In Search of Financial Piece Of Mind

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In Search of Financial Piece of Mind

Maybe you have seen the graph — the one showing how much the stock market has made over time. It starts with a small investment years ago, and ends with what that investment would be worth today. It is impressive in illustrating the long-term superiority of stocks as an asset class.

Is it any wonder that so many Canadians own stocks? But while very long-term returns have been good, severe market corrections are all too common. In fact, this decade alone we have seen two.

Because of this, investors are increasingly questioning the wisdom of investing in the markets — especially those entering into retirement. Regardless of if and when markets recover, a reduction in one’s net worth during the early years of retirement invariably means a reduction in retirement income.

I have no doubt that some day markets will recover fully and reach new highs. But what I can’t tell you is when. So in the meantime, what is an investor to do?

In the end (for most) investing is about generating income — if not for today, then for some time in the future. If this is your investment goal, you may wish to find ways of guaranteeing your retirement income.

For example, several new investment programs actually guarantee you a minimum amount of lifetime income — regardless of how well the markets perform. You still  have exposure to the markets, and will benefit if markets
perform well, but with the piece of mind of knowing that you will not outlive your investment.

 

Another popular option with retirees is the single deposit insured annuity, providing guaranteed income for life with the principal amount ultimately going to your beneficiary or beneficiaries tax-free. Because of certain tax advantages, insured annuities often provide significantly higher after-tax income than investments with comparable guarantees.

While each of these strategies has its unique pros and cons, they can both give you one thing: financial peace of mind. Consider consulting with a financial advisor to see if these or other strategies are suitable for you.

Jim Grant, CFP is a Financial Advisor with Raymond James Ltd. The views of the author do not necessarily reflect those of Raymond James. This article is for information only.  Raymond James Ltd. is a member of CIPF.  Securities-related products and services are offered through Raymond James Ltd., member CIPF. Financial planning and insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member CIPF.