Top of main content

Focus on financial goals – not market ups and downs

When markets move, you may make choices that are not always in your best interest. Instead, focus on financial goals based on your age, risk appetite and the amount of time to invest — not what’s happening day-to-day in the markets.

4 areas to think about when you invest and plan your financial future

1. Your goals

What do you want to do with your money?

A GIC might be the right choice if you need your money in a year or two for a major purchase, like a car or house.

Medium to long-term goals, such as funding a child’s education or saving for retirement, are often better served through investments like mutual funds that can offer greater opportunities for growth over time.

2. Your timeline

Just starting out? Preparing for retirement?

If you have a longer timeline, consider longer-term investments such as mutual funds that have the potential to grow over time. That way you can enjoy the potentially higher returns that come with taking on more risk because you have more time to ride out the market’s ups and downs.

If you need your invested money sooner–especially if you’re approaching retirement or a major purchase—consider less volatile options like money market funds or other conservative options.

3. Investor risk tolerance

How well can you handle the market’s ups and downs?

You should have a realistic understanding of your ability and willingness to tolerate potentially large swings in the value of your investments. Investments with a high return potential come with higher risk. You may not be okay with how much the value of your holdings can change, even overnight.

 

Think about whether you prefer an investment that may offer lower, but more stable, returns compared to a more volatile option.

4. Taxes and inflation

Are you aware of how taxes and inflation may affect your investments?

Depending on the investment, you may have to pay tax on the interest or capital gains. Talk to a tax professional to ensure you understand how these costs may lower returns over time.

Inflation, or more simply the idea that a dollar’s value today does not equal a dollar’s value in the future, can also erode the value of your money.

Higher risk products like mutual funds have higher return potential that can cushion the effects of inflation. Lower risk products, like GICs, may provide safety of your principal, but cannot easily help maintain your purchasing power.

Consider the best investment options for your goals

  • Adapt your strategy as your financial needs and goals change over the course of your life.
  • Shorter-term goals, like saving for a home renovation, can be well-served by shorter-term investment options that offer stable returns.
  • Medium and longer-term goals, like saving for a large purchase, retirement or a child’s education, are typically a better fit for investments that have more exposure to the markets through diversification

Short term goals

1-3 years

Medium term goals

4-6 years

Longer term goals

7-10+ years

These options are usually lower risk, and therefore offer a lower potential rate of return and may not keep up with inflation.

These options have exposure to various markets without too much risk; they’re the middle-ground and good for a wide range of purposes.
These options typically offer the highest return potential, but with a higher level of risk. That’s one reason why they’re suited for longer terms.

Savings Accounts

GICs & Term Deposits

Money Market Funds

Conservative Funds 

Moderate Conservative Funds

Balanced Funds

Managed Solutions

Growth Funds

Aggressive Growth Funds

Managed Solutions

Why should I invest?

The chart below shows the impact investing can have on your savings

Returns from $100,000 invested in equities, bonds and savings over time

Investment chart - returns from $100,000 invested in equities, bonds and savings over time
  • The value of your cash probably won't grow at the same rate as inflation, so your money actually buys you less over time
  • Investing is a way to help your money work harder than it does in a savings account. You can seek higher growth than inflation, by investing over the long term
  • More risky investments such as shares in companies (equities) typically experience higher short-term fluctuations in value, but tend to produce higher long-term returns

Source: Bloomberg as at December 31, 2018. Indices used: Equities –S&P/TSX Composite Total Return Index. Bonds –FTSE Universe Bond Index. Cash –FTSE Canada 91 Day T-Bill Index. Inflation –Total Consumer Price Index. All returns are denominated in Canadian dollars.

Past performance is not an indication of future returns. The performance may go down as well as up.

 

 

Issued by HSBC Investment Funds (Canada) Inc.

 

Important information:

HSBC Investment Funds (Canada) Inc. (“HIFC”) is a direct subsidiary of HSBC Global Asset Management (Canada) Limited (“AMCA”) and an indirect subsidiary of HSBC Bank Canada, and provides its services in all provinces of Canada except Prince Edward Island. AMCA is a wholly owned subsidiary of, but separate entity from, HSBC Bank Canada. HIFC has not independently verified the information and makes no guarantee or representation of, and accepts no responsibility or liability for, its accuracy or completeness.

AMCA is the manager and primary investment advisor for the HSBC Mutual Funds. HIFC is the principal distributor of the HSBC Mutual Funds. HSBC Mutual Funds are also distributed through authorized dealers. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus and Fund Facts before investing. Except as otherwise noted, the indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemptions, distributions or optional charges or income taxes payable by any unit holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any compounded rates of returns are used only to illustrate the effects of the compound growth rate and are not intended to reflect the future values of the HSBC Mutual Funds or returns on investment.

All products and services of HIFC and AMCA are only available for sale to residents of Canada, unless the laws of a foreign jurisdiction permit sales to its residents. Please contact your HSBC Mutual Fund Advisor for more details. The contents of this site should not be considered an offer to sell or a solicitation to buy products or services to any person in a jurisdiction where such offer or solicitation is considered unlawful.

This information is not intended to provide professional advice and should not be relied upon in that regard. You are advised to obtain appropriate professional advice where necessary and should consult your investment representative before considering a specific transaction. Also, please consult your tax advisor to find out which strategies best suit your tax situation.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Investment Funds  (Canada) Inc.

Expiry date: September 14, 2020

H20190828-E

Listening to what you have to say about services matters to us. It's easy to share your ideas, stay informed and join the conversation.