Redirecting income into registered accounts, along with indexed pensions, gave Rob Plowright and his wife a very solid financial foundation for retirement.Getty Images/iStockphoto
Rob Plowright
Occupation
Retired teacher
The portfolio
About 80 per cent in income funds (such as the TD Monthly Income Fund); the rest in stocks.
The investor
Rob Plowright, 66, has been retired for several years now. One thing that keeps him and his wife busy is travelling. Just recently, the couple left on a two-month cruise to the Caribbean and Amazon River, a highlight of which will be a stop at the Carnival in Rio de Janeiro.
How he invests
After Mr. Plowright and his wife paid off their mortgage, they redirected the income that was paying down that debt into registered accounts. Along with their indexed pensions, this gave them a very solid financial foundation for retirement.
Mr. Plowright at first invested the registered accounts in junior resource stocks, using technical analysis. One main idea in technical analysis is to use moving averages to identify stocks in strong upward trends. These are the ones to buy.
Good investment returns were registered in the beginning. But as the commodity boom ebbed, small-cap stocks in the resource sector became volatile and less lucrative. The change in the market and some health issues led Mr. Plowright to decide, about four years ago, that it was time to stop trading and start enjoying retirement. The focus switched from accumulating financial assets to withdrawing from them.
As part of the transition, most of his stocks were exchanged for monthly income funds, which so far have had a total return (income plus capital gains) of 6 per cent to 7 per cent annually. Examples are the TD Monthly Income Fund and Fidelity Monthly Income Funds.
Mr. Plowright chose monthly income funds for several reasons. "They require little involvement of my time," he notes. "They are also in a low-medium risk category, so are relatively stable [and] less volatile than individual stocks."
He is still holding some of the resource stocks bought in previous years – on the belief they "will eventually turn the corner because of their in-ground resources." But they "have not been rewarding to date and in fact, some have disappeared."
Best move
It was moving into monthly income funds.
Worst move
It was buying shares in San Gold Corp., which went to zero and stopped trading in 2014.
Advice
Mr. Plowright recommends consulting with a "good accountant and certified financial planner" in the years before your registered retirement savings plan has to be converted to a registered retirement income fund. "Careful examination of income-tax implications lets you enjoy the maximum reward from your earlier efforts," he says.
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