Earn all you can, save all you can, but don't sit on the can

Fee-only retirement income planners, calgary

Earn all you can, save all you can, but don't sit on the can

We were talking about this recently when Nancy and I were having our first meeting with a new client. In 1989 we were earning 7% interest on our savings accounts. Imagine how much money you would sock away right now if you could earn 7% with no risk.
It has become very difficult in the last few years to find a safe investment that can earn us a return of more than 1%. The stock market can be frightening. So you prefer to sit on your cash.
The CBC ran a piece last year saying that Canadians are hoarding cash at an alarming rate, to the tune of $75 Billion. Is this a good idea? 

The short answer is NO. Here's a couple of reasons why:

1.) Time in the markets: There's an underlying belief that we sometimes have that we can "time the bottom" and jump back in. The problem is our timing is usually off and we end up missing that boat.
2.) Dollar cost averaging: When you pull out of the markets you miss the opportunity not only to be receiving dividends but also to be reinvesting those dividends at a lower cost. This reduces the average cost base of your stocks and investment funds. 
3.) Diversification: When you have a properly diversified portfolio you are able to better handle market volatility. 
Having the correct asset mix (stocks, bonds, cash), sector (industry) and geographic (some Canadian, US and Global) allocations in a well-diversified Portfolio is what matters most. Those who have this don't panic and pull their money out when markets are dropping because their portfolio is much more stable. Managing volatility is the number 1 concern with retirement investing.

What are some alternatives to Hoarding Cash and Avoiding the Pain of Financial Hoarding?

1.) Stay invested and stay the course, especially if you have time on your side and it will be several years before you need to withdraw the money.
2.) Continue to add more when prices are low. The markets run in cycles and we are on an upswing right now, but that will change soon enough. You'll never pick the exact bottom so don't try. 
3.) Pay off DEBT, especially anything with a high-interest rate. If you have a Home Equity Line of Credit it would be a better plan to place all excess cash onto its balance while you are waiting for new investment opportunities. Parking cash is like parking your dreams - it's not doing anything for you so you can't let it sit idle very long. Sitting on your cash will not benefit you; you must make your money work for you!

We can help you create a sustainable and predictable cash flow from your portfolio in the most tax-efficient manner to ensure you never have to worry about running out of money.

 

Register now for our next seminar, Get Rich Slowly.

 


Remember "Life is like a Taxi - the meter keeps running whether you are going anywhere or not"

 

 

Fee-Only Retirement Income & Investment Planners,
 
Willis & Nancy Langford
587-755-0159

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My wife and I realized a long time ago the value of a financial planner over just a bank representative. We just felt like a number to the banks as every year it seemed we saw a different adviser with a different view. But finding a trusted, knowledgeable and personable financial planner took a lot of time and effort. It just seemed, so many large corporate Financial Planners were more concerned about what they could make off of us rather than what they could make for us.
What we wanted, was not just reasonable returns now, but good personal advice in our preparation for retirement and what happens when retirement actually arrives. We wanted someone who would be walking with us, guiding us on our way to retirement.
From the first time, we found the web site for Langford Financial Inc, we could see the knowledge of Willis and Nancy and a real effort to educate and pass on their knowledge through seminars, workshops and their personal service. Once I reached out through their web site for more information, Willis was quick to respond, offering and giving whatever information I was looking for and never was there pressure to commit to anything.
The feeling of comfort and ease when talking with Willis was inviting enough for us to want to meet with Willis and Nancy, just to see firsthand if there was a connection and what working with them would look like.
And when we did meet for the first time, that feeling of comfort and ease was very evident. It was a unique experience for us to be able to sit down and get to know a financial planner (or a team of both Willis and Nancy) and not have any sales pressure on us. Just getting to know Willis and Nancy was important for us. We needed to be comfortable with them and see their competence in the business, and it was obvious that Willis and Nancy wanted to know us better so they could know how best to help us.
Once we decided to move our accounts over to Langford Financial, we found their process was comforting and refreshing as Willis and Nancy first worked at evaluating our complete situation. They dug down to get a complete picture of where we were at, where we wanted to be and how to get there. This took some reflection on our part but once we saw how they put it all together in our “Financial House In Order” binder, we were confident we made the right decision to go with Langford Financial.
Since the time we started working with Willis and Nancy I have attended many of their seminars and can say the information they have been teaching has been amazing. Always relevant, and consistent with their desire to help those coming up to retirement, and covering so many different situations as everyone has a different life situation. I know more than one of the tax-saving strategies they taught at their seminars will work for my wife and I, so we are very happy about that.
We would definitely recommend Langford Financial, not just for all your retirement planning needs, but they have great ideas on savings for your grandchildren too!
Paul and Elaine Radder

Paul & Elaine Radder
Long-term Clients

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