Welcome to Episode 19 of Retire Me.
On today's episode we discuss a recent article from Alexandra Macqueen.
Alexandra describes several ways the Coronavirus could change the way we think about retirement in Canada:
1) The move towards early retirement will dwindle as employment security drops
2) Fewer retirees will carry debt into retirement
3) The appetite for guaranteed income (annuities) will increase
I also discuss question 3 in our series: Key Questions for the Long Term Investor
Question: If I choose a fund because of strong past performance, does that mean it will do well in the future?
The rationale is, why don't I just pick the fund managers who have most recently outperformed? Surely they have demonstrated their skill and can go on to outperform.
The data tells us this doesn't work. What does the data tell us? Only 21% of the winning funds over the previous 5 year period go on to outperform (US Equity funds between 2008 and 2018). Only 28% of winning fixed income funds went on to outperform over the same time period (US fixed income)
a) it is very difficult for fund managers to maintain performance in the long run
b) those that do outperform in the long run may be more lucky than skilled.
Data from Dimensional Fund Advisors Canada
Disclaimer - This podcast is for informational purposes only. Please consult with a financial advisor familiar with your unique financial situation before making any decisions. Nothing in this broadcast constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Mark Walhout is the owner and lead financial advisor at Walhout Financial and an Investment Fund Representative at Investia Financial Services Inc.