The BlueSky team is working remotely from our homes to fulfill our obligations for the COVID 19 protocol. Like you, we have consumed countless messages daily from mainstream media and social media about COVID 19. It is important and necessary but also overwhelming. We are all watching the numbers and hope your family and community are safe. As we have reached out to clients, a number of common themes and questions surrounding the markets, accounts and financial plans have unfolded. We have decided to write a weekly email to ensure that we are addressing the common themes with everyone. We will take one topic each week and provide a brief commentary as well as respond directly to anyone who wants more information. If there is a topic or question you want us to research, let us know and we will do our best to dig up some helpful information for you. Let's start with Registered Retirement Income Funds (RRIF's) What can be done to reduce the impact of a depressed market on a fully invested RRIF? Here are a few ideas;
First, recognize that investment managers of a properly constructed RRIF portfolio are working behind the scenes to make the portfolio more defensive while still leaving it in position to recover when the market rebounds.
If you are taking monthly payments and don't need the cash flow every month, stop the payments. You can wait out this turbulent time until year end if necessary and then withdraw the balance of the minimum payment if necessary. This does not come without the additional risk that the markets will continue to worsen between now and then.
If you don't need all of your monthly payment, reduce the payments and conserve the capital. The federal government has just introduced provisions to allow payments to be reduced to 25% below the minimum payment providing even more flexibility.
If you have TFSA room available, you can have the payments invested back in the markets in a sheltered account to be as tax efficient as possible during a market recovery. If you have no TFSA contribution room, you can reinvest the payments in a non registered account.
If you or someone you know has questions about their RRIF or financial plan, call or email us! Stay Healthy! Your BlueSky Team
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