Welcome to our Living in Retirement blog, where a couple is writing about their real-life retirement journey.
September, 2012, was not just the start of a new school year. It ushered in a significant beginning for us: The official start of our retirement. For the first time in many years, Astrid did not rush out the door to teach a new classroom of children. Instead, we spent the day together, relaxing and enjoying our new life.
For most of July and August, we were busy exploring our new community and its surroundings. However, as the business of summer ended, we knew we had to get some financial planning tools in place. Astrid was now fully retired while Peter was still working about 25 to 30 hours a month, travelling to Toronto for a few days each month on business. We decided that we would try and save Peter’s part-time income for future use.
We were happy with our tracking system for daily spending, but needed to take a closer look at our RRSP investments. For us, the key question was: Could we increase our returns without increasing our risks? In recent years, the economy had pummelled some of our investments and, as a result, we had put as much as we could into Guaranteed Investment Certificates (GICs) to avoid further erosion and wait for the market to steady itself.
When we were both still working, we never had the time to look closely at our investments. As we moved into retirement, we wanted to take a more active role. We took our first step toward this goal in the summer of 2012 when we transferred all of our RRSP investment funds from a full-service broker at a big Canadian bank to their discount online brokerage, so that we could keep our fees low by managing our investments ourselves. All major banks have their own self-directed brokerage units that provide market research and allow clients to place their own orders in “real-time.”
We soon discovered that it isn’t as easy as it looks. We explored the website and asked retired friends and relatives how they managed their funds. Not surprisingly, we found that everyone had their own method of how best to invest and manage their money – from self-directed accounts to bank mutual funds to independent financial advisers. Because our goal was to educate ourselves about our investments, we focused on the self-directed route.
We spent a few months cautiously using the new Internet brokerage service on our own. By January, we were ready for the next step and enrolled in an online investing course with a web broker. We spent an hour and a half learning how to use the investing software in more depth. With a bit of instruction, we realized there was a wealth of resources available to us. The instructor showed us how to research stocks and bonds and how to buy and sell. Roughly half of the people at the seminar seemed to be retired couples like ourselves.
We have since sold off the mutual funds that were performing poorly and invested in Canadian equities that have – so far – appreciated in value and pay dividends. As our GICs mature, we would like to invest in other strong dividend-yielding stocks. And since we are buying and selling stocks on our own, we are saving on fees. We also have a large enough amount of money in our online brokerage account that we are paying the lowest amount of fees possible for each transaction.
Most recently, we have been researching exchange-traded funds and will be attending a course to find out more about these investments. As well, we have transferred some funds into our Tax Free Savings Accounts. Through our web broker account, we are doing more research on where to put our money once some of our investments mature.
We are still nervous – but excited at the same time – about steering our own investments. We hope to maximize our investment potential, but only time will tell. We don’t check our investments daily, but we do look at them periodically, depending on what we hear the market has done.
Above all, we are cognizant that at our age, we need to avoid taking risks and will not be trying to grab any brass rings in the investment arena.