Readers of this newsletter were asked a few weeks ago to send the personal finance questions they were embarrassed to ask because they’re so basic. Hundreds of replies have come in so far, and I’m ready with answers.
But first, a broad look at what people want to know about. Just over 30 per cent of the questions are about portfolio-building and specific investments, and 20 per cent are about retirement. Other popular categories include mortgages, how investment advisers and financial planners work, how to start DIY investing and economic matters like inflation, interest rates and the dollar.
The most unique question might be this one: “Best time to book an all-inclusive family vacation to Caribbean? Is it months ahead or last minute?” I’ll defer to readers on that – reply to rcarrick@globeandmail.com.
The most universal question: “How do you manage risk in an increasingly chaotic world? I still want to make money, and invest in balanced asset allocation exchange-traded funds and GICs. But with the way things are going in the United States, it seems that even having a longer horizon doesn’t mitigate risk.” Answer: Investing for the long term means accepting short-term uncertainty, risk and losses. If you can hold for five to 10 years, you’ll do fine with an asset mix like you laid out here. Asset allocation ETFs and GICs can be a smart mix.
The second most universal question: “Will I have enough money for the rest of my life?” asked by a 70-something reader. Answer: Consult a financial planner. Their business model is based on answering questions like this.
A perfect example of a smart basic question: “I’ve heard good things about ETFs, how should I get started?” Answer: Open an account with a digital broker or trading app, then use The Globe and Mail ETF Buyer’s Guide to help narrow down your choices. You only need one to four ETFs for a well-diversified portfolio. ETFs are a cheap-to-own version of a mutual fund that trades like a stock. For more info, check out this ETFs 101 info package from the Ontario Securities Commission’s GetSmarterAboutMoney website.
Most sobering question: “How do I talk to my parents about their retirement spending when it’s clear they will run out of funds very quickly?” Answer: Start a conversation about your finances and then segue into a comment along the lines of “what about you?” Keep pressing if you need to.
Stay tuned for more questions and answers.
From Readers
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
Better read this if you’re not sure how about mutual fund fees work.
