Investment Decisions – Q&A

There are many questions to have answered when deciding how to invest your retirement savings.  If your questions revolve around why you should save for your retirement, take a look at the Top 10 Reasons to Save For Your Retirement.

If not, let’s take a look at some popular questions:

Should You Hold Dividend Paying Investments Inside or Outside Tax Deferred Accounts?

Not a simple question, it depends.  If you have several investment accounts, some tax deferred, others not, then lean towards having income in a tax deferred account.  Keeping riskier investments, with potential for capital gains/losses, outside of tax deferred accounts will give you more flexibility and reduce the grab made by tax authorities.

How to Adjust Asset Allocation When Nearing Retirement?

There are many aspects to consider when looking for Your Ideal Asset Allocation. Your tolerance for risk, investment horizon (years invested before using your savings), your annual revenue, value of your investments and net worth.  As you move closer to retirement, the number of years before you start to use your savings decrease and you are probably looking at taking less risk.  My suggestion is to call your investment advisor / financial planner to Determine Your Investor Profile.

You’re Near 30, Plan to Retire at 55, What to Do?

Meet with a financial planner, establish your priorities and develop a way to save!  Sounds simple yet most find ways to complicate their lives.  Important points to realize: you may change jobs/careers, your priorities will change, and you will move through different life stages. No matter what, develop a plan, verify it annually and adjust it as needed.

Should I Pay Off Debts or Save For Retirement?

Both these goals are important, I hope to help you evaluate these options.  First off, if your debt is on a credit card or payday loan: pay off debt!  If not, take a look at the interest rate paid versus the return on your investment.  More than likely, the interest rate is still higher on the debt.  The caveat is the income tax refund where you can increase your net worth by moving money to your RRSP and use the refund to pay off debt.  For more info take a look at ways to Reduce Your Debt Level to Save For Retirement.

What Returns Can I Expect from Top Mutual Funds?

Here’s a loaded question if I’ve ever seen one!  You should hope (not expect) to beat the category and approach the index.  This is the simple answer.  How to do it: research your investment choices using impartial analyses such as those provided by Morningstar.  Also important, be wary of increasing your risk in an attempt to increase your returns.  Whatever you do, keep an eye on your choices, keep track of who the portfolio managers are, if the deposits in your funds are on the rise and be sure you know How to Read Your Investment Statement.

These are but a few of the questions posted, hope the answers help.  Keep them coming, we’ll do our best to answer them all!

Author: Robert