Finance Problem: plenty of gains, not enough income Maybe your portfolio is heavily invested in growth stocks that don’t issue dividends (high-tech stocks, for example). Maybe you’ve only recently retired, and you never really needed income from your portfolio before. Or, perhaps you’ve been reluctant to invest in bonds, GICs and other traditional income investments when interest rates are so darn low. Whatever the reason, your portfolio isn’t generating nearly enough income to meet your basic needs, which forces you to sell small portions of your holdings on a regular basis. Nothing wrong with that in a strong bull market − there are plenty of gains to go around. But what if we experience a market downturn? Selling into a downturn just to generate cash to pay your bills, take a vacation or live the good life would hardly be ideal. Solution: start thinking about income If you’re a snowbird who relies on your portfolio to support your lifestyle, it’s time to include some income investments in your portfolio, even if that means trimming back on some of your growth investments. That income can come from multiple sources: dividend-generating stocks, bonds and guaranteed investments, real estate and, of course, mutual funds and ETFs that hold such investments. And, as you advance in years, you should include more and more of these income-generating investments in your portfolio − a steady paycheque from your portfolio will help you avoid having to sell at inopportune times. Problem: you’re not really clear about what to do One of the challenges of a market in which everything seems rather expensive is that it’s sometimes tough to figure out exactly what to do. Add to that a lot of analysts, pundits, commentators and journalists who are all talking about how the stock market party is coming to an end − and an equal number who are all talking about how it isn’t. All too often, the result is a kind of “paralysis” in which you’re not entirely sure of what to do, so you end up doing nothing. Solution: seek a professional opinion Doing nothing is not always a bad thing in the investment world. But if you find yourself becoming increasingly reluctant to take any investment action, or hesitant to make any financial changes for fear of making the wrong decision, that can be a sign that it’s time to call in some help. While not everyone needs to work with a wealth advisor, financial planner, accountant, tax lawyer or other qualified financial professional, for those of us who need some guidance or advice about what to do (or what not to do), there’s probably no better solution. No, not every financial decision needs to be discussed or debated with someone else before you make it. But, if you’re truly stuck, it makes a lot of sense to seek out a sounding board − someone who can give you some perspective about what’s going on, and who can help provide a course of action for helping you achieve your long-term goals. Sure, such guidance and oversight might cost you more than trying to muddle through and figure things out by yourself. But the feeling of actually moving toward a solution to your portfolio problems − rather than being stuck in the middle of them − for most people, that’s an investment worth paying for. CSANews | SUMMER 2021 | 27
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