Smart Risk Magazine Spring 2018 | Page 29

SPRING 2 0 1 8 SMART-RISK INVESTING THE “SMART RISK INVESTING” METHOD IS DESIGNED TO PROVIDE A CLEAR INVESTMENT ROADMAP USING A SOUND, DYNAMIC AND SYSTEMATIC APPROACH. FOR MANY people, the idea of retirement can be a scary proposition. Not only could you be leaving behind a career you love, but also the daily comradery and familiar routine you may have shared with others for decades. The thought of retirement can also evoke serious concerns related to your financial situation. Questions like the following are quite common: • Will I have enough income in retirement to live the lifestyle I’m used to? • Will I outlive my savings and retirement investments? • Should I consider cashing out of my home? The low rate of return on interest-bearing investments – such as cash and government bonds – has made it difficult for people to live off of savings or guaranteed income streams. Also complicating the picture are the runaway increases in Canadian health care costs, which have increased by almost 70 percent during the last two decades, according to data from The Fraser Institute, Comparing Performance of Universal Health Care Countries, 2017. 1 Yet the volatility of the stock market and other risky investments – which can produce higher returns under the right conditions – have many people leery of jeopardizing their money this way. In my own wealth management practice, I’ve seen people nearing retirement age fall into many familiar traps, such as hanging on to losing stocks for too long, chasing high-flying stocks to unreasonable prices, and maintaining too many separate investment accounts at different institutions. Many of these decisions are often heavily based on emotion, rat her than sound reason. 1 My own approach to portfolio management was shaped by my experience working on Wall Street at major investment firms in the early 2000s where I learned to build investment portfolios designed to provide regular, pension-like income for many of our wealthy New York clients. Years later, I introduced Canadian clients to a new way of investing – the “Smart Risk Investing” method is designed to provide a clear investment roadmap using a sound, dynamic and systematic approach. Smart Risk Investing involves 1) gathering information about various investments; 2) weighing the likelihood – or probability – of each outcome; 3) comparing these outcomes with your tolerance for each; and 4) taking step-by- 29 step actions to increase your chances of reaching your financial goals. In short, it helps you make reasonable decisions that stack the odds of success in your favour over the long term. As leader of the “Smart Risk Revolution,” I hope to inspire thought- provoking conversations about a new way to think about risk. Many of the old “gut-based” methods of investing have become outmoded as new technologies and data transparency have become more prevalent in recent years. This allows us to better balance the use of technology and human expertise to broadly diversify across global investments using an evidence-based approach that tilts portfolios towards sources of higher expected returns, ultimately leading to well-diversified and cost effective portfolios. Be sure you understand all aspects of your portfolio and overall financial strategy, and if you have questions, try to clarify things with a qualified investment advisor. Maili Wong is a best-selling author, a leading Canadian investment advisor and licensed portfolio manager whose fresh, modern approach to investing for her high-net- worth clients sets her apart from others in her field. Her first book Smart Risk shares her personal story of resilience as well as lessons learned and secrets gleaned from more than 17 years of international investing experience. .