How to Build a Strong Investment Plan in Canada
Saving is essential for building a financial foundation, but investing is what accelerates growth and creates new opportunities. Warren Buffett, one of history’s most successful investors, said it well: “Risk comes from not knowing what you’re doing.” He emphasizes that investing in your own knowledge and skills can lead to significant growth over time, allowing you to make better financial decisions and ultimately yield greater returns. Investing isn’t just about money—it’s also about investing in knowledge and discipline, which are critical for building long-term wealth.
But where do you start? Here’s a quick guide to help you design an investment plan that aligns with your financial goals, time horizon, and comfort with risk.
Advanced MIC offers an alternative investment option that helps mitigate risk through minimal correlation to public markets, delivering genuine diversification to your portfolio. Reach out to us today to explore if Advanced MIC is the right fit for your investment goals.
Key Considerations for a Successful Investment Plan
A good investment plan is like a roadmap for your financial journey, helping you to make calculated decisions with your money. While traditional assets like stocks and bonds are popular, Canadians also have access to other forms of investing—such as real estate-backed mortgages—that can diversify and strengthen a portfolio.
1. Define Your Financial Goals with Precision (SMART Goals)
Setting clear goals is crucial. SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound—give structure to your financial ambitions. For example, you might aim to build a retirement fund of $1 million in 20 years by investing in a mix of stocks, bonds, and mortgage-backed investments.
2. Match Your Goals to Your Time Horizon
The timeline you set for each goal—whether short-, medium-, or long-term—will guide your investment choices. For example, short-term goals (within a year) might involve low-risk options like GICs or savings accounts. Medium-term goals (1–5 years) could benefit from bonds or mutual funds, while long-term goals (5+ years), such as retirement savings, allow for higher-growth assets like stocks or mortgage-backed securities.
3. Consider Your Risk Appetite
Investment risk is the potential for returns to deviate from expectations. Aligning your risk tolerance with your goals and time horizon is key. A longer investment period generally allows you to take on higher-risk investments, as fluctuations in value tend to balance out over time. Conversely, shorter-term goals benefit from stability-focused investments.
Popular Investment Types in Canada
Investors in Canada have various asset options to fit different goals:
- Short-Term Investments: High-interest savings accounts, GICs, and money market funds.
- Medium-Term Investments: Bonds, ETFs, and mortgage investment corporations (MICs) that offer stable returns.
- Long-Term Investments: Stocks, MICs, and even whole life insurance policies for those building generational wealth or retirement funds.
Investment accounts such as the TFSA and RRSP can enhance the value of these assets by offering tax advantages. TFSAs allow tax-free growth and withdrawals, ideal for short- and medium-term goals. RRSPs provide tax deferral, making them a good choice for retirement savings.
Alternative Investment Options
Alternative investments, like those offered by Advanced Mortgage Investment Corporation (Advanced MIC), focus’ on mortgage-backed investments, allowing Canadians to participate in the real estate market without directly owning property. Managed by professionals, MICs pool funds from investors to finance Canadian mortgages, balancing capital preservation with stable growth.
Steps to Build Your Investment Plan
Here’s a quick step-by-step process to set you on your way:
- Set SMART Financial Goals: Be specific and set timelines for each goal.
- Align Goals with Time Horizons: Choose investments that match the timeframe for each goal.
- Evaluate Your Risk Tolerance: Consider how comfortable you are with potential fluctuations in your investment values.
- Set an Investment Budget: Assess your capacity to invest, ensuring it aligns with your monthly budget and goals.
- Leverage Tax-Advantaged Accounts: Use TFSA and RRSP options to minimize tax impact and boost returns over time.
If you’re interested in more stable, income-focused investments, Advanced MIC’s offering may match various risk profiles and time horizons. Our conservative and prudent mortgage portfolio may cater to your specific risk appetite, making it easier to find a fit.
With a well-structured plan and the right guidance, investing in Canada can be both rewarding and tailored to fit your personal and financial needs.
Contact us to invest.
This document does not constitute an offering of securities. The securities are offered exclusively through an Offering Memorandum provided by Advanced Capital Corporation, a registered dealer, in compliance with applicable securities laws. The information contained in this summary is incomplete and is provided for informational purposes only. The financial returns discussed herein are target projections and may not accurately predict future performance. Investors are encouraged to review the full Offering Memorandum and consult with a financial advisor before making any investment decisions.
