Q&A: Afraid to Take Action
Question: I read your articles with total devotion – yet I feel apprehensive when it comes to taking action regarding my investments.
I had a defined contribution plan in Ontario that lost 40%. It then regained the loss but did not get anywhere in the past 10+ years. I transferred it to TD Waterhouse Discount Brokerage a few months ago as cash (into a locked-in account). I would like to invest it the best I can. I would describe my investment style as “assertive conservative”. I cannot afford either to have big losses or to be passive with my investment as I am 62 years old with a limited pension fund.
I am considering investing my money into the RRSP portfolio that you created for one of your newsletters. Would you recommend investing all my money in these few stocks or should I consider combining it with other investments? How well would my portfolio be diversified? I have approximately $100,000 in locked-in pension money and approximately $55,000 in an RRSP.
I am aware that I can never make up for the 37 years spent in Hungary but I want to do the best I can with what I have. – Poli V.
Gordon Pape answers: The RRSP portfolio you refer to holds a total of eight securities. If you invested all your registered assets based on the portfolio, you would have approximately $46,500 in a bond ETF. About $62,000 (40%) would be invested in three mutual funds to provide broad equity diversification, both sectoral and geographic. The balance of $46,500 would be divided among two limited partnerships (total value $31,000), one REIT ($7,750) and one stock ($7,750). This is not an unreasonable allocation for a younger person but because of your age it may be too aggressive.
I understand your concern about protecting assets and I agree with you. At this stage of your life and given the fact you have only a small amount coming in pensions, preservation rather than growth should be your priority. Therefore, you may wish to look at a lower-risk model. I suggest that you work with a financial advisor who has access to all your personal financial information to get the optimum result for your needs.
Do you have a money question you’d like to ask Gordon? Find out how to submit it here and then check out our Money section regularly to see if it was chosen for a response. Sorry, we cannot send personal answers.