For peace of mind, your investment strategy reflects your time horizon
Your time horizon is the time period chosen until you plan to access all or the majority of the funds you’ve invested. It’s a critical part of your investment strategy because our goal is to help make sure your money is there when you need it.
In practice, it means that if you have a very short time horizon, you need primarily very secure investments, like cash, GICs or money market funds. The longer your time horizon, the more you may incorporate growth-oriented investments (equities and equity funds) into your portfolio, depending on your tolerance for risk.
It’s not always easy to stay focused on your time horizon. For example, when markets are declining, an investor with a 20-year time horizon may still feel anxious, even though 20 years is in all likelihood more than enough time for the equities in his or her portfolio to recover and go on to new highs.
Working with a professional financial advisor is one way to help you stay focused. We’ve seen a lot of market ups and downs and can help you avoid overreacting to short-term events.
Multiple time horizons
In most cases, an investor will have multiple goals with multiple time horizons at any given time. For example, you may have a Registered Retirement Savings Plan (RRSP) with a 30-year horizon, a Registered Education Savings Plan (RESP) for a child in grade school, and an open non-registered account to save for an upcoming vacation.
You may even have multiple time horizons during retirement. You’ll need some short-term, lower-risk investments to generate income as well as longer-term higher-risk investments designed to provide growth and keep you ahead of inflation.
To invest with peace of mind, speak with an Assante advisor. We’ll work hard to ensure that your evolving time horizon and goals are reflected in your investment strategy.