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Investing 101

October 25, 2018

At Christian Credit Union our Financial Advisors use a proven and sensible process to navigate the investment decision. Often when prospective members come in they want to start by examining the products. Understandable, but let’s make sure the solution you are choosing will actually meet your needs first. The investment choice should rarely be the first thing talked about unless the member has a sound plan in place and only needs our help with selecting investments to make the plan happen. There are people in this category that do not need planning advice from us but do desire product support. They may work with their own Accountant and/or Lawyer, have a financial plan and need this end of it to support that. If that describes you please come on in for a chat and a coffee if you’d like to explore. For most people though the idea of a sensible, easy to follow process and plan is a comfort and gives great confidence in how to move forward. Having peace of mind concerning your finances means a lot more energy can go into other areas of your life.

Where should the investment choice fit in the process? Logically it makes sense to determine what your goals are. In other words, what are you working toward? Second, what have you done so far to meet those goals? Where are you relative to where you want to be? This section can be mathematical i.e. how much do I need? There may be tax issues, family concerns, business concerns, estate problems, and more. Third, what are the gaps between where you want to be and where you are now? Fourth, what solutions are available to the items you’ve identified in step two that need to be worked through? Fifth, choose a direction and implement. This is the step where product support, or the investment decision, should be made. The investment product choice should be a function of your financial plan. Finally, the last step is to schedule regular reviews with your financial advisor with an idea of how you will measure your success so that you can ensure you are on track. Life changes often which can mean an investment decision is required and a change in your financial plan. You and your advisor at Christian Credit Union will help you to determine a reasonable follow up schedule and what life events require a call from you to us.

Now that we know the step when the investment decision is best made, let’s have a look at the actual investment decision process.

The first step that needs to be examined is how much risk you can take. Do you need or want your money guaranteed or can you tolerate some risk? Investing in the markets can potentially lead to a higher return when compared to investing in a Term Deposit or GIC (Guaranteed Investment Certificates) as these instruments are known in banks. It is important to understand one major difference in regard to risk: when investing in the market you give up the guarantee on your principle. You should be prepared that your funds will also fluctuate in value and that past financial performance may not be repeated. You can invest in your personal or joint names, RRSP, RRIF, TFSA and even in your business name.

Once you’ve determined that you’re going into the markets there are more choices to make. I recommend a risk managed, diversified approach. Diversification is one of the basic building blocks of a solid, reliable portfolio. It can reduce the number and severity of market declines, while taking advantage of market gains. Mutual funds are a convenient option because they take care of all the diversification and oversight for you (1). At a time when the markets and their direction are so uncertain, I believe it remains a prudent and wise approach. Diversification typically includes several categories such as stocks, bonds, and cash, as well as diversification within categories. The actual mix is determined by your comfort with the markets, your net worth and fall back position, time horizon, and rate of return called for in your personal financial plan. Those are the investing 101 basics and a great place to start. Credential Asset Management Inc. at Christian Credit Union offers a painless process based on your personal details to help determine which mix is right for you.

If you have read enough so far, don’t already work with us, and feel confident enough to make a call to us, let’s meet and review how we can help you.

For those experienced with investing and want a little more detail, you know there is a great deal beyond the basics that we’ve covered so far. We are able to help you work through those discussions and choices too. A quick list of additional potential topics that can be included in discussions is strategic asset allocation, tactical asset allocation, Exchange Traded Funds (ETFs) via ETF Mutual Funds or for referral to a partner, active or passive management, alternative investments, high net worth solutions, Sustainable and Renewable (SRI) and Environmental and Social Governance (ESG) screens, what is involved in moving your money, fees, tax impact and efficiency, and so much more.

The best part about working with Christian Credit Union is that we know who you are and share your Christ focused worldview. You get the help you need to meet your goals without a sales push. We offer investment solutions that you can feel good about and know that the profits made support Christian causes. Your privacy is top of mind at Christian Credit Union and we adhere strictly to the privacy laws of the land. Sound too good to be true? For once it isn’t. Already our member? If you are happy with our help please tell your friends, and if we haven’t earned your recommendation please tell us so that we can do better. If you do not have peace of mind now in this area of your life, come on in for a free second opinion. We are here to help.

Carol Haayema, CFP®, CKA®
Senior Financial Advisor
Christian Credit Union
Credential Asset Management Inc.

(1) Wording from NEI Investing Basics published 2017
Mutual funds and related financial planning services are offered through Credential Asset Management Inc. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds.

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