Portfolio Examples

It is important to adjust investment portfolios to match investment requirements throughout an individual's life cycle.

The following profiles utilize age, income, and years until retirement to recommend a suitable portfolio structure. It's an excellent starting point for the portfolio planning process. However, we recommend that you contact Ken MacCoy, RHU to help you in designing your portfolio.
 
 
Initial Career Stage: The Early Years
During the early years most people are still establishing their career. They may be single or married. Any children are usually preschool. They may own or be saving for their own home. They are interested in starting a retirement plan. Because time is on their side, it makes sense to invest mainly in funds that offer the highest potential reward over the longer term. It may be wise, as well, to place some assets into balanced or guaranteed products for diversification. An advantage account or short-term guarantees can be used to meet short-term obligations (less than three years). RRSP contributions should be maximized and dollar cost averaging is the best method to establish a financial plan because money is typically tight.

                    The Early Years example portfolio: 

                                     Growth - 50%                                        
                                     Guaranteed - 15%                                             
                                     Balanced - 35%                                    
                                                        
 
 
Established Career Phase: The Middle Years
Middle years investors are more established in their careers. These investors typically own their own home and are concerned about their financial future. If they have children, they are in school and may be approaching post-secondary education. During the middle years they are trying to enhance their standard of living, save for post-secondary education for children, and reduce income taxes. With 15 to 30 years to retirement, long-term growth is still a key consideration. RRSP contributions should be a priority and non-registered investments should be growth oriented to enhance standard of living and fund children's education. An advantage account or short-term guarantees should be utilized to service short-term demands. Spousal plans can be used to take advantage of income splitting.

                    The Middle Years example portfolio:

                                       Growth - 35%                                        
                                       Guaranteed - 20%                                
                                       Balanced - 35%                                    
                                       Income - 10%                                                          
 
 
 
Peak Earnings Period: The Mature Years
Mature investors are normally in their peak earning years when the focus is on asset accumulation. Children's post secondary educations are usually paid for and other financial burdens are also easing. They are seeking time for travel and leisure while preparing for retirement. Preservation of wealth and securing a financial future is extremely important. RRSP contributions should still be maximized, however depending on the proximity of retirement, the focus on stability should begin. If not already started, spousal plans should be opened to ensure income splitting during retirement.

                    The Mature Years example portfolio :
 
                                     Growth - 25%                                                           
                                     Guaranteed - 25%                                
                                     Balanced - 25%                                                    
                                     Income - 25%                                        
 

Reaping The Rewards: The Retirement Years
During retirement the investor's active working years are typically over. Retirees may be looking at selling their home for retirement property. The mortgage is usually paid off. They are concerned about income security, maintaining a comfortable living, and helping out children financially. At this stage, portfolios should be well diversified with an orientation to generate regular income, both to enhance enjoyment of retirement and to protect hard-earned investment earnings.

Portfolios should still have some modest growth to keep abreast of inflation. RRSP contributions can now be converted into an annuity, RRIF, or a combination of the two. The portfolio's primary function is to provide a stream of income throughout retirement while protecting against inflation and maximizing after-tax returns.

                    The Retirement Years example portfolio:

                                     Growth - 10%                                        
                                     Guaranteed - 50%                                
                                     Balanced - 20%                                    
                                     Income - 20%