Retirement planning getting you down? There are always smart ways to plan the financial aspects of your retirement.
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Is the 4% Rule obsolete? + MORE Aug 3rd
Over the half decade I’ve written this column and attempted to practice what it preaches, a central pillar has been the so-called 4% Rule. As originally postulated by Certified Financial Planner and author William Bengen, that’s the rule of thumb that retirees can safely withdraw 4% of the value.... More »
How to boost your retirement income by 50% + MORE Nov 18th
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If you were told there was a way to boost your income in retirement by 50% it would no doubt get your attention. It certainly got my attention, in a paper in a recent issue of the Journal of Retirement. The paper was co-authored by one of MoneySense’s panelists for the annual ETF All Stars.... More »
How the coronavirus pandemic could change the way we think about retirement in Canada + MORE May 4th
Over the past few decades, the concept of retirement has grown increasingly more sophisticated. Canadians preparing for retirement have been able to contemplate a variety of highly personalized approaches—from early (or even very early) retirement; to active, phased, or working retirement; and mor.... More »
What it’s like to work with a financial advisor + MORE Apr 6th
If you’re like many Canadians, you’re probably weighing working with a financial advisor. Maybe you’ve just gotten married, started a business, expanded your family or come into an inheritance, or you’re planning your financial future as you approach retirement.
A financial advisor can be.... More »
What’s the best way of using your home equity during retirement? Nov 9th
Not sure how to make a retirement plan? Read on...
What’s the best way of using your home equity during retirement? - thestar.comContinue Reading On thestar.com »Getting the most out of your Retirement Plan in Canada can be tricky - let us help! Visit our Retirement page for.... More »
Why too much cash hurts investors
– moneysense.ca
You spent decades scrimping and saving to build up your retirement nest egg. And yet a lot of Canadians let inflation eat into their precious portfolio by leaving too much of it exposed, in cash.
Sure, there is a role for some cash. You’ll want to keep some accessible for household emergencies. And, in your portfolio, you might want some to use to take advantage of investment opportunities that pop up. But excessive amounts, sitting for long periods of time without a purpose, can cost you big time.
It is called a “cash drag.” Cash earns virtually nothing these days, so it drags down the performance of your portfolio. Let’s say you hold $50,000 in cash in your investment account, over and above what you have in your savings account for emergencies. If, instead, you had invested that money and earned a 5% return for 30 years you’d have $220,000 in your account. That’s $170,000 more, just by avoiding a lazy mistake.
Why this happens
There are three main reasons why some investors hold too much cash…
Sure, there is a role for some cash. You’ll want to keep some accessible for household emergencies. And, in your portfolio, you might want some to use to take advantage of investment opportunities that pop up. But excessive amounts, sitting for long periods of time without a purpose, can cost you big time.
It is called a “cash drag.” Cash earns virtually nothing these days, so it drags down the performance of your portfolio. Let’s say you hold $50,000 in cash in your investment account, over and above what you have in your savings account for emergencies. If, instead, you had invested that money and earned a 5% return for 30 years you’d have $220,000 in your account. That’s $170,000 more, just by avoiding a lazy mistake.
Why this happens
There are three main reasons why some investors hold too much cash…
What Sears retirees can do about the reduced DB pension
– moneysense.ca
Like Stelco and Nortel before it, thousands of pensioners of Sears Canada are experiencing firsthand what happens to corporate Defined Benefit pension plans when a business fails.
In October, Ontario’s Superintendent of Financial Services (FSCO) appointed Morneau Shepell to administer Sears Canada’s underfunded pension plan, a first step to winding the plan down in the wave of store liquidations that are now under way.
According to veteran Sears Canada spokesperson Vincent Power, the Sears DB pension is only 81% funded as of June 2017, although changes in interest rates and markets could alter the final figure. If it stands, it means DB plan members would get a 19% benefits haircut, although Ontario residents would have some restitution under the province’s Pension Benefits Guarantee Fund (PBGF), which we looked at in detail a couple of columns back. The PBGF guarantees the first $1,000 a month of pension, a figure slated to rise to $1,500 but which has not yet been legislated. Residents of other provinces do not enjoy this compensation, and roughly half of Sears employees were outside Ontario…
In October, Ontario’s Superintendent of Financial Services (FSCO) appointed Morneau Shepell to administer Sears Canada’s underfunded pension plan, a first step to winding the plan down in the wave of store liquidations that are now under way.
According to veteran Sears Canada spokesperson Vincent Power, the Sears DB pension is only 81% funded as of June 2017, although changes in interest rates and markets could alter the final figure. If it stands, it means DB plan members would get a 19% benefits haircut, although Ontario residents would have some restitution under the province’s Pension Benefits Guarantee Fund (PBGF), which we looked at in detail a couple of columns back. The PBGF guarantees the first $1,000 a month of pension, a figure slated to rise to $1,500 but which has not yet been legislated. Residents of other provinces do not enjoy this compensation, and roughly half of Sears employees were outside Ontario…
