How market volatility can work for the investor

What is market volatility? Volatility is when prices of stocks and equity funds increasingly shift in value up or down. When a low-volatility period is followed by increases in volatility, stock markets may begin to offer lower prices, which can effectually present lower priced fund units, both offering a buying opportunity for the investor.

The stock market can both gain value in a “bull market” and can have periods of slow down referred to as a “correction” or if more prolonged, a “bear market”.

Many investors have seen their investments increase dramatically since the 2008-9 financial crisis that affected all the world’s markets. Further, since 2020 during the pandemic, the market has experienced remarkable gains as investors moved into another big opportunity after an extreme correction based on fear in mid-March 2021 occurred. Many of these investors have also witnessed a remarkable bull market taking many stocks and equity funds much higher than their previous years’ valuation. Conversely, investors who unwisely sold their holdings out of fear lost money.

The ideal strategy exercised by most successful contrarian investors like Warren Buffet is to buy investments when others are fearful, and they are selling their holdings at lowering prices.

When buying opportunities abound The market can experience increased volatility due to fears such as various wars, debt crises of countries, economic slow-downs, or the potential of rising interest rates.

Nevertheless, during periods of higher volatility, wise investors think positively, relying on the professionals managing their investment portfolios.

Predesigned investment plans are important Though periods of volatility occur, it is important to exercise patience while maintaining a balanced and well-diversified portfolio according to a prescribed investment plan.

Plan with your advisor to establish a buying plan when others may be fearful. Market cycles of volatility are normal and expected.


How do mutual funds minimize exposure to single stocks?

Diversification advantage Mutual funds offer the investor the benefit of maximum diversification, with minimal exposure to any one stock. You pool your investment with the combined capital of other investors, which allows everyone to invest in many companies, not just focus on two or three larger stocks.

Fund managers usually diversify among at least 20 companies, investing no more than 10% of the fund’s total dollars into any one security.

Other advantages of mutual funds

• You can buy additional units of a mutual fund at any time.

• An automatic purchase plan called dollar-cost averaging (DCA) lets you invest equal amounts at regularly scheduled intervals. You buy more fund units when the prices are lower, fewer when prices are higher, thus averaging out the price of the units purchased.

• Mutual funds can be registered in RRSPs or RRIFs.

• Dividends, where applicable, are easily reinvested.

• Some fund companies allow transfers between their funds without charge.

• You can borrow against mutual fund assets (unless the contract is registered).

The Fundamentals of Financial Independence

Here are some essential strategies that will help you achieve financial independence. It is important to get solid advice to design a plan that incorporates planning values such as those noted herein.

Separate your savings from your investments. Before you begin to invest for a long-term financial goal, you’ll need to save for an emergency fund – up to six months’ worth of your salary. Then you are prepared for an unexpected expense such as an engine job on the car, a leaky roof or loss of employment. Otherwise, you may need to tap into your investments intended for retirement or other purposes.

Budget based on your income, not on your desire. Plan to spend less than you earn and don’t take on debt that your future income cannot service. Budgeting is based on your income, not on your past spending habits. Total your monthly expenses such as housing, utilities, food, clothing, child-care, transportation and debt repayment. This sum should not exceed 75% of your after-tax income.

Invest by paying yourself first. You will only beat the habit of procrastination if you focus on paying yourself first. A rule of thumb: save 10% to 20% of every paycheck. You can achieve such investing by purchasing units in a potentially promising investment fund systematically, using an automatic payment program.

Use beneficial debt to build equity. Minimize and pay off consumer debts – monies borrowed to purchase cars, clothing, vacations, stereos and other gadgets that devalue over time. Acceptable debt can help you achieve an education or mortgage a home.

Differentiate your risks. Inflation risk will compete with long-term investment risk. Equity investment funds or the stocks of many companies are not guaranteed, meaning there is a risk. Yet equities have a much better chance to outpace the adverse risk of inflation—or as some have humorously termed shrinkflation—when compared to a savings account over time. Inflation is the single most significant long-term risk. At 4% over 20 years, inflation will cut the value of today’s purchasing power by half.

Determine to diversify. A properly diversified portfolio will hold several types of funds, including a mix of equity funds. Equity funds should differ in terms of what sector of the economy they invest in, such as agriculture, technology, mining, or finance. Though each fund would hold many stocks, make sure they diversify among the various sectors. One sector may gain while another may lose some value, balancing over time. Equity funds can also diversify by country (such as holding domestic, US and global funds); investment style (such as growth funds or value funds); or company size (such as small, mid, or large-cap). Consider adding bond funds to the mix to diversify even more.

Optimize your portfolio. If you can optimize your portfolio, you may minimize the risks to help your return on investment. To truly optimize, one needs in-depth knowledge only obtainable from a professional whose job is to study funds as a speciality. To diversify in a balanced manner, one needs to weigh many factors concerning economic sectors, managers’ styles, company size, and foreign economic conditions.

Is your RRSP ready for you to retire?


The Canadian government regulates the Registered Retirement Savings Plan (RRSP) program, allowing it to have unique tax benefits as you save for your retirement. Annual RRSP contributions can reduce the amount of income tax you pay in the year of your contribution. These monies invested annually grow on a tax-deferred basis, and tax is only paid at the time of withdrawal. RRSP Planning is a very integral part of your investment planning.

Have a look at the graph below to see how RRSP money accumulates over time based on a maximum annual investment.


Your investments grow tax-free Your RRSP investments accumulate within the plan tax-free, as do any addition to your contributions, including capital gains, interest, dividends, and any other growth via dividends or distributions paid out on an investment fund. The longer your money stays sheltered from the taxman, the greater the tax-free accumulative earning power of your investment. However, taxation occurs once income is withdrawn from your RRSP.


Planning Together – Spousal RRSPs and Tax

A spousal RRSP allows a couple to place assets in the lower-earning spouse’s registered account. The benefit of this manoeuvre enables the account owner to withdraw more in retirement at a lower tax bracket while retaining spousal RRSP ownership, controlling the choice of the RRSP investment vehicles. The owner also governs when withdrawals are made and pays the income taxes upon withdrawal (if the funds have been in the account for three years).

What happens when the RRSP account holder dies?

For estate planning purposes, upon the decease of the account holder, the RRSP is paid out to the beneficiary designated for that account.

How Much can you contribute to your RRSP?

Your Contribution Limit To find out your allowable  RRSP contributions you are allowed to deduct for your income taxes, check Last Year’s Deduction Limit Statement on your latest Notice of Assessment or Notice of Reassessment. Canada Revenue Agency (CRA) establishes guidelines for the minimum and maximum overall yearly amount a person is eligible to contribute to their RRSP. The basic formula used to determine a taxpayer’s eligible contribution is as follows: 18% of earned income minus any Pension Adjustment = the eligible contribution amount.

Who can contribute to an RRSP? All Canadian taxpayers with “earned income” in the previous tax year, or those having unused contributions carried forward from previous years can contribute to their RRSP. A person is eligible to make contributions to their RRSP until December 31 in the year they reach age 71, provided that they have contribution room.

Two methods of contributing to your RRSP You may invest by purchasing a lump sum investment prior to the deadline. The alternative is to invest on a monthly basis using dollar-cost averaging. You can always top up your RRSP contribution (up to the allowable limit), just prior to the deadline year by year.

The RRSP limit Table

Source: CRA

Revised: January 2021

Market Indices

The links on this page of the financial market indices for your perusal is information provided as is and solely for informational purposes, not for trading purposes or advice and may be delayed.


Indices & Data Links

    • Latest TSX numbers, market commentary, other North American stock markets; please click here
    • Latest Canadian dollar exchange rates (USD, EUR, GBP): please click here

Source: Google Finance | OANDA Currency Tools

To retire well, maximize your income strategies

Life expectancy has increased on average by up to 10 or more years of life longer, than during the last century. Consider the serious question: will I outlive my wealth?

We invest in what people buy. By investing in an equity investment fund or stock you indirectly invest in many important consumer needs. Here are a few:

  1. Businesses relating to what consumers buy such as the energy;
  2. The fertilizer farmers buy to grow the food that we eat;
  3. The vehicles that we drive, the transportation of goods via truck, rail, or air; and
  4. The homes that we furnish or renovate. As you retire, you may invest in what you consume as a retiree when you invest in equity funds.


Baby boomers still affect our economy An alternate economic forecasting method informs us that we are affected by demographics. Baby boomers hold the highest average net worth of all living generations. Now retired or near-retirement, they still buy new cars, take expensive trips or buy retirement homes in the southern USA, buy their grandkids toys, use gasoline and consume groceries. They use health care products and eventually retirement homes.

Now, baby boomers are shifting to make financial security their first financial priority We have witnessed an extended period of a rising, bullish markets pre-2007 and post-2008 that compare historically to another boomer generation—a time that we will refer to as the post-war spending era when the spending of the majority of the populace also benefited the economy.

Like the boomers of the Frank Sinatra generation who entered their spending wave post-World War II, the current Beatles generation—many with four or more children, have moved through an incredible spending cycle and now are entering pre-retirement positioning.

Note: The Beatles generation refers to the current baby boom generation that is now approximately 50 to late-60s The Frank Sinatra generation refers to the baby boomers’ parents – those that were nearing retirement age in the last spending period between 1945 and 1965 and are now close to the end of their lifetime.

Consumerism versus asset accumulation Today’s boomers have finalized the education of the children, become empty nesters, seen grandchildren born, are now building and consolidating large net worths, while considering or entering the period of retirement.


At this time, the largest populace is between age 50 and 60-something. With many new advances in technology, many boomers like Bill Gates or Steve Jobs brought innovation and entrepreneurial skills to business and were among the highest paid in the workforce. They comprised three-quarters of the income-generating labor force. They’ve held power—to spend! Now they hold power to invest and need to have their assets managed well to create a secure income for a lifetime.

An aging Baby Boomer populace must invest for security As seniors look to and enjoy retirement, many have made their final mortgage payment, and some have inherited parental wealth. Now, the baby boomers’ discretionary investing power is immense as is their large population—to the extent they have and still enhance our economy as they spent a lot of money.

Make sure you have a wealth management professional working for you Creating a secure income will be the primary focus. A generation predictably works, saves, and finally spends as they age. The average individual looks for increased quality and spends more money as they approach age 50 and onwards. Baby boomers right now are willing and able to purchase goods and services with momentum which will decrease over the next 5-10 years as they shift from spending to protecting their wealth.

Investing their retirement assets strategically using financial advisors to manage and to protect their money will increasingly take precedence as they become “contented” utilitarian consumers increasingly expect the investment management industry to boom.

The author, Montaigne wrote about his father, who inherited a large estate, yet was very careful to manage his money.

“He was very fortunate in being able to keep his desires down to his means and to be pleased with what he had.”

Call us to set an appointment to learn how to maximize your income for a lifetime of retirement.

The scope of a good financial strategy

A good financial strategy is multi-faceted. It must anticipate change and reflect your specific financial goals and objectives while considering your level of investment risk tolerance.

A personalized financial strategy can be tweaked to reflect your changing life needs. Whether you’re starting a new family, preparing for retirement, or running a business, we will work with you or your business to build a plan to meet your needs. A customized plan can help you manage risk and bring your goals within possible reach throughout your life. Major purchases such as a home; retirement; and other life events, such as a disability or need for long-term care necessitate flexibility.

Creating your dream financial strategy

First, we will listen to you. We’ll help you create a plan just right for you. You can enjoy peace of mind knowing you have a financial strategy that provides you with the confidence that all your financial resources are working together toward your specific long-term financial goals.

Next, we’ll help you to devise a plan. The program will aim to address investment and retirement planning, minimizing income and estate taxes, assessing your life and disability insurance, will and estate planning needs.

Your plan should be flexible enough to anticipate life’s many fluctuations. Financial circumstances and responsibilities change over time, such as a career or income changes; marriage; the birth and education of your children or grandchildren; major purchases such as a home; retirement; and other life events, such as a disability or need for long-term care.

A financial strategy is essential for a secure future

When making a plan for anything in life, choosing a career, getting married, buying a car, we must spend hours going over lists as we determine priority and timing. We must have clarity as we develop our essential plan. In his famous book, Essentialism, Ewen McKeown suggests that while sorting out priorities, we must decide what not to do while we are working on what we must do, and that  “When we really have clarity of purpose, it leads to success”. (Ewen has the third-highest following on LinkedIn so he knows something about priorities)

A good financial strategy is multi-faceted. That is why it needs to be developed and governed by a credentialed financial advisor. In his latest best-seller, “The Total Money Makeover”, Dave Ramsey notes: “Build wealth. Invest and enjoy counsel from advisers with a proven track record. ‘Even the Lone Ranger had Tonto'”.

Here are some priorities to achieve financial security – priorities that one must organize well:

  1. Have emergency funds on hand Save at least $1,000 cash and aim to build this up to $5,000. This can come in handy for any emergency that comes as a surprise.
  2. Eliminate all your bad debts List your credit cards, smallest to the largest balances–then pay off these debts, from the smallest to the largest, regardless of interest or amounts, one at a time. Make minimum payments on the rest. This will encourage you as you see each card is paid off.
  3. Save for a home downpayment Save for a down payment or cash purchase of a home. If you have a home, aim to pay down the mortgage, especially now when interest rates are low.
  4. Pay yourself first Invest 15-20 percent of your before-tax income in retirement. Ramsey from his book The Total Money Makeover, notes “Only people who like dog food don’t save for retirement”.
  5. Save for your children’s college education. Your child can’t get much of a job these days without an education though it is not necessary if he or she creates a great business. However, not everyone is Bill Gates or Steve Jobs.

Source: The Total Money Makeover. Dave Ramsey | Essentialism, Ewen McKeown

Perspective on how we perceive time to invest

The neuroscientist, Dr Daniel J. Levitan, in his new book, indicates why our time remaining to invest may pass by faster as we age compared to when we were younger. He explains, “that our perception of time is…based on the amount of time we’ve already lived.” The Organized Mind, (Penguin Canada Books, Toronto, 2014)

Time from a financial perspective

Dr Levitan’s observation may apply mainly to the anxiety people can experience, as they age. As the time to retirement shortens, some may begin to fear that they might not have saved enough for retirement. Procrastination takes its toll on compounding investment gain potential. When looking at an average retirement age of 65, the two tables in this article reveal the serious truth about dwindling of time and the shrinking opportunity time remaining to invest as we age year by year.


Graph Source: Adviceon©

Time offers the opportunity to create wealth

We need to sincerely acknowledge the fantastic opportunity that investment time provides the investor. Most people have had lots of time within which to invest. At age 35 we cross over the halfway mark of the time remaining to invest our hard-earned income the age of 65; at age 45 approximately only one-third of our time is left! Look at the shrinking opportunity of time in the second table, revealing how as time passes, the availability to have compound gains working for you dramatically decreases.

Some parents begin wisely investing for their children right after they are born and get time working on their side early.


Graph Source: Adviceon©

Why does investment opportunity time get lost?

Greed and fear work against investing. Many people get caught up timing the market when influenced by either of the two emotions, greed or fear. Here’s why this never works. First greed compels people to buy when the stock market (and potentially a fund unit value) is higher. Conversely fear causes many to sell when the stock market’s value (and possibly a fund’s unit value) is lower.

When you can’t seem to begin investing, make regular investments in good companies to benefit from a method referred to as dollar-cost averaging (DCA) to level out the peaks and valleys of the market by purchasing at regular intervals of time. If the value of shares in a fund, go down, you buy more units. Conversely, if they go up, you buy less. It is time spent invested in the market, not timing the markets, that counts.

Don’t just look at an investment fund’s most recent performance. Instead look for long-term investment performance over one, three, five and ten-year periods. Moreover, make investment decisions with the help of a professional advisor who has access to investment managers.

Sure-Fire ways to invest for a rewarding life

Here are several tips to contemplate before investing in a mutual fund:

1. Eliminate the unreasonable desire for get-rich-quick profits. No one gets rich overnight after purchasing mutual funds. However, many people may get rich investing in them over the long term (at least 5-10 years). Equity funds (those holding stocks) are affected by the stock market when the market is gaining and when it is depreciating.


2. Identify your investment goals. Will you be saving for your child’s education over 15 years, or investing for retirement over 5, 10 or 20 years? Don’t buy a fund just because it has skyrocketed in value during any one period. Instead, choose the fund most suitable for your investment purpose. For example, keep short-term investments liquid if you put money away for an emergency (it is advised to save three months of income for costly emergencies). You can use a money market fund for this saving, not an equity fund. Consider using equity funds for a more extended investment period of 5-10 years. 

3. Invest in several types of funds. Don’t put all your money in one fund basket. A well-rounded fund portfolio utilizes several investment types of securities: equity, balanced, bond, and money market funds, for example.

4. Maximize your tax savings. Register a mutual fund investment (to create an RRSP) if you do not yet own an RRSP. Contributions are tax-deductible in relation to your taxable income, and the investments grow tax-deferred.

5. Position your fund investments. The best place for retirement investments that accrue interest or generate high returns is inside your RRSP because the income on these investments won’t be taxed year by year. Thus, you will gain the advantage of the total yield without the tax on interest-as-income. If you earn 5% and pay 40% in tax, you’ll only get 3.0% in a non-sheltered, non-registered investment (in the RRSP, you’ll get the full 5%). Consider placing mutual funds that accrue capital gains and pay dividends over fewer taxable distributions in a non-registered vehicle or a Tax-Free Savings Account (TFSA).

6. Invest in yourself first. The advantage of owning mutual funds is that you can establish a plan where the money is automatically taken out of your bank every week or month and invested (by purchasing fund units). You probably won’t miss this portion of your pay; try to invest 10-20% of your paycheck using this method.

7. Take investing seriously. Investing is that act of life whereby you put away today what you will need tomorrow.