Managing Your Money

You have a bundle of registered and non-registered investments.  You invest in stocks, bonds, T-bills, mutual funds, and who knows what else.  And all those widely scattered investments generate paper.  Bank statements.  Mutual fund reports.  Stock purchase and sale statements.  Tax reports.  Lots of paper, plenty of information.  So much so that you get lost in the details of your investments and lose sight of the ‘big picture’ – your overall financial goals and whether or not your investment ‘mix’ is actually doing the best job of getting you there.

A scattershot approach to investing can undermine your financial future in a couple of other important ways, as well.  With so many investments held in so many different places – from financial institutions and mutual fund companies to brokerages – you’re probably not getting the kind of consistent, ‘big picture’ advice you need.  That’s because each of your ‘investment advisors’ may see only one small part of your financial life and, as a consequence, cannot provide you with an informed opinion that takes in the full scope of your investments as they relate to your overall – and ever evolving – financial goals.

A consolidation strategy can be effective for almost any type of investment – but, as an example, let’s look at what it can do for your registered investments.

·         By consolidating all your Registered Retirement Savings Plans (RRSPs) from many financial institutions to one, you’ll not only simplify your retirement planning, you’ll also find it much easier to track your holdings, plan your investment strategy and make regular, maximum RRSP contributions each year.

One good way to consolidate is through a self-directed RRSP that provides an ‘umbrella’ under which you can hold a variety of investments – such as mutual funds, equities, bonds and Guaranteed Investment Certificates (GICs) – at a single financial institution, but still include investments offered by other organizations.

·         Instead of receiving several financial statements from many financial institutions, you’ll receive regular statements and one set of tax reporting documents from just one source.  It’ll be far easier to calculate how much you’ve invested and monitor renewals for term investments such as GICs.  Plus you may qualify for the more attractive investment rates offered on GICs at larger amounts.

·         Your annual RRSP contribution becomes a one-stop affair and, as you approach retirement age, it becomes much easier to convert your RRSP to a Registered Retirement Income Fund (RRIF) because you’re dealing with a single financial institution instead of several.

Consolidation can be equally effective for your non-registered investments, too.  The key to long-term success is to establish an asset allocation plan that fits your current financial plan and allows for revisions as your life changes.  A solid asset allocation plan diversifies your investments among the three asset classes – cash, fixed income and equity – to build a portfolio that smoothes out the peaks and valleys in any single asset category.  This strategy provides much steadier long-term growth than putting all your investment dollars into a single type of investment or into too many investments, scattered haphazardly across the asset classes without any regard to your tolerance for risk or for achieving your specific financial goals.

Consolidation, with the help of a professional financial advisor who truly understands your ‘big picture’ needs, will not only simplify your financial life, it can put you on a faster track to achieving your dreams for the future.

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.