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investment planning

Integrated Investment Management Can Save Taxes

High net worth investors are now sitting back and enjoying the summer weather, breathing a sigh of relief now that they are done with their annual tax filings. The work involved in assembling all of the relevant tax information is made more complicated by the fact they often deal with several investment firms.

U.S. financial research firm, Cerulli Associates, recently found that high net worth investors had, on average, 3.7 investment advisors. Ultra-affluent investors often spread their investments across many more.

The Safe Investing Dilemma

John was concerned because his 82-year old mother, Betty, was having trouble generating sufficient income to cover her cost of living with interest rates at rock bottom levels. Along with many other investors globally who have poured some $4 Trillion dollars into government bonds since the 2008 Credit Crises, she wanted to feel safe and have her money guaranteed. But the price of safety in a low interest rate world is higher than you may realize.

Diversification is Key

As with many retirement savers, it took two stock market crashes (2001, 2008) and a global financial crisis to convince Adam and Sonya that trying to 'time the market' or pick specific sectors was a costly exercise in futility. But, with the value of their RRSPs nearly halved in the 2008 crash, they also recognized that they could not afford to avoid equities if they were going to have any chance of meeting their retirement goals.

Volatile Economy = Investor Fatigue

Investors are becoming increasingly exhausted trying to follow the seemingly never-ending bad global economic news. Overseas markets have put a strain on Canada even though we are more stable, economically, than most other countries in the world.

Crystal balls are in short supply resulting in increased skepticism and general feeling of Is this downturn ever going to end?' The uncertainty has investors reeling - leading them to make judgements with their portfolios that they wouldn't normally exercise.

Baby Boomers Getting Nervous

Portfolio Diversification

Looking back over the past few years, one thing is certain - we can never be absolutely sure what the financial markets will do at any given time. We can study charts and graphs, both historical and forecasted, we can consult with economic experts, business leaders, and government officials, we can look at inflation and interest rates, and still we cannot predict the markets with absolute certainty

Don't Give Up on Growth

If you are a prudent investor, then you have a financial retirement plan that will ensure you have sufficient funds for the lifestyle you envision after you stop working. What constitutes sufficient depends on your ambitions and your hobbies, and also on how long you live. People are living longer, and it's not unreasonable to think that you could live into your 90s.

Canadian Market Recovery After Financial Crises

During financial crises, stock prices suffer. However, they typically recover over time.

This chart illustrate the cumulative returns of a balanced (60% stock/40% bond) portfolio after five historical financial crises. In the short term, uncertainty from such external shocks can create sudden drops in value. For example, the portfolio posted a negative return one month after the October 1987 stock-market crash. Over a longer period of time, however, returns were much more attractive, and investors who stayed the course reaped considerable rewards.

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