Q: Hello 5i team,
Your “Financial Facelift Folly” article was very interesting and has “hit home”.
Ten years ago, when I was 65, my RRSP portfolio was around $500k. I established an expense budget that I qualified as generous and that would have helped me maintain the way of life that I was accustomed to. If I achieved a compound annual return of 7%, I would have maintained my income needs for the next 25 years (on a constant $ basis).
Since then, however, I quadrupled my RRSP/RRIF portfolio in 10 years (around 15% compound annual return) and it stands now significantly higher. By the same token; I was never able to spend the amounts budgeted, this fact allowed me to unexpectedly save some additional cash and maximize my TFSA contributions.
However, at age 75, I am no longer comfortable to have 100% of my portfolio invested in equities.
I have revised my expense budget upwards just to be on the safe side and then projected the return I needed in order to meet my revised income needs. This projection shows that I can achieve that goal even if my rate of return matches inflation.
I have now the option to invest all my portfolio in guaranteed GIC’s which I consider as the “worst case scenario”.
For the sake of argument, I got in touch with 2 advisors and they both recommended the usual 50% equities / 50% fixed income; one wonders whose interest were they considering?
I decided (1) to exit the equity market for now, (2) to continue my membership in 5i Research and (3) to tip toe into the equity market in due course, after an eventual recession; but I’ll cross that bridge when I get to it.
I am now sleeping better and so is my wife.
Greetings to all and many thanks for your contribution.
Antoine Sepetdjian
Your “Financial Facelift Folly” article was very interesting and has “hit home”.
Ten years ago, when I was 65, my RRSP portfolio was around $500k. I established an expense budget that I qualified as generous and that would have helped me maintain the way of life that I was accustomed to. If I achieved a compound annual return of 7%, I would have maintained my income needs for the next 25 years (on a constant $ basis).
Since then, however, I quadrupled my RRSP/RRIF portfolio in 10 years (around 15% compound annual return) and it stands now significantly higher. By the same token; I was never able to spend the amounts budgeted, this fact allowed me to unexpectedly save some additional cash and maximize my TFSA contributions.
However, at age 75, I am no longer comfortable to have 100% of my portfolio invested in equities.
I have revised my expense budget upwards just to be on the safe side and then projected the return I needed in order to meet my revised income needs. This projection shows that I can achieve that goal even if my rate of return matches inflation.
I have now the option to invest all my portfolio in guaranteed GIC’s which I consider as the “worst case scenario”.
For the sake of argument, I got in touch with 2 advisors and they both recommended the usual 50% equities / 50% fixed income; one wonders whose interest were they considering?
I decided (1) to exit the equity market for now, (2) to continue my membership in 5i Research and (3) to tip toe into the equity market in due course, after an eventual recession; but I’ll cross that bridge when I get to it.
I am now sleeping better and so is my wife.
Greetings to all and many thanks for your contribution.
Antoine Sepetdjian
