The Problem

As a 59-year-old training administrator for a mining company, Heather is a member of her company’s defined contribution pension plan. She’s also mortgage-free. But in 2008 she suffered a 40% loss in her stock portfolio and has since slowly sold off all her high-fee mutual funds, putting her 100% in cash. “I have to pay more attention,” says Heather, who has started managing her own finances. After reading up on investing, she’s ready to rebuild her $200,000 portfolio-split evenly between registered and non-registered investments. She plans to add corporate bonds, but isn’t sure what to do about equities. “I have a low risk tolerance.”

Vancouver money coach Annie Kvick says losing 40% of your portfolio when you’re five to 10 years from retirement is stressful. But investing her entire portfolio in GICs and bonds is risky because Heather could lose her nest egg to inflation, or even outlive her money entirely. “Even though she wants safety, Heather needs some growth from equities for her portfolio to last,” says Kvick.

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  1. The problem with most Canadians is that they "think" they are suppose to do it in that way but don’t realize these obvious flaws with putting your eggs in one basket. I think the real issue is indeed inflation. Because it happens so slowly people don’t think it will affect them that much. Can’t be further from the truth.

  2. I just turned 18 and one thing i appreciate is that my dad started me investing back when i was 15. I thought it was more to have a relationship with my dad but i realize now that it helps make me more responsible. I learned and have GIC in my small savings mix but i feel i am on my way to real returns in my mid-20s.

  3. You can say this today or 50 years ago. You need to diversify. no investment is entirely safe. Even savings accounts in banks aren’t that safe because always remember that the banks give you lousy returns and over time it dwindles down due to fees by the bank and just inflation. Investing in the stock market is traditionally the best way to keep up with inflation.

  4. Hmmm…not sure i entirely agree with this piece. It really depends on how long you keep it inside gics. If you look at history charts its not recommended if you keep it in more than 5 years. At least that has been the case for the past 15 years.

    IMHO, I normally keep 1 year gic’s and some money markets. Everything else is in equities.

  5. Mutual funds are still very good. This year alone it didn’t take a rocket scientist to make at least 15% on your investment. Even the real estate market is still up this year in Canada.

  6. Hi @joshua. Bank accounts and GIC are two different things. You can google it but in short GIC is like loaning money to the bank and in return they will give you a set return. But if you decide to pull out too fast then you lose the interest that was gained over the period. So you have to be careful.

    GIC’s have their place in the scope of investing. If you were one of the lucky few who bought a GIC less than 10 years ago when they were routinely at 6% then you will have been locked in stille earning. This was a time when most savings accounts were at 4%. How i miss those days 🙁

  7. Am i too young or naive to say i have never heard of GIC? From what i am reading it’s like a more restricted bank account. What is the point of it? Sorry. I am new.

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