It’s That Time of Year Again


It’s that time of year again when we get inundated with messages about topping up our RRSP’s or investing for the long run for our retirement, but how do you choose what to invest in?

The markets are down, the dollar is down and according to the press it’s doom and gloom on the horizon. But how do you as a savvy investor, cut through the headlines to figure out what is the best bet for your dollars?

Experts (who are they?) will say buy when the markets are down and sell when they are high, but when you look at your statement and you haven’t seen a high in your returns for a long time, who do you trust? How do you know that the more money you invest, will promise the returns you want?

time to invest

Well looking from the other side, here are some options you can consider that don’t depend on the stock markets and whether you should buy now or not?

Real Estate – buying single family, multi-family, commercial (plaza’s, strip malls, apartment buildings, etc) in a buy & hold strategy, can provide you with monthly cash flow as well as long term appreciation. Even when markets are down, your property will always serve you well as long as you keep the following points in mind:

  • Buy in markets that have population growth, job growth, infrastructure growth and a diversity of industries to service that market;
  • Buy low and sell high – this is also true in real estate, but it is more dependent on figuring out whether your property will cash flow positively while also paying down the mortgage. It does not make sense to invest in a property if it is not going to provide long-term wealth or cash flow – cash is king to a buy & hold investor. Furthermore, if you decide to sell a few years down the road, make sure you have maximized your returns so when you sell you are not on the losing end – remember buy low and sell high!
  • Using your RRSP’s to invest in a property; I spoke of this in my last article. By investing Non-Arms’s Length, you invest in a property that is owned by another investor, stranger, etc. the distinction is they cannot be related to you by blood (see last article Making RRSP’s Or TFSA Work)

If you don’t fancy investing in bricks & mortar properties, you might want to consider investing in development through Syndicated Mortgages. Syndicated mortgages have quickly caught on amongst savvy investors as they get to choose from a variety of different asset classes (single family developments, commercial, condo’s and hotels to name a few) to invest in. With a minimum investment of $30,000 and a fixed return of 8% per annum, you can’t lose. Here are some other benefits:

  • By investing your existing RRSP’s, they are held in trust by Olympia Trust – one of Canada’s biggest and most respected trust companies and not by the syndicated company themselves;
  • Your RRSP’s are not affected by the markets and thus you will continue to get a fixed return of 8% per annum regardless of whether the market is up or down or the dollar is up or down;
  • You get to choose where your money is invested and you don’t have to pay fees to invest ever!

Even though I love Investing in Real Estate, I don’t put all my eggs in one basket so I also invest in Dividend paying stocks. “The best way for people to get a decent return these days is to have a good portion of that return come from reliable dividends versus less reliable capital gains,” says Bob Gorman, market strategist at TD Waterhouse. “This is going to be the era of the dividend growth stock.”

Here are some tips that make Dividend Investing a versatile investment:

  • I invest only in blue chip stocks (yes stocks) that provide a consistent flow of dividends for the last 10 years and only 1 or 2 from each asset class (Utilities, Communication, Tech, etc)
  • I invest in 1 stock and then purchase more through cash injections into my account, without paying fees ever;
  • Picking the right dividend stocks is key. Avoid companies with the highest yields, because that may indicate the dividend is likely to be cut, and the stock price will suffer as a result. Instead, choose reliable dividend-payers that can maintain those dividends even in bad times, while also growing them consistently over time. Look for well-managed, profitable companies in stable industries with good balance sheets and modest growth. They should also pay out only a reasonable proportion of profits.
  • Invest in Canadian Dividend stocks in non-registered accounts (such as a TFSA) but hold your US Dividend stocks inside your RRSP to protect from US withholding taxes of 15%.
  • Pick Dividend stocks that have medium yields but also beat the rate of inflation – many stocks today don’t provide adequate returns after you factor in fees; by self-directing your investments, you can omit fees and maximize on the return.

Regardless of how you decide to invest your hard-earned dollars keep in mind that in order to maximize your returns and your retirement goals, be careful of what you invest in, how much or little you pay in fees and your time horizon. All of these facts will help guide you on your path to investing your RRSP’s this year!

To your Wealth!


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