How 75 year olds invest

You would think that by the title, it would be obvious how 75 year old plus people invest. Safe, short term and no risk. Actually most 75 year olds invest the same way as 65 year olds, just a little more cautious.

Let me tell you a story about Mr. and Mrs. Jones (not their real names) from Qualicum. They have s good income coming in from pensions, about $30,000 total per year. With no debts and no major expenses, they had about $200,000 to invest. Since they were always involved with stock market investing for years, they understood the risks and rewards.

They were looking for tax efficient income. They were not looking to keep it short term in case of something happened to one of them because the other person would still require the income. At the very least, they could always sell their home and use the proceeds for long term care if the other funds were exhausted. Their goal was to develop a plan for income for the rest of their lives in a tax efficient manner.

Heres what they decided on. First, we put aside 20% short term for emergencies. This was invested into a cashable term deposit at the highest interest we could find. Then we built an income portfolio that consisted of bonds and GICs 20% preferred shares 20%, common dividend paying shares 20% and Income trusts and income securities 20%. The portfolio focus was to payout approximately 4-5% monthly on a tax efficient basis, meaning the income was not all interest, but dividends, business income and capital gains.

We used professional money managers to help us manage the security selection and asset mix so that the target 5% distribution could always be paid. The risk is also managed by having the ability to adjust the mix. The key here is the managers are simply looking in the four areas, bonds and GICs, preferred shares, common shares, and income trust issues for the most consistent yield, not necessarily the highest, that will payout on a consistent basis.

While yields can change, having a portfolio of only one type of security can increase the risk. This way there is no excuse as to where to find the best yield. All the yield bases are covered. Are your bases covered?


  1. Long Term Care Plans

    Great advice! I think we also need to estimate the person’s likely lifespan. Investing is always a risky thing. If you are in good health, you should anticipate another 10 to 15 years of life. The problem is that the whole economy has sunk into the crapper and the government’s effort the economy seems futile.

Leave a reply

Your email address will not be published. Required fields are marked*