Losing sleep? Don’t
stash your money under the mattress advises TD Waterhouse:
TD Waterhouse RSP Poll reveals Canadians’ spending and
investment behaviour TORONTO (February 4, 2009)
– 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 to 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. For more information, contact: Barbara Timmins
TD Bank Financial Group
416-307-6498
barbara.timmins@td.com
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