News
Funds that keep your money home07.23.2005
The Halifax Daily News
February 27, 2005
By David Swick
The best thing about RRSPs is they help us save for the future. At the same time, unfortunately, they send hundreds of millions of dollars out of Nova Scotia.
Every year, we invest more than $540 million in RRSPs. Less than two per cent of this money is directly reinvested here. Talk about your have-not province.
"Many people who invest in RRSPs," says Richard Nickerson, a financial planner with Assante in Halifax, "are unaware what companies they are actually investing in."
Few of us direct our RRSP investments to Nova Scotia enterprises, Nickerson says, partly due to fear. Fear of a bad investment. Fear of losing it all.
Who would you be more likely to trust - a mutual fund outfit with a national advertising campaign, or a couple dozen people in the next town? Most investors choose the well-publicized choice from away. And so miss out on something good.
Direct your RRSP investment toward qualifying local companies, and you get one heck of a tax break. Nova Scotia's Community Economic Development Investment Funds (CEDIFs) kick you back - on top of your federal RRSP tax break - an extra 30 per cent. And if the organization you are investing in is outside HRM, 20 per cent of your investment is guaranteed by the province.
Add together the federal tax break of 27 per cent (or more, depending on income), the 30 per cent provincial tax break and the 20 per cent provincial guarantee, and about three-quarters of your RRSP money is covered.
Nickerson is one of metro's few financial professionals fully versed in socially-responsible investments (SRIs). These are investments that make good financial sense, while also caring for the environment, working conditions and human rights. Often, they help build a communities.
Ten years ago, SRIs were a tiny part of the Canadian investment scene. With more people now wanting their money to not just grow, but do good, SRIs have become a $10-billion industry.
Asked for a couple of businesses enriched by Nova Scotians thanks to CEDIFs, Nickerson names Just Us coffee roasters and Scotian Windfields. Just Us is a 10-year-old Wolfville co-operative that sells organic, fair trade coffee, tea and chocolate. Scotian Windfields is exploring wind power development in HRM, the South Shore, and Yarmouth-Digby-Annapolis.
Before making any investment decision you should check with a financial adviser. Nickerson stresses that portfolio diversification is key. That said, he has put some of his own money to work here.
"I think it's an overlooked area. I own shares in Just Us. They have a good investment model, and you're both helping people on a worldwide scale and helping Nova Scotia."
That sounds good to me. Call me crazy, but I'm ready to do it - to take a calculated risk and support home-grown enterprise with my hard-earned cash. Better this than having the money leave the province, and work for who knows what.
One thing Nickerson said rang particularly true.
"Just because these companies are smaller and in Nova Scotia doesn't necessarily mean they're more of a risk," Nickerson said. "Look at Enron or WorldCom."
• David Swick is a journalist, author and King's College lecturer.
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