Younger clients in their 20s, 30s, 40s can remember me saying you’ll be happy in two events: when markets rise, also when they fall. When values go up people naturally feel happy about it. When markets fall however this is a unique opportunity for you to buy more for your dollar while things are on sale.  2018 offered sale prices, both early and later in the year. As time goes on the jagged thread of daily markets gets pulled into a straight line moving upward at 6% or more (check the picture down below). Investing regularly – especially monthly – is most effective. So while building your savings, there are “no bad times.”  Downswings accelerate your future wealth. Keeping in mind your goals of freedom and personal independence, family education, future retirement, and comfort while aging, up-and-down seasons are all part of the pathway to secure your future!

Later by our 60s, 70s, 80s, 90s people are drawing out monthly income for personal needs and lifestyle. So in 2018 imagine someone drawing $5000/month by selling units at $108 which fell during the year to $90. Their income in the earlier instance was satisfied by selling 46 units a month, but later they had to sell 55 units to get the same income. Selling when prices are low can be dangerous so we arrange your “income reservoir” to keep your monthly income away from the roller coaster. If you’re wondering what fell from $108 to $90 it was one of Canada’s biggest and most successful financial services companies. As we’ll see in a moment, combining “life income mandates” with a healthy “income reservoir” reduces downswings while allowing long term growth.

News reports described 2018 as a year that “nothing worked”. It happens. Since 2008-2009 markets were also down heavily in 2011, 2015, 2018. Other years are generous as you can see in the last slide here or in this picture. The process clearly works…

Life Income Mandates are built to provide high-income with lower-risk (like the picture above).  It’s a strong foundation for financial security at any age, and there’s MORE as we’ll see in a moment.  I’ve built out and shared these mandates over the past 20 20 years – if you need more about it ask me for further resources.

These clear mandates carefully protect against deep slides when markets fall, sustaining income while muting the risks that are raging in the news.  For instance, 2018, two of our positions in global infrastructure income dropped 4-5% as global markets dropped 20%.  Our real estate income mandate includes a Canadian property fund that rose +4% and a global fund that retracted -3.5%.  Bond and fixed-income holdings combine government and corporate, Canadian and foreign, negative-duration, high-yields, commercial loans, real-return, thus safeguarding income (and the income reservoir) at lower risk than the surrounding turbulence.  In combination also with dividend income these mandates greatly reduced risk while outperforming wider indices and benchmarks.

Next Steps in 2019…

Most important is that we speak regularly to review your investments, any questions, and life changes that can affect your goals & needs.  For your accounts, we stay focused on the objectives of your financial plan.  Life events are vital as well!  Can you reduce debts?  Are your expenses rising?  Is someone in your family needing your help?  What about milestones such as buying or downsizing a home, pausing for further education, launching into retirement, increasing travel, or setbacks in health!  We discuss all such experiences because in the final analysis, your wealth must carefully serve your personal needs and goals in all the seasons of life.  This focuses entirely on YOU … today and always, aligning wealth to the lifestyle and values you hold dear.

PS:  thank you again for comments on the November and December letters touching Eldercare Planning and Registered Disability Savings / Trusts.  These unique areas of planning will help someone you know.  Let people know — we are always grateful to serve your financial and personal wellbeing.

Yours in Financial Security for LIFE!

Brian