Article by Warren Buffett
I thought I'd share this article by Warren Buffett he wrote in the New York Times on Oct 16, 2008. http://www.nytimes.com/2008/10/17/opinion/17buffett.html?partner=permalink&exprod=permalink
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Newsletter September 2008
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*Warning, this is a long newsletter, but will be quite informative if you have the patience to read it.* I'm sure that by now, you've heard what has been happening to the market. Both the Dow Jones and S&P/TSX index dropped more than 500 points Monday due to Lehman Brothers filing for bankruptcy. In short, it was a slaughter. But is it really? Let me give you a background of what happened before I go into the details on how your investments may be affected. Let's start with Lehman Brothers. Lehman Brothers is one of the largest investment banks in the US if not the world. I was established in 1850, it is an innovator in global finance and serves the financial needs of corporations, governments, municipalities, institutional clients and high net worth individuals worldwide. It does financing, asset management, investment management, fixed income sales, trading and research. So what went wrong? Well, the best way I can explain it is this, it innovated itself in to a hole....
RRSP
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It's RRSP season again and if you haven't started an RRSP or have not fully utilized your RRSP, you better start now. As you may or may not know, the only way you can have a significant amount of retirement money is time. The longer your money is invested, the more time the magic of compounding will work for you. If your employer matches your contribution, use the maximum you can get. Nowhere else are you going to get a free return on your investment guaranteed. If you don't have enough money, look into getting an RRSP loan. Use it to fund your RRSP and when you get a refund, use the refund to pay off the loan. It's one of the cheapest way to fund your RRSP. Most companies are offering Prime rates (6%) for RRSP loans; some even offer Prime - 1%. Check with your adviser to see where you can get the best rate.