When it comes to building a solid investment plan, you need to know the reason why you want to invest. You’ll need to determine your financial objectives. The Tetrault Wealth Advisory Group helps investors build sound investment plans based on their specific needs and goals.

1) What is your purpose?

Investors must choose their portfolio’s main type and objective: income, conservative, balanced, growth, max growth. You’ll need to rank these five characteristics and decide the importance of each one. Once you have determined the main purpose for investing, it wise to seek financial advice from the best professional financial advisors of top rated wealth management firms.

Income Portfolio
If you are an income investor, you want to preserve your capital or establish a source of periodic income to finance ongoing expenses. You do not find the stock market very attractive because of its volatility, but you are not against the idea of investing a small part of your portfolio in stocks and equities, mainly to counteract the effect of inflation.  Fixed-income securities will constitute a large part of an income portfolio since the tolerance for risk is low. The main objective of investing for income is to supplement your monthly, quarterly, semi-annual or annual cash flow. Investment Advisors might suggest to income investors to invest a small part of their portfolio in REITs (Real Estate Investment Trusts) and Dividend Aristocrats (companies that typically have raised dividends for at least 25 years).

Conservative Portfolio
Retirees often make up a large percentage of conservative portfolio investors. Personal financial planning for this type of investor aims at preserving their capital and investing in fixed income securities. Wealth management firms and independent financial advisors need to protect their client’s invested capital and do so by constructing someone’s portfolio with low risk securities. Although you can tolerate limited volatility to ensure that your assets will grow, you prefer having a portfolio consisting mainly of fixed income investments for reasons of stability. If you are a risk averse investor, your tolerance for risk is low. Fixed income securities such as government bonds and treasury bills could be suggestions that make up a large percentage of your investment portfolio. The ideal conservative investment portfolio will keep up with inflation and the annual returns percentage on your capital should be slightly higher than the annual inflation rate. Eg. The investor made an annual return of 2.5% on his investment portfolio while the inflation rate was 2% for that current year. The investor’s real return would then be 0.5% for the year (2.5% – 2.0% = 0.5%).

Balanced Portfolio
This type of portfolio has an equal balance approach of achieving growth in your investments and receiving income. The balanced wealth portfolios will have a mix of fixed income securities as well some exposure to the stock market for reasons of stability. The balanced investor aims for a better return than income and conservative investors but he/she does not have the risk tolerance of a growth or max growth investor. You can tolerate moderate changes in market value. Overall, this investor hedges his exposure to the volatility of the stock market by investing in conservative fixed-income securities.

Growth Portfolio
The main goal is capital growth. This type of investor usually has a longer time frame to invest in the market and wants their investments to provide income later in life from the capital gains they make on their securities in their respective portfolios. Although you can tolerate greater volatility in order to increase the value of your assets, you are not prepared to invest your entire portfolio in stocks and equities. Your tolerance for risk is high. This type of portfolio focuses mainly on large cap and small cap companies. The investor believes those companies have a positive outlook for the future with a great potential to grow and expand their respective business. The growth portfolio investor strongly believes and hopes the current price of the stock, ETF (exchange-traded fund), mutual fund, etc. will rise in the future so they can sell it at a higher price and make a capital gain on the underlying security.

Max Growth Portfolio
This investor tends to have a higher risk tolerance and will perhaps choose to invest in venture capital companies, small cap stocks and precious metals and will tend to stay away from fixed-income securities. Max growth investors want to maximize the eventual return on their capital by investing all or most of their portfolio in the stock market.  The stockholder’s tolerance for risk is high and they accept higher volatility on their investments and are willing to take on more risk hoping to generate returns that will ultimately be higher one day. Since the inception of the financial investment markets right to this present day, when you compare two investors, one that is conservative and one that is considered max growth, you will notice over time, the max growth investor usually gained a much greater return than the conservative investor (even with all the historic market crashes). However, a max growth investor might have a lower or even negative percentage on his returns in any given year if the market corrects and if we measure a short period of time of someone’s investment history. Overall, in the long run, better returns will be generated by a max growth investor.

2) When will you need your invested money again?

Determining when you want or need your invested capital back is extremely important. Your personal investment and financial advisor will guide you and suggest what type of securities should make part of your portfolio depending on the time frame to retract your money from the financial markets.

If you need a guaranteed lump sum of money in the next year or so, it would be wise and prudent to construct your portfolio with low-risk securities to preserve your capital and give yourself the best chance to retrieve the lump sum of money that one would need for a big purchase (car, travel, house, etc.).

If you have no immediate need for the invested money and assuming your retirement is quite a few years away, the account balance of your portfolio after year one or two have little to no importance when looking ahead at the big picture. What you really care about is how your portfolio will look in 5, 10 or 20 years from now. The focus of your retirement planning should be on what your investment account will be worth by the time you retire.

3) What is your risk tolerance?

The financial markets offer a wide variety of investments. Anything from high-risk to low-risk securities. A great way to reduce risk is by diversifying your portfolio.

When you diversify your asset allocation during investment planning, you can still experience volatility and swings in investment value, however, you significantly reduce the risk of losing all your capital due to unfortunate circumstances or bad timing in the financial markets.

If you strongly believe in the potential of a handful of companies and you are more risk-tolerant than the average investor, you might consider investing your capital with those companies and you could possibly experience greater gains than a more diversified portfolio. However, there’s also the chance for a greater loss if ever the handful of companies you’ve invested in go through turbulent times.

One needs to be cautious of having only high yield investments in their portfolio. The best financial consultants and investment advisors will tell you that there is no such thing as guaranteed high returns with promised low risk. If you are more risk averse, you would be better off earning moderate returns than swinging for the fences and aiming for that big home run. Just remember that when you swing for the fences, there is always the chance that you might fail, strike-out and experience huge losses.

4) Invest in what type of security?

Too often people choose to buy the first investment product presented or suggested to them. You are better off taking your time and making a list of potential securities you’d like to invest in, then do some in-depth analysis and due-diligence of the pros and cons of the investment securities on your watch list. The best investment wealth management teams and financial advisory firms will already have done a thorough in-house research before allocating their client’s investment capital in specific stocks and fixed-income securities. The great benefit of working with a top professional investment advisor is that the hard work of doing the due diligence and analysis on securities is already done for you.


The securities or sectors mentioned are not suitable for all types of investors and should not be considered as recommendations. Please consult your investment advisor to verify whether this security or sector is suitable for you and to obtain complete information, including the main risk factors. The particulars contained herein are intended to provide general guidance on matters of interest for the audience who accepts full responsibility for its use, and is not to be considered a definitive analysis of the law and factual situation of any particular individual or entity. As such, it should not be used as a substitute for consultation with a professional accounting, tax, legal or other professional advisor. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. National Bank Financial may act as financial advisor, fiscal agent or underwriter for certain companies mentioned herein and may receive remuneration for its services. National Bank Financial and/or its officers, directors, representatives or associates may have a position in the securities mentioned herein and make purchases and/or sales of these securities from time to time on the open market or otherwise.