​​​Deciding how to invest your contributions is one of the most important steps in retirement planning.

Learn more about the two ways we can help you determine your investment instructions, the investment options in your plan, and what can influence your rates of return. Curious to know how many years you could live in retirement? Estimate your life expectancy.

Smart investing tools

1. Guaranteed funds

These funds earn a set interest rate and guarantee that you’ll receive the interest plus the money you invested (your capital) at the end of a specified period.

2. Market-linked funds

These funds invest in securities with varying risk levels, depending on your specific investment objectives. Your capital and investment returns aren’t guaranteed. Here are some examples:

Fixed-income funds

These funds invest in securities that provide regular fixed payments, mainly in interest. They include money market securities, mortgage securities and bonds.

Fixed-income funds are usually less risky than equity funds, but they usually have a lower long-term return potential.

Equity funds

These funds invest primarily in common shares and can be categorized according to:

  • Company size
  • Geographic region
  • Portfolio management style
  • Industrial sector
Balanced funds

Also known as diversified funds, these funds consist of a combination of money market securities, bonds and equities.

The asset mix can range from conservative (mostly bonds and money market securities) to aggressive (mostly equities).

Risk vs. return

  • Generally, the higher the return potential, the riskier the investment.
  • The opposite also tends to be true: the safer the investment, the lower your return potential.

Market up and down​

Unless you’re investing in GIC, your investments will fluctuate over time. Historically, equities have outperformed fixed-income, but equities tend to be riskier.

That means:

  • The further you are from retirement, the more equities you should have in your portfolio, since you’ll have time to ride out the ups and downs of the market and end up in a growth position.
  • The closer you get to retirement, the more fixed-income securities you should have, so you can hold on to the capital you’ve accumulated and not get caught by a market downturn.

Your risk tolerance

A number of factors influence your risk tolerance:

  • Your lifestyle, your financial situation and where you live
  • Life events like having children or buying a house

The best strategy is to invest according to your investor profile External link. Opens in a new window., which you should re-evaluate every couple of years or whenever your situation changes.