Canada Inc. – a sound investment
My pleasure at being invited to write a column for CARPNews on financial markets and investing from the mature Canadian’s perspective is all the greater – given that I can do so in the first person.
In my 64th year, I’m increasingly aware of far-reaching changes that lie ahead for my wife Nancy and me. I’m blessed with good health which I work at maintaining (a key investment). Our pleasant Toronto home is paid for, two of our three grown children are no longer on the family budget, and we both have incomes that should carry us through our middle 60s.
In fact, I’m determined that we not draw on our self-directed RRSPs until we turn 69 and the law obliges us to do so. If we average the nine to 10 per cent total annual returns I regard as realistic (not the extraordinary 20 per cent-plus of recent years), we should be able to grow our combined retirement pool by another two-thirds before Revenue Canada starts knocking on our door. Yes, compounding and growth through investment remain powerful wealth-building tools, even at our stage of life.
In an era of growing longevity, increasingly costly healthcare (a key future expense for our generation) andver-diminishing government support, the best way of ensuring financial self-sufficiency and independence must be through carefully structured, individualized investment portfolios. It’s a challenge all of us cannot undertake soon enough, and one which will also require us to follow the financial markets in a quizzical way. It’s a challenge we should relish.
But why, you might ask, the haste to launch such an investment challenge when the most powerful bull markets in history are pulling back from dizzying nosebleed heights; when Asian “contagion” is by no means over; the fickle months of September and October lie ahead; and, a pullback to more tenable valuation levels seems increasingly likely? Because two tried and proven axioms of successful investing – by definition a long-term affair – are as applicable as ever; namely, that “time in the market is much more important than timing the market” and “the trend is your friend.”
Powerful forces are at work everywhere in a market- and technology-driven world, in the U.S., in a powerful European Union being readied to launch next January, and in a new-look Canada – now on an impressive recovery path. I urge Canadians to subordinate the day-to-day markets and their worrisome headlines to building and positioning ther portfolios against a big-picture background that couldn’t be “friendlier,” and which includes a cheap, competitive, rehabilitated Canada, poised to enter the new millennium in its best fundamental shape ever. Truly it’s Canada’s turn for economic and investment excellence. We should be positioning ourselves as owner-investors in “Canada Inc.” in this expectation.
In this inaugural column I’ve wanted to introduce myself and set the score. In so doing, I’m reminded of John Templeton’s persuasive example on how sound investing works out well over time, regardless of the ups and downs in the markets. His conclusion: The best time to invest is whenever you have money, according to a carefully prepared, soundly structured, longer-term investment plan. This sage advice remains as timely as ever. If I can assist my fellow CARP members in rising to a necessary but compelling investment challenge that stands to leave us ultimately much better off than we would have been otherwise, I will feel all the more pleased.