Summary & Conclusion


The task of managing our money throughout our lives is not a simple one. Along the way choices have to be made and priorities need to be set. Very few of these are easy.

Part of the problem is that many of your professional advisors may be focused on their particular area of expertise rather than the overall picture.

The banker wants to lend you as much money as you can afford to pay back, the insurance representative wants to sell you as much insurance as possible, the realtor wants you to buy the most expensive house you can afford, the accountant wants you to adopt tax-driven strategies and the financial advisor wants you to save every nickel for retirement.

Given all of these conflicting approaches, it is a challenge to develop a comprehensive strategy that addresses all of these issues with a sense of balance. There are the lucky few whose careers or financial position allow these decisions to be pushed to the back of their minds without much worry.

For the rest of us it takes some planning.

Financial Plan

It begins with a budget, or more accurately, budgets. These budgets do not need to be financial straightjackets, but they can help provide you with some direction and help identify where your money should be going.

Your budget during your working years can help you find ways to develop a savings plan that will result in an investment portfolio to fund your retirement. Your (future) retirement budget gives you the information you need to begin setting targets for retirement dates and the assets you will need to accumulate.

As you begin your savings and investment program, a process of self-examination is required. The task is to determine what kind of investor you are. In other words, how much volatility can you stand or, put another way, how much volatility is appropriate for your situation? It is something only you can determine, but there is help available.

The amount of assets you will need to accumulate along with your risk tolerance profile will determine how much you will need to invest and how it should be invested.

The question of how your money should be invested is frequently the first question asked. In fact, many investors ask for opinions on specific investments without knowing whether or not those kinds of investments are even appropriate for their situation.

Throughout our lives our financial situation changes and our plans to address each of these unique situations need to be flexible. It is a good idea to have objectives in mind for each stage of our lives.

Work with your financial advisor so you can develop a strategy to meet your objectives and then cross them off your list once they have been achieved.

Investment Plan

After identifying your risk tolerance profile, the next step is to identify, in broad terms, what kinds of investments should be held in your portfolio and in what proportions they should be held. This is the process of asset allocation. The broad categories of asset classes include cash, fixed income, preferred shares, real estate, equities and precious metals.

Only after determining what percentage of your portfolio should be held in each asset class should specific investments within each asset class be explored.

Generally speaking, your mix of investments (asset allocation) should remain relatively constant from one year to the next with only minor variations to account for changing economic conditions.

Over time and as you approach retirement the asset allocation should gradually reflect a more conservative risk-tolerance profile.

Along the way it is important to monitor your progress to ensure that you are accumulating the capital that you will require to fund your retirement.

While monitoring your rate of return can tell you if you have gained or lost ground over a given period of time, these results are often used in the wrong way. It is important to keep the rate of return achieved in perspective and relative to the world markets and economies.

Mistakes can be made in trying to compensate for periods of below average or negative returns. The wrong approach is to become significantly more aggressive than your risk-tolerance profile indicates is appropriate.

The right approach is to increase contributions to your portfolio until you are back on-side. It doesn’t have to be a lump sum and you don’t have to catch up in one year, but you do need to adjust your savings patterns.

That means making some sacrifices in other areas and it is something our society has become unaccustomed to doing. As a society we always seem to looking for the easy to way to lose weight, get in shape and gain wealth.

Given the number of infomercials on television, someone is taking the bait but a quick look around shows us that very few are following through.

It is worthwhile to examine the actual steps required to implement your plan. I recommend that you use a financial advisor to guide you through the process, assist you in structuring your accounts to provide maximum benefit, take care of the day-to-day administration requirements and provide you with financial advice; then it is helpful to know what to expect when starting that relationship.

Financial advisor

Financial advisors tend to use their own unique approach to help clients manage their money. Some like to concentrate on helping their clients plan for retirement and build portfolios that will serve their needs over the long term. Others have a shorter term focus and prefer a trading strategy. Choose one whose style is compatible with what you are trying to accomplish.


Once you have found an advisor you will need to decide what kinds of accounts best suit your needs.

There are basically three types of accounts. These include:

  • taxable accounts, which are sometimes referred to as cash accounts, margin accounts or investment accounts;
  • there are tax-deferred accounts, such as RRSP and RRIF accounts;
  • and finally, there are tax-free accounts, or TFSA accounts, now available.

Your advisor can help you make those choices and help you to allocate appropriate resources to each.


When you are first establishing your accounts a great deal of paperwork can be required if you are opening the account. This paperwork serves two purposes. It fulfills the requirement of the regulatory and government agencies and it also provides the advisor with the basic information required to properly understand your situation.

Accurate and detailed information leads to the best recommendations and advice possible.

Once the paperwork is in place, dealing with an IIROC (Investment Industry Regulatory Organization of Canada) firm can be very convenient.

Most business can be transacted over the phone. Because you are dealing with a specific advisor, you will almost always be talking to the same individuals regarding questions about your account. They will have an understanding of your situation and communications should be consistent and clear.

Regulations do require a brief update of your account information every two or three years to ensure that your advisor still has an accurate profile of your situation.

Fees and commissions

Before making the final commitment, know what fees and commissions apply to your various accounts and any transactions. It can be convoluted and it is better to have that information ahead of time to avoid any unpleasant surprises.

Client Service Agreements

 Investment policy statements (or client service agreements) formalize the agreement between you and your advisor. They provide guidelines with respect to portfolio construction, fees or commission and the portfolio review process. These agreements can be basic or detailed and can help to avoid any misunderstandings between you and your advisor.


In a world that seems to be increasingly run by lawyers, prepare yourself for even more regulation. While these regulations may seem cumbersome and intrusive, they are designed to protect the rights of investors. The best course of action is to comply with the regulations. If you feel they are either lacking or unnecessary, make your thoughts known to the appropriate regulators.

In the meantime, it is the environment in which clients and advisors must work.


The role of life insurance needs to be examined and just as our investment needs change over time, so do our insurance needs. For most people, insurance should be just that . . . insurance. The exception can be very high net worth individuals who may have redundant capital (money they will not need to generate income for future living expenses).

For them, advanced life insurance strategies can be employed that will complement investment programs. For most of us, these kinds of life insurance policies are forced savings that have significant costs associated with them and offer little value.

Other forms of insurance, such as long term disability, critical illness and long term care should be investigated to determine whether they suit your situation.

Just as some financial advisors may use the best case scenario when making investment presentations, some insurance agents use the worst case scenario to encourage insurance sales that may not be entirely necessary.

Take the time to understand your insurance needs along with the costs and benefits of any policies.

Home Ownership

The decision to rent or buy a home is a personal one. In reality, it is more about making a lifestyle choice than about creating wealth. A large home doesn’t necessarily create wealth and, in fact, home ownership can be so costly that it undermines your attempts to accumulate wealth and can cramp your lifestyle in the meantime.

Know all of the facts before jumping into buying a home in the misplaced belief that if you wait too long it will become unaffordable.

High Risk Strategies

While some strategies are obviously risky, there are others that may appear to be relatively conservative at first glance but actually belong in the high risk category. Promises of high returns or big tax savings can be tempting.

Proceed with caution when something appears too good to be true.


The trend is toward making us more reliant on our own savings and investments in retirement. The days of future generations funding our golden years are slowly changing and we need to be prepared to look after ourselves.

Despite what you may read in the financial press or see on television, it will not be a simple or straightforward journey. Economic upheavals, political change, market corrections and unfortunate personal decisions can all be obstacles to our success. We can try to mitigate the effects of those incidents but there are no guarantees.

Your best protection doesn’t come in the form of government guaranteed investments; it comes from building a sound plan and sticking to it as closely as possible; it comes from having the ability to adjust when things don’t unfold as expected; it comes from being prepared.


Treating your money well is a key to financial success. It involves creating a vision, developing a plan and investing wisely. It involves being well-prepared and taking a logical approach to your personal finances rather than blindly following the next good idea.

There is always someone willing to tell you that there is a simple, painless solution to achieving personal wealth and a life of leisure. For a lucky few, that may be the case, but managing your personal finances is an ongoing process that requires personal discipline.

The majority of us need to plan wisely, spend carefully, and save regularly.

The information in this book provides you with information and strategies to help you get started. If it seems too complicated to tackle on your own, don’t throw up your hands in despair. I advocate the use of a financial advisor and have given you the tools to help you identify the individual who best suits your needs.

For many, the investment experience may be a new one. For others, the entire process may seem a little vague and confusing. This book demystifies the process of opening an account, preparing a financial plan and making investment decisions. It outlines the less than transparent fee structure that seems to be a characteristic of the investment industry and helps you make educated decisions on the products and services you choose.

Don’t procrastinate. Take control of your personal finances and decide on a course of action.

Your best course of action may be to do it yourself based on your past experience, courses you may have taken and information you have gleaned from this book and others. Or you may choose to work with a financial advisor who can help you navigate through the world of finance.

Hopefully, in reading the chapters in this book, you have garnered at least one idea that will help you in your efforts. Good luck!