BMO’S Tip of the Day on Financial Literacy
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).