7.1.3 Life stages and your investment goals

What you want from your investments depends on who you are. Your goals may be:

• to make as much money as you can
• to provide a comfortable income at retirement
• to make enough money to do something specific, like take a trip or go to college
• to keep your money from losing value due to inflation.

Your investment goals will be different from those of other people, and they will change as you go through your life. Usually, you have a variety of goals at the same time. You may be looking for long-term growth in value with a Registered Retirement Savings Plan (RRSP), but also want a secure and flexible fund for emergencies. Each household will have a variety of objectives, and will need a different investment strategy for each one.

The investment choices that are best for you will also change as your investment goals change. For example:

• If your goal is to make as much money as you can, you have to be ready to take some risks. You are likely to choose shares in companies with a potential for growing rapidly, although the company might lose money if its business fails.
• If your goal is to keep your money safe, or to provide money to live on, you would choose different investments, such as guaranteed investments or bonds that pay a low but reliable return.

One easy way to see how personal factors affect investment choices is to think about your life stage—the phase of your life that you are in.

• If you are young, with a job and no family, you may be willing to take more risks because you are planning for the long term. If the value of your investments goes down, you'll have time to recover and your investments can grow over a long period of time.
• If you are starting a new family, you want to provide security. You may still be planning for the long term, but you need to keep at least part of your money available to provide for shorter-term savings goals and emergencies, or to make major purchases such as a family home.
• If your family is becoming more independent, you may have less need for short-term savings, and be able to save more for your retirement. You may be at the peak of your earning years, with cash available for investments, but unwilling to invest your money in anything risky.
• Once you have retired, you may be relying on your investments to provide a regular, reliable income to add to benefits such as your public or private pensions.

Because investing goals and strategies vary from person to person, it's important to understand what your goals are when you plan your own investments and when you are asking for professional advice.