Q – With most markets up year after year for the past several years, if you have a long-term time horizon (greater than 10 years), what is wrong with keeping money in a money market fund or bond fund within an RSP and waiting for the large correction to come before diversifying into equity funds? – Marc L.
Do you think you’ve saved enough for retirement? Do you think you’ll ever retire? Research from such organizations as the Conference Board of Canada shows that Canadians approaching retirement are more worried than ever about their ability to fund their golden years. I’ve identified three key areas where the anxiety is the highest, and proposed some solutions.
Today, the Fidelity Income Allocation Fund is a tactically-focused fund that invests in a mix of fixed-income asset classes and income-oriented equities. Before July 2010, it was a dramatically different offering, known as the Fidelity Monthly High Income Fund, which invested primarily in income trusts. The downside is that this makes it difficult to get a sense of the longer term performance of the fund, because anything before 2010 is not applicable.
Markets never go up in a straight line. The past few months have reminded us of that market maxim in a very graphic way. Even in a secular bull market, there will be corrections and periods of high volatility along the way. Modern Portfolio Theory has demonstrated that the simplest way to guard against experiencing big losses during these periods is to construct a well-diversified portfolio that includes securities that are not highly correlated. Here’s how it’s done.