What is "asset allocation"?
The mix of investments within your portfolio is also known as your portfolio's asset allocation. A diversified portfolio typically holds a combination of savings, income and growth investments.
3. Invest regularly
It's generally much easier to come up with a smaller amount to invest on a monthly or weekly basis than to make a large, lump-sum contribution. A regular investment plan allows you to choose when and how often you make contributions - ensuring you make investing a priority. With a CIBC Regular Investment Plan, money will be automatically withdrawn from your account and invested in a range of CIBC investment solutions. You can invest with pre-authorized contributions of as little as $25 a month.
How can I lower the average cost of investing?
Investing smaller amounts in mutual funds over time - or "dollar-cost averaging" - can mean lower average costs than if you make infrequent purchases. For example, your money will buy more units of a mutual fund when prices are low; and fewer units when prices are high. Provided the fund gains in value over the long term, you'll profit from your purchases during short-term price declines.
4. Build a diversified portfolio
Spreading your assets across a wide range of investments is an effective way to reduce risk and increase potential returns over the long term. Holding a mixture of different types of investments will help cushion your portfolio from downturns, as the value of some investments may go up while the value of others may go down.
5. Monitor your portfolio
You should examine your investment portfolio with a CIBC advisor, or on your own, at least once a year to ensure that it continues to meet your needs. Market conditions, life events (marriage, children and retirement) and changing goals are cues to review your portfolio.
6. Align your investments with your time horizons
The type of investments you choose will depend on whether you're saving for long-term or short-term goals. For your long-term goals, you may want to consider long-term, growth-oriented investments. Your short-term goals call for investments that are more conservative, and more accessible. For example, if you're investing to save for a downpayment on a home, you'll want quick and easy access to your funds.