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Sherry Cooper, BMO’s former chief economist, takes a page from Warren Buffett’s books, arguing that investors need not broadly diversify if they have a deep understanding of their investments.

Moe Doiron/The Globe and Mail

Sherry Cooper left her job as chief economist at the Bank of Montreal in 2013, when she was 62. But for Ms. Cooper, retirement is not a time for lounging on the beach. It's a time for doing new things – for "regeneration, rejuvenation and lower-stress contributions to society," as she wrote in her book The New Retirement: How It Will Change Our Future (published in 2008). She is currently the chief economist at mortgage broker Dominion Lending Centres, business professor at McMaster University and consultant to marketing firm MDC Partners Inc. She also publishes regular economic commentaries on her website,, is active on the speaking circuit and gives interviews to the media.

How do you invest your savings?

I'm heavily invested in different bank shares, which pay dividends yielding about 4 per cent. I would like to live on dividend income when I'm no longer working. Right now, I am still working, so I reinvest the dividends through dividend reinvestment plans. This enables me to increase the value of my portfolio without trying to time markets. Where it really works well is during bear markets. Many investors are too frightened to buy stocks at such times, even though they are really cheap, but dividend reinvestment plans keep buying for me. And because prices are low, they pick up more shares for each dollar invested.

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What about the view that dividend portfolios are not diversified enough?

I am comfortable with this non-diversified plan because the banking industry in Canada is one I know very well, having worked in it for several decades. Like Warren Buffett, I believe that if you have a deep understanding of your investments, broad diversification is not essential. In fact, it can dilute your returns. Moreover, the banking industry in Canada is solid and heavily regulated – if the banks go down, there is no safety anywhere. But I do have other assets besides shares in Canadian public companies, notably U.S. and Canadian real estate, private equity and venture capital funds, U.S. exchange-traded funds in my RRSP, BMO stock options and substantial cash balances in both the U.S. and Canada.

What were some of your better financial moves?

Putting savings on automatic pilot was the best thing I could have done. … I signed up for my employer's [Bank of Montreal] group RRSP and had the contributions automatically deducted from my paycheque. An added benefit was that my contributions were matched by my employer. I also invested in the employee share-ownership plan though payroll deductions. Once I was in a solid financial position, I saved the maximum allowed of my annual bonus in a deferred profit-sharing plan.

Using a financial planner was one of my better moves, too. With their help, I calculated how much I will need to save from my work income to meet my needs in retirement. This was a rigorous process that took into account expected inflation, interest rates, investment returns, spending in retirement and other parameters.

It looks like you have very ample financial resources. Is leaving a substantial legacy part of your plan?

Leaving a legacy is important to me. I am actively involved in mentoring younger women in the financial services industry, supporting female-led small businesses and working to enhance financial literacy for all women. I expect to leave a substantial legacy to my son and his two boys, as well as to some worthwhile causes, but my most important legacy to my family is my commitment to their getting the best education possible and to following big dreams through hard work and sheer grit.

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Where is the Canadian housing market headed?

I see a slowdown in Canadian housing, but not a crash. The underlying demand fundamentals are very strong and supply is limited, especially in the Toronto and Vancouver areas. Population growth coming from immigration underpins demand, and Toronto has become a major global city.

You have written several financial and retirement books. What was one of the top themes?

Don't stop working until you have to. Work provides social and intellectual stimulation as well as a sense of purpose. Even volunteer work exercises the brain. The people who are healthiest and happiest keep active and have a lot of social interaction and a sense of giving back.

Will you be writing any more books?

I am not thinking about writing another book. Each of my books took me nine months or so to write and then another year before hitting the shelves. The world is changing very rapidly, and my kind of books can feel outdated, even at publication. I prefer now to publish shorter pieces electronically.

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This interview has been edited and condensed.

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