An angry witch swept down on her broom, fire in her eyes and a crooked wand in each hand. "I'll teach you!" she cried out. "Think you can mock me on Halloween for a hundred years without reply?"
With an evil incantation and a stroke of her twin sticks of destruction she cast a strange spell on the planet below, then cackled thunderously, flying into the moonlight. Her spoils were contained in a small purple sack tucked at her side. She had stolen all the core flavours of the earth!
She was not interested in spectacular spices, only the ubiquitous basics we had practically ignored until they were gone. The flavour of meat and potatoes; gone. The flavour of chicken and corn; gone. The flavour of cream and sugar; gone. The flavours of bread and cheese and milk and eggs and broccoli and carrots and melting butter on hot toasted bread. Gone, gone, gone, gone, gone.
Candy was meaningless. Staples were still there but it was all so much denatured dinner. Meats, fruits and vegetables - all still looked and felt the same, but worse than cardboard, they tasted like an empty box.
Left behind were just the accents. Chilli peppers and all her cousins stayed earthbound, as did sea salt and her sisters. Rosemary, cinnamon, sage, curry, garlic, and every other accenting herb and spice kept their terrestrial tastes. A bowl of chili was not a bowl of chili. It was a bowl of battery acid with no hint of beans or meat or tomato.
Sometimes the key to the good life was there all along, like air.
Just as the basic flavours matter in the mix, a solid financial life is eighty percent dull - or so it should be. Never forget that good old vanilla is the basis of a wonderful bowl of ice cream. This is actually a hard thing. Hundreds of firms are designing thousands of products to win the attention of millions of people saving for decades of retirement. It can boggle the mind easily if we let it. But the core ingredients of a sound financial life are not so much difficult to understand as they are difficult to appreciate.
This is not to suggest that everyone should bulk up purely on GIC's, but like food, the core of your portfolio should include a healthy portion of ingredients you can pronounce. For some that will indeed include a good chunk of GIC's. For others, perhaps a small piece of a few big companies which are household names.
Some very basic questions ingredients to consider:
1)What sorts of risks are built in to my portfolio?
2)How much of my portfolio is invested in the stock market?
3)If there is a stock market component in my portfolio, what sorts of stocks determine the look and feel of the portfolio?
-Do they pay dividends?
-Can they afford those dividends based on their historical income levels?
-Are they profitable at all?
-Are they managing debt levels well?
4)How much of your portfolio is invested in small, unproven companies, either through stocks or other instruments? You might be surprised to learn that some people get very excited about placing part of their savings in to a company who has yet to so much as make their first product sale. Speculation on "exciting" young companies which have yet to earn a nickel of profit, let alone pay a dime of dividends, should be managed with due caution. There are some who make a living generating excitement. Know your limits on such as these. Be careful.
5)Although bonds prices are generally more stable than stock values, do we know how much is invested in high yield (i.e. higher risk) bonds? A portfolio of higher risk "high yield" bonds could fluctuate as jaggedly as a stock portfolio.
6)Does the portfolio we constructed a few years ago still make sense? We change what we eat over time to reflect our aging bodies and lifestyles. Likewise, we should make adjustments to investment portfolios as we age and life situations change, or as the portfolio values shrink and grow with the markets.
Like a healthy diet, a solid portfolio is founded upon a few simple basics, and accented by a moderate amount of additional ingredients to make it interesting. In the end, it's more about how it tastes, and how it makes you feel than having a waiter explain it to you in a different language altogether.
Mark Ryan is an advisor in Prince George who loves toast and peanut butter, and works for RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at [email protected].
