While investing in mutual funds and/or stocks, bonds and guaranteed term deposits can also play an important role to help you create a balanced retirement income portfolio. There are important wealth management tactics you can consider having in your overall strategy.

1. Deduct interest. If you plan to borrow money to finance your expenses, consider arranging your financial affairs so you can borrow to purchase non-registered investments. Interest on this type of borrowing remains fully tax deductible for as long as you continue to hold income-generating investments (outside of an RRSP). This especially makes sense after the market has made a significant correction offering lower stock prices ready to rise rapidly as it did after March 2009 (also achievable via equity funds). Longer term bonds (also offered in bond funds) may offer value if bought prior to low interest rates rising. Any future gains are enhanced by the value of the interest of the loan being deducted from the income gains.

2. Consider income splitting. Income splitting is the idea of moving income away from high-income earners to family members who are in a lower tax bracket. To split family income with your spouse you can invest the lower-earning spouse's income, while the higher earner pays family living expenses and taxes. You may also want to contribute to a spousal RRSP. If you own a business, where applicable, pay your spouse a salary for work performed on behalf of your business. To split income with children, you can also employ them in a family-owned business. As well, you can gift them cash, or any other assets (if they are over 18). For children younger than 18, consult with your advisor to learn more about attribution rules.

3. Structure your investments for tax. To avoid paying high taxes on income from earnings or interest, structure your investments to earn primarily capital gains outside your registered accounts. If you have lost money on equity investments consider using tax-loss selling techniques. Your advisor can then advise if this is wise in your case.

4. Defer tax. If you are investing in non-registered holdings, but have not maximized your RRSP, you may be losing the opportunity to deduct up-to-the-maximum contributions from income. You also miss out on the pre-retirement tax deferral, during all the time that elapses until you retire. You could be deferring these tax liabilities on investment income, until you withdraw the funds held within your RRSP or RRIF.

5. Consider the Tax Free Savings Account (TFSA). You can invest up to $5,000 per year using a TFSA to defer income. Though you do not receive a tax deduction on income, all future monies grow tax free, and are not taxed when withdrawn. Your advisor can give you more details.

6. Create trusts. Trusts are ideal if you hope to transfer income, and/or capital gains to a beneficiary. If you own a business, you can even use trusts to pass the business on to your children for tax purposes while still retaining some control. Make sure you obtain expert advice.

7. Donate. Charitable donations are effective wealth management tools because they provide you with a tax break while allowing you to make a real difference for a cause important to you. In times of crisis such as the Haitian earthquake, you may consider a monthly donation to World Vision or ADRA (an agency that was the last to leave Rwanda during the Genocide) for example. Often with careful planning we can achieve a giving plan that can teach children the value of helping others while deferring their own spending thus teaching both the values of human compassion and frugality.

8. Start early as time adds value to money. Habitually pay yourself first every pay-cheque, before you pay your bills. Due to inflation (you may need well over $1.5 million to retire 30 years from now. Time will work against you if you procrastinate.

The Rule of 72: divide your annual percentage rate of return (yield) into 72. The answer will tell you how many years are necessary to double your money.

9. Reduce Credit Card Debt. Credit cards have very high interest rates (most are 15-28%) which normally exceed any gains one can achieve on an investment. Thus, you have your positive gain potential wiped out by such debt for investments valued up to the credit card debt carried month after month. Essentially credit card debt places you into a negative reduction of those comparative assets (investment gains on assets versus interest on the credit card liabilities of a similar sum). It is important to plan to pay off credit card debt beginning with the smaller card sums first (in order to see victory earlier and motivate the process of ending credit card debt).

10. Invest with caution. The old adage that “differing economies worldwide can experience market gains at differing times or at the same time depending where each economy is in its own distinct market cycle” can sound like a fable when the market retraces gains due to market fear as in the 2008 mortgage credit crisis. Not just the markets such as Canada and the USA influence one another closely in their market cycles today. The entire world is connected to everyone’s’ media hype and corporate news and thus react similarly from the USA to China (China is a major consumer of materials, resources and products of the Western hemisphere).

Moreover it is increasingly important to invest with an advisor who is both cautious and stays on top of the market cycles, and will move your money before the market reduces one’s portfolio. There is a compendium of factors an advisor needs to watch in order to safeguard one from loss. He or she can no longer simply rely on money managers of funds, though he can align with managers who faithfully monitor the market with a mandate to allocate assets in your favour. Funds can often be moved into another fund in the same family to protect from overexposure to equities; and can be moved back when the influence of the masses is not negative or full of fear as in 2008.