With Registered Retirement Savings Plan (RRSP) upon us, BMO Financial Group today announced the results of a study which indicates that while most Canadian investors have target dates for key life events such as marriage, buying a house, having children and retirement, fewer than half feel that their investments are structured to be able to support these milestones.
The study, conducted by Leger Marketing, found:
• Just under two-thirds (60 per cent) of Canadian investors have time frames or target dates in mind to reach their financial goals.
• Eighty-nine per cent agree that it is important to hold investments that evolve over time to become less risky as key life-event dates approach.
• Despite this, only 49 per cent feel that their investments become less risky over time.
“One of the basic rules of investing is that your investments should progressively become more conservative as your investment horizon shortens,” said Serge Pepin, Head of Investments, BMO Investments Inc. “This is especially critical during times of market volatility. However, as simple as this concept may seem, many of us don’t get around to ensuring that our investments are properly balanced, whether it’s because of lack of time, knowledge or convenience.”
Addressing that, BMO has introduced LifeStage Class Mutual Funds
BMO LifeStage Class Mutual Funds are intended to provide growth in the early stages and to become progressively more conservative over time as they near their respective target end dates. Investors may choose from six portfolios with different end dates that match their individual financial goals. The target end dates range from 2017 to 2040.
BMO Corporate Bond Target Maturity ETFs
Target maturity bond ETFs combine the advantage of maturity dates (as with traditional bonds) with the added benefit of portfolio diversification. The average time to maturity of the ETF’s underlying portfolio will decrease to match the approaching maturity date. Like a regular bond that matures on a specific date, the target maturity bond ETF will convert into a short-term bond fund. This gives investors the flexibility to access funds when needed while reducing the risk profile of the portfolio over time. Investors can choose from four BMO target maturity ETFs with target dates ranging from 2013 to 2025.
The survey was completed on-line from Jan. 23 and 25, 2012 using Leger Marketing’s online panel, LegerWeb, with a sample of 1,523 Canadians. A probability sample of the same size would yield a margin of error of +/- 2.51%, 19 times out of 20.
