When building an investment portfolio for retirees, there are three criteria that when met, will provide you with the highest probability of success.
Now, most articles being written today about investing for income are all focusing on the income distributions, yield and consistency of both. The problem is that if you don’t apply these three pillars to successful RRIF investing to those strategies, you will be accepting more risk than is appropriate for your age and stage of life because no matter how you slice it, when you are investing in a low interest rate environment, the only way to increase the yield or distributions are to take on more risk. Plain and simple.
The problem with this approach is that the risk is hidden and will only reare it’s ugly head when you can’t afford it to. Focusing on these three pillars to successful RRIF investing will provide you with an investment solution that is providing you with the highest probability of success to protect and preserve your RRIF portfolio.
- Quality Management
How do you rate an investment manager? If your answer is by historical rate of return then you are potentially setting yourself up for failure. As I always say, live by return, die by return. Don’t focus solely on return, focus on consistency of return and you’ll be more inclined to stick with your discipline as opposed to make an emotional decision at the wrong time in the economic cycle.
Here is an example of how to determine if your investment manager is providing you with quality management. (NOTE: I will not be promoting an investment solution in this post, only the methodology for you to use in order to assess your own portfolio. However, these are actual audited numbers for one of our favoured Canadian investment counsellors – they are not made up)
- Availability of Tools To Those Managers
- Attention To Fees
