Secrets to a Successful Retirement
Ultimate investment goals can vary widely, and may include wanting to maintain your lifestyle in retirement; leaving as much as possible to your estate; making bequests to designated charities, etc. In addition, your goals will invariably change as you change.
Of paramount importance is what you want from your available resources, what you can afford to risk, and the stage you are at in life's journey. If there is one constant in a uniquely individual process, it is the need to build wealth according to a well-constructed plan that will not risk your precious resources beyond tolerable limits.
You should have a balanced portfolio with an equity bias. In establishing a successful portfolio, no decision is of greater initial and ultimate importance than the correct allocation of resources between cash or other short-term vehicles, bonds (and related-fixed income securities), and stocks (and related equities). It is, in fact, proven that superior investment performance depends much more on the judicious balancing and periodic rebalancing of investable assets than on the selection of individual securities.
Of course, successful investors may periodically change the bond and equity weightings as the relative attraction of each changes with economic and market conditions. In fact, eventual overall performance should be enhanced through periodic rebalancing. After all, you have probably heard the term "Don't put all of your eggs in one basket". So, not only should you not invest your hard-earned dollars in only one asset class, but you should also diversify across sectors and industries on the equity side, and between the length of term-to-maturity of the bond section.
In building portfolio wealth, one must never forget that it is equities that stand to provide superior growth over the long-term better than any other asset class. In other words, well-chosen stocks are essential as the true building-blocks of future wealth. It is important to review your portfolio at least annually to analyze the asset mix and to determine if rebalancing is required.
The information contained herein is considered accurate at the time of posting. CIBC and CIBC World Markets Inc. reserve the right to change any of it without prior notice. It is for general information purposes only.
Clients are advised to seek advice regarding their particular circumstances from their personal tax advisors.