What am I investing for?

Understanding your investment goals

Life is filled with lots of exciting moments, and you’ll likely have a couple of goals that you’re working toward. Knowing why you’re investing is the first step toward building your investment strategy.

Here are three questions to help you map out your investment goals.

1.  How long do I want to invest?

Knowing when you’re going to need your money (your time horizon) will help you decide how much risk you may be able to take on in your investments.

  • Short-term: Goals that you want to achieve within three years. When you’re working within a short time horizon, consider lower-risk strategies that won’t put your principal (what you’ve already saved) at risk.
  • Mid-term: Goals that you want to achieve in three to seven years.  Look to strike a balance between protecting your savings and achieving modest growth that doesn’t get gobbled up by inflation.
  • Long-term: Goals that you want to achieve in more than ten years. A long time horizon allows you to weather the ups and downs of the stock market – which could offer the best potential for growth.


2.How much will I need?

Estimate how much you’ll need, and adjust for inflation. A long time horizon means that you’ll need your investment return to outpace inflation to grow your money. The inflation rate in Canada generally hovers around 2%.*


3. What is the best account type, taxable or tax-advantaged?

In Canada, there are several types of investment accounts. Aligning your investment goals with the right account type can help make your investment journey more efficient.

  • Government-registered plans and accounts, like RRSPs, TFSAs and RESPs, let you grow your savings tax-free.
  • Non-registered accounts have limited tax advantages but can offer you more flexibility.

*Source: Bank of Canada. Inflation. As at July 14, 2020. https://www.bankofcanada.ca/core-functions/monetary-policy/inflation/

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The statements contained herein are based on information believed to be reliable and are provided for information purposes only. Where such information is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. It does not provide investment, tax or legal advice, and is not an offer or solicitation to buy. Graphs and charts are used for illustrative purposes only and do not reflect future values or returns on investment of any fund or portfolio. Particular investment strategies should be evaluated according to an investor's investment objectives and tolerance for risk. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.

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