RRSP boot camp

Battle-weary investors are being urged to base their financial planning on sound, strategic military principles during these tough times.

Retired Canadian general and chief of defence Rick Hillier is teaming up with TD Bank Financial Group to offer advice to investors currently feeling like they're losing ground in a battle to preserve their investments.

The former head of Canada's armed forces and a top bank official say proven military directives can give you more control, confidence and a plan of action to help you through volatile economic times.

“In the chaos of battle, uncertainty, instability and fear are all part of the scenario. It’s intense, but there are methods to counter those emotions and help you stay focused on the mission,” says Hillier, who joined TD in September as a senior advisor.

“That ‘battle’ environment describes well how investors have been feeling in the past few months. And the applicable military principles are surprisingly appropriate for battle-weary investors contemplating this year’s RRSP contribution,” says Patricia Lovett-Reid, senior vice-president of TD Waterhouse.

TD's RRSP Boot Camp includes five key military principles that Hillier advocated during his career as Canada’s top soldier and Lovett-Reid’s advice on how to successfully apply them to your financial planning.

1. Go back to the basics:

“Soldiers need to conduct their basic drills first and foremost,

otherwise they’ll lose the fight,” says Hillier.

“The same strategy applies to investing in your RRSP,” says Lovett-Reid. "There is a

tendency right now to want to put your financial statement away, but

you’ve got to confront the facts even though it might be tough. You need to start ... by reviewing your financial plan and assessing your investment objectives, risk tolerance and time horizon. An advisor can work with you to make sure your portfolio is properly allocated and diversified, and keep your long-term financial plan on track.”

2. Think long:

“Leaders in military strategy ‘think long’,” says Hillier.

“In battle, it is essential to stay focused on the mission at hand,

which means thinking about the long-term goal and not abandoning

everything to overcome short-term setbacks. It is the difference

between losing the battle and winning the war.”

“Think about your long-term strategy, such as saving for your

retirement which might be 20, 30, even 40 years away,” echoes

Lovett-Reid. “History has shown that the current economic

situation will not last, so it is essential to focus on the long-term

goals and not panic when the markets are volatile.”

3. You are not alone; rely on your battle buddies:

“In the middle of a mission, what’s most important to us are our

‘battle buddies’,” says Hillier. “It’s all about the people

you can rely on, who get you through the worst and who are your

trusted advisors.”

“The same tenet applies during tough economic times,” says Lovett-Reid. "Canadians may

develop what feels like a ‘siege mentality’, but you need to realize

that you’re not alone and that there are experienced professionals

you can rely on for advice and counsel to get you through it."

4. Always keep a reserve:

“Never commit to anything completely and always have a little

something up your sleeve,” says Hillier. “A reserve gives you

flexibility.”

“Make sure that you keep a reserve of cash in your portfolio,” says

Lovett-Reid. “It will give you the flexibility to take advantage

of buying opportunities when they present themselves. Be prepared for

the unexpected, keep three to six months' worth of living expenses in safe,

liquid investments like a cashable GIC or savings account to act as

an emergency source of funds if you need it.”

5. Hold out for daylight:

“When you are in a siege, nights are the toughest, but in the

morning, daylight will come and your confidence will increase

dramatically,” explains Hillier. “There are always tough

times but we make it through to the good times; we just have to stay

focused on the long-term mission and wait until daylight comes.”

“The key is to not let this short-term volatility cause you to

overreact and change your long-term plans,” says Lovett-Reid. "It is likely going to be a

tough year ahead, but history has shown it won’t last, so stay

focused on the future: balance your expenses, find focused ways in

your own household to reduce costs and continue to be growth-oriented

by making your RRSP contribution. There is a light at the end of the

tunnel."