INVESTMENT GUIDE

CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.

OUTLINE INTRO: What is Investing? 3-6

PART 01: What is the Stock Market? 7

PART 02: What Can I Invest In? Types of Investments 8-12

PART 03: What is Compounding? 13-15

PART 04: How are my Investments Organized? 16-18

PART 05: Where do I Start? 19-28

FINAL THOUGHTS 29-31

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WHAT IS INVESTING?

Everybody wants to make money. We all want to live a certain lifestyle, send our children to university, and retire comfortably. Other people have done it, so why can’t you? Maybe you think it all comes naturally, or maybe you’re curious about how it all actually works. This guide explains the importance of investing, and how it will help you achieve your financial goals.

INVESTMENT: “The purchase or ownership of a security to make money by gaining income, increasing capital, or both. Investments may also include artwork, antiques and real estate”.1

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It’s never too early to invest. In fact, the sooner you invest your money, the more it will benefit you in the long run. Investing involves putting your money to work for you, yet many of us are unaware of the benefits of investing. In general, we know that in order to make money, we need to get a job and work to earn an income. This is true, however, investing allows us to earn money elsewhere in order to maximize our earning potential without working more hours or getting a raise. Essentially, by investing, your money makes money for you while you are busy walking your dog, hanging out with friends, or even sleeping.

This sounds pretty good, doesn’t it?...

Not only is investing your money a good way to save and create wealth, it is also becoming more and more of a requirement to secure your financial future in retirement. Investing however, is not gambling and it is not a get rich quick scheme. It takes time and careful planning.

We know there is no time like the present to start thinking about investing and planning your future. If you are new to the world of investing, it can be hard to understand where to start. This guide will give a new investor a good idea of what investing is, how to start, and where it can take you down the road.

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TIP: Don’t spend everything you make. This may mean delaying immediate gratification, but it will be important in the long run!

TIP: Know yourself. Your success in investing comes from making sure that your strategy fits you and your unique goals and circumstances.

TIP: Starting early is a major advantage. There is nothing that can make up for the effect of compound interest. You will also have more time to accumulate your wealth.

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PART

1

WHAT IS THE STOCK MARKET?

STOCK EXCHANGE OR STOCK MARKET: “An organized marketplace where buyers and sellers are brought together to buy and sell stocks and must follow certain rules, regulations and guidelines. This is also known as the equity market”.2

If you want to understand how the stock market is performing, you can consult an index of stocks for the whole market or for a portion of the market. For example, the TSX composite index.

TIP: We are our own worst enemy. Don’t let market upturns and downturns cause you to make hasty decisions. The most successful investors control their behavior and act wisely.

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PART

2

WHAT CAN I INVEST IN? – TYPES OF INVESTMENTS

1. STOCKS OR SHARES: These two terms are used interchangeably. Certificates representingownership in a corporation and the appropriate claim on the corporation’s earnings andassets.3

2. PREFERRED STOCKS OR SHARES: A class of stock that entitles the owners to a stateddollar value per share in liquidation (paid after bondholders) and a fixed dividend paid aheadof the company’s common shares. Preferred shares usually only have voting rights when astated number of dividends have been missed. Preferred shares are generally consideredincome investments.4

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3. COMMON STOCK OR COMMON SHARES: Securities which represent ownership in a companyand carry voting privileges. Common shareholders may be paid dividends but only after preferredshareholders are paid. Common shareholders are last in line after creditors, debt holders andpreferred shareholders to claim any of a company’s assets in the event of liquidation.5

4. BONDS: When you buy a bond, you are lending your money to a government or companyfor a certain period of time. In return, they promise to pay you a fixed rate of interest atcertain times and to repay the face value at the end of the bond’s term (its maturity date).

Bonds typically offer better rate of return than cash investments because you’re taking on more risk by lending out your money for a longer period. Many bonds come with a guarantee and are relatively safe. Others offer much higher rates of return, but can be very risky and have no guarantees.6

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5. MUTUAL FUNDS: Mutual funds are a collection of investments from one or morecategories. Each fund focuses on specific investments, like government bonds, stocks fromlarge companies, stocks from certain countries, or a mix of stocks and bonds. The level ofrisk and return depends on what the fund invests in.

When you buy a mutual fund, you’re pooling your money with many other investors. The main advantages are that you can invest in a variety of investments for a relatively low cost and leave the investment decisions to a professional manager.7

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6. SEGREGATED FUNDS: Segregated funds are professionallymanaged investment funds sold by life insurance companiesthat give investors the opportunity to build wealth while limitingtheir risk. While segregated funds are similar in many respectsto mutual funds, they do offer investors some unique features.Segregated funds provide potential protection against severedownturns in the stock market. As an investor, you benefitfrom the ability to “lock-in” gains and reset your maturityguarantee on some funds. Segregated funds also allow youto avoid probate fees* by naming a beneficiary if you are thenamed owner, potentially protect your assets from creditorsand purchase in an RRSP/RRIF. If you are looking for a uniqueinvestment opportunity that combines potential for growthwith peace of mind, consider segregated funds.

*Probate fees do not apply in the province of Quebec.

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7. ETFs: ETFs are essentially baskets of securities that are listed and traded on major stockexchanges, just like individual stocks. Some ETFs offer investors the diversification of atraditional mutual fund, plus the trading freedom of a stock.

Compared to certain mutual funds, ETFs are typically more tax-efficient as they have lower portfolio turnover, minimizing the tax consequences of potential capital gains. Also, when investors liquidate their positions, ETFs do not sell their securities to meet redemptions. Instead, creations and redemptions of additional units of the fund are done institutionally to meet the demands of the marketplace. Individual buy and sell orders do not affect the fund directly.8

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PART

3

WHAT IS COMPOUNDING?

TIP: “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn’t ... pays it”. - Albert Einstein9

Another important thing to keep in mind is the idea of compounding. It is necessary to realize that the earlier you start investing your money, the easier it is to build your wealth - thanks to compounding.

Take a look at the following example…

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THE POWER OF COMPOUNDING

A mother and daughter learn the difference that time makes when you invest regularly. Mary, 50, works as an accountant and has a 22-year-old daughter, Susan, who just started working full-time. Although a generation apart, both women want to reach retirement with adequate savings. Here is how they went about it:

DECIDING TO SAVE:

When Mary was 35 years old, she enrolled in her employer’s retirement savings plan. She began contributing $400 a month to her account. Seeing her own account grow over time, Mary has encouraged her daughter to start saving early. Susan contributes $200 a month to her company-sponsored RRSP.

PUTTING TIME TO WORK:

Despite her lower monthly contribution, Susan has the advantage of compound investing because she has more time for her earnings to grow. The chart below compares the results of her account at age 65 with her mother’s, assuming both earn a constant 6% rate of return and continue their current monthly contributions, deposited at the beginning of each month.10

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GROWTH THROUGH COMPOUNDING:

When Mary and Susan each turn 65, the value of their accounts will have grown considerably. Mary will have contributed more, but Susan’s earnings will be greater due to compounding.

Susan ($200/month for 45 years)

Mary ($400/ month for 32 years)

Total Contribution $108,000 $153,600

Total Earnings $445,954 $311,788

Total at age 65 $553,954 $465,388

NOTE: The 6% annual return is compounded monthly. Inflation and fees are not factored in.11

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PART

4

HOW ARE MY INVESTMENTS ORGANIZED? Your investments are organized in a portfolio:

PORTFOLIO: The entire combination of securities or investments an individual or institution holds. A portfolio can contain a variety of government and company bonds, preferred and common stocks from different businesses and other types of securities and assets.12

Your portfolio should be custom-fit to match your goals, objectives and your unique life circumstances. However, not everyone has the same values and goals. Think about what is important to you while considering the “bigger picture.” Your portfolio is also arranged according to your risk tolerance:

RISK & RETURN: Risk means the possibility of losing money on your investment. Return is the amount of money that you earn on an investment. Usually, the higher the potential return, the higher the risk.13

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Some investments are more “high-risk” than others; meaning there’s a higher risk that you could lose money, yet these higher-risk investments also may come with greater rewards in a short period of time. Some people are comfortable with more risk, while others are more comfortable knowing their investments will grow at a slow and steady rate.

As a general rule, the shorter the amount of time you have to invest, the more conservative you should be.

DIVERSIFICATION: Spreading investment to reduce risk by buying different securities from various companies, businesses, locations and governments.14

TIP: The two biggest obstacles to investors: fear and greed

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How can you make the right decisions to manage your investments? This may seem like a rather large undertaking. Knowing where to start is the first step in achieving your financial goals…

PART

5

WHERE DO I START? People invest for different reasons, with different goals and motivations. Some think short term; others, long. Some may be planning for retirement or are seeking to preserve their assets in retirement. Many parents want to provide their kids with a post-secondary education. Others are simply interested in growing their assets. Who doesn’t want to minimize taxes?

As is true for many things in life, having a strategy is key to achieving the outcome you want for your investments. You could take an ad hoc approach – making decisions on the fly – but having a plan is more effective for achieving your goals.

THE QUESTION REMAINS: Do you want to go it alone? Or do you want to get expertise on your side to help you devise an investment strategy that can work for you – no matter what you’re investing for?15

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INVESTMENT VEHICLES

TFSA: Tax-Free Savings Account – A registered savings plan that allows taxpayers to earn investment income tax-free inside the plan. Contributions to the plan are not tax-deductible and withdrawals of contributions and earnings from the plan are not taxable.

You can hold a variety of investments inside a TFSA, including mutual funds, stocks, GICs, savings accounts, bonds and certain shares of small business corporations.

RRSP: Registered Retirement Savings Plan – A vehicle available to individuals to defer tax on a specified amount of money to be used for retirement. The holder invests money in one or more of a variety of investment vehicles which are held in trust under the plan. Income tax is deferred until the money (the amount originally deposited plus any interest or dividends made on that money) is withdrawn at retirement. RRSPs can be converted into Registered Retirement Income Funds.

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RESP: Registered Education Savings Plan – A tax-deferred investment plan that helps you save for a child’s post- secondary education, so that you’ll have the funds you need, when you need them. You can make contributions up to a maximum of $50,000 per child until the child turns 31. Your contributions can be supplemented by the federal government’s Canada Education Savings Grant (CESG). Unlike an RRSP, your contributions to an RESP are not tax-deductible, but the investment income earned is tax-sheltered until withdrawn.

RRIF: Registered Retirement Income Fund – A RRIF is a tax deferral vehicle available to Registered Retirement Savings Plan (RRSP) holders who de-register their plans. The plan holder invests the withdrawn RRSP funds in the RRIF and each year must withdraw and pay income tax on a set fraction of the total assets in the fund.

RDSP: Registered Disability Savings Plan – The federal government introduced Registered Disability Savings Plans (RDSPs) in the 2007 Federal Budget, to help parents and other individuals save for the long-term financial security of a person with a disability. RDSPs allow funds to be invested on a tax-deferred basis until withdrawn and contributions to an RDSP may further be eligible for a federal grant (up to $3,500 per year). Low income families will also have access to a federal bond ($1,000 per year).

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KEY CONSIDERATIONS FOR GETTING THE SELF-KNOWLEDGE THAT CAN HELP DETERMINE THE OPTIMAL INVESTMENT STRATEGY FOR YOU:

FINANCIAL GOAL

You’re more likely to achieve a goal if you define it. If you can say you want to have a specific sum in five years’ time, you can invest more effectively. Having a goal focuses your choices and decision-making.

TIME HORIZON

Knowing your “investment time horizon,” or when you need a return from your investments is key to determining which type of investments best matches your financial goals. Some investments may be too volatile for brief periods; other types may not offer adequate long- term growth.

RISK TOLERANCE

Everyone is sensitive to risk: some fear losses; others fear missing the maximum gain. However you respond to risk, you should be aware of your tolerance to it as it influences which investments you choose.16

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INVESTMENT KNOWLEDGE

You may have limited knowledge about investing or you may be quite sophisticated. Towards defining your strategy, ask if you really understand what you’re investing in, or if you have knowledge gaps that would benefit from an Investment Advisor.

FINANCIAL SITUATION

Your personal finances may be robust or strapped. You may owe money or be owed money, receiving a regular income or faced with special expenses. Where you are in your personal financial cycle is critical to forming an effective investment strategy.

OTHER CONSIDERATIONS

For some people, investing must be consistent with deeply held values. Whether you invest primarily for the returns you’re seeking or according to explicitly defined principles, it will affect where you place your money.17

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So you know you want to invest your money, and you have some general knowledge. But now what? It can be a rather large undertaking trying to create and manage your own investment portfolio. Most people do not have the time or expertise to know exactly what they should be doing… and this is where an investment advisor comes in handy.

INVESTMENT ADVISOR: This is a person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products. Investment advisors must attain set educational qualifications, follow certain rules and regulations and be registered by the securities commission in the province in which he or she works.18

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Think of your relationship with your advisor as a partnership. Your investment advisor will help you determine your risk tolerance, help define your financial goals, and create a comprehensive plan for achieving what is important to you.

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BUT WHAT IS A PORTFOLIO MANAGER?

PORTFOLIO MANAGER: The person or persons responsible for investing a mutual, exchange- traded or closed-end fund’s assets, implementing its investment strategy and managing the day-to-day portfolio trading.19

Roy Ruppert, head of the Ruppert Team, has the ability to manage investments in both a non-discretionary or discretionary manner as a Portfolio Manager.

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ABOUT THE RUPPERT TEAM We offer our clients:

n Financial planning solutions unique to their personal circumstances

n Work with clients to determine their personal objectives and time horizons

n Structure portfolios that are actively monitored and managed

n Continuous due diligence on product offerings and manager performance

n Ongoing education, extensive product knowledge, understanding of industry trends and changes

Products & Strategies:

n Corporate Class Discretionary Services

n Financial & Estate Planning

n Cash Flow Strategies

n Alternative Strategies

n Structured Products

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ROY RUPPERT, FCSI, CIM, EPC First Vice-President, Portfolio Manager, Branch Manager

Roy is a highly qualified Investment Advisor with over 35 years of experience. He conducts all initial meetings with potential clients to establish their financial management needs. Roy ensures that The Ruppert Team invests the time required to develop a solid financial plan and service arrangement for each and every client.

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FINAL THOUGHTS

“The key to success of any saving regimen whether for young adults or mature adults, is to get into the habit of doing it regularly…”20

Learning how to manage your money is a life skill similar to learning how to read and write. With practice and patience, it becomes second nature. Understanding your finances can help you make sound life decisions and avoid costly mistakes. The sooner you are able to understand these concepts, the more success and prosperity you will be able to generate for yourself.

Whatever your goals are, an investment advisor and portfolio manager can help you achieve them. As a young person it is important to save regularly, and be in the market for the long term. They say there is no time like the present, so what better a time to start reaching your goals and creating the life you’ve always dreamed of? We think the time it is right now.

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Start designing your financial future today, to secure a better tomorrow. The Ruppert Team can help.

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FINAL THOUGHTS Phone: 905 272 6000

The Ruppert Team

Roy Ruppert

NOTES

1-5,12, 14,18-19 | “Glossary.” CIBC Investor’s Edge-. Accessed January28, 2016.https://www.investorsedge.cibc.com/ie/education-centre/glossary.html

6-7, 13 | “Investments 101.” Canadian Securities Administration.Accessed February 03, 2016.https://www.securities-administrators.ca/uploadedFiles/General/pdfs/Investments%20101%20ENG%20Final%20201201.pdf

8 | “Understanding Exchange Traded Funds.” CIBC Investor’s Edge. Accessed January 28, 2016. https://www.investorsedge.cibc.com/ie/education-centre/topics/ investment-strategies/etf.html

9 | “Albert Einstein - Compound Interest.” Compound Interest. Accessed January 28, 2016. http://www.quotesonfinance.com/quote/79/Albert-Einstein-Compound- interest

10-11 | “How Compounding Grows Your Wealth.” How CompoundingGrows Your Wealth. Accessed January 28, 2016.https://www.cibc.com/ca/advice-centre/growing-your-wealth/how-compound-grows-your-wealth.html

15- 17 | “Know Yourself.” CIBC Wood Gundy. Accessed February 05, 2016.https://www.woodgundy.cibc.com/wg/financial-planning/investment-solutions/know-yourself.html

20 | Cudmore, B. Andrew, John Patton, Kemble Ng, and Charles McClure. “The millennials and money management.” Journal of Management and Marketing Research 4, no. 1 (2010): 1-28.

If you have questions please feel free to ask for our Investment Glossary or find it online at: https://www.woodgundy.cibc.com/wg/ reference-library/glossary/b.html

31 CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.