To this point, we have been using the term “saving” when it comes to building the assets you need to fund your retirement. If only it were that simple! It would be easy if all you had to do was earmark a part of each paycheque for deposit into your RRSP and then forget about it until it comes time to reap the rewards at retirement. Unfortunately, you need to make some decisions along the way about how the monies you've saved can best be invested. We say it's unfortunate because investing is causing more anxiety and head-scratching these days than has been the case for a long time. For instance, the investment-counselling firm, BlackRock, reveals that more than two-thirds of investors with more than $100,000 in investable assets feel “much less confident” about the investment decisions they make now than they did in the past.
The anxiety comes from the roller-coaster ride experienced by investors when the stock markets fell 50 per cent in a 10-month span ending in March 2009 and then rose 100 per cent in the subsequent 24 months, only to be afflicted by a Euro-malaise which may linger for some time yet. As for the head-scratching, how can one achieve a decent investment return when bonds are yielding less than 3 per cent, and bank deposits less than 1 per cent? There was a time when a long-term return of 9 per cent didn't seem outlandish. By contrast, the pension projections in this book are based on RRSPs earning an annual return of 5.75 per cent net of fees. ...