Building a Financial Plan

Formulating a Strategy

1

The objectives that you have set will be used to determine the strategy that you implement. It’s important to develop a strategy that will specifically help you to meet your financial goals.

2

If your goal is to maximize the growth of your capital, as there is no specific use for the money now or in the coming years, then it would be appropriate to invest in riskier investments (stocks) over the long term.

3

If your goal is to increase your income, perhaps due to retirement or unemployment, then it may be appropriate to invest in fixed-income securities such as bonds or to invest in dividend stocks.

4

If your goal is to simply protect the real value of your capital, then it would be suitable to invest your money in inflation-linked securities such as inflation-linked bonds.

Test your knowledge...

1. How much can you expect to earn from a cash investment?

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