What is financial planning?

by Marc-André Turcot, Corinne Sauvé-Boulé

Financial planning is used to answer the question “Am I well aligned for my short and long term goals?”. It reduces stress while serving as a guide for portfolio management.


Suggestions

Why Should I Start Saving and Investing As Early As Possible?

In order to finance a comfortable retirement, we need to make more strategic consumption choices throughout our lives and start investing as soon as possible. Fewer and fewer companies are offering pension funds to their employees and we should not rely too much on government programs because with the level of government debt that is only increasing and with the aging of the population which will put even more pressure on public finances, we cannot be certain of the amounts of money that will be available in the future.

What kind of investment returns can we expect on fixed income and stocks as of September 15, 2020?

To be realistic, we should expect over the next few years an annual return of around 1% from fixed income securities and an average annual return of between 4% and 5% from equities with a probable marked drop in their value in the short or medium term.

If you've ever asked yourself, "Do I have enough savings?" or "Am I well aligned for the future?", this article is for you!

We will cover why financial planning is important, what is financial planning, and what we can work on to achieve our goals.

How do you make sure you have a qualified financial planner?

To be a financial planner, you must be a member of the IQPF and registered with the AMF.

Why is it important to have financial planning?

It is used to answer the question “Am I well aligned for my short and long term goals?”, it is used to reduce stress and finally it serves as a guide for portfolio management.

What does financial planning cover?

Financial planning covers the following 7 fields:

  1. Finances: budget, savings capacity
  2. Retirement: retirement age, desired lifestyle
  3. Legal aspects: marriage contract, cohabitation agreement, shareholders' agreement
  4. Insurance / risk management: cover the needs in the event of death or incapacity
  5. Tax: optimize investments to reduce or postpone the tax bill
  6. Investments: asset allocation, expected return required to achieve objectives
  7. Estate: will, testamentary trusts

Is one of the 7 financial planning fields the most important?

The first step is very important! The budget is the basis for all the rest of the planning. We must start by determining whether we are in surplus or in deficit. Someone who has a good income but spends more than what they earn should tackle this problem before planning for the future.

Once we establish that we are not in deficit but in surplus with our financial plan, what do we do?

You have to ask yourself: what is my ideal in the short and long term? (retirement, home, marriage, estate) We start with the ideal scenario and, if it works, so much the better! If the ideal scenario does not work, you have to go back and make adjustments.

What points can we work on to make the financial plan work?

  • The delay before being able to achieve my objective.
  • How much money I'm going to need to reach the goal.
  • Current savings level. Could I cut down on some things?
  • Net rate of return on investments. For example, if you need 20%, it is not realistic. If you need 9% but you can't tolerate the volatility associated with being invested 100% in stocks, that's not realistic either. Also, for a short investment horizon, one should avoid stocks.

Once you know the financial plan is working, what would be the last step?

We need to ensure that portfolio management is in line with the plan and that everything is in place. For example, setting up automatic contributions to RRSPs or TFSAs. Following this, we need to review the plan periodically to ensure that we are still well aligned for the future.

Disclaimer

Information in this article is from sources believed to be reliable; however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Marc-André Turcot, and not necessarily those of Raymond James Investment Counsel Ltd. Investors considering any investment strategy should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision.


Our Suggestions

Why Should I Start Saving and Investing As Early As Possible?

In order to finance a comfortable retirement, we need to make more strategic consumption choices throughout our lives and start investing as soon as possible. Fewer and fewer companies are offering pension funds to their employees and we should not rely too much on government programs because with the level of government debt that is only increasing and with the aging of the population which will put even more pressure on public finances, we cannot be certain of the amounts of money that will be available in the future.

Learn more

What kind of investment returns can we expect on fixed income and stocks as of September 15, 2020?

To be realistic, we should expect over the next few years an annual return of around 1% from fixed income securities and an average annual return of between 4% and 5% from equities with a probable marked drop in their value in the short or medium term.

Learn more

An Introduction to Our Income Strategy

Are you looking for income? We may have just the solution for you! Introducing the Demos Income Strategy, our newest investment strategy focused on recurrent income generation.

Learn more

Contact us

We are there to listen, inform and help you.

Contact Us for More Information

To secure your future and your family's

Contact Us for More Information

To secure your future and your family's

Demos Family Wealth Management
107-65 St-Paul Street West
Montréal QC H2Y 3S5
Marc-André Turcot, CFA, F.Pl
Portfolio Manager
Raymond James Investment Counsel Ltd.

[email protected]
Phone: 514-543-6531

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