When investors are considering hiring us to manage their portfolios through Successful Investor Wealth Management Inc., they sometimes ask about the difference between portfolio management and financial planning.

It’s a good question....

Members of my Inner Circle service often ask me for stock advice about picks they are thinking of buying that we don’t cover in our newsletters. A large number of these stocks fall into a grey area. Sometimes my stock advice is that they are “okay to hold,” but we wouldn’t advise buying them. When Inner Circle members ask about one of these companies, that’s what my stock advice would be: it’s “okay to hold.” Others don’t inspire our confidence at all, and our advice would be to avoid them or sell them if you own them. Here are three recent examples of our Inner Circle stock advice: YELLOW PAGES INCOME FUND (Toronto symbol YLO.UN) is the largest telephone-directory publisher in Canada, where it owns the Yellow Pages and Pages Jaunes trademarks. Aside from phone directories, it prints free, advertising-based publications, including Auto Trader, Buy & Sell and Renters News, through 98%-owned Trader Corp. It also operates web sites devoted to classified advertising....

Lately, a number of readers have been asking me whether it’s worth holding onto their U.S.-stock holdings if the U.S. dollar keeps falling. Some wonder if they should follow their brokers’ suggestions and hedge against the risk of a drop in the U.S. dollar, using options, futures or other investment products. If you knew that the U.S. dollar would keep falling, the best portfolio management strategy would be to sell all of your U.S. stocks and buy them back when the dollar stabilizes. However, you don’t know where the U.S./Canada exchange rate is going next — you never do. The financial industry has a variety of products that can insulate your U.S. investments from a drop in the value of the U.S. dollar. These products obviously cost you money. In addition, they reduce the long-term value of your U.S. investments. After all, you invest in U.S. stocks for two key reasons. One is that the U.S. stock market offers certain types of investment opportunities that are rare or non-existent in Canada, such as giant multi-national consumer companies like Procter & Gamble or McDonalds. The other key reason for U.S. investment is that it gives you currency diversification. That’s crucial to a sound portfolio management strategy....

One of the questions we often get from clients of Successful Investor Wealth Management involves financial contingency planning. That is, how do you set up your finances and investments so that someone else can handle them if you can’t? When you’re doing this kind of retirement planning, we think it’s always a good idea to have such an arrangement in place. The first step is to find someone you thoroughly trust to step in on your behalf. You should also resist the urge to leave fixed instructions. Instead, give that person as much latitude as possible. This goes against the first instinct of many investors. But there is good reason to take a more hands-off approach.

Flexibility is a plus

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Should you stick with your current stock broker or switch to a discounter? To answer that question, you need to consider your own experience and abilities, and those of your stock broker.

Brokers, good and bad

A good stock broker (one who is experienced, knowledgeable, and oriented toward the long term) is worth the top commissions you are likely to pay. For instance, suppose your average commission is 2% and you replace one-third of your portfolio every year (both figures are on the high side). In this case, you’d pay 1.34% of your portfolio’s value each year in commissions. That’s less than the 2% to 3% management fee on a typical mutual fund....

Asset allocation funds are mutual funds that distribute their assets in accordance with all investors’ goals (consistent returns, diversified investments, etc.). Unlike balanced funds, they can shift their portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those classes. If a fund’s name includes the term “asset allocation,” it means the fund’s managers, or sponsors, feel that they can enhance returns and/or reduce risks by switching back and forth among stocks, bonds and cash equivalents, often using a so-called “black box” – a computer program that makes trading decisions based on a pre-selected set of rules for interpreting financial statistics. For example, if the managers feel that the bond market is depressed and poised for an upswing, they may overweight the portfolio in fixed-income investments for a few months to take advantage of the change. Computer modelling makes this investment approach sound scientific, but it is just as likely to detract from a portfolio’s long-term return as it is to add to it....

Here are two simple retirement investing strategies that can help you maximize your investments in RRSPs.

High-risk retirement investing

Planning your retirement investing and picking stocks for your RRSPs can be difficult. It can be tempting to pick higher risk (and potentially higher return) stocks for your RRSPs. However, we believe these investments are generally unsuitable for this type of retirement investing, and that higher-risk stocks should be held outside of an RRSP. That’s because if higher-risk stocks lose money in your RRSPs, you have a triple loss:...

Cautious investors wonder if they own enough different stocks, or perhaps even too many. The right number of stocks for investors to own for portfolio diversification depends, in part, on where they are in their investing careers. When they’re just starting out, most people have modest amounts of money to invest. Even so, it generally pays to invest at least several thousand dollars at a time, or the broker’s minimum commission will significantly lower profits....

Registered education savings plans (RESPs) are one of the best ways to save for a child’s post-secondary education. RESPs are a government-assisted form of savings, similar to registered retirement savings plans (RRSPs).

How RESPs work

There are no annual limits for contributions to RESPs. However, RESPs have a lifetime limit (from birth to age 17) per child of $50,000. Only the first $2,500 of contributions per year to RESPs will receive a Canada Education Savings Grant (CESG) from the federal government. Under the CESG, the government will match a portion of what you put in: for the first $500, the matching amount is dictated by your family income, and for the subsequent $2,000, the government will match at a rate of $0.20 for every dollar contributed. The net family income amounts are indexed to inflation each year....

We created our Wall Street Stock Forecaster Hotline to keep you up-to-date on our recommendations, and tell you when they change. Now we’ve made our Hotlines available to you on the Internet, so you’ll never need to worry about missing a Hotline. As a subscriber, you can receive our Wall Street Stock Forecaster Hotline every week (44 or more times per year) by phone or email....