Our guest today is Jason Heath, CFP who has been providing fee-only, advice-only financial planning since 2001 and is one of Canada’s best-known fee-only financial planners.
He is currently a personal finance columnist for the Financial Post, MoneySense and is also a regular contributor to RetireHappy.ca.
I’ve been reading his insightful financial planning articles on MoneySense for years, so I thought it would be great to have him on the show to discuss how we Canadians can optimize our investment portfolios.
We cover both phases: Before retirement when you're in the growth phase trying to retire early, and after retirement, once you’ve hit your number and want to make sure you don’t run out of money.
Questions Covered:
1. What do you think is the best way for do-it-yourself investors to determine their asset allocation in terms of what percentage of stocks vs fixed income to hold in their portfolio? Does the answer change depending on whether someone is working towards an early retirement vs already being retired? I find asset allocation questionnaires are far from perfect, as people's emotions and feelings about the answers can really change depending on when you ask them and how much they already know about investing. For somebody that is in or approaching an early retirement or traditional retirement, do you also base the percentage of their fixed income on some spending related rule? For example: That common advice to hold five years of living expenses as fixed income as that should ride out most recessions.
2. When you're working with clients and strategizing on what should be in the fixed income/safe portion of their portfolio, how do you determine how much they should put into bonds vs a high interest savings account vs GICs? Are there certain rules or processes that you like to follow to determine this?
3. For those that are retired, what are some of your favourite ways to manage the cashflow in retirement so that the retiree doesn't run out of money. For example, do you use some sort of bucket strategy? ex. Having equity, bonds, GICs and cash buckets then rebalancing and refilling those accordingly?
4. I find that many investors who are new to investing, or are switching to do-it-yourself investing to save on fees, sometimes they get intimidated by now having to rebalance their investments. For anybody new to this, can you define what rebalancing is and what rule or rules do you have for yourself (and your practice) that determines when you rebalance?
5. What are your thoughts about the increasingly popular Asset Allocation ETFs where the rebalancing is done for you?
6. Are there any negatives about Asset Allocation ETFs that you think should be considered?
7. What accounts are they best suited for?
8. For somebody that is already retired and needs to use their investments for living expenses, how do you determine whether to sell off equities vs sell bonds or use cash or GICs?
9. Do you have some sort of rule/process like if X happens in the markets then I'm selling off equities to generate cash to live from. If Y happens then I use a cash cushion or the bond portion?
10. What are your thoughts on the 4% rule and are there any variable spending strategies that you like instead of using the 4% rule?
11. If you could go back to when you first started investing, what advice would you give yourself?
Resources from the Episode:
Free tickets to the Canadian Financial Summit: ([ Ссылка ])
I’ll be speaking again at the Canadian Financial Summit ([ Ссылка ]) and I have free tickets for you. The entire event is online so you can watch it from anywhere, and it’s Canada’s largest personal finance conference.
I’ll be there together with over 25 Canadian personal finance experts, and in my talk I’ll be speaking about how we optimized our investment portfolio before we retired, and after we retired. This way no matter where you are on your financial independence journey, it’ll at the very least give you some insights on ways that you can optimize your own investment portfolio so that you can retire early, or at least hit your financial independence number quicker.
To get your free tickets for a limited time, go to: [ Ссылка ] ([ Ссылка ])
Top Tools and Resources for Financial Independence (for Canadians) ([ Ссылка ]) :
All the top tools and sites that I’ve personally used to help us achieve financial independence in our early 30s. They’re also what we use now to optimize and manage our finances, and ensure that we’re paying the lowest fees while getting solid ret...
