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Are you making the right investment choices?

There is no one-size-fits-all answer to that question – your answer will be unique to your needs, goals and expectations – but there are some general guidelines that can help aim you toward the right investment choices for you.

Here are four basic questions that, when answered from your personal perspective, can help you focus your investment choices.

1. What are the tax implications of the investments?

  • RRSP contributions are tax-deductible; all other taxes on your RRSPs are deferred until money is withdrawn during retirement
  • Your non-registered investments will attract taxes, except for the amounts that are invested in your TFSA
  • It’s usually a good strategy to place tax-attracting investments inside registered plans, and investments that enjoy a preferential tax treatment in your non-registered portfolio

2. Will I be able to sleep well at night?

  • Evaluate your time horizon and your tolerance for risk
  • Younger investors may be willing to accept more risk and decide on a more aggressive portfolio, since they have more time to save
  • Older investors typically opt for less volatile investments that deliver steady returns, so they can count on it when it comes time to withdraw
  • Asset allocation and diversification are always important – but the essential rule is to pick the asset mix that lets you sleep soundly at night

3. Am I confident I will have enough income to fund my retirement dreams for all the years of my retirement?

  • Assess all your sources of income and make investment adjustments as required to be assured that your income will last as long as you do

4. Do I know what my financial legacy will be?

  • Decide what you want to pass on and to whom – and take the right steps to ensure that’s what will happen in the most tax-efficient way

You may have the financial skills to put your own investment and financial plan together but why gamble with your future? Your professional advisor can help you make the best investment choices and keep them on track as time goes on.

Date reviewed: February 11, 2015

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.