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Planning for Retirement in Mississauga and the Greater Toronto Area? We asked the Dedicated Financial Solutions team of Janet Baccarani and Jennifer Black, who are both Financial Advisors and Certified Financial Planners with Manulife Securities Incorporated and Manulife Securities Insurance Inc., to respond to some questions that are high in people’s minds as they contemplate retirement planning: Q: How do you approach retirement planning with your clients in Mississauga and the GTA? A: We look at each client’s situation individually, or as a couple if that is the case. First we make sure we understand the client’s unique needs and goals. We gather information together that will give us a picture of the client and their financial circumstances. We determine what they are doing with their finances, if anything, and then analyze and research any investments they already have. We then put together a financial plan with recommendations. We look at each plan as personal and customized, rather than using a cookie-cutter approach. While we can make some generalizations about the cost of living in Mississauga and the GTA, there is no single plan that works for everyone. Q: What is your opinion on market volatility and the economic forecasts in the news? A: Very few people are really comfortable with market volatility, and fewer enjoy the dire news reports. Certainly everyone who is invested will have been affected in some way by the fluctuating markets. We have a better understanding now of the causes of the financial crisis, and we have historical data that shows us how markets have recovered after a significant downturn. Simply put, we will have to be patient, but things will eventually improve. Meanwhile, we have to keep in mind that market volatility also offers opportunity. One should not panic. A drop in stock prices due to market volatility is preferable to having a stock bottom out because there are problems in the company. We have to look deeper into the situation before making any decisions. Q: Most people have seen a drop in the value of their investments in the last year. You must be hearing complaints about that, right? How do you respond to clients who are disappointed with their portfolio statements? A: We do our best to provide context around the chaos. When reviewing a portfolio, we take a close look at the holdings within the funds they have. Most often, the client will see that the funds have been invested in companies they would otherwise believe to be strong and worth their investment. If we find that there are changes that could be made, we will make those recommendations, and discuss how to make the best of the situation. Q: Are people abandoning equities in favour of money market funds or GICs just to protect their principal wealth, even though the growth will obviously be minimal? A: Yes, it does seem that many people are dropping their equity holdings and turning to GICs or money market funds. We don’t really think this is the best course of action. It depends on the individual investor and their financial goals. If the investment is needed for income, the investor may be more anxious to protect their principal wealth. Younger or long-term investors can be more patient and can wait for the economy to recover. They can take advantage of some low prices right now. Investor behaviour does affect returns. The reason for the difference is that the average investor is emotional and makes financial decisions based on those emotions. When prices are high they get excited and want to buy in, and when the price drops, they get frightened and sell low in their panic. Experienced investors do the opposite. Research has provided evidence to support the theory. We can quote a Manulife Investments Market Insight commentary from October 2008: “…over the last 20 years, the average mutual fund investor has lagged the return of the S&P 500 Index by a considerable margin. While the S&P 500 has increased in value a respectable 11.8 per cent per year on an annualized basis, the average mutual fund investor has only obtained a 4.3 per cent return over the period.” It just underscores how emotional decision-making can be very costly. Q: Are people still buying insurance policies, in spite of general belt-tightening? A: Yes. The need for personal insurance does not change according to the state of the economy. People may be more motivated to get insurance coverage for their mortgage or critical illness and disability insurance. Small businesses may be more interested in starting group health and dental benefits plans for their employees. We have had some executive clients with larger accounts contact us to increase their insurance in order to cover what their portfolios have lost due to the economic downturn. Q: When should someone begin planning and saving for retirement and what is the best way to get started? A: The best time to start is right away! Seriously, the younger someone starts investing, the less they will need to save compared to someone who starts even one year later. A registered retirement savings plan is a good place to start. The most immediate benefit is the tax deduction. If the RRSP is through a group plan where the employer contributes a portion, that‘s a second benefit. Most importantly, though, the benefit of dollar cost averaging may reduce the cost of your investment while potentially generating a bigger return over a longer period of time. These factors have the biggest impact on creating wealth for the future. It is worth making an appointment to discuss all the options with a financial advisor. ****************************** About Dedicated Financial Solutions Janet Baccarani, BSc, MBA, C.A., CFP, FMA, CSA, and Jennifer Black, BSEd, FMA, CSA, CFP, FCSI are Financial Advisors, operating as Dedicated Financial Solutions, a Canadian financial planning company with Manulife Securities Incorporated, a Manulife Financial company. The company provides financial planning services such as: wealth creation, money management, retirement planning, financial advice. Dedicated Financial Solutions also offers tax accounting services, specializing in the needs of Canadian investors, individuals and businesses. They can be reached at Manulife Securities Incorporated, 714 Burnhamthorpe Rd. East, Mississauga, Ontario, L4Y 2X3 Canada, by telephone at 905-896-8373, or by email at janet.baccarani@manulifesecurities.ca or jennifer.black@manulifesecurities.ca. If you’d like to learn more about Financial Planner Services by Dedicated Financial Solutions, or to schedule an interview with Janet Baccarani or Jennifer Black, visit their website today at: www.createwealthnow.ca ******************************* The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Incorporated. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The purchase of mutual funds using borrowed money (i.e. leverage) magnifies the gain or loss on the cash invested. Investors considering a leveraged purchase of mutual funds should be aware that a leveraged purchase involves greater risk than a purchase using personal cash resources only. The extent of that risk will vary depending on the circumstances of the investor and the type of mutual fund purchased. If you borrow money to purchase mutual funds, your responsibility to repay the loan and pay interest as required by the loan's terms remains the same even if the value of the mutual funds purchased declines. Before investing, read the prospectus and speak to a financial advisor. Insurance products and services are offered through Manulife Securities Insurance Inc. (a licensed life insurance agency and affiliate of Manulife Securities) by Manulife Securities Advisors licensed as life agents. RELATED ARTICLES:
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Janet Baccarani, Senior Financial Advisor and Certified Financial Planner DEDICATED FINANCIAL SOLUTIONS Manulife Securities Incorporated is a Member CIPF The information contained herein is for Canadian residents only and does not constitute an offer to sell or a solicitation in any foreign jurisdiction, or in any Canadian jurisdiction where Janet Baccarani and Jennifer Black are not qualified to effect sales. This website is not meant to provide legal or account advice. As each situation is different you should consult your own professional advisor for advice based on your specific circumstances. Manulife Securities and the block design are registered service marks and trade marks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Securities Incorporated and Manulife Securities Insurance Inc. |
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