Planning to cash in on your home to help fund retirement? Here’s how to do it right + MORE Dec 19th

For retirees and near retirees, it can sometimes seem like there’s no such thing as a “safe” investment—especially now. Even bonds and bond funds, typically considered the safest of investment—suffered losses in 2021, as interest rates were poised to rise. Now that central banks have said they will hike rates soon, such losses seem destined to continue in 2022 and beyond. Meanwhile, stocks look determined to retreat from the all-time highs they reached in the year following the short-lived initial COVID bear market. 

It’s true short-term bank savings accounts and guaranteed investment certificates (GICs) seem relatively safe from both stock meltdowns and precipitous rises in interest rates, but now there’s the added scourge of rising inflation. Even if you can earn 2% annually on a GIC, if inflation is running at 4%, you’re actually losing 2% a year. 

Are ETFs a good investment for an all-weather portfolio? 

It’s tempting to throw your hands up and retreat to those much-praised asset allocation exchange traded funds (ETFs)…

Several years ago, an advisor recommended I hold a Canadian dividend ETF in an RESP for my son. Would this still be a good approach for someone just starting an RESP for their baby, or is there a better alternative, given the increasing number of ETF options?–Pete

In many ways, RESPs are fundamentally different from retirement accounts such as RRSPs. They typically have a shorter time horizon, and they are usually depleted within four or five years once your child reaches post-secondary school. In general, they are also much smaller than retirement accounts, since the most you can contribute is $50,000 during a beneficiary’s lifetime. But the same principles of risk management apply, and holding nothing more than a Canadian dividend ETF in an registered education savings plan account may not provide enough diversification.

READ: What is an RESP?

If you’re opening a new RESP for a baby, then you have at least 18 years before you need to start withdrawing the money. So you should start with the goal of building a globally diversified portfolio, which includes all asset classes, not just Canadian dividend stocks…

Elizabeth and Charles have a home worth about $1.3 million. They’re considering selling and downsizing to a smaller unit to bulk up retirement savings. We ask experts for advice on the right move.

Elizabeth and Charles have a home worth about $1.3 million. They’re considering selling and downsizing to a smaller unit to bulk up retirement savings. We ask experts for advice on the right move.