Thanks for the questions Nick and Aubree!

I am going to tackle Aubree’s question first because it’s a little easier.

Aubree: What’s the magic number for retirement savings?

Anyone nearing retirement has the question “will I have enough?” and our process answers this for all of our clients. The results of our calculations are not always favourable though the data enables us to develop alternatives. The good news is that only slight adjustments need to be made if you start the process early in your career. In a previous blog post we provided an example of a financial projection so you can see the inputs, assumptions, and results of these calculations. (Click here)

Okay, now for Nick’s question. You couldn’t have gone easy on me, eh? Just kidding.

Nick: How do we know that our savings are diverse enough that if the world changes significantly in the next 10, 20, 30 years we will be okay? For example if Trump starts WWIII and we survive, will we have anything left?

I think people mistakenly assume they are hiring a fortune-teller with a crystal ball when hiring a financial professional. Unfortunately, we do not know beforehand what the next big market event will be and when it will happen. You mention Trump starting WWIII and while I know you are kidding around, I have provided two charts that will put things in perspective.

  1. Here is a history of disasters and the financial market losses during the subsequent reaction period. This chart does a great job at illustrating why you should not react to external events when it comes to investing. In fact, if you want to know the best time to invest new money into financial markets, it would be sometime during these reaction dates when other investors are fearful.

 

 

  1. Here is a graph that shows the power of staying invested over 30 years in Canadian markets. This chart takes into account four of the negative market events noted in #1. I hope this chart doesn’t create a fear of missing out (FOMO) on the next best market day! Although FOMO might be a better feeling than thoughts of WWIII…

 

 

We hope our answers gave you some extra peace of mind. You’ve already got a plan in place and by sticking with it you’re on your way to your personal “magic number”, and you won’t miss out on any growth opportunities the market provides. Thanks Nick and Aubree for being our Client Heroes!