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416.473.6100 PAGES 4 Dream 2 Issue 27

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3 DECEMBER 2012 Direct

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Economic growth slows in India, Brazil and Canada

Free Market Evaluation Three Basic Tax Rules Everyone Should Know

A string of major economies have reported disappointing data

Economic growth slowed in India in the third quarter, while in Canada and Brazil it dropped surprisingly sharply. Meanwhile in the eurozone, unemployment hit a new high of 11.7% in October, as German retail sales fell

unexpectedly and French consumer spending dropped. And in the US, citizens saw their incomes stagnate in October, while spending fell slightly, in large part due to disruption from Storm Sandy. North of the border by contrast, Canada's economy fared far worse over the summer. A sudden drop in the country's exports and weakening activity in its oil and gas sector pulled its annualised growth rate in the third quarter down to

Canadian Family Debt Spurs Warning From OECD The Organization for Economic Cooperation and Development gives mostly a passing grade to Canada's economy in a new outlook However, it warns Canada is not out of the woods yet. The two big domestic risks, the OECD says, are the record level of debt Canadian families hold and their dependence on house prices remaining firm. “Continuing high household debt levels could lead to a sharp deceleration in household spending, while a sudden weakening of the housing market could have sizable negative spillover effects,” the OECD says. Should the risks materialize, or Canada be hit from an outside shock,

0.6%, This was the same growth rate that Brazil manage to eke out during the same period - but a lowly 0.6% growth rate came as a much bigger shock for a country that was growing at a rapid 7.5% clip in 2010. The markets had expected the growth rate to be twice as fast. Like Brazil, India has hit a soft patch in the last 18 months, and has averaged less than 5.5% growth this year. Of the major developing economies, only China appears to have recovered from what has looked to be a worrying slowdown before the summer, with a string of positive economic data announced just ahead of the country's


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Toronto and Global Market Review

decennial leadership transition earlier this month. (Source : BBC News)

TFSA limit Increase a Boon for Young Canadians Looking to Buy First Home

policy-makers should respond by increasing government spending if necessary, it said. “Federal and provincial budget consolidation is needed and welcome, but if new shocks were to weaken underlying growth materially, the pace of debt reduction should be slowed,” the OECD recommends. (Source :THE CANADIAN PRESS)

Where to Put Money First RRSP or TFSA? Here are some thoughts from the internet: From “million dollar journey” Overall, the TFSA will win for about 80% of Canadians. After declaring TFSA the winner for about 80% of Canadians, the best advice, however, will be to use a combination of TFSA and RRSP. The purpose is to end up with a taxable income in retirement between $15,000 (or $20,000) and $31,000. If you can, then you will be in a low bracket in

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retirement. Note these brackets will likely be increased for inflation every year, so the brackets may be about double in 25 years. From The Globe and Mail “The TFSA may make more sense than the RRSP for those in their early working years when they are in a low tax bracket and, at the other end of the age spectrum, those nearing retirement who are similarly not making a high income. “If they put it into a RRSP for instance, it w o u l d r e d u c e a n y >>Cont. Pg.2

Protect your most valuable asset yourself and your loved ones Buy term insurance buy peace. Price: cup of coffee a day or even less. Save money. Compare our rates with Banks' Mortgage insurance rates.

Since the launch of the TFSA in 2009, Canadians have embraced this new, tax-assisted savings program with approximately 8.2 million Canadians having opened an account and roughly 2.5 million Canadians contributing the maximum amount in 2011. Just in time for the start of year of the TFSA, beginning Jan. 1, Canadians will be able to contribute an extra $500 annually to their TFSAs as a result of the annual limit increasing to $5,500 for 2013 from $5,000. This is as a result of the rounding mechanism originally

established with the introduction of the TFSA which has the initial $5,000 annual contribution limit indexed to inflation using CPI data, rounded to the nearest $500. For someone who has never opened up a TFSA before and was at least age 18 in 2009, that means your total cumulative TFSA contribution room starting January 1, 2013 will be $25,500, which poses an interesting opportunity for younger Canadians looking to finance the purchase of their first home. (Source :financialpost)

Canada Housing Market Moving in Right Direction Canada's housing market is and acceleration in the right the key domestic risk to the direction," Murray told a economy but it is moving in the business audience in New York. right direction after a period of He said the evidence on overheating, Bank of Canada housing expenditures was "to a Deputy Governor John Murray - BOC's Murray degree encouraging." Murray said also noted that the Canadian economy "It's still early days. But we're was operating at fairly close to its full certainly seeing evidence of movement capacity.

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Three Basic Tax Rules Everyone Should Know In honour of Financial Literacy Month, I present three of the most common gaps in tax knowledge: Credits vs. deductions It's amazing how many people are still stuck in 1987 before our major tax reform switched many of our tax deductions to tax credits. What's the difference between a credit and a deduction? A credit reduces your tax payable while a deduction reduces taxable income. So, which would you prefer? That depends on your tax bracket. Other than the two-tiered donation tax credit, all other non-refundable credits are calculated at the lowest federal rate of 15%. If you are in the lowest federal bracket, with taxable income below $42,707 in 2012, you will pay tax at a rate of 15%. Whether you deduct $1,000 from your taxable income and save 15% tax or get a credit for $1,000 calculated Where to Put Money... From Pg.1 entitlements that they had such as the GIS (Guaranteed Income Supplement)” If you're a lower-income individual, perhaps because you're younger and in an earlier stage of your career (perhaps a student), or you're on parental leave or on sabbatical, and you expect to earn a higher income in the future, you're a good candidate for a TFSA contribution. Further, your RRSP deduction won't save you as much tax today as it might later, so contribution to an RRSP later may make the most sense if you can't contribute to both plans today (you can always contribute to your RRSP and save the deduction for a future year if you have the means to contribute to both).

By Jamie Golombek $150. Medical expenses While most Canadians know that there is a medical expense credit available for the cost of unreimbursed medical expenses, what they forget is that there is a minimum threshold amount which you must exceed first. For 2012, you must spend at least 3% of your net income (up to a maximum of $2,109) before you get any credit for medical expenses. In other words, if your net income for 2012 is $60,000,

at 15% against your taxes payable, it will make no difference to the amount of after-tax cash in your pocket. On the other hand, if you're in a higher bracket where your income for 2012 is more than $85,414 and you pay tax at a federal rate of 26%. In this case, given the choice of a $1,000 deduction versus a $1,000 credit at the nonrefundable credit rate of 15%, clearly the deduction of $1,000 that saves tax of 26%, or $260, is worth more that the credit of $1,000 at 15% that saves tax of

you must have more than $1,800 in medical expenses before getting a credit for any excess above this amount. TFSA contributions Finally, even the relatively new TFSA rules have confused many Canadians, who think of themselves as otherwise financially literate. The rules state that any TFSA withdrawals can be recontributed beginning the following calendar year. Yet this rule has confused tens of thousands of taxpayers, who were hit with penalty tax for over contributions and who then had to explain their circumstances to the Canada Revenue Agency to get their tax cancelled. (Source : Financial Post)

INSURE YOUR PEACE AND HAPPINESS If you want peace and happiness in life, one of the things that you have to learn is “living below your means” How? Here are some tips: ŸThink before you spent ŸAvoid spending leaks and impulsive buying Ÿ Know your needs and wants. ŸAllocate or budget your income for your needs and goals. Ÿ Have discipline to stick to your own budget That’s all. How to avoid spending leaks and impulsive buying? 1. Always buy what you planned only 2. Think of alternatives and buy big ticket items after careful consideration, 3. Plan your shopping in advance and list them. 4. Fix a budget for your purchases BEFORE shopping. 5. Always use your shopping list. 6. Buy only items on your list. 7. Compare price, quality and real benefits before buying.

If you receive income-tested benefits such as Old Age Security, the Guaranteed Income Supplement, child tax benefits, or GST credits, withdrawals from a TFSA won't affect your income and therefore will preserve your benefits. Withdrawals from an RRSP will impact these benefits, so a TFSA may be a good option here.

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By Perrii Muthuraman 8. Use credit only when necessary. 9. Return poor quality or defective items to the seller. 10. Remember your financial goals and priorities, if you are tempted to buy anything not in the list.

“Self-control” is the phrase to remember at all times. Some interesting quotes to ponder: “When you change the way you look at things, the things you look at change.” self-help expert Dr. Wayne Dyer Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little. Adam Smith

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Editor-in-Chief & Publisher Perrii Muthuraman

Carney dismisses confusion over rate talk in the interview published in Financial Post My understanding of that interview is low interest rates are here to stay for a year or so. I don’t think interest rates are going to rise in the near future. As Carney says, "the primary objective of monetary policy is achieving low, stable, predictable inflation." The eurozone debt crisis, the fiscal concerns in the United States and a slowing Chinese economy – all are not

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Editor & Technical Advisor Aishwar Muthuraman 105-2100 Ellesmere Road, Scarborough, ON, M1H 3B7 Ph: 647 352 4945 | Fax: 647 352 6110 Email: DISCLAIMER Dreams and Money takes care to present all the information as accurately and efficiently as possible. Any advice or recommendation appearing in the paper is also part of information only. They should not be construed as an expert opinion. Please note that no representation or warranty with respect to the accuracy or the completeness of the information is given. Information always keeps changing. Hence all the information, including advice and recommendations are to be treated as of general nature only. For your specific circumstances, you are always advised to consult an expert before acting on any information.

unsolicited articles & community news are welcome selected ones will be published email :

going to disappear magically. They will stay for some more time. How long? No one knows the answer. That’s the writing on the wall. To c o n t r o l t h e personal debts, measures have already been taken and raising the interest rate is not the solution, at least for now. To q u o t e M a r k Carney, "There have been a series of measures, as you know, by the Department of Finance through CMHC [Canada Mortgage and Housing Corp.]. OSFI [Office of the Superintendent of Financial

Housing Market DEBT Institutions] has taken some very important measures. The most recent measures, both by OSFI and CMHC to tighten insurance rules, have just really come into effect and we’re starting to see the effects. It takes a while for that to fully play out and we monitor the situation. And that’s what we’re doing." “During the first half of November, there were fewer luxury detached homes sold as a percentage of total transactions compared to last year. The year-overyear change in the mix of detached homes sold in the GTA, rather than a change in market conditions, was responsible for a lower than normal increase in the average detached home price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“Smaller Condos or Mini Suites” - Is it a New Trend in Canada?

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THE MISSION At Dreams & Money, we want to help people lead happy lives. We want to help people reach their dreams. A lot of dreams in the world require financial awareness and proper planning to bring to fruition. To get this financial knowledge can be challenging. We realize this, and want to make this process simpler. We will bring you financial news happening around you that impacts you, along with timeless classics on topics like financial planning, life skills, health etc. to help you grow all around to reach your dreams. If you are someone who shares this same passion, and think you can contribute to us in any way (writing articles, spreading the message etc.), please let us know. We’ll be happy to hear from you.

I read an interesting article in Realty Times. Here are some selected portions from the article. If you are interested in reading the whole article, link is available at the end. British Columbia developer Tien Sher is planning to offer the country's smallest condominium units, at just 290 square feet "We wanted to build suites that renters could afford to purchase today," says Charan Sethi, president of Tien Sher. "With suites starting at $109,900, if you can afford the $6,000

Your Home Dreams Fulfiller

down payment and you make a salary of $17 per hour, we have a home for you." In Toronto, back in 2009 the average size of a new condo was about 920 square feet, says George Carras, president RealNet Canada. This summer, the average condo sold in the preconstruction stage was down to about 795 square feet - the equivalent of removing a 10-by-12-foot

room from that 2009 condo, says Carras. Who is living in these small condos? Statistics Canada reports that 51 per cent of households in the Greater Toronto Area now have two people or less, and one-person households grew by 14 per cent from 2006 to 2011. To read the whole articles visit


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Global and Indian Market Weekly Review - Week Ended 1 December 2012 GLOBAL REVIEW Global share markets during the week as traders chased for recently battered stocks after economic figures released globally signaled sign of improvement. Positive sentiment was generated by upbeat result from Market News International and Bloomberg survey polls results, as well as S&P China's rating affirmation. Investment rationale underpinned after a slew of key economic numbers came from the US to Europe to Asia bolstering confidence that global growth in gaining momentum The index that measures China's business conditions expanded for the third consecutive month to 53.78 in November from 51.86 in October and 51.35 in September, Market News International, a unit of Deutsche Boerse Group, said in a report today. In the US, second reading for third quarter Gross Domestic Product, showing an expansion of 2.7%, compared to the prior reading of 2.0%. Plus the US jobless claims report showed a drop in unemployment beneficiaries, while the Housing Sector showed a notable improvement as Pending Home Sales reached its highest since May. Obama and the U.S. Congress have until Jan. 1 to agree on how to trim the country's unwieldy deficit. Otherwise, a series of automatic tax increases and sharp spending cuts will take effect that could drag the world's No. 1 economy into recession. INDIAN MARKET Indian market settled at over 19month closing high on hopes that the government would be able to push through a host of reforms measures

during the current session of Parliament. Affirmative statement about the Indian economy from ratings agency Moody's also helped the market edge higher. The week's rally was also supported by news that Greece will get bailout fund from the troika of international lenders comprising the European Union, the European Central Bank and the International Monetary Fund (IMF). Sensex surged 4.50% to 19,339.90 and Nifty rose 4.5% to 5879.85 in the week ended Friday, 30 November 2012 Weekly Outlook – week begins from 3 December 2012 Market may follow the macro economic data to be released and global economic trend. Results of monthly surveys on manufacturing and services sectors and automobile and cement sales data for November 2012 will be focus next week. Auto and cement


Economics will unveil HSBC India Services PMI and HSBC India Composite PMI for November 2012 on Wednesday, 3 December 2012.. The government's decision allowing FDI in multi-brand retail will be debated in Lok Sabha on 4 and 5 December 2012. The government braved intense political opposition by allowing 51% foreign direct investment (FDI) in multi-brand retail in September 2012. Shares of private sector bank will be in focus as the government tables the Banking Laws (Amendment) Bill, 2011 in the ongoing winter session of

parliament. Two other key financial sector reforms bills that the government will table during the winter session include insurance and pension bills. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. On the global market front, investors are focused on US fiscal cliff. The fiscal cliff refers to the possibility of more than $600 billion of automatic tax hikes and spending cuts kicking in from January 2013, if the US Congress fails to act. Further details: | Ph : +91 9380034431/9962534431

TSX: Stocks Struggle for Direction TSX Trend From Nov.26, 2012 to Dec.1, 2012

stocks will be focus as companies from these two sectors will start unveiling monthly sales data for November 2012 from Saturday, 1 December 2012. Market Economics will unveil HSBC India Manufacturing PMI, which gauges the business activity of India's factories, for November 2012 on Monday, 3 December 2012. Market

TSX Trend From Dec.1, 2011 to Nov.30, 2012

Statistics Canada Reveals Slowing Canadian Economy

Source : Yahoo Finance

Canada's economic growth rate slowed to 0.6 per cent in the third quarter and it was below the 0.8 per cent annualized rate that economists had been expecting. It is about one third what the Bank of Canada had predicted as recently as the summer The slower pace of growth was the result of declines in exports and business investment. Statistics Canada said exports were the biggest drag on the economy in the third quarter, falling 2% — the biggest decline since the second quarter of 2009. Business investment in nonresidential buildings, machinery and equipment was down 0.6% between July and September, ending a string of

Friday The S&P/TSX composite index closed at 12,239.36. Thursday closed at 12,202.85 Wednesday 12,140. Tuesday 12,111.63 Monday 12,185.05 Friday the S&P 500 closed at 1416.18 U.S. consumer spending fell 0.2 per cent in October. U.S. initial jobless claims fell to 393,000, down from 416,000 in the previous week. The U.S. economy expanded by 2.7 per cent in the third quarter. The Conference Board’s consumer confidence index rose to 73.7 in November, up from 73.1 in October. Key commodities were mixed. Crude oil rose to $88.91 (U.S.) a barrel, Gold fell to $1,710.90 an ounce. Congressional Republicans rejected the Obama administration’s budget proposal of $1.6-trillion in tax increases, even as the President hit the road to sell it to Americans. Markets have shown considerable sensitivity this week to every sign of progress or lack thereof in the negotiations to avert the so-called fiscal cliff, which threatens to significantly slow the world's biggest economy at a time when it's still trying to recover from the last recession. Trading volatility may only increase as the deadline approaches.

increases that began in the third quarter of 2009. Business investment in residential buildings was down 0.9%, compared to a decline of 0.1% in the second quarter. Significantly, ownership transfer costs fell 10.7% in the third quarter as housing re-sales slowed after tighter mortgage rules were introduced in July. Residential investment — combining spending by homeowners, governments and non-profit groups —declined 0.8% in the third quarter of this year. Household spending on goods and services rose 0.9% month over month, the biggest gain for the year. On an annualized basis, the gain was 3.8%. 4

Dreams & Money: 1st Edition of December 2012  

Dreams & Money: 1st Edition of December 2012

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