For years, the generally accepted rule for working-age Canadians was to put 60% of assets in equities and 40% in bonds, and then move the allocation to bonds and away from equities the closer you got to retirement. But Ted Rechtshaffen, president of Toronto’s TriDelta Financial, argues the equation doesn’t make sense anymore. He says that if you can get only a 2% return on bonds—rates we’re seeing today—and 5.5% yields on blue-chip stocks like BCE, it makes sense to overweight stocks, no matter what your age. Rechtshaffen’s not advocating people jump into risky buys. But purchasing stable, dividend-yielding equities will go a longer way than owning low-paying fixed-income assets.
Also, consider how much money you’ve already saved. “The classic example is an 86-year-old with a $3-million portfolio that’s invested 100% in guaranteed investment certificates (GICs) because he’s a nervous investor and was told he shouldn’t take risks,” says Rechtshaffen. That approach, he says, is self-centered. Most of his money will go to his children, so he should try and grow those assets. “The older you get, and the more money you have, the less your age should apply to how you invest,” he says.
(Research, editorial and spiritual support provided by Bryan Borzykowski; “artistic” support by Trevor Melanson )