Include growth-oriented investments in your portfolio
One of the best strategies for protecting yourself against inflation
risk and longevity
risk is
to include sufficient growth-oriented investments in your portfolio.
In addition, some growth-oriented investments such as equities
can provide cash flow that is tax-effective. Outside of
registered plans, capital gains and dividends from Canadian
corporations are taxed at lower
rates
than interest income.
The chart below shows how even moderate inflation can erode returns over time. With a 5% rate of return,
a portfolio of $100,000 will grow to $432,194 in 30 years. However, with 3% inflation factored in,
the portfolio will be worth only $181,136 in today’s dollars.
For more information on this strategy, please review the case
study: When all your assets are in a RRIF.
If you'd like to build a portfolio that aims to provide enough growth to keep you ahead of inflation and
help your assets last longer, speak with an RBC
financial advisor.
Please stop by your nearest branch and ask us to review your retirement income plan with you,
or reach us by phone at 1-866-365-2123. RBC has a lineup of retirement cash
flow solutions to help you make your assets last so you can retire with confidence.
Important information about our financial planning services can be found at the bottom of our
homepage.
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