When I came across this article it got me thinking about the time value of money concept we talked about in class 6. Saving money is something that most Canadians struggle with in today’s economy. An elderly couple, Marielle and Matt, have gotten it right and managed to save enough money for their retirement. Or so they thought, until they got a second opinion on their investment strategies. The pair is very invested in keeping their large home and also keeping up their extravagant lifestyle. They tried to make the most of their money by taking a mortgage and using the proceeds to invest. The couple has not done a very good job of this. By only taking on two stocks in their portfolio they have failed to diversify and are sitting ducks if the stock market were to crash. Investment is tricky and everyone is looking to make money in a short period of time. For investment to work, you need to make time work for you and not expect to see short-term success. In order for equity to provide good return. you need to allow time, something this couple do not have much left of, to provide growth and produce dividends. Investing is not worthwhile for this couple because they do not have enough time to increase the value of their portfolio without taking too much risk. Because of their age, they should live a more conservative lifestyle, cash in on their home, and use the proceeds as capital to live the remainder of their lives.
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