Long-term, big picture investment mentality reduces stress ~Elizabeth O’Connor of RBC

The Bigger Picture –

Friends of ours recently took advantage of the run up in the Toronto real estate market to retire early and move permanently to live their Muskoka dream. When they bought their first home in Toronto it was during a mini housing boom in early 1981. A few short years and a couple of kids later, they had outgrown this house and had to sell. It sold for 20 per cent less than what they had bought it for. Certainly a loss on paper but our friends never saw it that way. They ended up buying a larger home in a nicer area for 20 per cent less than they would have paid in ’81 and very happily moved on.

Their more recent move to Muskoka was precipitated by a number of factors. They had a life-long love for the natural beauty of Muskoka and its laid back lifestyle. The kids are all grown and the nest was empty. The maintenance and upkeep of a large property and home they were no longer suited to, had lost all appeal. Perhaps though, the number one reason, was the continuing rise of Toronto real estate prices. They felt like they had won a lottery with the offer they received. As Toronto prices continue upward we wondered if they worried they may have sold too soon but they had already very happily moved on. Their circumstances were right, the timing perfect and besides, as they pointed out, with the number of boomers getting ready to exit Toronto the future for Muskoka looks pretty rosy.

What is interesting from my perspective is their thinking and attitude toward real estate markets aligns perfectly with what is going to make them successful equity investors. They expect markets will rise and fall; they understand there will always be a time to buy and a time to sell. They are going in with open eyes set on the bigger picture and for the long term.

They expect that over the long term, what they have accumulated will be protected and enhanced. Most importantly though, they plan on enjoying their retirement. They have no desire to obsess about money, live with their eyes glued to market screens, panic every time the price of oil changes or there’s an election or a referendum in the EU.

The most significant comparison to be made between the real estate and equity markets is that success over the long term invariably depends on planning the market for the long term. There are ups and downs and gains and losses every day but over the long haul markets will rise. Successful investors come up with a strategy and plan to stay the course. The strategy will need tweaking every now and again but always with eyes on the bigger picture and the end game.

May all of us retire healthy, wealthy and wise.

This article is supplied by Elizabeth O’Connor, an Investment Advisor with RBC Dominion Securities Inc. (Member–Canadian Investor Protection Fund). This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article.

This information is not intended as nor does it constitute tax or legal advice. Readers should consult their own lawyer, accountant or other professional advisor when planning to implement a strategy. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ®Registered trademarks of Royal Bank of Canada. Used under licence. ©2016 RBC Dominion Securities Inc. All rights reserved.

Elizabeth O’Connor can be reached at 705-789-2100 or [email protected].

Whether you are looking for a full time, full service financial advisor or seeking expert financial advice as a second opinion, call Elizabeth. With offices in Haliburton, Huntsville and Bracebridge, Elizabeth works closely with clients in cottage country from the lakes and surrounding towns.

Elizabeth O’Connor is an Investment Advisor with RBC Dominion Securities, which is a member of the Canadian Investor Protection Fund. 705-789-2100