How
to build a retirement plan that tunes
out the market
noise
How to build a retirement plan that tunes out the market noise
Jared Lindzon
Special to The Globe and Mail
Published 30 minutes ago
Open this photo in gallery:
When it comes to retirement savings, slow and steady tends to win the race.
Getty images
Share
Bookmark
Please log in to bookmark this story. Log In Create Free Account
Planning for retirement can feel like solving a complex puzzle• Образование » Математическое образование » Математические головоломки и досуг » Головоломки, with each
piece representing a decision that could impact your future. But here’s the
good news: It’s never too late to take control. In this series, we aim to
simplify the process, providing actionable insights to help you confidently
manage your financial future.
The options available to Canadians looking to build their retirement savings
may be growing, but the fundamentals of sound investment• Экономика » Финансы » Инвестиции remain the same.
As cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта reach record highs some Canadians may be tempted to take a
closer look at speculative assets, but experts warn that when it comes to
retirement savings, slow and steady wins the race.
“With speculative assets you can do exceptionally well, or you can lose a ton• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта » Ton
of money, and that’s why I think speculative investing should be limited to a
smaller portion of an investor• Экономика » Финансы » Инвестиции » Инвестор’s portfolio,” says Jason Heath, an advice-only
financial planner at Toronto-based Objective Financial Partners. “Boring, over
the long run, has a higher probability of success.”
Heath explains that access to more investment• Экономика » Финансы » Инвестиции tools and apps, alongside social
media content from non-experts, has driven many towards riskier assets like
cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта, “ meme stocks ,” and individual company shares in recent
years.
“Although it can be tempting to try to hit a big home run and find something
that will magically make you rich, it tends to be a slow, steady process,” he
says. “I’ve worked with thousands of clients in my career, and the vast
majority have achieved financial independence slowly and surely over a number
of years.”
Those looking to grow their wealth for retirement are advised to invest in
more diversified assets – like exchange-traded funds (ETF) and mutual funds –
and more stable assets, like government backed bonds and Guaranteed Investment• Экономика » Финансы » Инвестиции
Certificates (GICs).
ETFs trade like stocks on an exchange with lower fees, while mutual funds are
managed by professionals and priced at the end of the day, often with higher
fees. For stability, government-backed bonds and Guaranteed Investment• Экономика » Финансы » Инвестиции
Certificates (GICs) are considered to be low-risk options. Bonds pay regular
interest as loans to the government, while GICs guarantee fixed returns over a
set period, offering security and predictability for conservative investors or
those nearing retirement.
Heath says most Canadians should seek to make those investments via a
registered savings plan, such as a Registered Retirement Savings Plan (RRSP),
Tax-Free• Торговля » Tax free Savings Account (TFSA) or First Home Savings Account (FHSA).
Though each has its own set of restrictions, limits and requirements all offer
Canadians the opportunity to earn investment• Экономика » Финансы » Инвестиции returns tax-free• Торговля » Tax free. The RRSP also
allows them to defer income taxes on those funds until the money is withdrawn.
“When we’re in a lower income bracket, TFSAs tend to make more sense, and when
we’re in a higher income bracket, an RRSP makes more sense – but understanding
when and why you’re going to need this money over the course of time is really
important,” explains Chris Poole, a financial planner and president of CWP
Financial Services• Экономика » Финансы » Финансовые услуги
• Сфера услуг » Финансовые услуги Inc. for Sun Life Financial.
Both Poole and Heath also emphasize the importance of taking advantage of
employer-supported savings plans that offer matching contributions, when
available.
“If you are in a workplace where you have access to a boosted amount of
savings because you’re getting employer matching, that is something we almost
always want to take advantage of,” Poole says. “There’s nowhere else in the
market that you can put 6 per cent of your salary and get a 100 per cent
return.”
Poole also recommends against putting too much stock in the housing market, as
many of his clients ultimately find downsizing or getting equity out of their
real estate assets more difficult and less desirable than they had originally
anticipated. “If you own a house, you can’t exactly go to the ATM on the side
of the wall and just sell one brick at a time,” he says.
Poole explains that Canadians have three ways to use the equity in their homes
to fund their retirement: downsizing, renting out a portion, or borrowing
against the property, such as with a homeowner’s line of credit. Each has its
own drawbacks and complications.
“The switch from larger house to smaller house doesn’t actually create added
equity in the way that many perceived it would,” he says. “Smaller houses are
expensive too, the cost of moving is expensive, and the land transfer tax adds
up.”
Though some may be tempted to get more pro-active with their retirement
investing, Poole says the best approach is to create a plan that matches their
long-term financial goals and taking a hands-off approach – only checking-in
periodically to ensure they’re on track.
“There are so many distractions,” he says, “but the reality is when we look at
our own financial road map and build a plan based on our unique needs, it
gives us the permission to tune out the noise.”
@@@@
