Retirement planning
Retirement planning is an essential element that we all need to think about. This is the last stage of life that absolutely must be planned. We all want to arrive at this stage well prepared in order to experience a peaceful retirement, whatever our individual life journey. To do this, Villeneuve Wealth Management is a valuable ally who can offer you listening, advice and financial investments and personal insurance products adapted to your needs.
When building your retirement plan, we will examine your financial situation, your concerns and your objectives in order to provide you with a personalized retirement plan.
In order to be able to adequately advise you on your investments and retirement planning, we will take the time to take stock of your finances together. Afterwards, we will have a much better idea of what elements we can work on.
Example of elements to draw up a portrait of your finances:
- List your assets
- List your liabilities
- List of income and expenses
The second step is to make a budget! This can help you better manage your money for the following reasons:
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- Understand where your money is going
- Become aware of your income compared to your expenses
- Determine your budget surpluses/deficits
- Improve your understanding of your personal finances
- Increase your feeling of control over your finances and thus possible stress reduction
- Know your savings capacity
Now that we have taken stock of your finances and you have a detailed budget in hand, we can look at your debts.
The ultimate goal is to eliminate all of your debt in order to free up these payments to save for your retirement, achieve personal goals, but also simply to please yourself!
Obviously, each of your debts will be analyzed to determine the order in which you should repay them. Indeed, we will favor debts with the highest interest rates. Credit cards are generally the debts that cost you the most in interest.
If you only make the minimum monthly payment of $150 (3%), it will take you 4 years and 1 month to pay off your card in full.
In the end, you will have paid credit fees of $2,336.67 and therefore your purchases of $5,000 would have actually cost you $7,336.67, or 47% more.
The credit card is an advantageous financial tool when used correctly, but you must be careful not to fall into certain traps:
- Spending beyond your means
- Hard your credit score if you have late payments or use up a lot of your borrowing capacity
- Incurring significant interest charges when you don’t repay your balance monthly
On the other hand, certain debts with lower rates may not be a priority because you can, in general, invest elsewhere with a higher average return. For example, student loans have low interest rates compared to the average stock market return and the interest charges are tax deductible. It would therefore be more advantageous for you to invest your budget surplus in the stock market rather than repay your student loan more quickly.
At the same time as managing your debts, together we will organize an investment strategy based on your objectives. For example, changing your car, traveling, buying a house as well as your retirement income will be the type of goals that savings will allow you to achieve. By combining systematic savings and a return adapted to your needs, you can achieve your goals.
In order to save for her retirement, we agreed with Mrs. Laroche that she would save $300/month and that she would invest it in an investment vehicle with an average expected return of 6% annually. Mrs. Laroche plans to retire at 65. Therefore, his investment horizon is 41 years (65 – 24 years)
Balance accumulated at age 65 according to projection calculations: $613,310
After discussion with Mrs. Laroche, she asked us to calculate the accumulated balance if she saved $500/month rather than $300/month
Balance accumulated at age 65 according to projection calculations: $1,022,184
Mrs. Laroche will have saved only $246,000, but will have collected interest of the order of $776,184
(246,000 + 776,184 = $1,022,184)
This is exactly why Albert Einstein once said «Compound interest is the greatest invention the world has ever produced»
I would recommend to a friend looking for financial services.
Mr. Villeneuve always takes the time to explain his recommendations and he always makes sure that we understand. He knows how to put us at ease.