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It is crucial that your choice of investment funds be based on your personal financial situation and expectations.
Specifically, you need to consider three important factors: your objectives, your risk tolerance and your investment horizon. These three elements make up your investor profile.
To establish your investor profile online, click here.
Your objectives
Your primary goal is obviously to grow your money! But to do that, do you want to:
 | Prepare for your retirement?
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| Save up to buy property?
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| Build education capital for your children or grandchildren?
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| Receive regular income from investments?
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| Earn a return higher than on a saving account? |
Your answers will help you choose the funds that suit you best. For instance, if you need stable income, you should look at fixed-income funds.
On the other hand, if you want maximum growth to achieve long-term objectives such as retirement purposes, you would be better with equity funds.
Have you established your investment objectives? Congratulations! Now you need to evaluate your risk tolerance and set your investment horizon.
Your investment horizon
What is your timeframe for achieving your investment objectives? The answer will determine your choice of funds.
For instance, if you are young and do not plan on starting to draw on capital for many years (especially if your savings are in an RRSP or an RESP), you should opt for equity funds. While equity funds can take some time to reach their full potential, returns are usually higher. With a long horizon, you are in a better position to withstand the ups and downs of the changing economy.
On the other hand, if you are planning to retire soon, it would probably be wiser to protect your savings by investing in funds that do not fluctuate as much. You might also consider tax-efficient investments that generate regular income.
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