3 Rules for Success in 2007

Article Excerpt

Here are three key rules you’ll need to follow to invest safely and successfully in 2007. 1. Make sure you have substantial U.S. market exposure — 20% to 30% of your equity investments, if not more. Some Canadian investors have avoided the U.S. market recently. They worry that Americans are spending too heavily on consumer goods, especially with borrowed money, while neglecting to save. But the low U.S. savings rate is a misconception. That’s because the conventional method of calculating the U.S. savings rate excludes capital gains on stocks and real estate, and the build-up of value in U.S. pension funds. Yet this is where many Americans hold most of their life savings. It’s true that the U.S. dollar fell from $1.60 Canadian to $1.10 Canadian between late 2002 and mid-2006. During that period, Canada ran budget surpluses and the U.S. had federal budget and trade deficits, but that’s only part of the story. A more crucial reason for the U.S. dollar downturn…

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