Investing your money
by Sean Tidd - Investors Group

Successful investing requires a plan. It's not enough to know where you want to go; you must also draw a map to get you there.

Many professional financial advisors suggest that you take the "life cycle" approach to investment planning. This method allows you to map out stages of your investment plan that will change over your lifetime to reflect your changing financial needs, while still providing for your long-term goals.

Life cycle investing separates your investment life into three distinct stages: the savings years, the wealth building years and the retirement years.

The savings years (age 25-40). This is when you get started on the road to investing. But, because you're young, expenses will also be high as you deal with such costs as raising a family and paying off a mortgage. This often limits the amount you have to save and invest; however, investing at this stage is critical. The money you commit now has the rest of your life in which to grow and will generate much more wealth than if you invest the same amount 20 years later.

The wealth building years (age 40-60). When you're beyond 40, you should be able to save and invest more of your income. Your earnings will likely have reached peak levels, your mortgage might be paid off (or your closer to it), and you may have less in additional debt.

Retirement years (age 60+). This is when you don't want to take chances with your money. You'll be relying on your investments to provide income investments that preserve capital while minimizing risk. But, maintain a small proportion of growth as protection against inflation.

What sort of asset mix do you require? It varies, depending on age and circumstances. Your financial advisor can show you how to put the life cycle approach to work in your investment plan, as well as recommending appropriate asset mixes and strategies.