“While money can’t buy happiness, it certainly lets you choose your own form of misery.”
– Groucho Marx
Investment management is an important part of financial planning and includes consideration of not only your investment and retirement savings but also any pension assets you may own. How you manage your investments will largely be dictated by your goals, attitudes, investment experience, risk tolerance and time horizon, which should all be documented using an Investment Policy Statement.
An Investment Policy Statement (IPS) is a document that outlines general rules for how your investments should be managed. An essential document for anyone that engages the services of an investment advisor, the IPS is just as important if you self-manage your investment as it serves as a reminder of your investment goals in good and bad times.
When establishing investment goals, you also need to determine if you will be taking an active or passive role in managing your investments.
Active Management
Active investors are generally involved in the investment decision process. They rely on their advisor’s recommendations, analytical research and their own judgment and experience in making investment decisions on what to buy, hold and sell.
Passive Management
Passive investors are less likely to be involved in the investment decision process. They rely mainly on their advisor’s recommendations using a pre-determined strategy that doesn’t require their input in making investment decisions on what to buy, hold and sell.
Whether you choose an active or passive investment strategy you will want to maintain a record of all investment transactions you make.
RECORD TYPE: RRSP/RRIF
A Registered Retirement Savings Plan (RRSP) is a tax-sheltered investment used to save for your retirement. There are limits on the amount you can deposit to your RRSP which is reported annually on your Notice of Assessment.
A Registered Retirement Income Fund (RRIF) is a tax-sheltered investment that provides income withdrawals in retirement. You must convert all RRSP assets to a RRIF no later than Dec 31st of the year you turn age 71. Once setup, there is no limit on the amount you can withdraw each year provided it meets the required annual minimum.
Suggested Action: Upload a copy of your RRSP & RRIF statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
RECORD TYPE: LIRA/LRIF
A Locked-in Retirement Account (LIRA) and Locked-in Retirement Income Fund (LRIF) are investments designed to hold pension funds for a former plan member or surviving spouse.
The main difference between these two accounts and a RRIF, is that many provinces place restrictions on the maximum amount that can be withdraw each year.
Suggested Action: Upload a copy of your LIRA & LRIF statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
RECORD TYPE: TFSA
A Tax-Free Savings Accounts (TFSA) is an investment that individuals 18 and over can use to earn tax-free investment income.
There are limits on the amount you can deposit to your TFSA which is reported annually on your Notice of Assessment. There are no restrictions on the amount you can withdraw.
Suggested Action: Upload a copy of your TFSA statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
RECORD TYPE: RESP
A Registered Education Savings Plan (RESP) is a special type of investment for parents to save for their children’s post-secondary education. There are limits on the amount that can be deposited each year per child.
The Canada Education Savings Grant (CESG) is a federal program that will match 20% of RESP contributions up to a lifetime maximum $7,200 per child.
Suggested Action: Upload a copy of your RESP statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
RECORD TYPE: RDSP
A Registered Disability Savings Plans (RDSP) is an investment intended to help individuals save for the long-term financial security of a dependent who is eligible for the disability tax credit (DTC).
Suggested Action: Upload a copy of your RDSP statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
RECORD TYPE: Other Taxable
Once you have contributed the maximum to your RRSP and TFSA you can still invest in a taxable account using any number of investment vehicles.
The amount of tax payable on the earnings will be determined by your Marginal Tax Rate (MTR) and the allocation of interest, dividends and capital gains.
Suggested Action: Upload a copy of your Taxable Investment statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
RECORD TYPE: Other Sheltered
There are options available to invest outside of RRSP and TFSA that are tax-sheltered, generally referred to as Alternative Investments, they can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts.
Suggested Action: Upload a copy of your Sheltered Investment statements once each year or whenever you make a material change to the investment allocation. Also include the KYC and IPS that governs the management of this account.
NEXT Steps
- Download Resources
Click the Resources link to download and print the various worksheets and templates applicable to your needs. Set aside some time over the next few days to complete each one. Remember to involve your partner/spouse should you have one. - Gather Documents
Complete each worksheet or template and gather other statements and documents for each type of Record to be uploaded to this Tile. - Upload Documents
Using a scanner or the Sidedrawer Mobile App, upload all statements and documents to the appropriate Record for secure storage and collaboration with your family and trusted advisors. - Add Collaborators
From the Sidedrawer home screen, click on the Collaborator icon to add someone you wish to give access to one or more of your Records. Enter their email, name and relationship to you, then select the Record and permissions to be granted.
Click here to print the Investment Management Document Checklist.