May 2019 SWM Letter — Hiking Skerwink Nfld, Enjoying LIFE

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May 2019 SWM Letter — Hiking Skerwink Nfld, Enjoying LIFE

In your life journey, YOU are uniquely centre stage, accompanied with dear family and enduring friends.  Desired dreams and goals are so personal for each of us!  Achieving these means success.  Threat (delay or disappointment) can go two ways, along a path of fear, anger, and depression; or renewed vigour, vision, and persistence.  It’s a choice of sorts, yet life has wired us to feel the threat more than the thrill.  People feel loss three-times more than the joy of winning.  Whether marshmallows, muffins, or markets, people want to succeed but may sabotage themselves through fear of loss.

This is why we choose professionals to guide the way.  In medical matters we trust certain guides to bring better health-outcomes.  Buying large-ticket items like homes, cars, major trips, we often seek wisdom from someone who already knows the landscape for such a purchase.  Similarly in financial matters, the experience and dedication of a recognized guide can assure stronger outcomes.  … outcomes measured not only by periodic returns, but even more in how the accumulation of wealth is supporting actual life-goals and dreams.  This is Goals Based Planning.  This guided process becomes absolutely and personally designed for YOU.

Imagine if you could step out of “time” and see the lifestyle and achievements you want to gain or protect over the next five, ten years or more.  Spend a moment with this – it’s about your life, your lifestyle, what you enjoy and gives you gratification.  Any threat to this may breed fear and anger.  Finding yourself on track to achieving your goals naturally inspires confidence and personal gratitude.  Investment and financial planning must fit and align with your desired lifestyle and the journey onward.  Are you winning or losing?  Are you approaching your goal or falling behind?  Can you see the rewards, the life, events and circumstances you most desire?  Are you able – today – to get up in the morning grateful for a new day, knowing your future is on track?   If your glass is full, what keeps it that way?  If it’s half-full, how are we planning to fill that cup and secure your abundance …even while you enjoy the pathway getting there?

Here’s a story to illustrate and then we’ll dig in a bit deeper.  While traveling in Newfoundland Virginia and I enjoyed what became at times a strenuous hike around Skerwink Head by Trinity Bay.  It began easily, and the later stretch was fine.  Much of the journey along this rugged coastline however demanded our full strength.  No pathway along ocean cliffs is likely to remain on level but there are long steep climbs and dramatic drop-offs.  Pictures accompanying this letter offer some views of the rugged and rewarding scenery that met our efforts.

So what can hiking Newfoundland say about investments and our life-journey?   Our pathway spared us the highest peaks, dangerous drop-offs, and bogs along the way.  In fact our guide Kevin Visser who pre-arranged our trip ensured our highlights from St. John’s to Bonaventure, to Twillingate, to St. Anthony’s (Viking settlement), and the Tablelands mountain (3 Billion year old seabed) stretched us but kept us engaged and on track.   Amid so many ups and downs in that rugged landscape, the whole experience rewarded our efforts, appetites, and all our senses.  (Nearly threw in the towel at Skerwink but that’s part of the fun – completing our hike led to a magnificent seafood dinner.)

Relate this to a question raised about “historic average returns” that used to be 8%.  Some may recall the radio urging, “if your money isn’t making 9% it’s not working for you!”  Those were the late 1980s.  But shouldn’t investments average the same from one period to the next?  … Answer is, partly yes, partly no.

When Costello was urging us to get 9% on our money, the central bank rate (1990) was 13%, ten-year bonds paid 9%, five-year mortgages cost 12½%, and inflation depleted the value of money by 5%.  Costello spoke of earning 9% because most people were investing in accounts paying half that much and inflation was eating their whole return.   That meant, the “real return” was zero to negative.  Adding insult, the stock market fell 18% that year, for a real-return at minus 23%.  Sometimes returns averaged 8-9% but much was lost to inflation and other costs.

Today is a different era.  Our central bank rate is at 1.75%;  ten-year bonds pay 1.7%, five-year mortgages cost 3.1% and inflation is 2%.  We continue targeting 6% growth today which gives the same or better real-return as before.  Focusing on clients’ life-plans we also use a litmus test to confirm our clients’ goals and dreams can remain secure even through periods of 4%.  It is quite remarkable how stock market averages have fallen – surviving meltdowns around 2000, 2008, 2011, 2015, 2018.  The mighty S&P500 (richest market in the world) in two decades has averaged 4.3% minus inflation … ie. 2% annually.  The MSCI All-World Index for three decades has averaged under 4%, minus inflation for 2% or less.  Passive index investing, despite all the media fervour, has netted less than 4% average over the past 20 to 30 years.  Hard to believe but it’s all in the numbers.

This could echo the demands of hiking a rocky coastline.  Eye-popping heights matched with jaw-dropping falls, and the drudgery of retrieving boots from a bog.  Investment markets are no easy stroll and difficult to manage alone.  Sometimes they fall by half:  anyone want a 50% drop?  Failing to protect against loss is like slipping off the trail at Skerwink and hanging over the cliff’s edge only to recover and get sucked into a bog.

Vital to success is staying on a path that can reduce permanent injury to our wealth and also supply our life’s needs and goals.  This means a consistent focus on net, real, risk-adjusted returns … for life!”  It includes getting a competitive return on investment, after adjusting for inflation, risks, and costs, from now “until death do us part.”  Ie. through life’s various transitions, retirement, aging and eventual settlement of your estate.  This is our constant measure and focus!  We’ve paved the trail so you can enjoy the scenery and opportunities for growth without grabbing one’s stomach when markets fall off a cliff.

We continue designing most financial plans at or near 6% – yet also test their success at 4% to remain safe.  This helps us keep your lifestyle secure and your wealth on track.  Setbacks can arise (and they will) in regard to health or illness, earnings or job loss, changing cash-flows or unforeseen family emergencies.  Your certified financial plan remains our compass and can adapt to any circumstances.  Working together through it all, you get to shape and achieve the life you choose with confidence.

Focus on life — your personal future that depends on a safe foundation of lasting wealth.  Take note of where you are today.  Dream and design the future you want to step into, whatever is most important for your personal happiness and enjoyment.  Then we take these words – your words – into the Certified Financial Plan that connects and aligns your Life and your Wealth for all seasons to come.


Freely share this letter with a neighbour or friend.  Ease their worry, share our support.  We’re grateful to safely guide the way forward.  Reach me …

Yours in Financial Security for LIFE!

Certified Retirement Coach

Brian Weatherdon, MA, CFP, CLU, CPCA. 905-637-3500

627 Guelph Line, Burlington, Ont. L7R 3M7.  1-877-937-3500

Author:  A Lifetime Of Wealth — And How Not To Lose It  (2013). Protecting Life, Loved Ones, and Future Dreams  (2013). Your Business, Your Retirement: Halton Retirement Study (2015).

** 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.

2019-05-08T12:22:13-04:00May 6th, 2019|