As my online piece in the Financial Post this morning reports, Catherine Swift and her Working Canadians group are releasing an online petition urging millions of Canadians with Tax-free Savings Accounts (TFSAs) to ask the incoming Liberal administration to keep annual contribution levels at $10,000.
The 3-minute video features renowned indexer and author Charles Ellis, author of Winning the Loser’s Game. (Link is to the latest or sixth edition).
Citing UBS research, the video notes that most high-net-worth couples do share responsibility for major financial decisions, although men and women tend to focus on different aspects of their finances. For the most part, women take more of a role in dealing with day-to-day household finances and charitable giving; men take more of an interest in investing: in fact, fear than one in five women pay much attention to the investments jointly owned by couples.
The main point of the video is that couples should share responsibility about investing in particular because it plays such a critical role in the health of their jointly held wealth. And naturally, Charles Ellis thinks they should give up on trying to choose high-priced actively managed investments (aka “The Loser’s Game”) and agree on an indexing approach to their investments.
In this respect, the video concludes that men are actually more prone to emotion during periods of market volatility, while women are better at staying the course.
With stock markets violently zigging and zagging during the month of August, I thought it would be a good time to check in with our ROBO Portfolio to see how it withstood the market gyrations. Here are some observations:
After being up 0.8 per cent year-to-date in July, the portfolio slipped into the red, dropping 2.93 per cent year-to-date. Every asset class in the portfolio was now in a loss position. The real estate and Emerging Markets components were the biggest laggards, posting -14.9 and -12.7 returns year-to-date. Given the meltdowns we saw in global equity markets, this isn’t much of a surprise.
Man sacrifices his health in order to make money. Then he sacrifices his money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived. – James J. Lachard
You have worked your butt off for many years saving, investing, and doing mostly the right things. You’ve accumulated a substantial retirement account and are ready to retire. You know both your yearly spending average and your daily spending average, and are well within your Safe Withdrawal Rate.
You retire, and life is better than you ever expected. As the years pass your net worth continues to grow, and you are feeling confident and have relaxed into your lifestyle.
Then you get sick.
Health insurance covers most of the expenses, and you move on. Then something more serious happens, and costs are exploding. You need in-home care and services that are not covered by your policy. You are starting to strain your nest egg, and the financial security that you have worked your entire life for is slipping away.
If you’re like many Canadians, your financial life story may go something like this: over the past 20 years you’ve been busy taking care of multiple financial commitments. You may have gotten married, bought your first home and have made some good headway to paying it off, you may have even had a child or two and gone back to school to further develop your career.
Now in your 40s, you’ve achieved quite a bit and are probably starting to seriously think about how you will fund your retirement, children’s education, a bigger house or something else specific to you. Throughout all this, you’ve managed to put away around $100,000.
Congratulations! But, this is most likely not enough for you to be considered a good prospect for most financial advisors. You’re either left to do it yourself [DIY] or your hard earned money is probably going to be put into an expensive option, typically in a mutual fund paying up to 2.5% in fees each and every year.
Though, you may not know just how much you’re paying and may even believe that you don’t pay anything at all because fees are not currently reported on investment statements. What’s more, these fees will likely destroy up to 50% of your potential gains in wealth — yes, small fees have devastating effects over time — leaving you with much more work ahead of you and a harder time reaching your goals. If this is not a slap in the face, I don’t know what is. The good news is that there are new options available for individuals just like you.