Exchange traded funds (ETFs) provide Canadian investors with more choice than ever before. If you are just getting started in learning about how ETFs can fit in your portfolio, it is important to ask your investment advisor these five essential questions to ensure you are on track to reaching your financial goals.
1. Is my vision of retirement realistic?
Communicate your future lifestyle plans to the advisor. Do you want to travel, open a new business, or work part-time? Defining how you see your future will help you and your financial planner build a better framework.
2. Is my plan working?
Ask what the overall performance of your portfolio was last year; do the same for the last three-year period, and for the last five years. Ask how much risk is being taken in order to achieve that level of return. If it’s not a good risk-adjusted return, make adjustments.
3. Do I have all my eggs in one basket?
If there is one lesson learned following the 2008 financial market crash, it is the importance of diversification. If you only own a few types of investments or are relying on your home or business to appreciate in value, ask your advisor about Exchange Traded Funds (ETFs). ETFs are similar to mutual funds, in that they are essentially funds that hold a collection of investments (such as stocks and bonds), but trade like a stock on the exchange.
4. Are ETFs right for me?
With a single cost-effective purchase, you can gain access to entire markets or strategies, providing you a diversified portfolio that’s better protected against market shakedowns. Not all ETFs are created equal so it’s a good idea to research companies such as CI First Asset, which specialize in trying to deliver superior risk-adjusted returns for investors, before meeting with your advisor.
5. Am I saving enough?
You may find the results unpleasant and surprising, but you need to discuss your spending habits with your advisor and adjust your lifestyle accordingly. It doesn’t matter how much money you have, if you spend more than you make, which a lot of people do, you’re in trouble.
Important information about each CI ETF Fund is contained in its respective prospectus. Individuals should seek the advice of professionals, as appropriate, prior to investing. This investment may not be suitable for all investors. Some conditions apply. Copies of the prospectus may be obtained from your investment advisor, First Asset or at www.sedar.com. Commissions, management fees and expenses all may be associated with mutual fund investments. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.
The commentaries presented are prepared as a general source of information. They are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. The opinions contained in this document are solely those of First Asset and are subject to change without notice. First Asset assumes no responsibility for any losses or damages, whether direct or indirect, which arise from the use of this information and expressly disclaims liability for any errors or omissions in this information. First Asset is under no obligation to update the information contained herein.