The 3 D formula: dollars, duration, diversification - For successful retirement planning

    MONTREAL, Jan. 15 /CNW Telbec/ - Retirement planning requires careful
thought and may appear complex. But the fact is, by applying a few simple
rules, consumers can manage quite well. For Laurentian Bank, the golden rule
is the 3 D formula. The three simple aspects of this formula - dollars,
duration, diversification - require sound investment management in preparation
for retirement.

    The 3 D formula: multiplying effect

    Basically, the goal of an RRSP is to secure a comfortable future. Since
the future is unforeseeable, however, investors must provide for the most
likely eventuality. It is here that planning comes into play, to ensure a
stable and reliable income whereby investors can maintain their lifestyle and
quality of life. To help consumers through this process and to make sure all
their vital considerations are taken into account, three aspects are essential
to successful planning:

    - dollars, because the first step toward enjoying a good return on
      investment is to contribute
    - duration, because now is the time to contribute, and to do so regularly
      and methodically
    - diversification, because varied investment instruments help keep
      fluctuations to a minimum, thus making for a more stable portfolio

    The multiplying effect resulting from the combination of these factors
places investors on a solid footing, with optimal return prospects.


    Contributing means growing your savings to build the future: all
contributions to an RRSP enrich the investor, and investing small amounts
earlier and regularly allows investors to leverage the reinvested revenues. It
is easier - and often more advantageous - for investors to contribute small
amounts on a regular basis than large amounts once a year. Moreover, once an
amount is invested, the investor benefits from another advantage:
capitalization, which is the effect obtained when the revenues generated are
reinvested, thereby accelerating portfolio growth.
    Also, it is more convenient and easier on the budget to contribute
regularly. This is the perfect solution for investors, as it also cushions the
financial impact of a one-time large investment. In addition, a monthly,
rather than annual, contribution adding up to the same overall amount offers a
substantially higher long-term return.
    Contributors often forget to translate their current budget dollars into
future dollars, for a clearer idea of the cost of living at the time of
retirement. For instance, a pair of jeans selling for $50 today will cost
$90.50 in 20 years.


    Everyone should start planning as early as possible, because the decision
to do so is bound to pay off in the end. This is why Laurentian Bank has
selected scenarios for three age groups based on the specificities of each.

    - The action plan for contributors in the 20-to-34 age group consists in
      opening an RRSP account and contributing in accordance with one's
      means. The idea is to start the process by sticking to a methodical
      savings plan. Later on, plan members can increase their contributions
      to reflect their financial growth.
    - In the case of customers aged 35 to 49, the goal is to keep growing
      one's savings. Now is the time to define retirement goals and establish
      the optimal plan to reach those goals. Insofar as possible, investors
      should contribute the maximum amount, using any unused RRSP deductions.
    - For those aged 50 to 64, the plan is to capitalize on the growth of
      investments, while still keeping caution and safety in mind. As a rule,
      these are the best earning years. Mortgages are often paid, so this is
      a good time to invest even more in an RRSP.

    On the other hand, deferring retirement by five years reduces the portion
of income one has to offset with personal savings. RRSPs therefore continue to
grow rather than dwindle, and investors continue to contribute to the plan, as
well as to the pension plan and QPP, all of which keep mounting. Since a
lesser amount of personal savings is required to maintain the same lifestyle,
investors have more funds at their disposal for personal expenses.


    Because it is impossible to predict future performances of the various
market sectors, diversification is essential to reduce the overall portfolio
risk, offset volatility and develop a higher growth opportunity.
Diversification can take various forms: based on the investor's profile, his
or her timetable, geographic region or sector of activity.
    Basically, diversification is a way to reduce risk. Investors should know
the different investment risks. Asset allocation is key to this process. A
combination of various types of assets such as stocks, bonds and other
securities, asset allocation is used to define a portfolio in order to reach
financial objectives. Over time, certain asset allocations perform better than
others, hence the importance of maintaining a diversified portfolio. As shown
by numerous analyses, diversification helps combine a wide variety of
portfolio investments, in order to reduce volatility. Finally, it is important
to know one's tolerance to risk whenever attempting to diversify. The trick is
to find the appropriate asset allocation mix after establishing one's goals
and evaluating one's financial situation.

    Maximizing your savings potential

    The 3 D formula increases the investors' chances of maximizing their RRSP
performance. Each of the three dimensions is essential, and they become
inextricably linked when the investor is seeking a multiplying, or leveraging,
effect that will make a real difference in attaining long-term objectives and
enjoying a successful retirement.

    About Laurentian Bank

    Laurentian Bank of Canada is a banking institution operating across
Canada and offering diversified financial services to its clients.
Distinguishing itself through excellence in service, as well as through its
simplicity and proximity, the Bank serves individual consumers and small and
medium-sized businesses. The Bank also offers its products to a wide network
of independent financial intermediaries through B2B Trust, as well as
full-service brokerage solutions through Laurentian Bank Securities.
    Laurentian Bank is well established in the Province of Quebec, operating
the third-largest retail branch network. Elsewhere throughout Canada, it
operates in specific market segments where it holds an enviable position.
Laurentian Bank of Canada has close to $18 billion in balance sheet assets and
more than $15 billion in assets under administration. Founded in 1846, the
Bank employs close to 3,300 people.

For further information:

For further information: Nora Bouikni, Public Relations Advisor, Public
Affairs, Communications and Investor Relations, (514) 284-4500, extension

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Laurentian Bank of Canada

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