bonds posts

Canadian investors are in luck: our home stock market is predicted to chalk up some of the best returns in the world this year amid continued economic struggles in Europe and the United States and political turmoil in the Middle East.

"Relative to the U.S. or east Asia, Canada's equity market carries more insurance against a worsening geopolitical climate in the Middle East, in the form of a larger basket of energy stocks and safe havens like gold shares," Avery Shenfeld, the chief economist at CIBC, says in an economic report.

He says that while a diversified investment portfolio is always wise, this year it looks like Canadian stocks will offer you some of the best growth opportunities.

After a shocking start to the year, Canadian pension plans recovered most of their losses toward the end of 2010, helped by stock market gains and a slight rebound in long-term government bond yields.

Investment fund managers expect this gradual improvement to continue in 2011 as stock markets rise and long-term bond yields inch marginally higher on the back of interest rate increases, according to a survey by Mercer Investment Consulting.

Pension plans suffered throughout the first three quarters of 2010 due to declining long-term government bond yields, a factor that offset decent stock market returns. However, Mercer says a 20 basis point increase in yields in the last three months of the year helped the typical balanced portfolio to a return of 9.2 per cent over the year. Mercer data show that 'Canadian equities' was the best performing asset class in 2010 with a return of 17.6 per cent. On the other hand, the strengthening Canadian dollar had a negative affect on foreign equity returns throughout the year.

GICs, TFSAs, ETFs -- it may seem like a lot of jargon, but these acronyms can make the difference between living paycheque to paycheque and getting the most out of your money.