Maximizing Your Investment Goals
In the world of mutual funds, the key to success involves a few simple principles: Planning. Patience. Long-term thinking. While it seems like common sense, these virtues can make a big difference in achieving lasting and consistent investment growth.
That said, let’s examine some steps to follow when reviewing and planning your mutual fund portfolio and your overall financial or retirement goals.
Five Key Steps to Achieving Your Investment Goals Through Mutual Funds
1. First off, if you haven’t already done so, enlist professional advice. An Investment Professional, working in true partnership with you, can bring unparalleled value to your mutual fund portfolio. Just think, a seasoned expert will be there to watch-over your funds on a regular basis, especially when you can’t. And remember, there is a multitude of mutual funds including equity, asset allocation and fixed-income funds. The bottom line is: there is no substitute for professional guidance and involvement.
2. Clearly identify your overall investment goals before you begin to select which mutual funds are best suited to you. You are unique. Your personal lifestyle and financial goals are unique. Factor in your current income-level, anticipated future income, and investment time horizon. Think long and hard about your needs before you arbitrarily jump-in and buy a batch of mutual funds. Consult with an Investment Professional who is skilled at listening and knowledgeable about your investment options.
3. Match your mutual funds to your situation. For example, equity and growth funds are best suited for long-term objectives because of the risk and volatility of these types of funds. As well, it’s a good idea to determine your risk tolerance along with the guidance of your Investment Professional. If you are averse to risk, then less volatile funds are likely the answer (although returns tend to be lower).
4. Once you’ve assessed your investment objectives, don’t delay purchasing the selected mutual funds. Get started early. Research has verified that attempting to ‘time’ the market doesn’t work. There is no better time than the present to begin. This way, you’ll be harnessing the power of compounding over a greater time period to make your investments grow.
5. Invest in your mutual funds regularly, not just once a year during RRSP season. Set up a schedule with your Investment Professional. Even if you can only contribute small amounts to your mutual fund investment program, you’ll still be ahead of the game. Consider it a regular part of your monthly budget, such as rent or the mortgage. A pre-authorized chequing plan (PAC) is your easiest and most direct way to execute this – whereby a set amount of money is deducted from your bank account. This method gives your money more time to grow tax free, and the difference is remarkable. Suppose you put $500 per month into an RRSP mutual fund over 25 years. If your fund grows 8%, you’d end up with $454,500 – or $15,850 more than if you made the same investment at the end of each year.
In summary, by following these simple but important steps, your financial future is poised for optimum growth. Every mutual fund investor should remember that planning, patience, and a long-term outlook are the cornerstones to success for the wisest investors – and for good reason – it works!
This article was prepared by Fidelity Investments for Andray Domise, Independent Financial Advisor, who is an Investment Professional with International Capital Management, Inc.
Read a fund’s prospectus and consult an investment professional before investing. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. Investors will pay management fees and expenses, may pay commissions or trailing commissions, and may experience a gain or loss.
Tags: asset allocation, dollar-cost averaging, Investments, Mutual Funds, RRSP
This entry was posted on Monday, October 19th, 2009 at 7:01 am and is filed under Investments, Mutual Funds. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
