BMO’S Tip of the Day on Fi­nan­cial Lit­er­acy

The Pak Banker - - Front Page -

TORONTO

BMO Fi­nan­cial Group is re­leas­ing a se­ries of fi­nan­cial tips throughout Novem­ber in or­der to mark Fi­nan­cial Lit­er­acy Month.

As part of ‘ Mak­ing Money Make Sense’ and BMO SmartSteps, the tips are de­signed to help in­di­vid­u­als and fam­i­lies save and man­age their day- to- day fi­nances more ef­fec­tively.

Take ad­van­tage of the ben­e­fits of pre­ferred shares. Pre­ferred shares can of­ten be a solid in­vest­ment choice, yet they re­main a mys­tery to many, said Serge Pépin, Vice Pres­i­dent, In­vest­ment Strat­egy, BMO As­set Man­age­ment. Pre­ferred shares are in­vest­ment prod­ucts that are a hy­brid of eq­ui­ties and bonds and for in­vestors seek­ing in­come, they of­fer guar­an­teed fixed div­i­dends with sta­ble share prices and pre­dictable dis­tri­bu­tions. An ideal in­vest­ment choice in to­day’s low in­ter­est rate en­v­i­ron- ment.

Mr. Pepin notes that in­vestors with pre­ferred shares have pri­or­ity over in­vestors who hold com­mon stock in the same com­pany, div­i­dends are paid out to pre­ferred share­hold­ers first. Al­though pre­ferred share­hold­ers do not have vot­ing rights, they have an ad­van­tage over com­mon share­hold­ers in the event a com­pany has to liq­ui­date, as they will re­ceive div­i­dends first.

Pre­ferred shares can be held inside or out­side a reg­is­tered plan (such as a Reg­is­tered Re­tire­ment Sav­ings Plan). If held out­side, in­vestors can take ad­van­tage of the div­i­dend in­come tax credit.

CFEE com­mends BMO’s on­go­ing ef­forts to sup­port Fi­nan­cial Lit­er­acy in Canada and pro­mote ways in which Cana­di­ans can in­crease their com­pe­tence and con­fi­dence when manag­ing their per­sonal fi­nances on a day-to-day ba­sis, said Gary Rab­bior, Pres­i­dent, Cana­dian Foun­da­tion for Eco­nomic Ed­u­ca­tion (CFEE).

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