Murray Callaghan, Callaghan Wealth Management
When I first entered the business, diversification was primarily the tool an advisor used to ensure that all of a client’s invested monies didn’t move in the same direction at the same time. In the simplest sense it was described as, “not keeping all your eggs in the same basket.”
Being diversified with your investments is important. Being diversified across all elements of your financial life is much more so. Today, decisions made half way across the globe ripple across the economic landscape affecting jobs, the economy, our dollar and the interest we pay on our obligations.
Contrary to popular opinion I believe those starting out should focus on defense not long term returns. Cash needs to be retained to build emergency savings and to provide flexibility. Building a credit rating is a good idea and soon job stability provides a basis for becoming a homeowner.
The birth of a child is a joyous occasion and life insurance becomes a necessity. Beginning a RESP sets the expectation that post-secondary is anticipated and starting early adds grants and market growth.
Equity in a home adds to net worth and higher incomes likely means RRSP contributions are the norm. TFSAs are considered and will be suitable for some.
Financial planning and cash flow projections will give you a better understanding of what retirement has in store regardless of whether you pull the plug permanently or ease out of the workforce.
With current life expectancy at 86/82 (females/males respectively) and many living well beyond those dates continuing to hedge by home ownership and quality securities is prudent as is having the financial diversification to withstand market risk.
Murray Callaghan is a Certified Financial Planner with 15 years’ industry experience. He partners with external portfolio managers and insurance providers. Reach him at 250.286.9968 or visit his website at www.crwealthmanagement.ca.