The “Big Five” Canadian banks offer investment funds and include Royal Bank of Canada, Toronto Dominion Bank (TD Canada Trust), Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce (CIBC). Let’s explore the best place for you to invest.
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Q. How safe or wise is it to invest some savings in gold? Many of my friends say it’s a great inflation hedge. But I have a very well-diversified portfolio that’s mainly equity index funds right now. Is having a small portion of gold, say 5% or 10%, a good option? Why or why not?— Thanks, Mary R.
A. I love my friends. I ask them for advice on all sorts of things. Like how to peel butternut squash without losing a finger, or how to gel my daughter’s hair for her synchronized swimming competitions. (Knox Gelatin, for the record). But unless we are talking about one of my friends who works full time as a portfolio manager in the investment industry, I don’t ask my friends for investing advice.
Your question is best directed to an advisor who can look at your complete financial picture. And I bet that before she recommends you buy gold, she’ll want to talk more about your fixed income position and whether or not you need some to balance out your equity.
But you didn’t ask me to opine on your friendships…
Q. My husband and I had a combined investment portfolio of about $750,000. We agreed to a 0.75% fee to our advisor, which amounted to $5,600 last year. Despite that cost, our portfolio is now worth $732,120. This advisor claimed that 4% was his expected gain for us, and he has fallen far short. Any advice would be appreciated.
— Dana
A. One of the most challenging parts of creating a financial plan is managing expectations. Dana, it’s possible that your advisor assured you that your portfolio would achieve an annual return of approximately 4% every year, but such a promise could have got him fired. In an era where safe investments (such as government bonds and GICs) pay less than 3% before fees, it simply is not possible to earn a consistent annual return of 4%: no advisor should ever promise that, and no investor should expect it.
My guess is that the advisor quoted you and expected long-term average return of 4%, which is actually quite conservative for a balanced portfolio of stocks and bonds…
— Dana
A. One of the most challenging parts of creating a financial plan is managing expectations. Dana, it’s possible that your advisor assured you that your portfolio would achieve an annual return of approximately 4% every year, but such a promise could have got him fired. In an era where safe investments (such as government bonds and GICs) pay less than 3% before fees, it simply is not possible to earn a consistent annual return of 4%: no advisor should ever promise that, and no investor should expect it.
My guess is that the advisor quoted you and expected long-term average return of 4%, which is actually quite conservative for a balanced portfolio of stocks and bonds…
