Portfolio Confidential
I’m a 32-year-old single woman, about to get married, and I plan to start investing my savings of $100,000 in the equity market. My fiancé and I will have separate finances. My time horizon for investing is very long at this point, so I know I don’t need to concern myself overly with market volatility. On the other hand, you have probably seen many “rookie” mistakes over the years—what do you suggest I avoid doing?
Here are my top five things to avoid doing:
1. Panic selling—letting emotions override your investment plan.
No one can time the market so please don’t try. Instead, consider the two things you do have control over. First, truly commit to being a stock market investor for the long term. Second, use a disciplined approach and invest the same amount of money regularly, monthly, for example, so that you don’t let your fears influence your investing behaviour.
2. Falling in love with stockpiling a disproportionate amount of money into it.
“This company is changing the world!” is among the more common rationales for doing so. But the trouble is anything can happen at any time to any company, including Nvidia.
3. Not having a focused strategy—there needs to be a rhyme and a reason for every holding.
I often see portfolios with too many different mutual funds and too much variation in the percentage weightings for each fund, for no good reason! This is a costly way to invest from several angles.
4. Trying too hard to be green. This can lead to a much riskier portfolio.
The average environmental, social, governance (ESG) fund is more concentrated (the top 10 holdings comprise 35 to 50% depending on the fund) compared to 21% for the S&P 500.
5. Doing business with your brother-in-law.
Avoid dealing with an investment advisor who is a close relative. I have seen countless scenarios where qualifications are exaggerated, results are poor, and the client is taken for granted. Plus, changing advisors is complicated, to say the least.
I would appreciate some advice on my wife's spousal Registered Retirement Savings Plan (RRSP) account. We have been withdrawing funds from her account of $250,000 to reduce future taxes. I remember an article about the benefits of early RRSP withdrawals which made a lot of sense to me. I realize one downside is that we cannot income split the RRSP income as allowed in a Registered Retirement Income Fund (RRIF) withdrawal, but I hope to offset that by claiming more of my annuity income.
We are living comfortably within our means through our combined company pensions, Old Age Security (OAS), Canada Pension Plan (CPP) and our joint annuity that I funded with my $100,000 RRSP. I am 72 and my wife is 68. I have been withdrawing $5,000 for the past three years to fund the Tax-Free Savings Account (TFSA). My question is am I on the right track, and if so, should I consider converting the RRSP to a RRIF sooner than later?
Our combined portfolio:
RRSP $100,000
SRSP $250,000
TFSA $190,000
NON-REGISTERED $140,000
Total $680,000
I outsourced this question to Jason Heath, a fee-only Certified Financial Planner at Objective Financial Partners in Toronto. Jason’s reply:
My answer is “it depends”, but here are a few considerations.
You do not have to take money out of your registered retirement savings plan (RRSP) until age 72 but there are often advantages to considering early RRSP withdrawals. In some cases, it can even make sense to convert your RRSP to a RRIF earlier than required.
The idea is that if you retire in your 50s or 60s and defer withdrawals, your RRSP will continue to grow. When you take withdrawals from your RRSP, they are fully taxable. If your taxable income in your 50s and 60s is relatively low because it comes from non-registered and TFSA withdrawals, you may find yourself in a low tax bracket in your 50s and 60s, and a much higher tax bracket in your 70s and 80s due to withdrawals from your much larger RRSP. You may end up paying more lifetime tax as a result.
The low tax early might feel good, but you may have a lower retirement spending capacity or a smaller estate in some cases by deferring withdrawals. Particularly if you are subject to OAS clawback, which can happen if your income exceeds a threshold ($93,454 for 2025). Your marginal tax rate can be as high as 62% depending on your province of residence in this case.
If you are married, and one spouse dies at a young age, the survivor can end up in a much higher tax bracket as well. And if both spouses die young, or a single retiree dies earlier than expected, the tax payable on the deemed RRSP withdrawal at death could be at a rate higher than the tax rate for refunds on the initial RRSP contributions.
If you convert your RRSP to a RRIF, you can split up to 50% of your withdrawals with your spouse, which may allow you to minimize your combined tax payable.
It’s not a sure thing that everyone should take early RRSP withdrawals or convert their RRSP early to a RRIF. But deferring your RRSP withdrawals until 72 should not be the default either. Retirees would be wise to run some scenarios on their own or with a professional to try to determine a personalized approach that they can feel confident pursuing.
I’m interested in doing some reading about investing. I would like to improve both my knowledge and also my ability to ask my advisor better questions. Do you have any favourite books you can recommend?
Sure! I’ll share my three top picks:
Wealth Management Unwrapped, Revised and Expanded: Unwrap What You Need to Know and Enjoy the Present by Charlotte B. Beyer. Beyer worked with private clients for 40 years on Wall Street and strongly believes that “professionals only know as much as you tell them about your needs, desires, and tolerance for risk.” I agree 100%: the more that any advisor knows about a client, the better the job they can do for them. This book exposes the truth about what advisors never tell clients and what clients never tell advisors. Most importantly Beyer offers advice about how to communicate properly so that you achieve your investment objectives.
Unbiased Investor: Reduce Financial Stress and Keep More of Your Money by Coreen Sol. Currently working as a Portfolio Manager at CIBC World Markets, Sol offers a real-world roadmap to investing success. She explores the behavioural and psychological roadblocks to achieving optimal results from your portfolio and the strategies you can use to overcome these roadblocks. You’ll learn to focus on basic economic principles—rather than harmful psychological biases—to reduce financial stress and reliably grow wealth.
How I Invest My Money, co-edited by Josh Brown and Brian Portnoy. The book is a compilation of chapters written by 25 financial professionals who explain how they invest and more importantly, why they invest. The key takeaway of the book is that there is no single “right” way to save, spend, and invest. Via the background stories, we read a wide range of perspectives on stocks, bonds, real assets, funds, charity, and other means of achieving the life one desires.