Choose the right funds
“If you don’t know where you are going, any road will take you there.” Lewis Carroll
To make smart investments in financial markets, you first need to ask the right questions:
- What are my goals?
- What degree of risk am I willing to accept?
- When will I need my savings?
Determine my profile to invest better |
2 concepts to understand to choose the right funds to invest my savings in |
Self-manage or delegate? |
Determine my profile to invest better
Determining your investor profile is the first step to investing in keeping with your savings goals.
This involves using the investor profile simulator to define your investment objective and evaluate how much risk you're willing to accept.
This way you’ll be able to determine an asset allocation between equities, bonds, and the money market that fits your profile and your time horizon, though it does not count as investment advice.
How to distribute your savings across different asset classes will depend not just on your investor profile, but also on your investment horizon, meaning how long you plan to keep your savings invested in the Funds.
2 concepts to understand to choose the right funds to invest my savings in
Risk/return
In financial management, the concepts of return and risk (meaning the likelihood of losing or gaining capital) are closely linked. This is because each fund has its own level of risk and an expected return.
Funds with the highest potential return tend to also have the highest risk. In other words, if you want to get a high return on your investment, you’ll need to accept the risk of losing a significant amount of capital. Conversely, the safest funds have a lower potential return.
See the Key Information Document (KID) for your Funds in which the “Risk/reward profile” indicator presented as a scale from 1 to 7, corresponding to the level of risk and increasing returns, is there to help you assess the potential performance of a fund relative to the risk it entails. Note that the lowest risk category does not mean risk-free. This indicator may change over time without prior notice.
The minimum recommended investment period
The riskier the fund, the longer the minimum recommended investment period. That period corresponds to the minimum lock-up period needed to get the most benefit from the investment by reducing the risks that it entails.
See the Key Information Document (KID) for your Funds in which the “Recommended holding period” gives the minimum period for which it is recommended that you keep your investment in that vehicle. If you remove all or some of your savings earlier, you’ll increase the risk of not achieving the fund’s performance goal, or even lose some of your capital.
Self-manage or delegate?
Your employee and retirement savings allow you to access 2 types of financial management:
- Self-directed management (PEE, PERE-CO, PERCO) : where you get to choose the Funds in which you will invest your savings.
- Life-cycle management (PERE-CO, PERCO) which allow you to assign the management of your retirement savings, based on the time horizon that you've set (such as your theoretical retirement date) and, in some cases, your investor profile (conservative, balanced, aggressive).
Your savings are then invested based on those criteria, and exposure to the riskiest asset (equities and, to a lesser extent, bonds) gradually decline in favour of less risky assets (money market).
To find out more about the funds offered in your employee savings scheme, long on to your Company Scheme Account.
Access information and documentation of the funds.
You are now able to choose your investment vehicles from among the Funds offered by your company depending on your own situation and personal goals, assessing the level of profitability and risk that you've planned for.
No matter your investor profile and chosen vehicles, always remember that a well-managed portfolio is a diversified portfolio.
In other words, "don't put all your eggs in one basket".
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