My wife has a LIRA and a RSP. Every now and then she asks me how her accounts are doing but really has no interest when it comes to investing money. My wife turns 57 in another couple of weeks and only cares about not losing money and that her investments are relatively safe. She trusts me implicitly.
I handle her accounts a lot different than my own, simply because depending on the month or the year I want to make sure she understands what and why things are happening the way they are. During the financial crisis of 2008/9 this was extremely difficult to articulate to her.
Once I told her that Iceland went bankrupt in 2009 it put losses we were experiencing in a bit better perspective.
Nobody likes to lose money, this is a given. Where our collective investments differ is how soon they recover. One prominent early retiree who used to profess a DG strategy and claimed his portfolio was recession proof, turned around and sold all his stocks near the bottom of the market chaos in 2009. You can read my review of his strategy and history here. Try not to be this guy.
It seems even Canada's youngest retiree couldn't handle losses as much as he liked to claim he could. Reality is a cold hearted bitch sometimes. The stock market is a really poor place to learn how to invest.
Be careful who you read and take investment advice from.
The whole reason I decided to dump all my wife's individual stocks was out of her concern over taking over her investments should something happen to me.
Her concerns are legitimate as she knows nothing and has no interest in learning about buying and selling stocks.
So, I bought her a mutual fund as a one stop shop to better understand her account holdings. If she wants to sell it all when I'm gone it's just one fund. Kind of like an auto-pilot strategy with dividends automatically invested for her.
This is like going back to the future for the both of us. I dumped all of our Fidelity and IG mutual funds back in 1999 when we got married. With aging comes adaptation and the realization that our lives are closer to the end than the beginning. For her to take over if I die first then a mutual fund makes perfect sense for her to handle.
I decide to buy her the Mawer Balanced Fund.
Why Mawer (MAW104)?
- Lost cost at a reasonable MER of 0.92%
- Ranked 12/1258 of Global Neutral Balanced Funds
- A wrap of 7 individual Mawer Funds
- 5 star Morningstar Rating
- Returned 10% last year
- same fund manager since 2006
There are just so many funds to choose from but from all I've read about the Mawer family it's a highly rated very conservative investment.
I love the simplicity of buying this mutual fund for a portion of my wife's retirement money. I have her RSP in a series of 4 X ETFs that is simple but a little more complex than owning a mutual fund. I am really thinking of switching her into Vanguard's new ETF VBAL with a cheap MER of 0.22%.
The fact that I don't have to worry about picking stocks for my wife's account relieves a lot of stress for me if they take a dump. I don't have to answer questions on why I lost so much money like 2009.
When the fund goes down in value and it will, I believe it will recover faster than an all stock portfolio which she had. This 60/40 mix of mutual funds inside a mutual fund with a history of returns dating back to 1988 seemed to be a great choice and ticked off all the boxes I was looking for.
Would you ever consider a mutual fund for portfolio simplicity and to ease your spouse's concerns should something happen to you?
Recommended Reading:
My Final Take
I have no plans to sell all my dividend paying stocks that I own. My wife still owns ETFs in her RRSP so we still need to have that discussion on whether she feels comfortable handling it in the unfortunate event something should happen to me. More to follow at a later date.
If you have a SO I truly believe when you enter retirement they should be on board and fully informed on the investment portfolio. They should have an understanding of how to take care of things should something happen to the other partner with all the knowledge. Putting things as much on auto pilot will help ease those concerns. Buying a balanced mutual fund does that for us.
Would you ever consider a mutual fund for portfolio simplicity and to ease your spouse's concerns should something happen to you?
Recommended Reading:
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ReplyDeleteMost people worry about Losing Capital and too often they use performance measures which have little meaning, at least to me, because they are are looking at one years return or comparing to index's. We've been in a bull market since the Fin Crisis, so everything looks good on paper. Let's see what happens on the next downturn.
ReplyDeleteMy sister retired from teaching and could easily live off her pension. Her savings were always in GIC's. It took me years to convince her to get out of them. Finally she said Ok and we slowly invested in a group of DG stocks. We made two mistakes, D.UN and POT, which we've sold and invested in her 10 solid DG stocks. When she had gic's they provided about 20% of her pension. Today her dividends now match her pension and are growing.
What she's learned from this change is: Watch the Income, not price!
She also wishes she had made the change years ago.
Good for you and your sister. She is lucky to have you giving such great advice to get into DG stocks. That yield and growth can build a powerful portfolio in time. Thanks for sharing that example to all.
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