It's no secret that a combination of high inflation and the rising cost of living is weighing on the minds of many Canadians.
According to the 2023 TD "Beyond Banking" survey, more than four in five respondents say they are still able to meet their financial obligations, however, three quarters of respondents believe these factors are having a negative impact on their ability to reach their savings and investing goals.
According to the survey, 82% of respondents said they are still able to comfortably pay their bills and meet their financial obligations. Yet, 75% of respondents stated that the "rising cost of living" has negatively impacted their ability to save and/or invest as much money as they would like to, with 59% of respondents reporting that finding extra money to save or invest is a challenge for them.
"Although the majority of Canadians surveyed can still tick their day-to-day financial boxes, for many, their ability to save and invest for the future appears to be negatively impacted," said Kathryn Del Greco, Senior Investment Advisor, TD Wealth.
"With economic headwinds set to continue for a while longer, Canadians might want to consider seeking out advice on how to help make those savings and investment dollars go as far as possible."
A financial plan can help steer you during both good times and bad, ensuring you work towards your goals when circumstances change.
The importance of a financial plan
Whether you're looking to purchase your first home, save for retirement, or anything in between, a financial plan can help you reach your goals.
According to TD Wealth, "financial planning helps bring focus to your overall goals and offers strategies to help you achieve them, no matter what life stage you’re in."
A financial plan is especially important during uncertain economic times, notes Del Greco. When the market seems choppy, many might be tempted to jump ship when it comes to their investments.
But, as Del Greco notes, these reactions are often emotional, leading some to make decisions that run counter to their longer-term goals. For instance, there can be consequences if you withdraw funds from – or forgo contributing – to a Registered Retirement Savings Plan (RRSP). And, once you withdraw money, you lose that contribution room. At the same time, if you don't contribute to your RRSP, you could miss the opportunity to decrease your taxable income.
Behavioural finance
Becoming aware of how your personality could impact your financial decisions is known as behavioural finance. It can help you determine what investments are right for you and help you weather more volatile markets, according to Del Greco.
At TD Wealth, one way to learn how you make financial and investing decisions is through the Wealth Personality™ assessment. Available exclusively to TD Wealth, TD Wealth Advisors and Financial Planners conduct the full assessment with their clients. You can try the abbreviated version, called the introductory assessment for yourself (which only takes approximately 30 seconds to complete).
The assessment is based on the Five-Factor Model of Personality that asserts that each personality is determined by five traits: extraversion, reactiveness, openness, conscientiousness and agreeableness. How much, or how little, you demonstrate each trait helps determine your Wealth Personality™profile.
And your personality is an unconscious driving factor behind the financial decisions you make. "Discovering your financial blind spots, through the Wealth Personality™ assessment can help you better understand why you make certain investment decisions," said Lisa Brenneman, Head of Behavioural Finance with TD Wealth.
If your Wealth Personality™ profile is more on the Reactive side, this can mean that you will likely be more anxious or nervous during times of financial stress, (for instance market turbulence). This knowledge allows TD Wealth Advisors and Financial Planners to adjust their approach to help you meet your investment needs, Brenneman said.
"If you're less Reactive and calmer under pressure, you may be less anxious during times of financial stress," she said. "It's really all about customizing an investment approach for their clients to tailor advice to help meet the investment personalities of their clients."
The amount you invest
At TD, if you prefer to go the do-it-yourself (DIY) investing route, you wouldn't need much capital to get started – or continue contributing. The TD Easy Trade mobile app can be a great direct investing option for beginner and seasoned investors alike.
There are no minimums required, meaning you can trade with as little or as much as you'd like. TD Easy Trade also comes with no account fees.
There are TD-created how-to videos built into the app, so you can learn as you go.
It's natural for people to be worried about their future in times of economic uncertainty. Having a financial plan can help you manage your finances and more confidently invest towards their goals.