Investing for Income

People invest their savings for a wide variety of reasons: a house purchase, contingencies, vacations, children's schooling, plus retirement. Then there are those who invest to provide an income for their families and themselves. Conventional thinking has long suggested that bonds and other "fixed income" securities be the source of such income. This can work well if interest rates are stable and there is no inflation.

An awkward aspect of bond investment for income is the reinvestment risk, that is what the interest rate will be when the bond comes due. Since 1982, Canadian 10 year government yields have fallen from 16% to 1.15%. Suppose you had a million dollars to provide income. In 1982, you would have received over $150,000 but today only $11,500; a rather sharp decline. The reality is that the price of income has grown enormously.

Another way to gain income from capital is to invest in organizations where there is a likelihood of increasing payments to owners. No strategy is riskless but a prudently selected portfolio of dividend paying shares in companies in stable and growing businesses can provide solid income gains over time.

The accompanying chart shows the yields for 10 year Government of Canada bonds and shares of the Royal Bank with the data coming from the Bank of Canada and ThomsonReuters. As well, it is important to note that the dividend paid by the Royal Bank increased eight times during the time frame cited. There certainly have been other companies which have raised their dividends consistently.

In respect of investing for income, it is worthwhile to remember the words of Benjamin Graham writing in The Intelligent Investor:

Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.


The Altus Advantage

Independence is at the centre of The Altus Advantage.

Our group of Investment Advisors (IA's) work with each client to create investment portfolios and strategies to help you achieve your investment objectives.

Other financial institutions manufacture products first and then proceed to slot customers into their proprietary products. These proprietary offerings seldom accurately match your unique goals.

Have you ever known a Canadian bank to recommend the investment product of another Canadian bank?...even if it is perfectly suited for you? … not likely.

The brokerage units of the major Canadian banks are strongly inclined to include in their customer portfolios the shares and debt instruments of companies from which they have received underwriting or other fees.

These type of conflicts seldom exist at Altus

The independence of our advice ensures that you, our client comes first.

So there you have it.

The Altus Advantage…your Advantage!


On Women Excelling in the Workforce

How can it be that in the 21st century we are still discussing equality for women? 2015 Oscar winner Patricia Arquette called out for wage equality for women during her acceptance speech. Sheryl Sandberg, COO of Facebook and best-selling author of the book "Lean In" asserts that by having more female voices in positions of power there will be more equitable opportunities created for everyone.

A few years ago I ran into a childhood friend. We discussed our careers and family. He said he always knew that I would have a successful career. When I asked what it was that would make him think that, he related a story about the first time his family (3 boys) came to visit our family (2 girls, 3 boys). What he remembered most was the girl who took control of the group directing each child to their specific role during the activities, willing each and every one to have a good time. He alluded to the fact that the girl was a bit "bossy" but in retrospect, he sees that the girl had what it takes to be a leader.

Why is it that not enough women are making it to the top of their professions? Women hold only 15% of the top corporate jobs, C-level jobs and membership on boards of directors.

Many studies have been done regarding women's perception of themselves in the workforce. The broad conclusions are that women underestimate their own abilities, they do not negotiate for themselves in the workplace and they attribute their successes to external factors such as another individuals help or a lucky break. What women need to do is OWN their success.

Our society puts more pressure on our boys to succeed than on our girls. The truth is that women face harder choices between professional success and personal fulfillment. The decision to pursue a career is not the right decision for everyone. It is a decision that is very personal and despite your commitment to your career, feelings of guilt regarding your family cannot be avoided.

So here is my advice to young women who wish to stay in the workforce.

Women must reach for opportunities and be confident in their ability. My parents not only told me that I could be what I wanted to be, they also said that I could do anything that a man could do. I believe that gave me the confidence to reach for opportunities and take risks.

Our life partner must truly be a partner. I know that my success has been a true collaboration with my husband, David. His commitment to equal household responsibility has allowed me to pursue my career dreams.

Your job should be challenging, rewarding and make a difference. Stay engaged in building your career as long as possible. If you decide to start a family, the question of how long to stay at home raising children is not always clear, so wait until you reach that point in your life to decide. Seize opportunities as they present themselves - don't let them pass you by.

We need you.


On Mentorship

I have been fortunate to have several mentors over my career. One individual in particular had a profound influence on me.

I began my career in 1977 as an Analyst in the Research Department of a major Canadian brokerage firm, straight out of university. Having quickly established my name in equity research, I was soon approached by a senior executive of the firm who asked me to become an Investment Advisor.

At first, I found the prospect of living off commission income terrifying. The guaranteed salary of my research position was comfortable and provided a good living, but we both knew it would eventually limit my career. My mentor recognized this fear in me immediately.

He shared with me the stories of his own hard work, perseverance and discipline to help me see beyond that temporary fear, and reach for new heights. Under his guidance, I began to understand how to treat my career like the companies I was analyzing; strive for the earnings potential of a start-up, deliver the return on equity of a growing business, and produce the consistent cash flows of my own blue chip favourites.

In 1985 my mentor asked that I become his Assistant Branch Manager with the goal of doubling the number of stockbrokers in the office. Working closely together, we accomplished this goal, setting a new precedent for growth at the time. I ultimately inherited my mentor’s position, and with my team proceeded to create the largest branch operation of its kind within Canada. It was then my turn to offer mentorship in helping our new Advisors develop their careers and build client relationships.

Along with our other directors, I bring this shared vision of mentorship to Altus Securities. Although it can be rather elusive, at its base mentorship is about communication and relationship. As leaders, we offer ourselves, our experience, our skills, and knowledge. For us, the immediate rewards of mentorship are not just in minimizing errors or enhancing the career paths of our Advisors and staff. What makes us proud is the ability to give back to our organization and our industry. As a team we will grow together, developing the next generation of mentors, even better than the last.

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