BMO Financial Group

BMO Financial Group
BMO Investments Inc.

BMO Investments Inc.

April 21, 2011 08:00 ET

BMO Investing Study: Canadians Uncertain How To Generate Income From Their Investments

Opportunities Exist for Investment Advisors to Educate Clients on the Many Benefits of Income-Generating Funds

- Almost Half of Canadians Remain Unaware of the Many Benefits of Income-Generating Investments Such as Mutual Funds and Exchange Traded Funds

- Three-Quarters Are Keen to Learn More About How to Generate Income from Their Portfolios

- Income-Generating Investments Can Play a Critical Role in Helping Canadians Realize Their Ideal Retirement Lifestyle

TORONTO, ONTARIO--(Marketwire - April 21, 2011) - BMO Investments Inc. today announced the results of a study indicating a significant number of Canadians do not understand how to use their investments to provide additional income. The importance of generating cash-flow from portfolios is becoming increasingly important as boomers retire in greater numbers and seek out additional sources of income.

The study, conducted by Leger Marketing, revealed that only half of Canadians (51 per cent) are aware of the benefits that income-generating investments provide. These include providing more cash flow, tax efficiencies, and improving overall portfolio value.

Not surprisingly, those who use a financial professional for their investments are more likely (91 per cent) to know about various income-generating investments.

The study also found that, while there is a gap when it comes to Canadians' knowledge of investment options, a significant number of respondents (73 per cent) say they are interested in learning more about the topic.

The results of the study indicate an opportunity exists for investment advisors to help Canadians better understand how specific investments can generate income.

For example, only 55 per cent are aware that mutual funds can help provide them with additional cash flow. Canadians' knowledge of the income-generating capabilities of other investment products include:

  • Only one-third are aware that Exchange Traded Funds can generate income
  • A little over half (52 per cent) state they know that Bonds can provide investors with income
  • Fifty-seven per cent say they are familiar with the ability of Guaranteed Investment Certificates to create income

Individual investments generate different types of income, typically in the form of interest, dividends or capital gains. Income investments also vary in their distribution frequency, commonly by month, quarter or even year.

"As Canadians begin to retire in greater numbers, ensuring they have a steady income from their investments will be critical in helping them realize their ideal retirement lifestyle," said Serge Pépin, Head of Investments, BMO Investments Inc. "These results show that there's a huge opportunity for financial professionals to educate Canadians on the benefits of income-generating investments."

Mr. Pépin noted that investing in non-traditional vehicles can not only help grow a portfolio's overall value, but can also provide retirees with tax efficient income that will help them sustain their ideal retirement lifestyle. For example, BMO Guardian Monthly High Income Fund II consists of dividend-paying equities and real estate investment trusts that pay high levels of income while BMO Guardian ETF Portfolios have a T6 option for tax efficient cash flow.

The online survey was conducted by Leger Marketing from March 28 – March 31, 2011, with 1501 Canadian adults.

About BMO Investments Inc.

BMO Investments Inc. is a member of BMO Financial Group and part of the organization's Private Client Group. The Private Client Group provides integrated wealth management services in Canada and the United States and had total assets under management and administration of $250 billion as at January 31, 2011.

BMO Guardian Funds are offered by BMO Investments Inc. a financial services firm and separate legal entity from Bank of Montreal. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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