Investment Considerations for Your Withdrawal Portfolio PART 1

There are a number of strategies and considerations that will be beneficial to you in obtaining the maximum benefit from your income-producing assets. Some have been addressed in previous posts such as:

  • consolidate assets
  • consider income streams as well as assets
  • layer income in a specific order
  • provide the potential for some growth
  • adopt a model for income delivery

Here are some more pointers that will assist you to improve the efficiency with which your income is being created, reduce taxation and preserve your income-producing assets. Some of these actions are straightforward, simple and obvious, but you would be surprised to see all the situations where they are not done properly. Here are some strategies to ensure you’re successful:

Allocate for tax efficiency
Make sure your tax-inefficient investments within registered accounts or other shelters such as a TFSA or corporate class mutual fund. If you are going to have interest-bearing investments, hold them in an account that is sheltered.

Follow an investment and income process
Ideally, the process and the strategy for managing the assets and creating the income streams should be documented through an instrument known as Investment Policy Statement (IPS). It provides understanding and direction to the entire investment process and serves to create a more systematic and disciplined approach to ongoing decision-making. Here are some items it should include:

  • review of your objectives, circumstances and investment tolerances
  • specifics of the asset mix and target rate of return
  • details of the asset allocation mix and specific investments
  • guidelines for portfolio/manager evaluation
  • triggers for action, including rebalancing, taking profits and replacing managers
  • disclouse of the fees associated with the investments chosen
  • expectations/commitments for service

It should serve as a communication tool between you and your advisor, along with your blueprint and should be the basis for discussion at review meetings.

Stay tuned for our next post that will provide you with other approaches to putting your money to work!

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