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Financial Fitness: Whom are you investing for?

You may, on occasion, ask yourself why you are investing. Why go through the fluctuations of the financial markets, the worry over interest rate movements, the fears of today and the uncertainties of tomorrow?

To answer this question, ask yourself one more question: Whom am I investing for?

You’re investing for yourself. It sounds selfish, but it’s not. You may be investing in your Registered Retirement Savings Plan (RRSP) and other investment accounts so you can enjoy a comfortable retirement after working your entire adult life. But you’re also investing so you can become financially independent — free of worries that you’ll become a burden to your grown children or other family members. And given the real possibility of spending two, or even three, decades in an active retirement, it’s imperative that you put as much as you can possibly
afford into investment vehicles that can help you pursue your financial independence.

You’re investing for your family. If you have children or grandchildren, you may well want to help them pay for college or university. And, as you know, post-secondary education has become much more expensive in recent years. You’ll also need to think about other family members. Have you built up enough in your retirement accounts so that the money will be sufficient to support your surviving spouse should anything happen to you? Will you have enough financial resources to help support your elderly parents should they require assistance? And will you be able to leave the type of legacy you desire?

You’re investing for your beliefs. Throughout your working years, you may try to give as much money as you can to charitable organizations you support. Yet you may wish you could do even more and eventually, you may be able to do more. For
example, if you sell an asset that has appreciated in value, there will be tax implications. But if you were to give securities that have appreciated in value to a charitable organization, you could avoid taxes on the appreciated amount, and you may even get a current income tax break for your contribution. You might also want
to include charitable organizations in your estate plans after consulting with your estate tax advisor.

As you can see, you’ve got some “key constituencies” counting on you. By keeping them in mind, you should have the motivation you need to overlook the day-to-day ups and downs of investing while you keep your focus on your important long-term goals.

Deborah Leahy is an Investment Advisor with Edward Jones, Member CIPF

deborah.leahy@edwardjones.com

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