Friday, October 6, 2000
The Financial Planner for 50+: The Complete Guide
As population ages, the market for books for mature investors grows. This book is a brief introduction to the investment needs of people over 50. A routine and elementary explanation of stocks and mutual funds, RRSPs, systematic withdrawal plans, registered retirement income funds and so on, it is is fine as far as it goes.
Trouble is, it does not go far enough. Bonds, which should be of interest to the older investor, get eleven lines. There is no evaluation of the risk and return evaluation of corporate bonds that tend to have higher yields, though with liquidity and event risks, than government bonds. Life insurance gets two pages of cursory advice. There is not a word on the use of universal life insurance to build up tax-advantaged pensions via bank loans against cash value. Most of all, there is no discussion of the tradeoff of beginning to develop a body of financial assets at entry into the labour force and sacrificing consumption spending versus postponing building up financial assets until children have left home and retirement is in view. In the latter case, people have usually become net creditors and have liquidity and ample RRSP space in which to invest. As to posterity, estate planning gets cursory treatment.