Which Investments Make Sense at Age 70? What to Know in Canada
At the age of 70, many people face the question of how to manage their assets safely and sensibly. This stage of life comes with specific priorities: security, accessibility, and a balanced approach between preserving capital and achieving modest returns. This article explores investment options that may be suitable for individuals in this age group in Canada and provides practical insights into managing wealth later in life.
Changing Financial Priorities at Age 70
Turning 70 brings fundamental shifts in how you should approach investing. Unlike younger investors who can weather market volatility over decades, those in their seventies typically prioritize capital preservation and reliable income streams. Your investment timeline has shortened, making it essential to reduce exposure to high-risk assets that could significantly impact your financial security. Canadian seniors at this age often face unique considerations including mandatory RRIF withdrawals, potential healthcare costs, and the desire to leave a legacy for beneficiaries.
The psychological aspect of investing also changes at 70. Market downturns that once represented buying opportunities may now feel threatening to your financial stability. This shift in risk tolerance is natural and should be reflected in your investment strategy. Many Canadian financial advisors recommend the “100 minus your age” rule as a starting point, suggesting a 70-year-old might consider allocating 30% to equities and 70% to fixed-income investments, though individual circumstances vary significantly.
What Is the Right Investment Approach at Age 70?
The optimal investment approach at 70 balances growth potential with stability, recognizing that you may need your investments to last 20-30 years or more. A conservative approach doesn’t mean avoiding all growth investments; rather, it means being more selective and focusing on quality over quantity. Canadian investors should consider their total financial picture, including government benefits like CPP and OAS, employer pensions, and personal savings when determining their investment strategy.
Diversification remains crucial, but the focus shifts toward income-generating assets with lower volatility. This might include a mix of government bonds, high-grade corporate bonds, dividend-paying stocks from established Canadian companies, and potentially some international exposure through diversified funds. The key is creating a portfolio that can provide steady income while maintaining some growth potential to combat inflation over the long term.
Investment Options for Older Adults in Canada
Canadian seniors have access to several investment vehicles specifically designed for their needs. Government of Canada bonds offer the highest level of security, backed by the federal government’s full faith and credit. Provincial bonds provide slightly higher yields while maintaining strong credit ratings. Corporate bonds from established Canadian companies like the major banks or utilities can offer attractive yields with reasonable security.
Equity investments for 70-year-olds should focus on established, dividend-paying companies with long track records of stability. Canadian bank stocks, utility companies, and real estate investment trusts (REITs) often appeal to older investors seeking regular income. Index funds and exchange-traded funds (ETFs) provide instant diversification and professional management at low costs, making them attractive options for those who prefer a hands-off approach.
Investments for Retirees: Prioritizing Stability Over Returns
At 70, the investment philosophy should emphasize “return of capital” over “return on capital.” This means prioritizing investments that protect your principal while providing reasonable income. Guaranteed Investment Certificates (GICs) offer complete principal protection and predictable returns, making them cornerstone investments for many Canadian retirees. While returns may be modest, GICs provide peace of mind and can be laddered to provide regular income streams.
Annuities represent another stability-focused option, providing guaranteed income for life in exchange for a lump-sum payment. While annuities can be complex and expensive, they eliminate longevity risk – the possibility of outliving your money. Canadian life insurance companies offer various annuity products, and the income from prescribed annuities can provide tax advantages for non-registered investments.
Comparison of Common Investment Options in Canada
| Investment Type | Provider/Example | Typical Yield/Return | Risk Level | Liquidity |
|---|---|---|---|---|
| Government of Canada Bonds | Bank of Canada | 3.5-4.5% | Very Low | Moderate |
| High-Grade Corporate Bonds | TD Bank, Shopify | 4.0-5.5% | Low-Moderate | Moderate |
| Canadian Bank Stocks | RBC, BMO, Scotiabank | 4.5-6.0% dividend | Moderate | High |
| GICs (5-year) | Major Banks, Credit Unions | 4.0-5.0% | Very Low | Low |
| Canadian REITs | RioCan, Canadian Apartment | 5.0-7.0% | Moderate | High |
| Balanced Mutual Funds | Vanguard, iShares | 4.0-6.0% | Low-Moderate | High |
Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.
The investment landscape for 70-year-olds requires careful consideration of multiple factors including tax implications, estate planning goals, and personal risk tolerance. Working with a qualified financial advisor who understands the unique needs of Canadian seniors can help ensure your investment strategy aligns with your long-term financial security. Remember that while conservative investing is generally appropriate at this age, maintaining some growth component in your portfolio can help protect against inflation and extend the longevity of your savings.
Regular portfolio reviews become increasingly important as you age, allowing you to adjust your strategy based on changing circumstances, health considerations, and market conditions. The goal is creating a sustainable investment approach that provides financial security and peace of mind throughout your retirement years while potentially leaving a legacy for your beneficiaries.
