Briefly: “Online tool helps calculate RRSP recovery” and more of Tuesday’s news

The Investor Education Fund has launched an online tool designed to help investors get their retirement goals back on track this RRSP season in light of the market downturn.

Available at investorED.ca, the “Getting Back on Track Calculator” shows people how to adjust their investing goals so they can recover from a loss and better manage their finances during challenging economic times.

“Many people mistakenly believe that a 20% in a portfolio will offset a 20%,” says Tom Hamza of Investor Education Fund, a non-profit source of information and tools for Canadian investors. “In fact, investors will actually need a 25% gain to make up the money they’ve lost plus the growth that did not occur in order to get the ongoing growth they require.”

The calculator shows that one of two things needs to happen to get investments back on track — either increase the annual rate of return on a portfolio or increase the length of time an investment is held. As an added guide, the calculator offers illustrative examples that help investors understand the effects and corrections that need to be made given three scenarios, which include losing money with many years to go, losing money with few years to go and making more money than expected.

• • •

Little shine in metals right now: PwC

A difficult economic climate, plummeting demand and lack of access to credit are just some of the difficulties facing CEOs in the global metals industry today, according to the 12th annual Global CEO Survey, which included input from 25 global metals CEOs.

Only 44% of global metals CEOs are confident about prospects for revenue growth in the coming year, compared with 64% of the total survey sample.

PwC says the steel sector has given back all of the pricing gains earned in 2008. The aluminum sector has also been experiencing considerable pricing pressures, leading to speculation that a number of global producers are operating at a loss.

“It is no surprise that metals CEOs are gloomier than their peers in other industries surveyed by PwC,” says Jim Forbes, global metals leader, PwC. “Even in areas where there is still demand for metals, many customers cannot access letters of credit to support their orders.”

More than three-quarters (80%) of metal company CEOs are optimistic about their long-term outlook and believe they can increase their revenues over the next three years.

Joint ventures and strategic alliances are high on the agenda, with 76% of respondents expecting an increase in collaborative business arrangements in coming years. Slightly more than a third (36%) are focusing on new geographic markets.

“Due to the current crisis, only 4% of metals CEOs see mergers and acquisitions as their main means of growing revenues — a view that makes sense, since tumbling metals prices have already called the economics of several recent acquisitions into question,” Forbes says.

Metals CEOs are also more likely than CEOs in other sectors to see low-cost competition as a serious problem — 56% versus 48% of total survey sample.

• • •

BMO launches new variable rate mortgage

BMO Bank of Montreal has launched a new five-year variable rate closed mortgage product that gives the flexibility to lock into a fixed rate closed mortgage at any time.

“Recently we’ve seen an increase in the number of customers choosing a variable rate mortgage,” said Lynne Kilpatrick, senior vice-president, BMO Bank of Montreal. “At 3.8%, our new five-year variable rate closed mortgage offers a very competitive rate yet gives our customers the peace of mind of knowing they can lock in at any time should rates rise.”

BMO also offered tips to more efficiently manage a mortgage.

BMO suggests when you get paid, pay your mortgage. Most people are paid every two weeks — aligning mortgage payments with your paycheque can save in interest over the life of the mortgage.

BMO also suggests increasing monthly payments and/or making lump sum payments using 20+20 prepayment options every year to become mortgage-free faster.

(02/10/09)