Balanced investor strategy:

Phil's story

Story summary:

Phil is a CSS member in his 20s and has limited knowledge about investing and is considered an anxious investor. He believed that timing the market was a smart strategy. However, after discussing his concerns with a qualified financial advisor, his knowledge and risk tolerance level improved.

Planning strategies in this story:

Determining your risk tolerance

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Choosing the right funds

Speaking to a Retirement and Pension Advisor

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Phil is 26 and doesn't know much about investing. “But, I do know that I want to be really careful with my retirement nest egg,” Phil says. 

“I used to be sort of an ‘anxious investor,’ so I was always monitoring the rates of return on the Plan’s website with the hope of being able to quickly move my pension funds from the Plan’s higher-risk funds to temporarily protect my pension funds in a year when the markets aren’t doing so well.

I thought that would be a smart move but am I ever glad that I did some research on CSS' website before I made an investment decision!”

Phil's risk profile

Ability to Take Risks

Low

Moderate

High

Time Horizon

Investment knowledge

Other assets/income sources



Willingness to Take Risks

Low

Moderate

High

Willingness to Accept Short Term Losses

Panics Over Negative Returns



Phil used the online Risk Tolerance Estimator to determine an investment fund mix that would be appropriate for him.

The Estimator result showed that he best fits a moderate investor profile and suggested that he invest 75% in the Balanced Fund and 25% in the Bond Fund. He then used the myCSSPEN Compass Retirement Planner (login to myCSSPEN) to see if this investment mix had a high likelihood of helping him reach his retirement savings goal.

To Phil’s disappointment, he realized that his projected savings at retirement would not be enough to provide the income required to support the retirement lifestyle he was anticipating. Phil called a CSS Retirement and Pension Advisor to discuss his situation.

“The information I got from the advisor was very helpful. They suggested that trying to ‘time the markets’ by moving back and forth between the Plan’s investment funds can be a risky strategy that might very likely reduce my overall investment return.

And, because I’m only 26 years old, moving all my pension funds into the Plan’s lower-risk funds now and keeping it there just to be ‘safe’ might prevent me from saving enough to retire comfortably,” Phil said.

phil_2

Suggested Asset Mix

The Risk Tolerance Estimator suggests Phil invest a 100% in the Balanced Fund based on his investment horizon.

Determine your risk tolerance

Did you know that CSS offers

Complimentary retirement planning consultation to our members?

The Retirement and Pension Advisor also referred Phil to the market timing information sheet, which he took the time to read before deciding.

“Although nobody likes to see the value of their investments decline, accepting some investment risk is necessary to access higher long-term investment returns. Now that I understand this better, I’m not so worried about short-term losses anymore,” he said.

With his improved understanding of the investment risk/reward trade-off, and considering that his investment horizon before retirement is very long, Phil tried the Risk Tolerance Estimator again. His result this time indicated that the Balanced investor profile more accurately describes him. He is now invested 100% in the Balanced Fund, the recommended portfolio for balanced investors.

“I’ll stay invested in the Balanced Fund until I’m much closer to retirement or my risk tolerance changes,” he concluded.

Investment Funds

The CSS Pension Plan offers four investment funds - the Balanced Fund, Equity Fund, Bond Fund and Money Market Fund.

View funds

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