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Thread: what should old folks invest in

  1. #11
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    thanks all. how did your balanced funds etc do in 2015?
    do you take into account Bloomberg says stocks only go up now cos of buybacks that make the bosses bonuses even bigger.
    We wont see any growth in my lifetime, just like japan for the last decades.


  2. #12
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    anon, if reading a single article makes you want to change your investment strategy, you are better off getting your mitts off your money and leaving the decisions in the hands of someone else.

    Have you considered buying an annuity with your RRIF?

  3. #13
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    Do not rely on the fifteen year performance of a bond fund to indicate future performance.

    Fifteen years ago, bond returns were much higher than they are now. We have just gone through a long period of falling interest rates during which bond prices have risen. If rates rise, longer term bond prices will fall and bond funds will struggle to break even. For the fixed income portion of your portfolio, you may be better off with GICs. However, you should not be invested totally in fixed income. You are guaranteeing yourself a zero return after accounting for inflation. Adding some REITs and blue chip dividend paying stocks will improve your returns without adding very much risk.

    If you are totally risk averse, you might consider buying an annuity (they can be very tax efficient). But remember that inflation will erode its value over time, so you will need to save in the early years to maintain equal, inflation adjusted, income. A TFSA would work very well as a savings vehicle in that case.

    By the way, starting a RRIF does not take you out of the tax protected regime. RRIFs are not taxed until withdrawal (same as RRSPs).

    I don't know your personal situation, whether you are well off or just surviving on your present income. Are you married? Do you have kids that you want to leave an inheritance? Do you have any pension outside of CPP or OAS?

    My RRIF is invested 100% in dividend stocks and REIT's. I take out the dividends and leave the capital intact, except for an amount that I withdraw to top up our TFSAs every year. I firmly believe that this approach will minimize any risk of running out of money before I die.

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  5. #14
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    I note that nobody wants to say how their investments did in 2015!
    I read far more than a couple of articles. the ones I pointed out are they ones about reality that few people wish to face.
    yes I have considered an annuity.
    it is in cash right now while I decide.
    the global investment situation has greatly changed in the last few years. the book I mentioned is one of the clearest on that point.
    the money coming out of the RRIF is for our future when we are doddier than now. I am aware that in a rrif it is tax protected.
    thanks all.

  6. #15
    Senior Member zylon's Avatar
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    ^^

    The information is publicly available with a simple google search.

  7. #16
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    It does not matter what anyone's investment portfolio performance did in 2015. They will be all over the map depending on how people were invested in terms of asset allocation and geographical distribution. Even then, one year performance numbers are meaningless. If you want to talk about 5 or 10 year annual averages that is another matter.

    I do agree that future global GDP growth is likely to be slower than historically but that is an assumption that the growth in services will not accelerate to overcome slowdown in demand in goods. It will also depend on whether there will be increasing barriers to trade. To hear Trump say it, he would rip up trade agreements and that will have a very significant negative effect on global GDP growth. Time will tell.

    IMO, a balanced global fund such as MAW104 is one's best shot at getting things, on average, just right. It is a solid and reasonable marker for global market performance.

    http://quote.morningstar.ca/quicktak...&culture=en-CA

    5, 10 and 15 yr performance net of fees is 10.33%, 7.47% and 7.56% respectively. Note that the 10 and 15 year performances include the effects of the 2008-2009 crisis, so it is representative of both up and down markets. Going forward, I would expect performance in the range of 5-6% (knocking off 1-2 points for bonds and 1 point on equity), or vice versa depending on how/when interest rate increases come our way in the next 10 years. I am resigned to believing interest rates will stay low for a very long time (relative to recent history).

    And to your other question, note that 2015 performance for that fund specifically was 10.54%.

    Why not commit your RRIF to MAW104?

  8. #17
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    Quote Originally Posted by anon125 View Post
    I note that nobody wants to say how their investments did in 2015!
    I will share I'm not a retiree, but I prepared a good portfolio for my parents and they've been in this since 2007. The allocations are: 32% XIC, 26% cash/XSB, 18% BRK.B, 13% CEF.A, 11% XSP

    2014: +11%
    2015: -0.1%
    2016 to date: +5.0%

    This is not a balanced portfolio though.

  9. #18
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    Quote Originally Posted by AltaRed View Post
    IMO, a balanced global fund such as MAW104 is one's best shot at getting things, on average, just right. It is a solid and reasonable marker for global market performance. ... 5, 10 and 15 yr performance net of fees is 10.33%, 7.47% and 7.56% respectively. Note that the 10 and 15 year performances include the effects of the 2008-2009 crisis
    Yes it's good that the time range includes the 2008 bear market, since those aren't very rare.

    TD Monthly Income (another balanced fund)'s performance for 5, 10 and 15 years is: 5.45%, 5.22%, 8.09% -- pretty amazing 15 year performance, but this is not as globally diversified as MAW104

  10. #19
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    Anon125, about a year ago you started a thread titled "sell my strip bonds". At that time you mentioned that your adviser said you should sell your strip bonds that were in your RRSP.

    So my question is, do you still have an adviser, and what are they suggesting you do?

    We know very little about your overall situation so it is difficult to make an informed suggestion. All we can do is answer your fairly narrow question(s). You seem to feel that you need/want a higher return in your RRIF but also seem to believe that the markets will not or cannot deliver it.

    We don't know if your adviser is good or not, but we do know that everyone's financial decision making ability declines as we age. So it becomes an increasingly good idea to have a second opinion when we are considering changes (particularly large changes) to our investments.

    --------------------------------------------------------------------------------------------------------------------------------------

    This is something that I have only recently been reading about and it is interesting that while our financial cognition declines, we typically don't recognize it and we remain confident of our decision making ability. I'm probably 10 yrs younger than you but I have made a note to review our RRIF plans with my son when the time gets closer. Here are a couple of interesting articles on the subject:

    ...Households aged 60 years and older control more than half of the wealth in the United States. Since fewer employers provide pensions than ever before, more people are dependent entirely on their retirement savings...
    “This was originally one of the most surprising and alarming findings from the study,” Finke said. “As we get older, our ability to answer basic financial questions that include knowledge, and the ability to apply that knowledge, gets worse. But we have no idea this is happening. It’s very similar to the research on driving skills. Since it happens so gradually, we’re not aware our abilities are getting worse over time.”

    Old Age and Decline in Financial Literacy: http://today.ttu.edu/posts/2016/03/financial-literacy

    The findings confirm that declining cognition ... is associated with a significant decline in financial literacy. The study also finds that large declines in cognition and financial literacy have little effect on an elderly individual’s confidence in their financial knowledge, and essentially no effect on their confidence in managing their finances. Individuals with declining cognition are more likely to get help with their finances. But the study finds that over half of all elderly individuals with significant declines in cognition get no help outside of a spouse. Given the increasing dependence of retirees on ... savings, cognitive decline will likely have an increasingly significant adverse effect on the well-being of the elderly.
    How Does Aging Affect Financial Decisin Making: http://crr.bc.edu/wp-content/uploads...B_15-1-508.pdf
    Last edited by OnlyMyOpinion; 2016-05-15 at 10:01 PM.

  11. #20
    Senior Member zylon's Avatar
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    Bond Funds : charts from theglobeandmail.com

    In case anyone holding a bond fund is getting nervous about rising rates sooner or later; one thing I'll be keeping an eye on is the 30-month moving average.
    The average has been good support for price in the past; if price falls below the 30-month average, it will be a time to rethink the wisdom of holding on.






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