DON’T MISS OUT 
So much has changed in the last year because of Covid.  But here’s something that has stayed the same:  at this time last year, I was receiving many of the same calls as I am right now.

Our portfolios have had a very positive 2021:  just as we did in the tumultuous 2020, we have had a year of double-digit returns. Yet recently, I have received a number of questions as to whether the market is too high – and whether we should sell now, take some profit and get back into the market once it goes down.

My reminder to everyone is that the reason we had such an impressive 2020 is that we stayed invested.  And that it is not possible to time the market.  As I said in last year’s December issue of Marche Monthly, the single biggest lesson of that year was:  Stay invested.  

Here’s what would have happened if, in 2020, we exited the market in February and March, when it was plummeting:  we would have missed out, in a matter of months, on more growth than the TSX/Canadian stock markets delivered in the previous decade. Because as of early December 2020, the market was up 55% from its low point – a low point at which many people wanted to, and did, sell.  We, on the other hand, were selectively buying high-quality companies at deeply discounted prices – and then we enjoyed the fruits of those decisions as the market, inevitably, went back up.  

This December’s issue of Marche Monthly is still weeks away, but I have it on good authority that the lesson for this year will be unchanged.  

Stay invested. 

And so, we do not focus on the impossible task of trying to time the market. What matters, instead, is the amount of time you are in the market.  The longer you invest, the greater the returns will be.

Have a look at this graph.  It shows us that, if we missed merely the 10 best days of the market over a 20-year period, 2001-2020, we would have missed more than half of the market’s gain.  And if we missed the top 40 days, we would have actually lost 3.4% over that two-decade span!

 

So we continue to focus on our long-time equity and fixed income strategies, which we have mentioned in a number of past blogs and which are described here, on our website. 

And we focus intensely on financial planning, a critical part of which is knowing what portion of our client portfolios can be invested longer term, in order to generate superior returns.  Again, the further out you can plan and the longer you can invest, the greater your returns will be.

EXECUTOR DECISIONS
In the October issue of Marche Monthly, we featured our Will and Estate consultant, Alleen Sakarian.  A lawyer with the TEP (Trust and Estate Practitioner) designation, Alleen works with clients in reviewing their existing estate plan, which may include a review of their wills, and offers guidance, as required, to minimize tax and maximize administration efficiency.

More and more, we are finding that a natural outcome of that consultation is a desire among clients to consider engaging a corporate executor and/or power of attorney (POA), to either do the work completely or work alongside a trusted friend or relative.  That’s where a meeting with Karen Snowdon-Steacy, a TEP with Royal Trust, comes in.  Because the fact is this:  being an executor or POA is a serious, time-consuming and stressful responsibility that exposes someone you care about very much to legal liability and very often puts them in the middle of family conflict.

That’s why I have assigned a corporate executor and power of attorney to work alongside the executor of my estate.

TIME FOR THE BARBER?
David Chilton, The Wealthy Barber, has been talking about the pitfalls of being an executor – and the virtues of hiring a professional – in a series of short RBC videos, which we have posted on our blog.  Here are two you can watch to get started:

The Wealthy Barber on how a corporate executor helps family harmony
The Wealthy Barber’s advice to Bryan and Sarah Baeumler on being named an executor of a Will

(Here, by the way, is a quick summary of the Barber’s advice if you are asked to be an executor: “Don’t do it!”)

Intrigued?  Let us know, and we will arrange a meeting with Alleen and/or Karen as appropriate.

YEAR-END PLANNING
A good problem to have 
Because many of our holdings have generated positive long-term returns, we do not have losses that we could trigger now, in order to offset capital gains tax for the year 2021.

Nevertheless, we are always looking for opportunities to maximize what you keep after tax, so if the market permits, we will continue to do our best to defer any more realized gains to 2022.

Donating stocks to charity 
At this time of year, donating to charity is on many people’s minds.  Many of our clients have been taking advantage of an approach that does not have wide awareness in the public.  It is this:  by donating appreciated securities to a registered charity, you avoid all capital gains tax.  For example, if you donate $10,000 worth of stock that you bought for $2,000, you will not pay tax on the $8,000 gain. 

Have a look at the graph below, which illustrates the benefit of gifting stock to make a donation versus selling the stock and donating the cash.  As you can see, in this example, directly gifting the stock results in a considerable tax savings (the difference, in this example, between saving $2,760 and $4,600).

If you would like to explore whether this approach is suitable for you, we will be happy to discuss anytime.

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We don’t speak jargon.  We’re all about uncomplicating your life, so we speak plain English.  If there is someone you care about – someone who would appreciate this simple and straightforward approach – please feel free to share this message with them or put us in touch.

Want to discuss any aspect of this month’s blog, or any other issue on your mind?  Have a story idea?  I am always happy to receive your call or email. 

Tyler Marche, MBA, CFP, FCSI
Your life, uncomplicated

tyler.marche@rbc.com
1-416-974-4810
www.tylermarche.com