Five fundamentals to get the most from your investments

1. Be realistic about whether or not your current investments will deliver an adequate level of income...

A sound financial plan usually includes developing and maintaining a portfolio of investments that you will, at some point, tap into on a regular basis to cover living expenses or for some other ongoing need.

That is most likely to occur after you retire but, depending on your unique financial needs, it could come earlier — so here are five fundamentals for getting the most from your investments.

1. Be realistic about whether or not your current investments will deliver an adequate level of income.

In retirement, your income will usually consist of amounts you’ll receive from the Canada Pension Plan, Old Age Security (CPP/OAS), private pension plan(s) and perhaps work income, plus draws from your investments.

If you think your retirement expenses will be such that the income produced from your investments will be inadequate, you should revisit your portfolio and savings strategies now.

2. Verify that your income will last as long as you need it.

The level of income you draw from your investments should not completely deplete your savings while you still need them. The investments you choose will depend on your investment style and income needs.

3. As your expenses increase with inflation, your income needs will also change.

A portfolio that consists solely of fixed-income investments, such as GICs, is unlikely to produce long-term growth above inflation. Growth in income comes from growth in assets. That’s why investing for income during a long retirement usually means including investments in diversified equity markets, depending on your comfort level with market risk.

4. Assess your need for income stability and how to achieve it.

Be mindful of the impact that constant withdrawals can have on your investments. If you need a high level of income stability, look at investments that deliver regular distributions — fixed income, real property, dividend paying securities — or products that provide a guaranteed monthly income, such as annuities.

5. Consider the tax impact on the income you draw Income from investments held within a TFSA are tax-free, while income from your other registered assets is fully taxable.

For your other accounts, the tax on interest is generally higher than income from dividends or capital gains. The amount of your taxable retirement income may also trigger clawbacks of your OAS benefits. Look at investment structures that can provide more tax-advantaged income for non-registered accounts.

Planning to ensure you retirement income needs will be met can be complex. Your professional adviser can supply the expertise and vision you need to meet those needs.

J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc. His column appears every Wednesday.

Just Posted

Printmakers association and fair in Cumberland

The Comox Valley Printmakers Association is holding a members’ exhibition and print… Continue reading

Cumberland mayoral debate announced prematurely; Leslie Baird declines invitation

Eduardo Uranga hoped to hold the debate Wednesday evening

‘Police are ready’ for legal pot, say Canadian chiefs

But Canadians won’t see major policing changes as pot becomes legal

VIDEO: Care-A-Van offers more than just care in a van

Mobile clinic brings medical and social services to the Valley’s most vulnerable

Comox Valley Regional District seeking input on development of Tsolum River Agricultural Watershed Plan

This fall, the Comox Valley Regional District (CVRD) is inviting the community… Continue reading

Naked man jumping into Toronto shark tank a ‘premeditated’ stunt: official

The man swam in a tank at Ripley’s Aquarium of Canada

Workers at BC Interior mill strike as negotiations resume in Kelowna

Picket lines went up at 4 a.m Tuesday, Oct. 16 at Tolko Lakeview Division in Williams Lake

Courtenay’s Dingwall Road to be temporarily closed for construction

Next week, the intersection of Dingwall Road and McQuillan Road will be… Continue reading

Fall-ing for unseasonably warm weather on Vancouver Island

Environment Canada forecast calls for sunshine through weekend

Toronto Police ID B.C. man as naked shark tank jumper

David Weaver, of Nelson, is wanted on mischief and assault charges

In Florida, families seeking the missing amid storm damage

Five days after the hurricane slammed into the Florida Panhandle, people are struggling to locate friends and loved ones.

Prince Harry and Meghan start Aussie tour with baby gifts

Prince Harry and his wife Meghan are on a 16-day tour of Australia and the South Pacific.

EU’s Barnier hopes Brexit deal possible in ‘coming weeks’

Britain is set to leave the European Union in March, but a Brexit agreement must be sealed in coming weeks to leave enough time for relevant parliaments to ratify it.

Earth samples show dust from B.C. pipeline blast not a health threat: Enbridge

Enbridge says earth sampling shows mineral and metal composition is well below provincial and federal standards for urban and residential areas.

Most Read