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The Best Way to Manage Your Investments in 2023

A woman managing her investments.

The world of investment is constantly changing thanks to advancements and the creation of new policies in the Canadian financial system. Therefore, if you have an investment portfolio, you must stay up to date with tips on how to manage it. Your investment management strategies should be tailored to your financial goals and risk tolerance.

It is important to note that even though you find the tips we will provide in this blog helpful, investment decisions should only be made after you have consulted with an expert financial planner in Edmonton. This is because an Edmonton financial planner will learn about your financial situation and make specific recommendations based on what they learn.

There are certain proven strategies and rules to follow when it comes to maintaining good financial health and in this blog we will be sharing them with you.

Clearly Define your Financial Goals

No investment decision should be made without short and long-term financial objectives. Make it clear what you are saving for; is it for retirement, for a house, or for your children’s education? Once your goals are clear, it will be easy to create and follow an effective investment strategy.

As an investor, you may not be able to make significantly recognizable progress without clear financial goals. This is because they form the foundation of every investment move you will eventually make.

Diversify your Investment Portfolio

One major principle of investing is diversification. When you consult a financial planner in Edmonton, one of the first things they will advise you to do is spread your investments across different asset classes.

You also need to consider geographical locations and diversify within your asset classes. All of these are important for reducing your investment risk margin.

Carry Out Risk Assessment

Your risk tolerance should be assessed regularly to gauge your ability to withstand market fluctuations. Investments with higher risks usually come with high potential returns, but the catch is that they normally have higher volatility. So, your investments should align with the level of your risk tolerance, and your portfolio should be adjusted as things change.

Working with a certified financial planner in Canada can ease this entire process and save you from making mistakes that are detrimental.

Allocation of Assets

The allocation of your investment across asset classes should be determined based on your unique investment goals, time horizon, and risk tolerance. If you have a longer time horizon, you may be able to allocate more to equities, and if you have a shorter time horizon you should be moving towards assets that are more stable.

Regular Review of Your Portfolio

Your investment portfolio should be reviewed periodically to ensure that it is constantly aligned with your goals and risk tolerance. When you carry out regular portfolio reviews, you may find that there is a need to rebalance your portfolio and bring it back in line with the asset allocation you want.

In addition, a regular portfolio review will help you reduce and prepare for any possible surprises with your investment, so you can stay focused and hit your set financial goals.

Stay Updated with Information

The Canadian economy is volatile and very prone to change, so it’s important that you stay updated on the latest market trends, regulation changes, and economic indicators that may affect your investments.

Working with a financial planner in Alberta will help you to understand what these changes mean for your investments. It will also prevent you from making impulsive decisions based on short-term fluctuations in the market. Your major focus should be on the long-term trend and your investment fundamentals.

Understand Tax Efficiency

Your investments may have tax implications, and it is important for you to understand them. There are many ways to minimize your tax liabilities, but considering tax-efficient investment strategies is one of the major ones. Instead of using normal Canadian bank accounts for investment savings, your financial planner in Edmonton may advise you to consider tax-advantaged accounts like RRSPs, and TFSAs.

There are some effective tax-efficient investment strategies that you can use to reduce your tax implications;

Diversify your account types

You can own different account types to minimize your tax expenses. RRSPs have tax-deferred growth potential so long as the money remains inside of the account.

Divide assets across your accounts

Understanding and choosing tax-efficient accounts is one way to improve your returns after tax but there is a need to know the type of account to leave your investments. One way to reduce the amount of taxes you pay is by dividing all your assets and putting them in different taxable and non-taxable accounts.

How does this work? Investments with high tax efficiency should be put in taxable accounts while investments without tax efficiency should be held in non-taxable accounts. A a financial planner in Alberta can help you to create tax-efficient strategies tailored to your situation.

You can put assets that produce capital gains in taxable accounts. While accounts that are non-taxable should hold interest producing assets because they are taxed higher than capital gains.

Make Long-term Investments

Investing is a long-term action that yields a return over time. Although there are also beneficial short-term investment opportunities, trying to get fast gains might lead to insignificant results. Try to maintain a disciplined approach and follow the advice of a financial planner in Canada rather than make decisions based on market buzz.

Always double-check with your financial planner to know when it is right to sell because you may not realize the full tax consequence of doing the sell. For some people this unwanted income could affect their ability to receive different government benefits like the old age security pension (OAS).

Meet a Professional

The importance of a professional financial planner when it comes to investments cannot be overemphasized. If you do not have enough time to manage your portfolio properly, they can help you with personalized guidance and clear investment strategies.

Having a professional in your corner can reduce pre and post-investment jitters especially if you are a first-time investor. You’ll receive the motivation and assurance you need to trust the investment process while you wait for your investments to yield returns.

Don’t forget that investments involve risks, so the best way to manage your portfolio is to follow these strategies and seek the help of professional financial planners in Edmonton like DeHaan Private Wealth. Contact us today and schedule a consultation.

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