Finding Investment Common Ground with Your Spouse

Finding Investment Common Ground with Your Spouse

by AgingFinancialFinancial PlanningInvestment Planning

It can be hard to find common ground between two unique individuals, even when they are in a relationship. This kind of dilemma can occur when dealing with investments. Just because you love each other doesn’t mean you have the same risk tolerance as investors! You may not be able to sleep at night if the market has taken a hit, while your spouse may be sleeping soundly right next to you, knowing your investments are bound to go back up. If you find yourself in this kind of situation with your loved one, we can help. Here are three approaches that can help you find investment common ground with your spouse.

Agreeing on a goal and timeline

There are three key factors to take into consideration when creating an investment portfolio. They are called investment objective, time horizon and risk tolerance. Even if you and your spouse don’t have the same risk tolerance, you may be able to come to an agreement because of your circumstances. For example, if you want to save for a down payment on the home of your dreams, you may be able to convince the aggressive investor to stay away from high-risk investments knowing that your home purchase may rest in the balance. You both can agree on your objective and time horizon and come to an agreement on your risk tolerance for this investment.

Meeting halfway

You may be able to find common ground with your spouse by creating a diversified portfolio. This means you can adjust the risk level of the investment to please each spouse. You should be able to find a mutual fund with an agreeable mix of equities and fixed income that creates a suitable compromise for each spouse’s risk tolerance. This would eliminate the more aggressive and conservative holding, allowing you both to meet halfway. This strategy can be very beneficial as diversifying your portfolio is a smart investment strategy.

Separate portfolios

You won’t always be able to come to a compromise, so you may just have to agree to disagree. If this is the case, you may have to each keep your own separate portfolio. This actually isn’t a bad investment strategy; it can be considered a well-rounded approach to investing. You may be able to strike a nice balance between the two of you. One portfolio could focus on long-term growth while the other focuses on capital preservation.

If you and your spouse need help with your investments, you should talk to a financial advisor at The Beacon Group of Assante Financial Management Ltd.

retired man and women on boat

What are the Key Risks to Your Retirement Income?

by Investment Planning

Retirement is your reward for working all of your life. Savings have been delegated to your retirement funds over the years to cover you when you are no longer earning a salary, but will it be enough to sustain a retirement lifestyle? Here are five key risks that may affect your retirement income.

Life Expectancy

Modern medicine has made it possible for people to live happy healthy lives well into their senior years. However glorious and rewarding this may be, it also can prove to be financially crippling. In Canada, the general retirement age is around 65 years old, and people continue to live healthy and full lives long after retirement age hits. People can expect to live well into their 80s even 90s, which is a wonderful life expectancy, however is there going to be enough money in your retirement savings to supplement 30+ years of retired living?

Inflation

The value of a dollar is always decreasing due to inflation. Things in life are constantly growing a larger price tag to the point of it being difficult to sustain a household without an increase in salary. How is your retirement income going to stand up next to inflation? With the cost of everything on the rise, there is concern that retirement funds will not be enough.

Poor Investments

Investing your retirement income is not always a guarantee of success. A poor investment will not yield you a return that will keep you afloat in the growing economy. Safer investments, such as GICs, retain their value, but they do not increase in value and do not generate a steady income.

Overspending

If retirement celebrations last a little too long and a few too many vacations are taken, the retirement fund can start to rapidly deplete. It is extremely important to stay on top of your investments and be very aware of how much money you have allotted to spend so as to stay out of an overspending trap. With income not coming in at the same pace it once was, replenishing the retirement fund will not be possible.

Unexpected Expenses

Life is unpredictable. As we age, medical issues and other unexpected complications bring with them more expensive challenges. Medical expenses can quickly eat up portions of a retirement fund.

Retirement is meant to be a time of enjoyment and reward for a lifetime of hard work. Be sure your retirement income is properly managed and that it will be enough to sustain the lifestyle of your choosing upon retirement. Consult your retirement planning advisor from The Beacon Group of Assante Financial Management Ltd.

education fund

How to Plan for Your Child’s Education

by EducationFinancial PlanningInvestment Planning

Sometimes it feels like no time passes between the day your child nervously steps through the kindergarten doors for the first time and when they confidently walk on stage to claim their high school diploma. If you want to provide your child with funding for a university education in Canada, it takes a proactive approach – not just idly throwing a few dollars into a Registered Education Savings Plan (RESP) and hoping the numbers add up. Here are some key steps to successfully fund your child’s education:

Step 1: Know the Numbers

Each RESP has a lifetime maximum of $50,000 per child. This number may seem sufficient, but consider that according to Statistics Canada the average yearly tuition at Canadian post-secondary institutions is just shy of $6,000. With tuition rates rising by year, an average four-year program can be expected to cost $25,000 before a penny is spent on room and board ($48,000 for four years, according to the University of British Columbia) or books, fees, transportation, and personal expenses.

As evidenced by the numbers, a $50,000 contribution to your RESP is a terrific start, but it’s only a start. Supplement this fund with savings in a Tax-Free Savings Account (TFSA) and in-trust account. Your financial advisor can help you come up with other strategies for flexibility, such as taking advantage of the maximum Canadian Education Savings Grant (CESG) with a $2,500 yearly contribution to an RESP.

Step 2: Allocate Your Asset Mix

Every investor is different, and your asset mix will vary depending on your risk tolerance, time horizon, and investment objective. Your risk tolerance depends entirely on your own investment personality. The time horizon is relatively fixed, if your child plans to attend post-secondary school immediately after high school. Your investment objective should include tuition, books, and fees. Account for living expenses in case they go to a school out of town. Share these factors with your financial advisor, and they’ll help you determine the right mix of fixed income and equities to suit your goals.

Step 3: Track Your Investments

If you have an organized education savings plan in place, it is not necessary to obsessively monitor the progress of your investments. The Beacon Group of Assante Financial Management Ltd.’s advisors will make sure your investment growth is on track to meet your savings goals. If market fluctuations affect your target allocation, your advisor can assist with rebalancing to make sure everything is on track.

With these three steps and assistance from The Beacon Group financial advisors, you can meet your education savings goals. Before you know it, your child will be walking up for convocation to accept a well-earned university degree.

investing calgary

Tax-Free Investing By the Ages

by FinancialInvestment Planning

When the Tax-Free Savings Account (TFSA) was first introduced, nobody was quite sure of the best way to utilize it. Since then, different strategies have emerged depending on where you are in your life. Please read on to discover the best ways to use the TFSA at each stage of your life.

Young Adults

 When you are first starting to build your savings at a young age, using the TFSA to save for short-term goals is a good idea. It’s a tax-free way to save for a car or a down payment on a home. Basically, if you think you will need to withdraw funds in the foreseeable future, start with a TFSA. Parents can use TFSAs to their advantage to help get their children off to a good start. You can use your TFSAs to help cover the cost of university education. You can transfer your TFSA to your child’s TFSA when they turn 18, and they can use that to draw from during the school year.

Established Adults

Using a TFSA for high-return investments is a smart idea, as any returns are 100% tax-free within the account and once you withdraw from it. It’s also a great place for retirement savings, as a complement to your RRSP and work pension. You can also use the TFSA in your estate planning. You can dedicate the TFSAs belonging to you, your spouse, and your child and make maximum contributions each year. All these funds grow and are paid out tax-free, when the time comes. Your TFSA funds can be transferred to your spouse’s TFSA without affecting their own allotted contribution room. One other estate planning tip is designating your TFSA assets to help offset tax liabilities, so your beneficiaries receive more of what you planned on leaving them.

Retired Adults

 As mentioned before, withdrawing from you TFSA is not considered taxable income, so it is a great way to support your retirement. This is especially true if you are in a higher tax bracket, or if you are worried about your eligibility for Old Age Security (OAS). You can also consider putting any excess cash you have into your TFSA, so it can grow tax-free and be available to you whenever you need it.

 If you have questions regarding how to best utilize your TFSA, contact a financial advisor at The Beacon Group of Assante Financial Management, Ltd.