This past Sunday I drove from Kelowna to Powell River. For those of you who’ve never had to, particularly in winter, it means rising in the wee hours; managing a treacherous journey on the Coquihalla; avoiding white knuckled Vancouver drivers on snow covered highways and timing two different ferry schedules.
I calculated that if I left at 5:45 AM, we would have five hours to traverse the mountain passes, negotiate the erratic traffic between Hope and the Port Mann bridge, and then stick handle the uninitiated Vancouver winter drivers between Coquitlam and Horseshoe Bay, all leaving us with a 30 minute cushion at the Ferry terminal to get across and catch one of two connections on the other side. Simple, right?
The conditions this winter on the Coquihalla have been unpredictable, volatile and extreme. At some points I was easily cruising along at 90-100 km an hour with complete confidence, other times I was down to 30 km an hour and praying the B train next to me in the right hand lane didn't slip or narrow the gap as I tried to pass. As we got back into cell range, I had an idea: I asked my daughter to bring up Google maps, set the directions for Horseshoe Bay Ferry Terminal and start the GPS. It wasn't that I needed directions, what it gave me was a way to measure if we were on track or not.
I would know if my efforts were going to get us there on time, or if I should back off and work on plan B. Surprisingly, as we pulled into Hope for a quick stop, it had us within three minutes of our goal. As we drove and our pace kept fluctuating wildly, I would ask my daughter the ETA; it changed in both directions a little but never varied far from the goal.
The point I realized was that the short term fluctuations mattered very little; what mattered most was that I kept moving, that my average speed over time remained close to what it needed to be and that I relaxed. Whether traffic slowed to a crawl, a possessed driver suddenly just had to change lanes right in front of me, or I had to pull over for a minute mattered very little. We arrived at Horseshoe Bay with a few minutes to spare beyond our buffer and hadn't taken any big risks to do it - 90% of the drama was in my own head.
So why am I telling you this? Because managing your wealth is very similar. Firstly, you need to make sure your goals are realistic and achievable; I know you hear this all the time but it really is important. Second, you need to find a reliable way to check your progress as you go, a method that will warn you in advance if you're off track and give you comfort in knowing when you are on course. This goes a long way in getting rid of the worry and anxiety that many people experience with their financial affairs. Thirdly, many things can happen along the road, and if we judge our progress solely by the individual events that happen along the way, we’ll never be at peace until we arrive at our destination.
Finally, the understanding that as important as getting to the place I wanted to get to was, the journey was equally as important. Too often we lose sight of the good things that our journeys give us unexpectedly: an opportunity to spend several days with my 17 year old daughter on a road trip; the magic of technology that gave us the ability to video connect live with my wife along the way and assure her of our progress; the comfort of knowing that regardless where we were on the road, there were other people out there just like us having the same challenges and uncertainties. And yes, even ferry food has its good side.
They say that if you ask three witnesses to an accident what happened, you’re likely to get three different stories. We all have our own lens through which we see the world – shaped by our experiences, our family and our geography. Now imagine we aren’t talking about a fender bender that happened five minutes ago, but instead our future. Our personal vision of what life will look like when we turn in the keys and start retirement. For many people, the answer is obvious: a fifth wheel, happy hour, golf in the desert and months of Arizona sunshine. For others it’s just as obvious but completely different: Canal cruises that last 45 days, months in exotic locales or multiple country hops lasting an entire season. Then again, maybe it’s time to spend in the shop woodworking, or cultivating magnificent gardens, writing that first book or an opportunity to serve a great cause.
Whatever the vision, we each have one. The issues arise when two people, who have planned to spend their lives together, have differing versions of the same future. Worse, they may have assumed they were on the same page, and never bothered to have a heart to heart conversation.
I’m reminded of the movie Don Juan Demarco, starring Johnny Depp, Marlon Brando and Faye Dunaway. At the end of the movie, Brando’s character, transformed by his experiences with Don Juan Demarco, sits across from his wife of many years and says to her, "I want to hear about your hopes and dreams that got lost along the way while I was thinking about myself." She cries gently and replies, "I thought you'd never ask."
This is the kind of conversation you need to have with your significant other, long before that final day. I’m always amazed at how far apart people can be on what a shared future looks like. Sure there are compromises, separate vacations: he goes to California golfing, you go to the Baja for the heat and simplicity; one of you gives in and spends the rest of their life doing something they never really wanted to do; or you come upon a third, neutral option that you can both agree upon. These are all decisions you made when you haven’t had a conversation that brings together a blended vision of the future that leaves you both with a sense of ownership and excitement.
So the time to start, if you’re not already there, is now. Sit down and each of you lay out (write, draw, cut and paste images or whatever creative medium you choose), what the future looks like for you. It’s about both of you, but through your own eyes. Let your partner read your vision and you read theirs. Now find the places where they overlap. What have you got in common, where is there room for compromise and what is a must-do? This is a great starting point, the conversation has just begun and hopefully you have years before you need to put the plan into action. Of course, this assumes you both understand the financial realities of your situation, and have common ideas of the grandiose that you will be capable of experiencing.
As all things in love and money, communication is the key. Listen, have an open mind and know what you’re willing to give up, and what you feel you can’t compromise on. This may sound more like relationship advice than financial advice, but retirement is about more than money, it’s about perspective, and a common perspective is the best way to work towards a shared retirement.
This is for information purposes only. It is recommended that individuals consult with their financial advisor before acting on any information contained in this article. The opinions stated are those of the author and not necessarily those of Scotia Capital Inc. or The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF.
Market Big Picture
Jittery markets eye data
After a rocky start to the week, markets remained jittery as traders looked to economic data for guidance. Today’s (Feb. 7) US jobs report may point the way forward as it’s the one Fed officials watch closely to determine future monetary policy. The report has taken on added significance because the previous one landed with a thud in January. It painted a still-iffy employment picture and if we see a repeat today, markets could darken. But the opposite may also come to pass. The most likely scenario, however, is another murky report that breeds more uncertainty. Spirits were lifted Thursday after a jobless claims report unexpectedly showed the number of people filing for benefits falling to 331,000 from 351,000. The previous day, however, private payroll firm ADP weighed in with its jobs report which pegged the number of new jobs at 175,000 in January; 15,000 below expectations. The number economists are looking for today is 189,000. In other economic news, the ECB left interest rates unchanged but the central bank did say future rate cuts and increased stimulus measures are on the table. Finally, there may be another debt-ceiling dust-up in the offing as the US government hits its debt limit today. Although the federal government will be able to use special measures to continue spending it can only tap those measures until late February.
US stocks demonstrate resilience
The month may have changed but the pattern of volatility we’ve seen in the markets of late has not. On Monday, the Dow plunged 326 pts. or 2.1% in the biggest sell-off in more than seven months but buyers quickly returned and the blue-chip index recorded its biggest one-day gain of the year Thursday, up 188 pts. or 1.22%. For the four days covered in this report, the Dow fell 70 pts. to end at 15,628, the S&P 500 fell 9 pts. to settle at 1,773 and the Nasdaq shed 46 pts. to close at 4,057. The TSX rose 19 pts. over the period to finish at 13,713.
Volatility up, equity markets down; Are we worried? No
- Equities - Himalaya Jain, Director, Portfolio Advisory Group wrote “When we advocated raising cash two weeks ago (HWWT, Jan 21) even we didn’t expect the sell-off to start so quickly and proceed as fast. The pullback does reaffirm our view that 2014 is going to be much different than 2013, both in terms of return expectations and volatility. With most investors singing from the same song sheet (i.e. overweight equities in developed markets) it is reasonable that markets were reflecting this optimistic consensus view. We think the recent weakness in U.S. economic data has been tainted by severe weather and is not indicative of a momentum shift in the economy. While businesses are still somewhat cautious, the corporate earnings recovery appears to be intact and this forms the basis of our expectation that equity markets should end the year higher than where they started. With the S&P500 off 5% YTD, we think a further 2%-4% slide is plausible, and should it occur it would return the forward P/E of this market to a more reasonable14x (from 15.4x at the peak). Having raised some cash in the past few weeks, we are looking for opportunities to redeploy. In the near-term, we have sought the safety and income of higher dividend paying stocks (and preferreds) as we are unsure how long this sideways market may continue. Once the risk/return equation improves we anticipate venturing further into European equities and expect to rebuild U.S. equity positions. Given the relative YTD outperformance of the Canadian equity market, we no longer have a bias toward Canada.”
- Preferreds - Tara Quinn, Director, Portfolio Advisory Group wrote: “Approximately $1.1 billion of bank rate reset preferred shares will be redeemed during February. With the resulting influx of cash we anticipate that preferred share markets will be well bid through the month as investors put these proceeds to work. We recommend reinvesting into existing non-NVCC bank perpetuals. Since the majority of existing bank perpetuals are not Basel III compliant they will likely be called prior to 2022 and thus trade with a shorter duration than non-bank perpetuals. Some issues we have been looking at are BNS.PR.M, BMO.PR.J, and RR.PR.E which have a yield to worst of approximately 3.93%.”
Email Jeff with your comments or questions: [email protected]
All performance data represents past performance and is not indicative of future performance. This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author is an employee of ScotiaMcLeod, a division of Scotia Capital Inc. (“SCI”), but the data selection, analysis and views expressed herein are solely those of the author and not those of SCI. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor SCI can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your investment advisor, who can assess all relevant particulars of any proposed investment or transaction. SCI and the author accept no liability of whatsoever kind for any damages or losses incurred by you as a result of reliance upon or use of this publication in contravention of this notice. ® Registered trademark of The Bank of Nova Scotia, used by ScotiaMcLeod. ScotiaMcLeod is a division of Scotia Capital Inc. ("SCI"). SCI is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.
Do you have a social network? Of course you do. And I’m not talking about Facebook, Instagram or Twitter. I’m talking about your family, friends and community who are part of your everyday life. The people whose voice you know on the phone, those who you have thanksgiving dinner with, those who support you in tough times and those who share your joy when things are on a roll. When we’re young, our social networks are limited to the people we go to school with, our immediate neighbours and our relatives who we see. As we grow and mature, we become involved in social networks with people who do the same things we do: sports, arts, church and academic interests.
As we raise our families, our social network grows to include the parents of children whose kids are involved in the same things as we are; as well, we start to connect with people who we work with. As the kids get older and we get some of our own time back, we began to add people who have the same interests as us. That is the basic building blocks of your social network: a lifetime of friendships, acquaintances and relatives woven together to create what is your world.
And then we approach retirement. We have time on our hands, nowhere to go in hurry and a desire to deepen our relationships – then a funny thing happens: our social network begins to shrink. The kids have moved away (and have not yet moved back), friends start to move on – maybe heading South in the winter or to locations that are closer to family. People pass on; we lose touch with Aunt Mabel and Uncle Frank. All of a sudden, that broad network of people who have been there all along starts to thin out. The phone rings less, the Christmas cards stop coming and the email addressed directly to you is less frequent.
You have two options at this point: continue to watch your address list shrink, or put yourself out there and make some new connections. Making new friends is hard, especially when you’re set in your ways and struggle to open up or begin again with new people. It’s the same for everybody though: a lifetime of experiences has taught us to tread slowly, protect our fragile inner-selves and not trust strangers easily.
We need to learn to treat this much like driving into a curve: counter-intuitively. We may brake a little before we reach the curve, but once in the curve, braking will only make our turn less stable. As we come out of the curve, a little acceleration smoothes it out. So it is with social networks: just when we think it’s time to hide in our shell, we need to put ourselves out there and meet new people. It’s time to build networks based on the things we care about, our activities and interests. Finally we have the opportunity to meet people who have things in common with us and the maturity and experience to move slowly. Our social network is no longer dictated by the needs of others or necessity; they are now there to be built on the things that really matter to us.
It’s a fact that engaged people with healthy social networks live longer and have healthier lives. They spend less money on healthcare, have less downtime and feel a greater sense of fulfillment. So the next time you meet someone, don’t let guarded optimism be your first reaction, look upon the meeting as a fresh opportunity to expand your network and a chance to improve your life.
Email Jeff with your comments or questions: [email protected]
Read more Navigating Your Wealth articles
- Surviving your health Jan 29
- Selling the family home Jan 22
- I can see for miles Jan 15
- The secret of change Jan 8
- Protect the inheritance you leave behind Dec 18
- Markets take a breather Dec 11
- Year-end tax planning for individuals Dec 4
- Protecting investments from higher rates Nov 27
- See your future Nov 20
- Generating income in uncertain times Nov 13
- Purple cows and stock operators Nov 6
- Pay now or pay later Oct 30
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