Philosophy to Investing
Philosophy to Investing
Who should benefit from the money you have accumulated and
the legacy plans you have put in place?
Lifestyle for Yourself
- How much money does it take you to be comfortable?
- Are you going to spend all of this before you die?
- Perfect financial plan?
Lifestyle for Family
- Are there family members you want to benefit?
- After you die?
- Legacy for Family
- What do you want future generations to know about you?
- Trusts or specific bequeaths
Legacy for Community
- How do you want to be remembered in your community?
- Ongoing or one time?
Canada Revenue Agency
The answer to the above questions form the basis of
“Your Financial Plan”
Permanent Loss of Capital
- 1930 Depression
- Recession resulting in a temporary loss such as C-19 or 2008
- Risk tolerance – the level of risk you can handle and still sleep at night, the quintessential “risk vs reward” battle
Structural Risk Factors
- Currently historically low rates
- Currently historically low rates but what about the future? Debt?
Taxation of Capital
- Interest or salary – 100% inclusion in tax return
- Capital Gain – partial inclusion in tax return; change in amount as governments need more money
- Dividend – partial inclusion in tax return
- Influence Factors: Age, physical and mental health, financial health
- Short Term – Parking funds until decision made
- 0 to 3 years
- 3 to 10 years
- 10 years plus
- Non-Registered Products
- Registered Products
- Critical Illness
“How we are going to invest the money to get the rate of return we need for your financial plan?”
- Low risk – Preservation of capital – Guaranteed up to CDIC limits (Currently $250,000)
- Bank account
- GIC (Cashable ↓ or Uncashable ↑) using the Laddered GIC Concept with 20% in each year
- 1 Year _______
- 2 Year _______
- 3 Year _______
- 4 Year _______
- 5 Year _______
Low to Medium Low
- Laddered Bonds – similar to laddered GIC concept but slightly higher rates than GIC, duration risk – locked in for specific time
- Capital Market Strategy Model Asset Mix (as of June 30, 2020)
- fluctuating risk levels from low to high
- High Risk and Speculative
- List of individual stock portfolios or high risk mutual fund e.g tech or emerging markets
- Combination Plans for Your Portfolio
- 50% insurance, Bank GIC and 50% Balanced/Moderate Portfolio
- Based on what you want to accomplish
- Taking into consideration the factors of time, health, risk, legacy, taxation
- Tools used include asset allocation as the engine for product selection