tax records.

You’re invited to send in your own money question. Use the special e-mail link you’ll find on the page.

RETIREMENT TIME BOMB INTERVIEW ON ROB-TV

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  Recently, I was interviewed about my book, The Retirement Time Bomb, by Patricia Lovett-Reid on her popular ROB-TV show, MoneyTalk. It was a far-ranging discussion that covered the crisis in our private pension plans, RRSP strategies, retirement problems facing baby boomers, the CPP, and much more. If you missed it, you can watch the whole interview at http://www.robtv.com/servlet/HTMLTemplate/!robVideo/robtv0726.20060209.00036000-00036851-clip1/h/220asf/

The book continues to do well. You can buy a copy from Amazon.ca at 34% off the cover price by going to www.buildingwealth.ca and clicking on the cover image or by using this link:

http://www.amazon.ca/exec/obidos/ASIN/0143050737/buildicaquizm-20/701-4857943-6159565?creative=330649&camp=8641&adid=0CNSR82P7Q1WKNEA2BMM&link_code=as1

That’s all for this month. We’ll be with you again in April.