Zara's story

“I don’t know much about investing, but I do know that I want to be really careful with my retirement nest egg,” Zara, 26, 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 the Plan’s website before I made an investment decision!”

Zara checklist

Zara used the online Risk Tolerance Estimator to determine an investment fund mix that would be appropriate for her. The Estimator result showed that she best fits a moderate investor profile and suggested that she invest 75% in the Balanced Fund and 25% in the Bond Fund. She then used the Basic Retirement Planner (available in myCSSPEN) to see if this investment mix had a high likelihood of helping her reach her retirement savings goal. To Zara’s disappointment, she realized that her projected savings at retirement would not be enough to provide the income required to support the retirement lifestyle she was anticipating. Zara called a CSS Pension Plan Consultant to discuss her situation.

“The information I got from the Pension Plan Consultant was very helpful. She 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,” she said.

The Pension Plan Consultants also referred Zara to the market timing information sheet on the CSS website, which she 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,” Zara said.

With her improved understanding of the investment risk/reward trade-off, and considering that her investment horizon before retirement is very long, Zara tried the Risk Tolerance Estimator again. Her result this time indicated that the balanced investor profile more accurately describes her. She 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,” she concluded.


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