Friday, May 20, 2016

Money. Slightly less important than breathing.

Money is important. I've talked about it a bit here, and here, if you missed it.  The first is older, rantier, and swearier. The second has some specific examples. Both say similar things. They are more focussed on getting you out of the financial ditches, and staying out of them in spite of all the crafty lures put out there by your not-friends the banks, insurance companies, and cable TV. Once you've done that and have some money you can start choosing which ways to put your money to work.

Our first wonderful financial advisor is retiring, and we're going through a transition process to someone equally wonderful so far. Our new advisor's firm puts a custom sign up to reserve a parking space, which is really nice.



We were there for several hours, going over paperwork and signing forms for both me personally and my corporation. My hand got tired. There are lots of new rules and regulations to do with background financial stuff, and it will give us more flexibility and choices. There was a bit of shuffling things around to take advantage of fee structure changes. I topped up my TFSA and RSP. (Have you?)

But we aren't done. We got homework, if you can believe it. The next meeting is to make sure everything got transferred over correctly, and look at rebalancing based on updated risk tolerance (that's the homework) and getting closer to retirement. There's a few low performers to get rid of.

But we aren't done. We need to start looking at the specifics of income in retirement, and begin planning that. CPP at 60 (which is coming up faster than you would believe!). Starting to draw down the RSP. Other stuff. Linda's is straightforward as these things go.

Mine is more complicated, given I want to work part time for a while yet and don't have a company pension. There are some things I need to be cautious about. It is entirely possible that I find an interesting contract, one that wants me to work full time for a calendar or corporate year, maybe at a higher rate than I am now, and I've got CPP money coming in, and I'd planned to withdraw RSP funds. That last would be madness during such a year, so I need to be careful I don't set up automatic withdrawals. Paying tax on earned income is a thing that has to be done, but paying way more because I drew out money at the wrong time would be dumb. Generally I've taken money out of my company as salary rather than dividends so I can continue to top up my RSP, but the time may be coming to change that.

I had thought we would go in, hand over some money, review the situation and be off. There was a thought of going to the pool. But no. Once home, hungry and exhausted from lots of detail on top of a week of work details, I was captured by cats and forced to sit. They seduced me with purrs and snores. I napped a little, then it was too late to swim.

This what happens when you treat money like a tool. Every now and then you have to maintain it, and make sure it's still working correctly. Some of the choices I made back in 1995 or so when I started this, and the ones I made along the way, are no longer the best choices. Circumstances change. Even though I'm still the same person, and still sanguine about the ups and downs of the market, I'm a lot closer to the time where the ups and downs matter in terms of overall retirement income.

I got given an updated Andex chart, good till the end of 2015. I just love these. So much information crammed into one chart. For a while I had one up on my office window at work, and lots of people stopped to look and comment. Only a few had seen one. Doing a risk tolerance assessment tells you which line you want to be on. And helps you understand why you don't sell in a panic when the market drops.

In answer to a question I was asked earlier, no, I don't own any Penn West stock. Some of the funds I hold might have it as part of their mix, but I doubt it. There's a general rule in the financial industry that for most people, any stock you acquire in the company you work for should be sold as soon as possible, and that under no circumstances should you have any part of your retirement savings be in that company. Why? Risk. You want to be diversified. If you get a salary and are building up retirement or investment savings all in one source, if that source goes under you are pooched. Enron. Worldcom. Nortel. Need I say more? Penn West stock was $12 or $13 when I started, and the other day it was 82 cents.  Oops.


5 comments:

  1. *Raises hand* I have Penn West shares--does that earn me sympathy cookies? Dave says "we're in it until bitter end...which may be soon." Ah well.

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    Replies
    1. Yes, you get sympathy cookies. And that bitter end may be soon. Did you read about their 1st quarter results, saying that if they don't get concessions from the lenders, they might be out of business by end of 2nd quarter. Which is 6 weeks away. I have no opinion on how likely that is.

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    2. Yup-we're aware. Fortunately, Dave didn't invest more than we could lose-but it will hurt and stink if that's the case. He says we'd love cookies and to put our name on some of the furniture at the office for us ;)

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  2. Ours was also a several hour meeting. And Evie was with us too. Thank goodness for cookies, TV, books and chocolate.

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    Replies
    1. Oh my! Evie is a lovely well behaved child, but I can't think of anything off hand more boring than financial stuff for her. I suspect your stacks of paper were at least as high as ours.

      And I didn't eat my cookie! I was so proud of myself.

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