Starting Out

Investor Profile Questionnaire Investment Myths

Identify Your Financial Goals

Before you invest ask yourself the following questions:

What is my primary reason for investing?
What time frame do I have to work with?

Your answers will help determine an appropriate asset mix for your portfolio. For example, if you are saving for retirement, maximizing the growth potential of your investments is of key concern and a portfolio biased in favour of equities is typically in order. On the other hand, if you are already retired and rely on your investments for income, preserving capital will be of greater importance. In this case, the bulk of your portfolio should be invested in a combination of bond and money market funds.

Identify Your Time Horizon

If you are saving for a vacation, a new car or a downpayment for a home, your time horizon will be fairly short. If less than two years, concentrate on money market and short-term bond funds. While these funds are unlikely to provide substantial gains, they typically exhibit lower volatility, and are highly unlikely to decline significantly in value.

For longer-term goals such as retirement, a greater concentration in equity funds is typically recommended in order to increase the growth potential of your portfolio. Equity funds are subject to a greater degree of volatility over shorter periods, but have historically provided higher rates of return than other investments.

What's Your Risk Tolerance?

In order to measure your risk tolerance, you need to identify how much variability in the value of your investments you are comfortable with. The following questions will help zero in on your risk comfort level.

How long do I have to invest? The longer your time horizon, the more important equity fund exposure becomes.
How important is avoiding losses? The more comfortable you are with short-term volatility, the more appropriate longer-term investments, such as equity funds, will be for your portfolio. By the same token, if you are more risk averse (safety minded), your focus should be on more stable investments, such as bond and money market funds.
How are my investments allocated? While an aggressive equity fund may not be appropriate when held on its own, it may be perfectly suitable when held as part of a well-balanced portfolio. A diversified portfolio of investments tends to reduce swings in the value of the entire portfolio.

There are other factors to consider when selecting the right mix of funds, including age, income, investment experience and net worth. Speak with an Altamira Investment Specialist to determine which funds are appropriate for you, or download our Investor Profile Questionnaire.