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‘Tis the Season for Smart Financial Goals

A young woman sits on the floor with a cup of hot chocolate and reviews her new year goals
Holidays are a good time to review your short and long-term financial goals.

The holiday season is upon us! Are you making your shopping lists, and checking them twice? If yes, chances are finances and budgeting are in the spotlight as you draft your holiday spending plan and determine your expenses.

With so many competing priorities, it’s a good idea to set or revisit your financial goals. Revisiting your goals can help you determine if your spending habits will increase over the holidays, and if your increased spending will impact your contributions to savings and/or investment accounts.

Here are a few tips for how to set and stay on track with your money goals over the holidays.

#1. Know Your Financial Self

An important first step is to have a good understanding of your financial self.

Knowing your financial self means understanding what you want to accomplish with your money and when you want to accomplish it. If you set specific goals, you’ll have a clearer picture of the steps you need to take to achieve them and how long it will take. You will also have a better idea of when you’re falling off track or if your goal seems unrealistic as your financial circumstances change.

For example, if you decide one of your goals is to save for a down payment on a home, set an exact amount and timeline. You could aim to save $100,000 in five years, which breaks down to $20,000 per year, or $1,666 per month. If you find it tough to tuck this away during months where you spend more, you can make actionable changes like adjusting your timeline.

#2. Consider Investing and Dollar Cost Averaging

If you decide it’s the right time to start investing, give careful thought to your risk tolerance, time horizon, and investment knowledge.

Risk Tolerance

Investing comes with risk. Your risk tolerance is your willingness to accept a level of risk in order to achieve a given return. It’s important to identify the level of risk in investment products, making sure the investments you choose fit your risk tolerance and financial situation. Take this quiz to better understand your risk tolerance.

The investment products you choose should be tailored to fit your risk profile.

Time Horizon & Financial Goals

Your time horizon is a factor that can affect your risk tolerance. Time horizons are the fixed point of time in the future when you plan to or need to meet a short- or long-term financial goal.

During the period between now and your time horizon, you need to be able to build assets and make up losses you might experience. For example, if you have a short time horizon (e.g., paying off high-interest debt), you might not be willing or able to take on much risk. But if your time horizon is longer (e.g., retirement), you may be willing to take on more risk.

Investment Knowledge

Building your financial knowledge takes time and effort. Reading books, taking courses, staying on top of financial news, and talking about the subject with colleagues or friends are all things you can do to learn more. To boost your investment knowledge, our Get Started with Investing video series is a great way to learn investing basics!

A Quick Lesson on Dollar Cost Averaging

Dollar cost averaging is a strategy that could help you navigate uncertain markets and keep you on track to meet your goals by supporting your efforts to invest regularly.

This strategy involves contributing the same amount of money at regular intervals towards an investment over a certain time period, regardless of the market price. The theory is that over time (especially for those who have longer time horizons), investors may lower their average cost per share and cushion the impact of market volatility. Another way to use dollar cost averaging is through a Dividend Reinvestment Plan (DRIP).

Remember, theories are just that. There is no way to predict market performance, and the value of your investments could change at any time.

If you’re able to commit to a regular contribution to your investments, this strategy may help you continue working towards your short- or long-term financial goals. If you are already using dollar cost averaging, it may be a good time to revisit your fixed contributions and adjust if needed.

Talk to your registered investment advisor or seek independent advice to help you determine what strategies may work best for you.

#3. Seek Professional Help

Do you feel overwhelmed trying to manage your current expenses, while also trying to plan for your financial future? You might consider working with a registered investment advisor to help you create an investment plan.

There are different types of investment professionals who can provide an array of services. It’s important to know though that an investment professional who sells securities – investments like stocks, bonds, mutual funds, or exchange-traded funds – must be registered. Learn more about registration by watching this short video.

The word ‘registered’ is essential – registration helps protect investors. In general, anyone selling securities or offering investment advice must register with a local securities regulator, like the BC Securities Commission (BCSC). Securities regulators will only register firms and individuals if they’re qualified and meet certain requirements. Be sure to ask questions and conduct a background check when choosing your advisor.

Report a Concern

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website. Subscribe to receive email updates from BCSC InvestRight.

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