Share these investment strategies with employees
BY Staff | January 23, 2013
As the March 1st deadline for registered retirement savings plan (RRPS) contributions is fast approaching. It's an ideal time to remind clients and their employees to think strategically about their investment strategies, says BMO Financial Group.
According to a study by BMO Financial Group:
- 60% of Canadian investors have time frames or target dates in mind to reach their financial goals.
- 89% agree that it is important to hold investments that evolve over time to become less risky as key life events approach.
- However, only 49% currently hold investments that become less risky over time.
BMO offers the following investing strategies for each life stage:
In Your 20s – Getting That First Job:
- Though you may be just starting off your career and cannot even imagine retirement, it is not too early to think about establishing a long-term financial plan.
- With years to your advantage, consider taking a more aggressive approach to your asset mix by diversifying with a higher mix of equities compared to fixed income instruments or cash.
- Pay down debt and try to save as much money as possible.
In Your 30s and 40s – Family and Big Purchases:
- You may be getting married, raising a family, saving for a child's education and making large purchases such as a house, car or cottage.
- Build a relatively balanced portfolio across all asset classes. Include an education savings plan to help save for a child's post-secondary education.
- Set up a savings plan that automatically puts money into your RRSP. Investing smaller amounts regularly is easier than coming up with a lump sum at the end of the year, and it allows you to take advantage of dollar cost averaging for any investments that fluctuate with the market.
- If your clients offer a retirement plan and a match, encourage employees to take full advantage of it.
In Your 50s and 60s – Serious Business:
- Retirement is on the horizon – start strengthening your retirement savings by shifting investments from a long-term to a mid-term focus and taking a low-risk approach.
- Consider a conservative asset mix with a good portion of fixed income instruments such as GICs.
- Create a snapshot of how much you own to help you understand how your assets could help fund your future. For instance, an RRSP can be a source of income during retirement while other accounts can pay for a child's education or a major purchase.
- Pay off outstanding debts.
In Your 60s and Older – Looking at Retirement Head-On:
- Adjust your financial plan to achieve your ideal retirement lifestyle, whether that includes taking early retirement or an extended trip, or launching a second career.
- Consider income-generating investments coupled with a conservative asset mix.
- Maximize your RRSP contributions and consider an RRSP loan for making catch-up contributions, as you will only be able to contribute to your RRSP until the year you turn 71.
- Review and update the beneficiary designations for RRSPs, Registered Retirement Income Funds (RRIFs), TFSAs and insurance policies.