Help to increase your confidence to invest
Hesitant to get back into the market? You’re not alone. Some investors still feel uncertainty about the recent economic downturn.
Markets are recovering; investor confidence is growing, however many Canadians still have money in cash or cashable short-term investments like money market funds, guaranteed investment certificates (GICs), and low-interest rate bank accounts.
Unfortunately, these investors may be limiting growth potential. Even during the best of times, these types of holdings have often struggled to keep up with inflation.
Diversify your exposure to any one asset class
A common response to volatility is a retreat from the market. This can reduce portfolio returns over the long term. Diversification, a risk-management strategy that mixes a wide variety of investments within a portfolio, can help reduce fluctuations and allow you to stay the course. A diversified portfolio can help you achieve more consistent returns within your risk tolerance and can reduce volatility associated with the investment market.
Fund-of-funds solutions that combine several types of investments and asset classes into a single fund, give you diversification and exposure to different asset classes, management styles and geographic regions. Choosing the right mix of investments is key to helping manage risk, and allows you to remain invested regardless of market conditions.
Managing your portfolio using asset allocation helps ensure you have an appropriate mix of investments. Asset allocation is an investment technique designed to manage risk and reward by aligning a portfolio’s assets with an individual’s goals, risk tolerance and investment horizon.
But how do you get a handle on what markets might do, and finally get matched up with the right investment? Contact your financial security advisor for a risk assessment questionnaire and a software tool to help you do just that.