May 2016 SWM Letter

Once upon a time two hikers set out through the woods aiming for the peace and serenity of a lake up in the hills – where they would hear the clear call of the loons, taste some fresh trout, and experience the magnificent beauty of springtime in the rugged Canadian shield.  Carrying packs and a canoe they were often debating along the way, whether the ground was going upward or downward.  It was doing both. From hour to hour they discussed whether they were making progress and how long it would take to reach their destination at the lake above.

Pic _ carrying canoeTime Smooths the Results

Investments can be a similar experience.  Many people wish for higher values without having to suffer dips along the way.  Values in March rose strongly, sandwiched by Jan/Feb and April where they dropped.  In such short periods values can fluctuate, even sharply.  Time smooths the result so we usually see positive return over a year, within 3- and 5-year periods, and so on.  If someone wanted a perfect guarantee that values would always rise, the only choices would be whole life insurance with steady dividends, or GIC/deposits paying 0-to-2%.

Easing worries because we Maintain your Plan.

Beneath all that is a simple fact that many people are inclined to worry.  Worry is not a plus for our health, and it can harm investments.  We’ve shared the survey results I published last year as the  Halton Retirement Study.  The same is echoed in this month’s Investment Executive (IE):  “Baby boomers are unsure of how much money is actually required in retirement and are frightened by the large numbers that are casually thrown around.”  As roughly 70% are counting on a lottery or inheritance to help them avoid poverty, we recognize how fear is affecting many people these days.  IE’s title for that article is “Money-worries tarnish golden years.”  WE don’t want our golden years tarnished with worries!

Confidence picThe answer to these fears isn’t having an unlimited amount of money.  Nor is it avoiding all of the natural ups and downs of investment markets.  Getting into the “comfort zone” for retirement depends solely on having a Certified Life and Financial Plan.  It needs to fully address all aspects of your retirement living, and probably also your estate planning.  This plan is the evidence of our safely navigating a future which cannot yet be fully seen …and here we show how personal needs and values, capacities and wishes, will progress safely over time.

Hard assets paying an Income-for-Life.

WHAT IF these are particularly difficult times?  What if, as David Rosenberg this week suggested, “In today’s market, caution is the watchword”?  The answer as you may suspect will partly include how we match our investments to growth in Canada and the wider world.  Even more, it comes down to what he calls, “dividend growth, dividend yield, corporate credit, and exposure to hard assets that spin off an income stream…”   This touches our perennial theme of Life Income Mandates which secure growth, reduce losses, and assure a strong and growing income-yield over the years to come.

Safety Focusing on Life and Income.

Someone asks, could we just get the good months and skip the bad ones?  Only in our dreams -- it doesn't work that way!  There is always someone out there forecasting doom; once in a while they'll be right!  The most bizarre this year was the Royal Bank of Scotland (RBS) who said markets were poised to fall 50% or more like 2008.  They said, “Sell everything except high-quality bonds.”  John Heinzl in the Globe and Mail retorted on April 23rd, “how did that work out?”  RBS’ forecast has been shattered by rising markets, higher oil, and a more lofty looney.

What’s key about investing in Life Income Mandates is that while we rebalance periodically, we never have to sell it all because doing so would increase risks!  Our focus is fixed on GROWING YOUR INCOME YIELD to sustain and secure your lifestyle.

Challenges of Investing in an Aging Society.

Ponder the impact of our AGING society.  Some call it “depopulation” but the truth is, our populations aren’t shrinking, they’re aging.  Aging can bring stagnant employment, reduced economic growth, and a diminishing tax-base, much as we see with the tsunami of aging hitting Japan’s economy since the 1990s.  If western/European economies are aging, and growth is slipping into a range of 1% to 3%, one wonders where can we invest with below-market risk to get the growth we are seeking?

Part of the answer is in hard assets with a rising yield like infrastructure, real estate, and dividend income.  (See Sticky Money.) We also invest globally in younger populations/economies showing annual GDP growth 5% to 12%.  Emerging/Frontier markets, even Global Small-/Midcap Business, fit into this theme, to support wealth we'll need 5, 10, 15+ years from now.  Investing in a basket of young vibrant populations can pay astonishingly well over time and prove highly rewarding as 5-15% of one’s investment.

Planning is a Compass to keep our journeys safe.

The hikers with whom we began our story today traveled their up-and-down pathway and happily reached their destination at the lake above.  Dipping their line, they pulled up some magnificent trout, also gathered some tasty berries, and nourished themselves in the beauties of nature.  They noticed also that the loons would dip and disappear into the deep, reappearing after a while by coming back to the surface.  Pic _ Loon in flightIt’s a facet of nature that aside from gravity, what goes down will often come back up.  It’s a fact of investment, borne out over hundreds of years, that value continues to rise even if the short-term fluctuates.  So we focus your plan to succeed through short, medium and long term horizons, assuring the results we’ll need along the path of life.  The “plan” acts as our compass to assure that our journey and destinations along the way are as safe as can be.

Reach me with any questions or needs, or with financial concerns being shared among family or friends.  I remain always,

Yours in Financial Security for LIFE!


Brian Weatherdon, MA. CFP. CLU. CPCA. CRC. MDRT.  905-637-3500 x 223
627 Guelph Line, Burlington, Ontario. L7R 3M7.   1-877-937-3500 FREE x 223 
Ret.Coach SEALAmazon (2013):   A Lifetime Of Wealth — And How Not To Lose It.
Amazon (2013):   Protecting Life, Loved Ones, and Future Dreams.
Amazon (2015):   Your Business, Your Retirement: Halton Retirement Study.
** This monthly letter touches on key strategies in Canadian and global investing and financial planning. This letter is not an offer to sell any kind of security, insurance, or program. Historical returns and risk measures are not a valid guide to future performance. Returns are from publicly available sources and research from a variety of firms including but not limited to GLC, RBC, CIBC, Mackenzie, Franklin Templeton.  Opinions reflected in this letter belong solely to the author and no other body is responsible for the content expressed here. We value opportunity to consult alongside your legal and accounting firms to advance your financial security and unique goals. We are grateful always to receive your comments and questions.

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