investments to properly round out your total asset holdings. Further, you’d want to consider the correlations between the value of your real estate assets and your investment portfolio. This isn’t an issue for most Canadians, but if prosperity in the neighbourhood, city or region you live in is driven by one or two industries, you’ll want to reduce your exposure to these industries in your investment portfolio so that the value of your total wealth isn’t overly exposed to the one or two industries. A Calgarian should hold a smaller proportion of oil & gas investments in her portfolio than someone in Quebec because the value of her real estate holdings is already highly exposed to the success of the oil & gas industry.
You and your spouse’s income. Picking right back up where we left off with the Calgary oil & gas example, a couple that work in the oil & gas industry, so that their income levels are directly dependent on the success of the industry, should have a smaller proportion of oil & gas investments in their portfolio than a couple that work in the forestry industry. But the income effect goes beyond just industry exposure. Someone with a highly volatile income should offset the effect this has on her total wealth by reducing the volatility in her investment portfolio. Using two extreme cases for an example, on the one hand a business executive in the oil & gas industry that earns 50% of her total annual compensation as variable bonus pay has a volatile income and is dependent on the success of the oil & gas sector. On the other hand, a high-school teacher that lives in Vancouver and earns 0% of her total annual compensation as variable bonus pay and earns a steady income with