Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts

Safety first: Foreign investors bond with Canada

An assortment of United States coins, includin...Image via Wikipedia

DAVID PARKINSON | Columnist profile | E-mail
From Saturday's Globe and Mail

Canadian investors have long been accused of being homers. As the rest of the world has been telling us lately, that might not be such a bad thing.
Despite the elimination of foreign-content restrictions on registered retirement savings plans six years ago, most Canadians still keep the vast bulk of their investments in domestic securities. A recent study showed that even the country’s wealthiest investors – those with more than $250,000 to invest – average only 15 per cent of their portfolios in overseas holdings.

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But while investing experts have been telling us for years that we should be looking beyond Canada, data this week from Statistics Canada highlighted that foreign investors have increasingly been flocking to Canada. Foreign buyers snapped up a net $15.4-billion of Canadian securities in May, adding to a year that is shaping up as another big one for foreign buying of Canada’s stock and bond markets.
Seeing as most of us – for better or worse – have most of our money in the Canadian market anyway, it might be worthwhile taking a closer look at what those investing tourists in our country have been buying.
Destination of choice
Warren Lovely, head of macro strategy at CIBC World Markets, broke down Statscan’s data in a report this week to get a better sense of where the foreign money has been flowing.
While equity purchases are up significantly for the year to date, bonds have increasingly replaced equities as the destination of choice for foreign buyers – punctuated by a big surge in bond buying in May, particularly in federal government and federal Crown corporation bonds.
The impetus may be the deterioration of the government debt situation in Europe and the United States, which has fuelled a flight to safe, high-quality bond markets such as Canada. At the same time, it has convinced investors to step back from so-called “risk assets,” such as equities. Canada is being perceived as a low-risk market in risky times, and government bonds are the lowest-risk option for investors.
Crowning your portfolio
One particularly interesting trend has been the sharp gains in buying of bonds issued by federal Crown corporations. Mr. Lovely said that as big foreign buyers such as central banks have become more comfortable with Canada, they have begun to move past the federal government debt to buy high-quality Crown issues such as Canada Mortgage Bonds – which carry the same top-notch credit rating but offer higher interest rates.
“It’s yield enhancement without erosion in credit quality,” he said – adding that this same logic makes sense for smaller retail investors, too.
“There is a very strong argument that this could be a diversification tool for investors of all stripes.”



Canada encourages Immigration through the Immigrant Investor Program

Canadian Provinces and TerritoriesImage via Wikipedia

In order to promote economic growth and employment, develop new commercial opportunities, and to improve access to growing foreign markets, Canada is attracting people around the world who are familiar with markets, people with capital, business acumen as well as people who have entrepreneurial skills into the country together with their special requirements and customs.

Canada is offering foreigners with business skills and who has had obtained a big net worth and is willing to live in the territorial provinces of Canada, to help support provincial as well as the territorial economic objectives in the country.
Canada’s banking system was again voted as the “soundest” in the world as it promoted the Immigrant Investor Program which would attract wealthy immigrants to invest in the Canadian economy in return of granting them Canadian visas.
Two ways in which investors can get Canadian visas
There are 2 routes in which wealthy business people who are planning to get a quick way to move into Canada. One is through applying through the Federal Investor Program, and the other would be to apply to the Quebec Investor Program if they are going to invest in Quebec which offers a different program from other Canadian territories.
Applicants in the program must have a minimum net worth of about $1,600,000 CAD that is legally obtained and liability-free, and is willing to invest the amount of $800,000 CAD into the Canadian economy, and with meeting other requirements such as having an experience in owning and managing a business, has an experience of managing employees not to be less than 5, and must confirm into writing, the intention to invest at least $800,000 CAD by transferring funds to the Receiver General or show documents proving that such investments have already been made.
Other incentives offered by the program
Investors are also entitled to opt for the Permanent Resident Card in which permanent resident card will be issued to the investors, the spouse as well as the dependents after their entry to Canada as a resident. The card together with the holder’s passport can also be used to travel freely within and outside Canada.
And if the investor, spouse or dependent has been present in Canada for 3 years out of the 4 years before the application for citizenship, the permanent resident, could apply for Canadian citizenship. And he/she can also be allowed to apply for a dual citizenship if he/she is qualified.
Visa application period
In applying for the visa however, the investment must be made prior to receiving the immigration visa, and in situations where the application for permanent residence is declined, the investor has 90 days to be able to claim the invested sum, and to receive a full refund guaranteed by the government of Canada.
The funds invested in a period of 5 years and are returned to the investor after that period, in which the government has full discretion in managing the funds. 
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BC PNP APPLICATION PROCESS Business Skills, Fast-Track

The chamber of the British Columbia provincial...Image via WikipediaThe BC PNP is a provincial immigration program which is operated in partnership with Citizenship and Immigration Canada. The specific program we will describe below is known as the “Business Skills” program and is suitable for investment in the GVRD or Abbotsford. Applicants can be fast-tracked if a client is willing to deposit $125,000 interest free with the province after nomination. The deposit is refundable in full when the client satisfies the terms of the PNP program.

Compared to the Federal Investor Program, the BC PNP business programs typically offer a number of advantages, including early entry in Canada on a work permit, control over investor dollars and flexible qualification criteria.


The general requirements of the program include:

  • Confirmation of a personal net worth of at least $800,000.00
  • An minimum investment in a BC business of $400,000.00 (existing business or start-up)
  • The investment must create three full time jobs in the business
  • You must actively participate in the management of the business
  • You must demonstrate enough unencumbered funds to make the investment
  • You must own at least 33.3% of the voting and non-redeemable shares in the business

The Investment

The general guidelines regarding the $400,000 investment are flexible, but must still conform to a number of rules, including:

  • A maximum of $267,000 of the $400,000 investment (2/3) can be attributed to the purchase of shares. You may purchase shares for more than this amount but will only get credit for $267,000.
  • Investments in real-property are generally not credited except for in unique situation
  • The balance of the investment may be used for items such as equipment, leasehold improvements, inventory, patents, promotion/marketing, professional/start-up fees and start-up wage
  • The business investment has to be reasonable and make good commercial sense

A Regional Program exists for clients wishing to invest outside of the GVRD or Abbotsford, but still in BC. The requirements under the Regional Program are half of the Business Skills program, i.e., $400,000 net worth and a $200,000 investment and at least one full-time job created.
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