Never Retire Profile of the Week

Sir Ian McKellen & Sir Patrick Stewart

Sure, Gandalf and Captain John-Luc Picard are two entirely different fellows. But great friends and frequent colleagues, McKellen and Stewart perfectly represent the Never Retire philosophy. Born a year apart – McKellen in 1939 and Stewart in 1940 – they both began in theatre, have prolific careers, have been knighted, and achieved tremendous success in their later years. They became close while filming the X-Men movies, playing Magneto and Professor Xavier, and now consider themselves best friends – McKellen even officiated at Stewart’s wedding in 2013. They have shared the stage in productions like Beckett’s Waiting for Godot and Pinter’s No Man’s Land. They are also activists committed to charitable work in several areas, such as domestic violence, combat stress, LBGT rights, and elderly care. Please carry on working and giving, good sirs. Or as Picard would say, make it so!

Ian McKellen
Patrick Stewart

In a bear market, who doesn’t start imagining wondrous and fantastical – perhaps even magical – solutions when the value of their investments dramatically falls? I do at times, though I never act on them. I hope you also refuse to grasp at glittery straws. It’s not easy to remain level-headed at times like these, but we would all do well to keep fairy tale solutions firmly in the imagination where they belong. Don’t take them out into the real world.

To help you stay the course and come out the other side of a downturn intact or, perhaps, even better off than before, here are four ways to take advantage of a bear market and four ways to avoid trouble.

Four Opportunities of a Bear Market

1. Buy the stuff you need to improve your business/home

If you are fortunate to have steady revenue/income and plenty of cash on hand, it could be a great time to buy what you need for your home and your business. There are likely not a lot of customers shopping today, so buying today has two advantages. First, you help the business owner stay in business by purchasing their products. Second, as demand has declined, you may obtain an attractive price for the product.

2. Buy stocks instead of luxury goods

This advice will be difficult to implement, but buying stocks during a bear market has historically been a wise long-term decision. Postpone discretionary expenditures and invest the savings into your investment portfolio. Your future self will thank you for this decision.

3. Get rid of painful legacy positions

During the bull market between 2009 and 2020, many investors may have ventured away from investing in solid companies and turned to speculative stocks, such cannabis or start-up companies. Use this opportunity to sell stocks that don’t fit your Investment Policy Statement (IPS), trigger the capital losses, and clear your mind of this issue.

Also, promise yourself that from today onward, you will follow your IPS and not alter your plan when you hear about the next “can’t lose opportunity.” (Note: if your situation changes, you will need to update your IPS.)

4. Consider an estate freeze for your business

An estate freeze crystallizes the value of your business for tax purposes at its current market value (most likely at a depressed value given the recession) and transfers the tax on any future growth of your business to your successors, usually your children. Hence, the estate freeze allows the business owner to calculate the tax liability due on their death and permits any future tax to be paid by the next generation.

Four Mistakes in a Bear Market

I have advised clients through three bear markets (1999, 2001, and 2009) and in each; I am tempted to do a bunch of things that in hindsight will prove to be counterproductive. But as mentioned already, I avoid roads that often lead to trouble. Here are four of them.

1. Timing the market

I don’t know anyone who can successfully and consistently call the top or bottom of any market. But every time the markets falls, many investors feel that they have a special/magical talent to identify the top of the market and sell their investments. And they believe they can also recognize the bottom of the market and buy back at the right time. In reality, this scenario rarely, if ever, happens. Usually, investors sell at the bottom of a cycle and buy at the top of the market, because this approach “feels better” than following a disciplined investment plan.

2. Day trading

Same advice: don’t do this. I don’t know anyone who does this successfully on a consistent basis. You have an Investment Policy Statement. Stick to it!

3. Buying leveraged Inverse ETFs (for that matter, any leveraged ETF)

Some ETFs bet against the market and make the bet more aggressive by borrowing money for their trades. This makes the trade very risky, because the markets historically advance more often than they decline. So you need a particularly good crystal ball to play this game. In addition, the leverage magnifies your losses when the trade goes the wrong way (when the market advances instead of declining).

4. Leaving the stock market for alternatives

Anytime the stock market declines, you always hear some people say “I told you so.” No matter what they were selling before the market drop, they will point out that the stock market just fell 20-40% and that you should have bought whatever they are selling. Maybe they’re selling a digital currency or a start-up company with “unbelievable potential.” Whatever the case, they will show you charts and facts to prove their investment ideas are better than stocks.

For me, their cries are annoying and should be ignored.

If you were convinced of the long-term merits of owning stocks in the world’s most profitable companies before the bear market, then I see no reason to change course and try an alternative investment.

I hope these do’s and don’ts help you stay safe in a bear market and come out stronger when the pandemic is under control and the economy improves. Bottom line: put away the magic wands and ouija boards, trust the historical data around bear and bull markets, and have faith in the kind of dependable strategies used at the Dri Financial Group.

Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.

The process of finding an Advisor can be overwhelming. Our process is designed with you in mind. Its structured framework helps you make an informed decision about engaging an appropriate advisor.

Get started here. 

Call me if you in want to map out how you can Never Retire. You can also subscribe to our Never Retire Newsletter, contact us to order a complimentary book, register for one of our events, and call us to meet with a Certified Financial Planner. We offer you a range of services from a financial plan to investment advice or helping you take advantage of our investment models. Call me at 416.355.6370 or email me at richard.dri@scotiawealth.com.

source https://richarddri.ca/4-ways-to-take-advantage-of-bear-market-opportunities-and-4-missteps-to-avoid/

Despite renewed hostilities between the U.S. and China, and a host of discouraging economic data, N.A. markets remain focused on the positives as more countries begin to slowly reopen their economies. On Monday, N.A. stocks were in the red for much of the session but pared losses before the closing bell, buoyed by a rally in the oil market.

Canadian and U.S. indexes climbed again on Tuesday as health care stocks rallied and oil extended its recent recovery, with U.S. crude futures for June gaining 20%. The positive sentiment for oil is being led by increased demand, as countries restart their economies, and falling production. Although U.S. markets finished in the green, stocks declined sharply late in the afternoon after Fed Vice Chair Richard Clarida offered his downbeat take on the likelihood of a V-shaped recovery.

On Wednesday, the Dow and S&P surrendered ground as oil prices declined and U.S. private payrolls fell by a record 20.2 million workers in April, according to the ADP National Employment Report. Although the Dow was down more than 200 points, the TSX was up slightly, while the Nasdaq continued its climb as resilient tech stocks led Wall Street. U.S. stocks rose Thursday as initial jobless claims continued to decline. For the week ended May 2, those applying for unemployment benefits came in at 3 million, a far cry from the 6 million registered in the last week in March. By Thursday’s close, the Nasdaq was in positive territory for the first time in two months, erasing 2020’s losses.

Finally, turning to Europe, the data’s been especially bleak. A release of purchasing managers indexes Monday showed that coronavirus lockdowns sent manufacturing activity in April to all-time lows for Germany, France, Spain and Italy. Meanwhile retail sales in the eurozone also suffered their largest decline on record in March. In light of recent data, the European Commission is forecasting “a recession of historic proportions,” with the eurozone economy projected to contract more
than 7% in 2020.

Read more…

source https://richarddri.ca/n-a-markets-clinging-to-positive-sentiment-despite-downbeat-data/

David Victor is a colleague of Richard’s at Scotia Wealth who prepares financial plans for clients with larger portfolios and complex issues. He is a former tax lawyer with work experience at some of the larger firms on Bay Street, and is also a chartered accountant, which he did before law school. His broad experience in working with tax issues and finance issues, and just the business world in general, renders him an ideal fit for his current role with Scotia Wealth.

During today’s podcast, David and Richard discuss the impact that the pandemic and the market downturn may have had on their financial plans, explore retirement projections and estate plans, and look at the need to understand risk profiles before making asset allocation decisions. Throughout the episode, David also offers a number of useful examples, suggestions and
strategies to assist investors in each of these areas.

Download the full transcript here

Highlights:

– David has a great deal of advice to offer about preparing a retirement plan involving
illiquid investments.

– It’s useful to go back and actually evaluate where you are specifically in your unique
situation, and compare your projections against the actual.

– It’s a very good idea when there is a major change, such as the potential impact of
this pandemic, to give wills, powers of attorney, and retirement plans a review and
make sure they still make sense.

– In times of depressed values as is happening now, it can be good to look at something
like an estate freeze or tax loss harvesting.

– Three things that Richard looks at when determining asset allocation are risk
tolerance, risk willingness, and capacity to take the risk.

Quotes:

“ One of the things that’s great about what we do at Scotia Wealth in my role, is that we create
very, very customized bespoke plans for clients.”

“ We’re planning to make sure or at least do our best to make sure that there are the fewest
amount of surprises. And I think everyone would agree, nobody wants to run out of money when
they’re 90…”

“Don’t just look at the market, don’t read the paper, look at your own particular situation.”

“I think most people, they make their estate plan and then they throw it in a folder and forget
about it for years, and years, and years until someone prompts them to take another look at it.”

“The decision around the asset allocation has a greater impact on the overall rate of return than
the actual selection of the individual stocks that you choose.”

“Don’t assume more risk than you have to.”

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Listen to more podcasts by Richard Dri:

My Disaster Plan

Keeping Cash Flow Consistent with Sara Forbes

Balancing the books with Drew Tetz

source https://richarddri.ca/financial-planning-and-the-covid-19-pandemic-a-conversation-with-david-victor/

Never Retire Profile of the Week

Serena Williams

The average age in women’s tennis is about 27-years-old, but Serena Williams has never been average. On her way to setting numerous world records, Williams has come back from injuries throughout her career, played while pregnant in 2017, returned to tennis in 2018, and achieved a top-10 ranking in 2019 (at the age of 37). This year, she became the first woman in the professional era with at least one title in four decades: 1990s, 2000s, 2010s and 2020s. In her career, Williams has won 23 Grand Slam singles titles, the most by any man or woman in the Open Era, and is a four-time Olympic gold medalist. And, further defying the typical retirement age of tennis pros, she is the oldest player to reach a number one ranking and to win a Grand Slam singles title. Fans of tennis around the world have been dazzled by Williams’ talent and grateful for her staying in the game so long.

biography/Serena-Williams

Bear markets make everyone nervous.

When rattled by downturns like we’re experiencing, investors worry as their portfolios shrink. Sometimes, that worry transforms into making decisions based on emotion rather than evidence, which is invariably a bad course. At Dri Financial, we always advise our clients not to react rashly to current market conditions but rather to keep their eyes on the long term. As the Oracle of Omaha – Warren Buffett – says, “Our favourite holding period is forever.”

Of course, you won’t necessary “hold forever,” but his point is to focus on growth over at least a decade. In our current situation with this coronavirus, we’re all going to see losses. But long term, the stock market has always delivered growth.

So in this downturn moment, let me offer seven tips for managing a bear market.

1. Stay the course

At Dri Financial, we start all new financial planning engagements with an Investment Plan (we call this an Investment Policy Statement. It outlines your time horizon (when you need the money), the types of investments that you will buy (bonds, stocks, alternative investments, illiquid investments, real estate, etc.), the portion (percentage) of your portfolio that will be allocated to each asset class, and your risk tolerance (how much of a portfolio decline you are willing to accept).

Because we are in a highly volatile period, let’s discuss risk profile more closely. Using the S&P 500 Index as a measure, there have been 16 bear markets (a drop of 20% or more from the previous high) since 1926, averaging once every six years. They last an average of 22 months, and the market loses an average of 39%¹.

If we have a 30-year career and a 30-year retirement period, we can expect to pass through approximately 10 bear markets. That means we shouldn’t be surprised by them and that we must take them into account when preparing an Investment Policy Statement.

For example, let’s assume that you decided on an asset allocation of 30% bonds and 70% equities. Let’s also assume that during a bear market, equities drop by 40% and bonds rise by 5%. Given this scenario, the portfolio would yield a return of negative 26.5% during a typical bear market. In other words, $1,000,000 would drop by $265,000.

Historically, the S&P 500 has recovered from all past bear markets and eventually achieved new all-time highs. But that does not matter when you’re in the middle of a bear market, and it doesn’t make you feel any better.

When preparing the Investment Policy Statement and studying the potential loss in your portfolio, ask yourself, “Can I sit through this type of decline? Or would I be driven by fear to sell my position at the bottom of the market?” If the answer to the second question is “Yes, I would sell,” then go back and adjust the asset allocation towards a more conservative slant.

Let’s assume that a person lowers the equity component to 50% and increases the bond component to 50%. Based on the same assumptions, they would see a hypothetical drop in their portfolio of 17.5%. Would this lesser decline drive you to sell into panic? If so, you would keep lowering your equity component until you are comfortable.

When the next bear market occurs (and it will), you want to say, “I will stay the course.” And you will have confidence in saying this, because you thought through a bear market and you quantified how much volatility you could tolerate.

2. Rebalance your portfolio

Many studies have shown that consistent portfolio rebalancing helps the investor’s long-term investment performance. The Investment Policy Statement also outlines your desired asset allocation (say, 60% equities and 40% fixed income), maximum weighting of each stock (say, 5% in each stock), and the maximum range of fluctuation that you will accept before rebalancing.

For example, the Investment Policy Statement states that you will rebalance your asset allocation back to the 60/40 mix, if the mix fluctuates more than +/-5%. If equities decline to 43% and bonds increase to 67%, then you will sell 7% of the bonds and buy 7% of equities, thus returning to the preselected 60/40 mix.

Or perhaps the Investment Policy Statement states that you will rebalance each stock position that has an increase/decrease in weight of +/-2%. For example, if a specific stock declines to 3% weighting and another stock increases to 7% weighting, sell 2% of the over weighted stock and buy 2% of the underweighted stock.

During a bear market, you will be motivated to do something (especially if you are a Type A personality like me!). So instead of selling your stocks in a panic, rebalance you asset allocation and the individual weighting of each stock.

3. Harvest tax losses

Selling underperforming stocks (from a non-registered account only) triggers a capital loss that can be applied to capital gains during the past three years. Alternatively, it can be brought forward for an indefinite period and applied against capital gains.

This is a great example of making lemonade out of lemons.

4. Make sure you have enough cash

A market decline is usually followed by a recession, and a recession is usually followed by higher unemployment. So it’s important to have an emergency reserve of three to six months of monthly expenses in a guaranteed investment (for example, a GIC).

If you are retired, it’s also important to have two to five years of monthly expenses in guaranteed investments (GICs).

In both cases, the objective of the reserve is to prevent you from selling stocks when the markets are depressed and allowing them time to recover while, at the same time, the reserve ensures you have the necessary cash flow to pay your monthly expenses.

5. Do not look at your statements

With headlines full of pandemic news and its corresponding effect on the stock market, it’s very difficult not to look at your accounts (especially if you have online access). But I suggest you do not. Stay the course and, if necessary, rebalance your asset allocation and individual stocks.

6. Maintain your philanthropic commitments

As mentioned above, a bear market usually leads to a recession and job losses. So if your main concern is the decline in the value of your stock portfolio, consider yourself fortunate and maintain your charitable gifting. It doesn’t matter if you donate to a food bank, hospital, religious organization or any other cause. Just continue your gifting, as the need is greater during a recession.

7. Have a momentum strategy

At Dri Financial, we developed an investment strategy that buys the market when the S&P/TSX trend line is upward and sells the market when the trendline is downward. The result is that we are in the market when there’s positive momentum and parked safely in cash when the momentum turns negative.

Historically, our strategy flashes a buy signal close to market bottoms and flashes a sell signal close to market tops. It’s not perfect, but historically it has signaled the beginning of big selloffs. For example, during the current pandemic, the model flashed a sell signal on February 26, very early in the general market decline, avoiding the major decline in the indexes.

I hope you find these bear market tips useful.

Stay safe out there, everyone.

Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.

The process of finding an Advisor can be overwhelming. Our process is designed with you in mind. Its structured framework helps you make an informed decision about engaging an appropriate advisor.

Get started here. 

Call me if you in want to map out how you can Never Retire. You can also subscribe to our Never Retire Newsletter, contact us to order a complimentary book, register for one of our events, and call us to meet with a Certified Financial Planner. We offer you a range of services from a financial plan to investment advice or helping you take advantage of our investment models. Call me at 416.355.6370 or email me at richard.dri@scotiawealth.com.

¹Fidelity Investments. “Bear Market Basics.” Accessed March 20, 2020.

source https://richarddri.ca/what-to-do-and-not-do-during-a-market-turndown/

It was an auspicious start to the week as global stocks rose Monday over news that more countries, and some states in the U.S., were beginning to reopen their economies. By Monday’s close, the Dow jumped nearly 360 points, while the TSX added 222. Meanwhile, oil prices weakened sharply Monday on continued concern about oversupply, falling near their lowest level since 1999.

Global stocks were mixed, however, on Tuesday in a volatile session that saw U.S. markets reach new multi-week highs before fading later in the day, as serious questions remain about declining corporate profits, stretched equity valuations and a deteriorating U.S. economy. Weighing on markets was news that the U.S. consumer confidence index in April tumbled to a reading of 87 from 119 in March. That’s the lowest reading in about six years and a clear indication that consumer spending will face considerable headwinds for some time to come. In commodities, U.S. crude dropped 3.4% to $12 a barrel. By Tuesday’s close, U.S. markets were down slightly, while the TSX climbed 156 points.

Numbers released by the U.S. Commerce Department Wednesday showed that the U.S. economy contracted 4.8% in Q1 2020, the biggest drop in quarterly GDP since Q4 2008. According to many economists, the decline marks the beginning of a near-certain recession, with Q2 numbers expected to paint an even bleaker picture. Meanwhile, the eurozone economy contracted at the fastest pace on record, as Q1 GDP shrank over 14%.

Despite the downbeat data, N.A. markets regained considerable ground Wednesday on reported progress on a coronavirus treatment and optimism for a post-pandemic resurgence. The TSX hit a seven-week high on Wednesday, boosted by a 22% jump in U.S. crude oil futures, while the loonie saw its biggest increase in three weeks against the greenback. By the close, the TSX added 430 points, while the Dow surged more than 530. Since the market crash in February and March, the TSX and S&P 500 had both clawed back roughly 60% of the losses by Wednesday’s close.

While markets looked poised for another strong showing on Thursday, weak reports on U.S. unemployment and consumer spending tempered investors’ appetite for risk. Consumer spending fell 7.5% in March, the steepest monthly recorded decline in six decades. Meanwhile, weekly jobless claims in the U.S. hit 3.8 million, bringing the total number of newly unemployed to roughly 30 million. Despite Thursday’s modest losses, the Dow and S&P during April gained 11% and 13%, respectively.

Read more…

source https://richarddri.ca/n-a-markets-regain-ground-despite-weak-economic-data/

Richard, once again, is taking the opportunity to respond to client concerns rather than interviewing a guest on the podcast today. In this episode, he looks at Disaster Plans, the important role they play, and what documents are included in them. Drawing upon his own recent and tragic experience of losing his wife, Mary, he also provides compelling examples which clearly demonstrate the necessity for everyone to be prepared for any eventuality, and to generate these plans which will help ensure financial stability for themselves and their families.

Finally, Richard emphasizes the importance of reviewing current account values, and offers an exercise for listeners to engage in that will help calculate their financial readiness for retirement.

Download the full transcript here

Highlights:

– A Disaster Plan is made up of 5 documents.
– Have a will and powers of attorney.
– Review your life insurance policies.
– Have what Richard calls joint ownership with rights of survivorship.
– Review your disability insurance.
– Have a document prepared and reviewed by yourself and updated regularly with the list of all your assets, and who to speak to in the event that you are no longer here.
– Review your current account values and determine the approximate amount of money that you need in retirement.

Quotes:

“My personal life, as you know, changed on January the 15th when my own wife passed away.”

“Unfortunately, many Canadians die each year without a will or powers of attorney and even more die with a will or powers of attorney that are not current and no longer reflect their current wishes.”

“If you were to die today, would your family be financially stable or would their world turn upside down because of money worries?”

“If you do have the assets such as a bank account in joint ownership with rights of survivorship, on your passing, your beneficiary will automatically own that particular investment without it going through probate fee, and it will also save a tremendous amount of time.”

“I suggest that if you don’t have disability insurance, you consider buying some coverage.”

“When Mary passed away, I realized that I did not have her passwords to her bank accounts nor her iPhone nor her personal computer.”

“My opinion is keep doing the things that you are passionate about and of which you have a special skill.”

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Listen to more podcasts by Richard Dri:

Canada’s Emergency Assistance for Businesses

What to do if you lose your job

Conference Call Replay: 10 important issues for investors to remember in tough times

source https://richarddri.ca/my-disaster-plan/

Richard Dri Canadian Dividend Model

US Dividend Growth Model

Richard Dri Earnings Momentum Model

Focused Tactical Canadian Model

Richard Dri Tactical US Model

Canadian Smart Fixed Income Model

US Smart Fixed Income Model

source https://richarddri.ca/richard-dri-models-3/

Never Retire Profile of the Week

Joan Didion

Born in 1934, the American novelist and essayist is probably most known today for her memoir, The Year of Magical Thinking. Written after the death of her husband, John Gregory Dunne – a prolific writer himself – Didion’s book recounts her experience of grief and has touched countless readers in the same life circumstance. For her overall contributions to literature, culture and politics, Didion was awarded an honorary Doctor of Letters degree by Harvard University in 2009 and a second Hon. D.Litt from Yale University in 2011. In 2013, President Barack Obama presented Didion with a National Medal of Arts. For a fascinating look into the life of this fascinating woman who refuses to retire, check out the Netflix documentary The Center Will Not Hold, directed by her nephew Griffin Dunne.

Who would have thought that our lives could be upended so suddenly and in such a dramatic manner?

Our current situation reminds me of something Mary Shelley once said: “Nothing is so painful to the human mind as great and sudden change.” The famous author of Frankenstein was a master storyteller when it came to events that launch a bomb into people’s lives.

As many of you know, my life took a great change when my wife died on January 15. And then, while I was grieving her death and supporting my children, the youngest being 17-years-old, the world’s attention turned to a deadly virus called “severe acute respiratory syndrome coronavirus 2” (SARS- CoV2), which causes the disease COVID-19.

These two back-to-back events, and the rising number of deaths related to COVID-19, left me pondering my own mortality and asking myself if my personal disaster plan was still applicable.

When I became a widower and single parent, much of that plan was suddenly irrelevant. Many of my life goals were based on mutual dreams that my wife and I had set for our future together.

We dreamed of travelling to every continent. We dreamed of helping our children with their lives (both financially and emotionally). We dreamed of continuing and increasing our charitable gifting. We dreamed of leaving an educational legacy for our grandchildren. We dreamed of downsizing and spending the winters in warmer climates. All these dreams changed on Jan 15th .

I needed a new financial plan. And then, when the risk of dying from COVID-19 landed, I thought even more about my financial goals and those of many clients and readers of this blog.

You may also have heard the warning bell rung by this pernicious and deadly virus. You may be asking yourself, what’s my plan? If I get sick or die, will my family be okay?

I know how easy it is to brush aside thoughts about and plans for death. In the midst of life, it feels far away. Heck, I didn’t have a Will or Power of Attorney until our third child was born. I was 40-years-old!

How has your life changed in the face of COVID-19? Have you considered all aspects of your financial planning? Let’s talk about a disaster plan.

Your Disaster Plan

Wills and Powers of Attorney

Each year, many Canadians die without Wills or with an outdated Will that does not reflect their current last wishes. I urge you to take this first step: find your Will and read it. Does it still make sense? If not, call your estate lawyer today, ask for a virtual appointment, and update the Will as soon as possible.

Of course, if you do not have a Will and Power of Attorney, then stop reading this blog now and call the lawyer (if you don’t have an estate lawyer, please call our office and we will provide referrals). Trust me, settling an estate with a valid Will is a complicated and time-consuming process – but trying to settle an estate without a Will can be nearly impossible.

Life insurance

Review your life insurance policies – both individual policies and group polices from work. Perform a mental exercise like this: if you died today, would your family be financially stable, or would their world turn upside down because of money worries? If your family would suffer financially, perform the following mental math exercise: determine the annual cash shortfall your family would face if you died and estimate the duration. For example, if my family’s shortfall is $50,000 per year for the next 25 years, then I need approximately $1,250,000 of life insurance.

The last step is obvious. Compare your existing insurance to your estimated amount needed. Are you adequately insured? If you need help with this calculation, call our office for an appointment.

Location of your documents

Let your family know where to find these documents. Make it easy for them: write down their location and, while you’re at it, also record the names of your lawyer, accountant, financial advisor, your passwords, and your bank account numbers. Tell your family where all this is stored. True personal story: after Mary’s passing, I realized I did not know the passwords to her bank accounts, iPhone, or personal computer. I’m still looking for ways to get some of them.

Joint ownership and rights of survivorship

Examine all assets such as bank accounts, investments, principle residence, and so on. If they are in your name, they will not automatically transfer to your spouse on your passing. The assets will pass through probate and, along the way, fees of 1.5% will be deducted. I suggest you make a list of all your assets and note the ownership. Then, consider if they should be transferred to joint ownership with rights of survivorship. If you need help with this discussion, please call our office.

Another true story: after Mary’s passing, I realized that she had several bank accounts in her name. Unfortunately, before I receive ownership of these accounts, Mary’s estate will pay probate fees.

Disability insurance

Although Disability insurance doesn’t apply at death, I include it here because a COVID-19 related illness could remove you from the workforce for an indefinite time (think of Boris Johnson) and reduce or eliminate your cash flow. A disability could force you to prematurely draw down your savings or reduce your ability to achieve your financial savings goals.

You can’t be in a position where you are disabled and have no income. I suggest you locate your disability insurance policy and read and understand the coverage and terms. If you need assistance, please call our office for guidance.

My Retirement Plan

In additional to my disaster plan, I reviewed my investment accounts and assessed how/if the market downturn has affected my financial independence.

Readers of this blog know that I promote a ‘Never Retire‘ philosophy, which simply means that if you enjoy doing something (like running your business), why retire at a randomly selected age of 65? Keep doing the things you are passionate about and for which you have a special skill.

I am passionate about my unique role of helping business owners “Live Well, Stay Rich, Never Retire.” After more than 25 years of working with entrepreneurs, I believe that I have developed the distinctive skills that business owners demand from a Certified Financial Planner (CFP).

Although my account values are down, I calculated that they are still sufficient to cover my living expenses for the rest of my life. In addition, since I intend to keep working (God willing), I have time to replenish my savings and provide a larger cushion to handle future life surprises.

I understand that some readers plan to eventually retire, and I respect this decision. If so, a market decline may have reduced their ability to fund cash flow needs. If you find yourself worried about running out of money before death, consider this easy exercise: take your annual cash requirements and multiply this number by 25. That figure represents an approximate amount of money needed at retirement (assuming a 4% growth rate).

For example, if my lifestyle expenses are $50,000 per year, then I should have a nest egg of approximately $1,250,000 (after tax). Do you still have this amount? If so, there is a strong probability that you have enough funds to cover your retirement income needs. In order to be more accurate, call our office and we will update your retirement projection and offer suggestions.

Let’s hope we find our way through this pandemic as safely and swiftly as possible. At the same time, we can turn it into an opportunity for good: taking care of ourselves, our future, and our families. No-one likes sudden and difficult change. But we can do everything in our power to transition to a “new normal” wisely and well.

Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.

The process of finding an Advisor can be overwhelming. Our process is designed with you in mind. Its structured framework helps you make an informed decision about engaging an appropriate advisor.

Get started here. 

Call me if you in want to map out how you can Never Retire. You can also subscribe to our Never Retire Newsletter, contact us to order a complimentary book, register for one of our events, and call us to meet with a Certified Financial Planner. We offer you a range of services from a financial plan to investment advice or helping you take advantage of our investment models. Call me at 416.355.6370 or email me at richard.dri@scotiawealth.com.

source https://richarddri.ca/what-if-i-die-my-updated-disaster-plan-and-financial-plan/

U.S. stocks declined sharply on Monday, signaling the start of another volatile week, after U.S. crude futures entered negative territory for the first time in history. The front-month May futures contract ended the day at negative $37 a barrel, leaving some producers having to pay buyers to take oil away or store it, as oil demand nearly vanishes in light of the pandemic. Year to date, the S&P energy index has lost 45%, by far the worst performer among 11 sectors. By Monday’s close, the Dow had dropped nearly 600 points, while the Nasdaq shed 89. Despite oil’s continued fall, the TSX climbed 28 points, buoyed by rising sentiment for Shopify, which climbed nearly 7% on the day.

It was another rough day Tuesday as further declines in oil prices dragged down everything from stocks to currencies, adding even more urgency to the crisis sweeping the energy industry. Major U.S. indexes opened sharply lower and continued falling in afternoon trading as the oil selloff gained steam. The Dow plunged over 600 points Tuesday, while the TSX fell more than 3%, and the loonie dropped to a near three-week low. Even gold declined, as investors scrambled for cash to cover other positions.

N.A. markets rallied Wednesday, however, to claw back some of the week’s losses, as Brent crude was up nearly 6% for the day. Adding to the positive sentiment was news that U.S. lawmakers were on track to approve roughly $500 billion in aid for U.S. small businesses struggling from the impact of the coronavirus outbreak. By Wednesday’s close, the TSX was up nearly 350, while the Dow jumped almost 500.

Positive sentiment continued on Thursday as signs of progress against the virus are fuelling hopes that many local economies could soon begin to ease lockdown measures. There was also more good news as oil prices climbed on signs of recovering demand in China, and weekly U.S. jobless claims appeared to be easing–although the total over the last five weeks has now reached 26 million. By Thursday’s close, U.S. and Canadian indexes essentially finished flat.

Read more…

source https://richarddri.ca/volatile-oil-prices-take-investors-on-wild-ride/

Once again, Richard is his own guest as he continues his series of episodes exploring topics of vital interest to investors in light of the economic impact of COVID-19. Today, he looks at just what precisely business owners need to know when they are considering whether or not to apply for the federal government assistance for business owners programs: the Canadian Emergency Wage Subsidy and the Canadian Emergency Business Account.

Download the full transcript here

Highlights:

• The Canadian Emergency Wage Subsidy is available for employers to help with the salary of people that are either on staff and working today or those that are laid off, and with the hope of having them come back to work.
• In order to be eligible either of these assistance programs, there are certain criteria that must be met which Richard outlines in detail.
• The aim of the Canadian Emergency Business Account is to help small businesses have access to capital that they need in order to see them through this pandemic.
• Richard’s recommendation is to definitely apply for this $40,000 loan because of the fact that, if you pay it back, at the very least you’ll have a $10,000 grant.

Quotes:

“The objective of the wage subsidy is really to help the employer keep their employees on their payroll or have them come back to work and put them back on the payroll.”

“The government has set up a program worth about $25 billion, which provides interest free loans of up to $40,000 to small businesses and not for profit organizations.”

“What I would recommend or suggest is that you use the loan to make your business as safe as possible for the employees and the customers.”

“As you’re waiting to restart, I would recommend that you come up with ways to reduce your overhead in a reasonable manner.”

source https://richarddri.ca/canadas-emergency-assistance-for-businesses/