CALGARY – A long life of assorted jobs, good times, hard times, moves and mistakes can result in an investment portfolio that looks like a jumbled basement storage closet.
Your working life goal of accumulating as many assets as possible to build a nest egg for retirement ends along with your employment income when retirement day arrives at last.
Now, investment experts say, de-cluttering those tangled stocks, bonds, mutual funds and can’t-miss-opportunities — and making sense of them so they last at least as long as you do — is your most important chore.
“Many people, especially those who live here in Alberta, have had a lot of different jobs throughout their careers,” said Willis Langford of Langford Financial Inc., a retirement income adviser in Calgary.
“So they may come with a TFSA (tax-free savings account), RSP (retirement savings plan), they may have a LIRA, which is a locked-in retirement account, they may have a defined benefit pension plan, a defined contribution pension plan, plus they have non-registered accounts.
“And those, technically, could be all over the place in multiple carriers with financial institutions all across Canada.”
Returns are vitally important when accumulating investment assets but tax planning and managing risk gain priority when retirement becomes a reality, Langford said.
“If you’ve got things in your plan of action that don’t fit, you’ve got a mumble-jumble, you’ve got stuff bought over the years and nobody can remember why, you have to do something about that,” said Adrian Mastracci, Vancouver-based fiduciary portfolio manager for Lycos Asset Management.
“Quite often, people come in and they’ve got 30, 35 mutual funds. I have no idea how somebody can look after 30, 35 mutual funds. Or even 15.”
Cluttered portfolios are often marked by missing written plans, non-existent savings projections, too many scattered accounts and either too many or too few different classes of investments.
They can contain mutual funds where costs and exit charges are unclear. Or different funds that contain the same kinds of securities.
Both Langford and Mastracci recommend finding a single trusted adviser to look at the entire portfolio and give advice on how to clean it up.
They recommend choosing someone who is paid with fees, not commissions, to get the most unbiased recommendations.
The result should be a schedule of actions designed to provide maximum income and tax efficiency with the least amount of risk over the client’s expected remaining lifespan.
“How you take income from those sources will dictate how much taxes you pay over your lifetime. If you don’t do it right, you will pay more than necessary,” said Langford, adding improper tax planning can cost hundreds of thousands of dollars.
The adviser should be chosen for what he or she can do for you, said Mastracci. Different clients need different services depending on the size and complexity of their investment portfolio.
A good retirement planner should also be able to help the client track down investments he or she has lost track of by tracing past employers and going through records, he said.
He presented the example of a 65-year-old client whose goal is an income of $100,000 a year for the rest of his life.
That could mean 20 or 30 years or more, which is where the math gets complicated enough to test even the smartest non-professional investors.
“Chances are your portfolio will not receive any savings from you, the client, for that period of time,” Mastracci warned.
He added: “Sometimes you have to tell the client something he doesn’t want to hear.”
This report by The Canadian Press was first published Jan. 16, 2020.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
