Evaluating your investor profile is an indispensable element underpinning your investment strategy and, consequently, your financial success. If you haven’t already done it, you and your advisor can establish it after having discussed various points concerning:
- your personal and financial situation
- your investment experience
- your tolerance of market fluctuations
- your investment objectives
- the time you have to accumulate and grow your money
Using your investor profile, your Caisse populaire advisor will analyze your file and recommend products that suit your aspirations, proposing a diversified portfolio in keeping with your personal parameters. A well-diversified portfolio will give you peace of mind while your RRSP grows.
Are you the conservative or the aggressive type?
Determining your investor profile means determining your investment risk tolerance. In other words, before you set up your investment strategy, you should ask yourself how much risk you are willing to take.
As a general rule, when it comes to investments, the higher the return, the higher the risk.
Determine if you’re comfortable with investments whose value may fluctuate rapidly, or if you prefer investments where capital is guaranteed.
Factors that can influence your degree of risk tolerance
- Investment horizon: Your investment horizon is the time you have set to meet your objectives. If you have a long investment horizon, you can take more risk because you have time to recover from any loss in the value of your investments due to market ups and downs.
- Liquidity needs: How great is your need to have assets than can be quickly converted to cash?
- Attitude towards market fluctuations: Each one of us may have a different reaction to investment losses and fluctuations. It’s up to you to determine if a potential loss in the value of your portfolio might make you lose sleep.