TORONTO, Dec. 21 /CNW/ - Over half of Canadians plan to work toward ridding themselves of debt in 2010 as more than 1-in-3 (35 per cent) say their top financial New Year's resolution is to pay down their debt and another 1-in-10 (13 per cent) want to pay down their mortgage faster, according to a poll conducted on behalf of Edward Jones Canada.
Canadians are choosing to take a cautious stance on their finances in 2010. In addition to the 48 per cent paying down debt, another 16 per cent are building themselves a cash reserve for a rainy - or stormy - day by resolving to put money into an emergency fund.
According to a recent Statistics Canada report, Canadians are deeper in debt than ever before. Household debt, (mainly mortgages and consumer credit) has increased by 1.6 per cent and the household debt-to-income ratio has risen to a record 145 per cent. That means for every $100 income, Canadians carry $145 in debt.
"The tough economic times are bringing out the best in Canadian caution," says Mary Chan, a principal and Certified Financial Planner at Edward Jones. "As the economy begins to show signs of recovery, investors need to remain focused on their financial goals by balancing debt reduction with good, long-term investment decisions."
Twenty Per Cent Planning Investments
The poll also found that 20 per cent of Canadians are resolving to increase contributions to an investment account in 2010. Ten per cent say that they will contribute more to their RRSP, 5 per cent will contribute more to their TFSA and another 5 per cent will put more money into their child or grandchild's RESP.
"Investing and staying invested for the long-term can impact your long-term savings significantly," says Chan. "It's all about growth and compounding. What may appear to be small savings today can add up to something significant."
For example, says Chan, a contribution of $5,000 every January that earns 6 per cent annually would give you close to $80,000 in 10 years.
To take advantage of investment opportunities in the New Year, Chan recommends that Canadians stay invested and consider the following:
Put your cash to work: While you should keep some assets in cash to help stabilize your portfolio and provide a much-needed emergency fund, you may not want too much cash on hand as you could be robbing yourself of growth potential. Instead consider putting any excess cash to work for you in long-term investments.
Diversify: Price fluctuations are unavoidable which is why it's important to maintain a diversified portfolio. Stock and bond prices often move in different directions, so if the stock market heads south, your bonds can help steady your portfolio. Keep in mind that diversification, by itself, cannot guarantee profits or protect against loss; however, it can help reduce the effects of volatility on your holdings.
Invest for the long-term: No one knows what will happen to the economy or stock market in the short term so use long-term progress as your guide when choosing investments. Investors who maintain an appropriate asset allocation and diversification strategy and focus on holding quality investments that offer growth potential are more likely to achieve their long-term financial goals.
About Edward Jones
Edward Jones is a full-service investment dealer with one of the largest branch networks in Canada. It is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, and a participating organization of the Toronto Stock Exchange. Including its affiliates, Edward Jones serves more than 7 million individual investors in Canada, the U.S. and the United Kingdom from more than 10,000 locations.
Edward Jones Limited does business in the Canada as Edward Jones and is a wholly owned subsidiary of Edward D. Jones & Co. LP, a Missouri limited partnership. Edward D. Jones & Co. LP does business in the United States as Edward Jones and is a wholly owned subsidiary of The Jones Financial Companies, LLLP, a limited liability limited partnership.
The Canadian survey results are based on a telephone survey of 1,009 nationally representative adults with retirement savings between December 3 and December 6, 2009 by Harris/Decima. A sample of this size will provide results that can be considered accurate within plus or minus 3.1 per cent, 19 times out of 20.
SOURCE Edward Jones
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