Posts Tagged ‘investments’

With the number of government grants, loans and other assistance available, we have frequently been asked whether companies can still file for the SR&ED program if they’re taking advantage of other assistance programs. There are so many different programs available: from IRAP, to small business grants, to funding that will help make things more energy efficient, to workshare programs, just to name a few.

So what does this mean when a company files for the SR&ED program? CAN a company get money back through the SR&ED program if they’ve already received some sort of government assistance for the project?

Well, the short answer is both yes and no.

Mainly, it depends on how much of your project was covered by other government assistance programs. If your project was fully-funded by other grants and loans, then your project is unfortunately not applicable for the SR&ED program.

Or, as it more often happens, if your project was only partially funded by the government, then you can claim for SR&ED on the portion that was not funded.

The SR&ED program is vital for any Canadian business doing work that runs into technological obstacles – don’t forget to include it in your funding plans.

… is dead. Bankrupt.

Lehman Brothers, America’s fourth-largest brokerage, and one of the latest victims of the US sub-prime mortgage crisis, has filed for Chapter 11 bankruptcy protection. The current disaster is one of the biggest meltdowns in modern-day history because it has affected stock markets across the globe.  In Canada, the TSX slid by more than four per cent, or 515 points. That represented the TSX’s second worst day of the year.

Garth Turner, in his published book “Greater Fool,” believes that the US real estate crash is about to sweep into Canada.

“When bungalows in Vancouver cost $900,000 and resale homes with no parking in midtown Toronto are $1 million, it’s only forty-year mortgages and an embracing of debt that sustain the unsustainable.  The inevitable conclusion is that the current Canadian real estate market is floating on a sea of unrepayable, and perhaps unserviceable, debt.

Many investors don’t realize that stock market indices, throughout the history of the stock market, have outperformed the average mutual fund. Very few mutual funds are able to consistently outperform indices throughout the course of time because:

1. They charge high management fees which erode any profit potential, and
2. What works in one decade doesn’t work in another decade.

“The best proof of the market’s intelligence is that even the professionals can’t keep pace with it. Over any period of a few years or more, about 80% of actively managed mutual funds lag behind the market. They\’re weighed down by the salaries of their managers, by research costs, by marketing expenses, by fees paid to financial planners, by trading expenses.”  Canadian Business Online

Furthermore, mutual fund histories can be deceiving, due to survivor-ship.  Losing mutual funds tend not to survive.  They either disappear, or they are incorporated into larger, more successful mutual funds.  Therefore, when you look at the prior performance of existing mutual funds, you are automatically discounting all the mutual funds that have failed or that have ceased to exist!

How can you combat this?  One way is to gamble on your luck.  If you can always pick the “hot” mutual fund at the right time, you will outperform the index.  But how lucky can you be?

Another way is to buy stock yourself.  TD Waterhouse is a great discount broker which charges minimal transaction fees.  However, buying individual stocks takes significant capital (i.e. to buy enough to fully diversify your portfolio), and time (i.e. to research company fundamentals).

A third way to ensure that you outperform the average mutual fund is to buy index funds.  Recall that a stock index will outperform the average mutual fund.  Dubbed the “Couch Potato Portfolio,” this strategy entails diversifying across several index mutual funds.  To invest in the Couch Potato Strategy, buy the market by investing in a small collection of low-cost index funds. These funds passively follow the ups and downs of market indexes, such as the S&P/TSX Composite index of Canadian stocks or the Standard & Poor’s 500 index of U.S. stocks. The key advantage of the Couch Potato strategy is that it gives you wide diversification among hundreds of stocks and bonds at rock-bottom cost.