I am 62 years old, but not risk-averse. Using a 2-3 year time horizon
which would be the best "home" for about 15% of my RRSP portfolio that I plan to move out of long-term bonds into shorter-term holdings? The choices are the iShares CDN Bond Index Fund (TSX: XBB), the iShares CDN Short Term Bond Index Fund (TSX: XSB), and the iShares CDN Real Return Bond Index Fund (TSX: XRB). I include the last one on the premise that inflation MUST return given current government spending. - Larry H., Ottawa
 

If you want to get out of long-term bonds, the Real Return Fund should be crossed off the list. Almost all the holdings are in bonds that do not mature until 2021 or later. The Short Term Bond Index Fund fits your objective most effectively but the return over the next 2-3 years is likely to be quite low. The Bond Index Fund tracks the universe index which includes bonds of all maturities. Normally I would recommend it for someone with a longer time horizon but it will probably outperform the Short Term Fund in the time frame you are considering. - G.P.
 

I am 36 years old and our mortgage is coming due in November. We owe approximately $104,000 on our house. I also have a GIC for $125,000 coming due this month that was earning 4.5%. I am thinking of paying off my mortgage with this money. I also have about $100,000 in other investments like GICs, RRSPs, etc. What do you think? I am a guess a conservative investor. Please help. - Adam 
 

I think it's a good idea to pay off the mortgage, given the circumstances you describe. Yes, mortgage interest rates are near record lows but it still costs money to carry the loan - somewhere between 3.5% and 4% if you renew for a five-year term. You won't be able to earn anything close to that if you were to re-invest the money in another GIC. Use the amount that is left after the mortgage is paid to top up your RRSP and/or open a Tax-Free Savings Account. - G.P.
 

I am 59 years old, working at a good job that pays $36 an hour. I have a pension income of $3,100 a month from a previous employer. I am eligible to make an early application to the CPP as I'll turn 60 this September. I'm asking for a "second opinion" as to whether it would be prudent to do this.  Our company's business is still strong until 2012 (we build helicopters for Canadian clients). I have not pegged a retirement date as of yet, as things are going well and I still enjoy my work. But aviation is a very cyclical business with several years of extremely good sales followed by several years of drought, depending on several factors such as the price of oil, exploration, and the annual forest fire season. I thought that by applying early for my CPP, which would amount to about $630 per month, it would add to my present retirement income should the bottom fall out. Would you advise an early application to the CPP in my situation? I understand the penalty issues of doing this at this time also. - Wilf S., Beamsville ON
 

Technically, you're not eligible to apply for CPP at age 60 unless you have stopped working. However, the rules are rather lax about this. You only have to show that you were not working at the end of the month before the payments begin and during the month when the first cheque comes in. After that, you can resume work. But you would have to make arrangements with your employer (who may be reluctant to go along with such a plan) and forego salary for a period of time, which you may not want to do.

The more basic question is: why bother? You don't appear to need the money now. If the bottom falls out of the helicopter business you can always apply then and your pension will be larger because you delayed. I can't see any reason to rush. - G.P.
 

Thank you for your response and your advice. We noticed that you titled our question "Misinformed by Advisor". My husband and I certainly hope that it will help other investors to ask more questions, to read their prospectus, and to get things in writing from their financial advisors. We also would hope that any financial advisors who are guilty of this misinformation, whether it is intentional or unintentional or because of lack of competence, take time to pause and reflect.

They might ask themselves if they would like their children or other family members to have trusted a financial advisor and then experienced such negative consequences, emotionally, financially, and morally. Thank you once again for your straightforward and honest information and advice. - Maria C.
 

The writer and her husband experienced significant losses after their advisors made investments on their behalf that they felt were highly inappropriate. This is an object lesson in the need to ensure that your advisor clearly understands your priorities and keeps you informed of all actions. But it is also incumbent on investors to review any recommendations before approving them and to have a written record of all decisions in case of dispute. - G.P.
 

I am a 62-year-old single female, with no dependants and own two businesses. I have health and dental insurance which is very costly. If I am well, and I am, why would I still need this coverage? - Jean W.
 

Nobody likes paying insurance premiums - until they get sick and need to make a claim. Then they're thankful they have the protection.

It sounds like you have been fortunate, health-wise, but how do you know what will happen tomorrow? You don't and neither does anyone else, which is why we pay for the coverage. In the end, it's your call but if you decide cancel your insurance I suggest you start to build a personal health fund to cover any unexpected expenses down the road. - G.P.
 

My mother is age 90 and lives in a nursing home in Nova Scotia. She has Alzheimer's so my youngest sister has power of attorney and looks after her affairs including her finances. The cost of my mother's care has been calculated based on her current income which includes Old Age Security, Canada pension, and a portion of my father's pension thus her bills for her retirement home are covered.

My question. Can my mother's estate be paid out to her children while she is alive since her financial requirements are being taken care of and she has no need of the money? All four children are in their late 50s and early 60s. We all love our mother dearly and happily, or sadly because of her condition, she might live for another 10 or more years and by the time any of us receive our inheritance we will be too old to enjoy it. My mother's estate includes cash of $85,000 plus the cash from the sale of her home of $182,000 for a total of $267,000. Me and my 3 siblings are to share in my parent's estate as laid out in my father's will. What would you advise? - Barrie M., British Columbia
 

I would advise you to consult a lawyer. If your mother were sentient, there would not be an issue because there is no law against giving cash gifts to adult children and no tax implications in doing so. But in this case she is not capable of making that decision and your sister, one of the beneficiaries, holds power of attorney. There would clearly be a conflict of interest if she were to use that authority to pay out the cash in the estate to herself and the rest of you. The laws covering this kind of situation are complex and vary from province to province so you need the guidance of a good estate lawyer. - G.P.
 

I am a very conservative investor who does not like to gamble with hard earned money. I work six hours a day and collect a small pension. I am 56.

We lost a considerable amount like everyone else and will not be able to retire as planed. I have $10,000 I want to invest but where? It must be relatively safe. I also have $5,000 for a TFSA but I am unsure which to put it in. - Cathy H., Ontario
 

"Relatively safe" suggests you are prepared to live with a little risk but not much. If that is the case, you might want to consider a short-term bond fund. You won't earn a big return but you are unlikely to suffer any losses and if you do they will not be large.

Almost every financial institution offers Tax-Free Savings Accounts. Choose a plan that has no fees and that will allow you to invest in the type of securities that are of interest to you. - G.P.
 

Four years ago, I bought a house and gave myself a mortgage from my RRIF at 6.05%. Being my own lender, the monthly payments are linked to the minimum withdrawal and both the principal and interest go back into my RRIF. Next year the mortgage is to be renewed at the then current interest rates. If they are as low as they are now, the earnings will be less than the minimum withdrawal. Will it therefore take much longer to pay off the mortgage?

According to my bank not many people are aware that this can be done and it is a relatively safe investment, since you pay yourself. - Ruth P., Ontario
 

You need to be careful here. If most or all of your RRIF is tied up in the mortgage and the repayment is less than the minimum withdrawal requirement, where will the RRIF get the cash to meet the payout that must be made to you? I'm sure the bank will take this into account in calculating the repayment but you need to be sure.

A more basic question is why are you doing this? It sounds like you are putting money into the RRIF to meet the mortgage payment and then taking it out again as taxable income. Doing it this way means you are paying a hefty fee to hold the mortgage inside the plan. I suggest you look at taking out a conventional mortgage when the term is up next year and paying off the RRIF mortgage with the proceeds. Use the RRIF withdrawals to make the mortgage payments. The on-going costs should be much less. - G.P.
 

I'm a seasonal worker and will be turning 60 in October. Would it be to my advantage to take CPP now? - Richard M., Nova Scotia
 

I generally advise people not to take CPP any earlier than they need to unless they require the extra income. You don't qualify for a full pension until you are 65. If you apply sooner, you lose half a percentage point of your payment for each month short of your 65th birthday. So if you were to apply at age 60, you would only receive 70% of the normal pension.

Of course, other factors have to be taken into account such as your health and life expectancy so the decision is not always cut-and-dried. - G.P.
 

I have decided to retire. I have money in savings and money in RRSPs.  My husband's pension starts in 2.5 years (we can easily live off it). However, we will have no income in the next 2.5 years. I will be using savings and I am wondering if I should take some lump sums from my RRSPs before my husband's Social Security, my work pensions, CPP, and OAS start? The older we get the higher our incomes will be so I would be taxed more on my RRSPs, no? I won't need the RRSP income later on as the pensions will suffice. Does this sound reasonable? Thanks - Sheila S.

Yes, your plan does make sense, as long as you have done your calculations carefully and taken the effect of inflation into account. (Yes, inflation is low now but it may be a different story in a few years.) In effect, you are using the RRSPs to bridge the gap until other income sources click in. Since you will have no other income in the meantime, the tax you pay on the withdrawals should be quite low. - G.P.