Wealth Management
Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.
If you’re new to investing, a good place to start managing your wealth is to consult your tax preparer or accountant. They may be able to provide you with financial planning services. They may also be able to refer you to somebody who can.
There are three types of professional wealth management services you can use.
1.    A full service stock broker – A good stock broker is one who understands investing and who has the integrity to settle conflicts of interest in the client’s favour. Good stock brokers can provide an effective and economical way to manage your investments. But if you are going to use a full-service broker, take the time to find a broker you can trust.
2.    A discount stock broker – A discount stock broker will simply carry out buy and sell orders for their clients, and charge lower commission rates than full-service brokers. You pay even lower commissions if you trade stocks online, instead of placing orders over the phone.
3.    Portfolio managers – A portfolio manager is someone who fully manages your wealth portfolio and has a fiduciary responsibility to make sound investment decisions on your behalf. Portfolio managers are more stringently regulated than full-service or discount brokers.
investing for retirement

Four key factors and three tips to consider when investing for retirement

We recommend that you base your investing for retirement on a sound financial plan. Here are the four key factors that your plan should address to ensure that your retirement investing generates enough income in retirement:

  1. How much you expect to save prior to retirement;
  2. The return you expect on your savings;
  3. How much of that return you’ll have left after taxes;
  4. How much retirement income you’ll need once you’ve left the workforce.

Investing for retirement: Stick with conservative estimates to account for unforeseen setbacks

As for the return you expect from investing for retirement, it’s best to aim low. If you invest in bonds, assume you will earn the current yield; don’t assume you can make money trading in bonds.

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Over long periods, the total return on a well-diversified portfolio of high-quality stocks runs to as much as 10%, or around 7.5% after inflation. Aim lower in your retirement planning—5% a year, say — to allow for unforeseeable problems and setbacks.

Above all, it’s important to remember that while finances are important, the happiest retirees are those who stay busy. You can do that with travel, golf or sailing. But volunteering, or working part-time at something you enjoy, can work just as well.

One thing we encourage all investors to do is perform a detailed study of how you spend your money now. Then, you analyze your findings to see what personal expenses you can cut or eliminate. This too can have fringe benefits, especially if it helps you break unhealthy habits. You may be surprised at how much you’re spending and how much more you could be saving for retirement.

Investing for retirement: Dollar-cost averaging brings automatic profits

The best retirement plan you can have is to start saving as early in your working career as possible. You then invest a steady or rising amount of that money in the stock market every year. When you follow this plan, you automatically profit from dollar-cost averaging. You will automatically buy more shares when prices are low, and fewer shares when prices are high.

In retirement, you reverse the process. You live off your dividends, and sell stocks only when you need more money. When you do that, you sell your lower-quality holdings first. That way, your sales have the added advantage of upgrading the quality of your portfolio.

Of course, you can improve your returns and cut risk if you structure your retirement investing around our three-part approach at TSI Network. Invest your money mainly in well-established, dividend-paying companies. Spread your investments out across most if not all of the five main economic sectors (Manufacturing & Industry, Commodities & Resources, the Consumer sector, Finance, and Utilities). Downplay or avoid stocks in the broker/media limelight.

That limelight tends to push up investor expectations to unrealizable levels. When unpleasant surprises come along, they can have a brutal impact on prices of stocks in the broker/media limelight.

A Registered Retirement Income Fund (RRIF) is a great long-term investing strategy for retirement

Converting your RRSP to an RRIF is clearly one of the best of three alternatives at age 71. That’s because RRIFs offer more flexibility and tax savings than annuities (see the pros and cons of annuities on TSI Network) or a lump-sum withdrawal (which in most cases is a poor retirement investing option, since you’ll be taxed on the entire amount in that year as ordinary income.

Like an RRSP, a RRIF can hold a range of investments. You don’t need to sell your RRSP holdings when you convert—you just transfer them to your RRIF.

When you hold a RRIF, you must withdraw a minimum each year and report that amount for tax purposes. (You may withdraw amounts above the minimum at any time.) Revenue Canada sets your minimum withdrawal for each year according to a schedule that starts at 5.28% of the RRIF’s year-end value at age 71, reaches 6.82% at age 80, and levels off at 20% at age 95.

If you have one or more RRSPs (registered retirement savings plans), you’ll have to wind them up at the end of the year in which you turn 71.

Are you investing for retirement already? If so, what strategies are you using? Share your experience with us in the comments.

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Wealth Management Post Archives

Are you making the best investing decisions?

Are you making the best investing decisions?

Investing decisions should be well thought out and based on these sound investing strategies

It’s essential to avoid letting an investment opinion turn into a fixed idea about the future. Instead, keep an open mind. Nobody can consistently predict what stocks will do… Read More

Trading with a discount broker could actually cost you money

Trading with a discount broker could actually cost you money

Trading online through a discount broker, rather than with a full-service broker, is now the preferred option for many investors—but it has risks.

The main advantage of switching to a discount stock broker is lower commissions. And commission rates can be even cheaper if you… Read More

Hidden risks of prepaid funerals

Hidden risks of prepaid funerals

Prepaid funerals may seem like a great deal for older investors, but you need to know about the hidden risks
There’s no limit to the types of financial questions Inner Circle members can ask me and my team of investment experts. But aside from asking our… Read More

How RRSP meltdown strategies could jeopardize your retirement

Whether you’re a beginning or experienced investor, these weekly updates are designed to give you the specific investment tips and stock market advice you’ll need for 2016 and beyond. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can… Read More

New free report: 10 Stocks to Buy and Hold Forever

Most successful investors describe themselves as buy-and-hold investors. But for many, their strategy is more like buy-and-hold-till-I-get-bored. How long you hold depends on the ability to find good stocks to buy.

Rather than “buy and hold,” we prefer a “buy and watch closely” strategy. That’s… Read More

Using bonds for retirement will hurt your retirement income

Using bonds for retirement will hurt your retirement income

Using bond for retirement income has often been standard investing advice for the last 50 years—but we think it’s bad advice.

As some investors near retirement, their advisors recommend switching to bonds and other fixed-income investments for their retirement investments instead of holding stocks… Read More

3 retirement investment “strategies” to avoid

3 retirement investment “strategies” to avoid

Here are 3 retirement investment “strategies” that will kill your returns and put your retirement goals in jeopardy.

If you’re headed into retirement, you’ve probably read about a range of different retirement investment strategies to follow. One we’ve been asked about a number of… Read More

The odds are stacked against you when investing in IPOs

The odds are stacked against you when investing in IPOs

Investing in IPOs may seem like a quick way to make money—but studies show that the reality is quite different.

Human nature puts the odds against you when investing in IPOs or Initial Public Offerings (we also refer to them as new stock issues).

Insiders decide… Read More

New 2016 FREE Report: Your complete guide to wealth management and planning the retirement you want: Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and more.

New 2016 FREE Report: Your complete guide to wealth management and planning the retirement you want: Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and more.

Whether you look after your own investments or have someone else do if for you, this report is essential reading. We have distilled decades of time-tested investing strategies and successful wealth management experience into this comprehensive guide. It’s ready to download now… Read More