Investing is one thing, but you have to know why you’re doing it.
Whether you’re looking to buy a home or plan for your retirement or your children’s education, investing your money instead of letting it sit in the bank is always a good idea. A good advisor can help you choose the best strategy based on your objectives.
Whether to choose an RRSP or a TFSA is the most frequently asked question. The answer is unique to you, depending on your objectives and financial situation. You want to avoid buying an RRSP after a five-minute meeting. Buying an RRSP, for example, reduces your taxable income and your tax bill at the end of the year. However, this tax is deferred until the moment you withdraw funds from your RRSP in retirement. The idea behind it is that you contribute to your RRSP at the peak of your career in terms of salary to pay less tax now; when you retire, you will most likely have a lower income and therefore pay less tax when withdrawing from your RRSP.
The important thing when investing money is to have an investment horizon. Contributing to a TFSA for the purpose of withdrawing from it in 3 to 5 years to purchase your first home is different than contributing to an RRSP with your retirement—in 30 years—as an investment horizon. It depends on why you’re setting money aside. A financial security advisor can help you determine the best investment strategy based on all these criteria.
The Autorité des marchés financiers provides a tool on its website that can help you determine your investor profile. The tool estimates your risk tolerance, among other things, to direct you to certain types of investments that might be a good fit for you. Naturally, it does not replace a good advisor, who will take your personal and financial situations into consideration, but it can help inform your decision. Get in touch with one of our advisors for a comprehensive assessment of your investor profile.
To learn more, meet with a VotreConseiller.net advisor.
