Align your goals to your investor personality in 3 easy steps

When thinking about a particular goal, there are a couple of key questions to ask yourself. How important is it to you, and to what degree are you relying on the money you're looking to invest to make that goal a reality?

If you absolutely need these funds to be ready and available when you are, then you may want more secure investing options to protect them. If the goal is more flexible, or if you’re not relying on these funds to make ends meet, then you may feel comfortable with more growth-oriented investment options.

With a short-term goal, such as purchasing a vehicle or saving for a down payment on a home, you typically want to protect your investment so you can use it soon. Lower-risk investment options are common for short-term goals.

If you have a medium-term goal, such as starting your own business or saving for a child’s post-secondary education, you have some time to ride out the market's ups and downs. By taking on some investment risk, you may be able to achieve higher returns than guaranteed assets can offer. In this case, you may opt for a balanced mix of lower-risk and higher-risk investments.

With long-term goals like retirement, you likely want to see your capital increase over a longer time period. By taking on additional risk with your investments, your portfolio may experience significant market fluctuations, but you're able to stay invested for the long haul and watch your investments grow by the time you're ready to use them.

How comfortable are you with risk, really? When it comes to investments, risk represents the possibility of losing some or all of your original investments, and also the magnitude by which it falls short.

If you’re willing to take on higher-risk investments to reach your goal, you'll have a higher potential for return. But the trade-off is an increased likelihood and magnitude of losses, even if temporary. Are you comfortable with that happening to your hard-earned savings?

If not, you may want to opt for lower-risk investments. They have a lower potential for return, but you’ll be more confident that your money will be there when you need it.

Your goals, priorities and risk tolerance will likely change over time, so check in regularly with your investments and make sure everything is still aligned to your preferences. You can also contact your CIBC advisor for more help optimizing your investments and mapping a plan for achieving your goals.