Picking the right funds for you

Once you’ve thought about how your risk tolerance, savings attitude and investor emotions affect your investment personality, you can choose your asset mix.

Your asset mix is made up of similar types of investments, grouped into categories called “asset classes”.

Different asset classes have different risks, so it’s a good idea to have a mixture. This distribution of your investment dollars among different asset classes is called an asset mix.

What investment options should you pick?

Once you know what percentage of your investments you want held in each asset class, it’s time to choose individual investment options. Each option has its own investment objectives, which will help you understand how your money is invested and how the fund is managed.

When choosing your investment options, it’s important to consider the following:

Benchmarks

An investment benchmark is a standard against which the performance of an individual security (for example a stock or bond) or group of securities like an investment fund is measured. For example, the Toronto Stock Exchange (TSX) in Canada is one benchmark for equity investments.

A benchmark can track a specific segment of the market, for example TSX financials or the whole market for a particular asset class. Individual investors and financial professionals often use such benchmarks to gauge market expectations. You’ll often see benchmarks on your fund reports, which help you judge the performance of that fund against an appropriate standard.

Rates of return

Investment performance is only one of the factors to consider and should never be the only reason you choose an investment. Past performance doesn’t guarantee a similar future performance, but reviewing reports on performance can help you make decisions. For example, you may look for investment options with a history of consistent returns over one, three, five and 10 years.

One size doesn’t fit all when it comes to choosing your investments. Use the Investment personality questionnaire and your results to help you make investment decisions.

If you’re a Great-West Life group retirement and savings plan member and you’d like more information, you can call Access Line at 1-800-724-3402, Monday to Friday, 8 a.m. to 8 p.m. ET.