How to Conquer Business Plateaus

Do you have a business that was launched with tremendous success and maintained a steady growth but despite a continuous flow of customers, lately seems to have become stagnant? If your revenue chart has flattened and your company is struggling to increase its monthly bottom-line, it has likely reached a business plateau.

 

Almost every business will reach a static period at some point but only businesses that are able to rise above and move forward will thrive.  When business growth levels off, many owners and leaders find themselves perplexed and unnerved as to what can be hindering further development. Often hiring more employees or increasing marketing efforts are the ‘go-to’ solutions for an easy fix. However, simple solutions such as these don’t effectively solve the problem. In order to create a more permanent solution that will push the company forward, it is vital to thoroughly assess the situation and determine the underlying cause for this lack in momentum.

First and foremost, assess current processes to identify inefficiencies. Are your employees overly occupied with manual tasks that are limiting their output or removing them from time that could be spent on sales? As businesses grow, simple tasks that may not have consumed significant time as a start-up may now be dominating periods that could be used more efficiently. If tasks that can be simple are involving too many steps, they may be creating inefficiencies. For example, when information is input in a database, it should be integrated with other databases so that it need not be entered more than once. If this is not occurring in all facets of your business, more automated systems could be beneficial.

Get motivated. When a business is launched, founders are typically very motivated to make the business thrive. This sense of enthusiasm usually trickles down to all levels of the organization, creating a culture of highly driven staff. Once the business becomes more established however, owners tend to decelerate their momentum which can cause a more laissez-faire attitude amongst staff. If this is the problem, then the same determination and drive that existed when the company began needs to be injected back into the culture.

Finally, constantly seek improvements. There is always room for improvement and if you don’t find it, your competitor will. When businesses experience steady growth and revenue is established, leaders may start to decelerate the pace at which they seek improvement – seeing that the processes they have implemented brought them growth in the past. When this happens, a business is more likely to reach a plateau. To avoid this, it is important for leaders to acknowledge that in order to maintain continuous growth, constant improvements must be made. No business will ever be perfect and strategies must incessantly be revaluated to keep up with the times.

 

Safiya | DBPC Blog

Photo credit: Aisyaqilumaranas

5 Steps To Handling Criticism

Taking criticism is rarely easy and can oftentimes be downright unpleasant. But it’s a part of life, particularly in the workplace. To succeed in business – and life in general – you must be able to handle constructive criticism.

In an office environment, this can be feedback from a manager, a supervisor, a co-worker, or a colleague. Regardless of who’s giving it, constructive criticism is an important tool in any workplace, and how you handle it could very well determine the trajectory of your career, for good or ill. There’s no foolproof or guaranteed way to deal with criticism, but below are some steps to dealing with criticism in a positive and professional manner.

 

  1. Whatever Your Initial Reaction Just STOP

This is a tricky one, but it may also be the most important. A lot of times, when you’re being criticized, your first instinct will be to get defensive. Whatever your initial response is, do your best to stop it, immediately. Try to control your facial expressions and/or body language – no reaction is the best reaction – and don’t vocalize any knee-jerk quips or replies that pop into your head.

The natural human response to being attacked is to defend. But the absolute worst way to handle criticism is to attack the person offering it. Remember that criticism in the workplace is intended to help you improve, so don’t take it personally, and make yourself a silent promise to do better moving forward.

 

  1. Listen and Process the Criticism

Listen to what’s being said to you, rather than just reacting to it or getting defensive. Your boss (or colleague) is likely coming from a place of genuinely wanting to see you grow. Acknowledge the feedback (which is not the same as agreeing with it), and don’t look to lay blame or make excuses. Just take it in, and don’t interrupt.

Remember, evaluating staff is literally part of a manager’s job. Criticism is a crucial part of quality control in any business, and if you’re an employee who doesn’t handle it well, you’re marking yourself as a problem for management. Make it clear to your manager that you understand the criticism being offered, and pledge to improve your performance in that regard. Demonstrate an understanding of what needs to be improved upon and commit to making those improvements.

 

  1. Thank Your Critic

This may be tough for some folks, but it’s important. Taking criticism the right way has a lot to do with being a professional. Look your critic in the eye and thank them for the feedback. It shows that you’re a true professional, and it also shows that you acknowledge the time the other person took to share their thoughts and observations with you.

 

  1. Ask Questions

Now is the time for you to respond to the criticism, and a great way to do is to ask questions. Try to get to the centre of the issue at hand, and don’t focus on little details – it’s not a debate.

For example, if you’re being criticized for being too blunt with a colleague, ask if there was something specific that you said or did that was problematic, or if there are any other examples of that sort of behaviour on your part. It’s also crucial for you to acknowledge that you’re not disputing the feedback; in this example, admit that you could have handled the situation better, or that you wouldn’t necessarily appreciate being dealt with in that manner yourself.

Perhaps most importantly on this point, seek out solutions on moving forward. Ask for tips on how to deal with a similar situation in the future, or how to avoid a repeat incident. It shows that you’re sincerely engaged in the process and are making a true effort to improve.

 

  1. Follow Up

This last one is less crucial than the others, especially in a less formal constructive-criticism situation (e.g. from a colleague, rather than your manager), but in many situations dealing with constructive criticism, ask for a follow-up discussion. It will provide you with an opportunity to return to the issue, and for you to ask any more questions once you’ve had time to think about the feedback and truly process it, as well as think about solutions, and even ask others for advice. Once again, it shows engagement and a genuine desire to take in the feedback and improve your performance, which are traits that any manager would want in a member of their team.

It’s not always easy to hear constructive criticism, and for many managers, it’s not a lot of fun to give either. But this type of feedback is one of the best tools for improvement and development available to both managers and employees alike. Keep that in mind, and follow the steps outlined above, and you can become a better employee, colleague, and person.

 

Justin Anderson

 

How to Handle Feedback as a Leader

It’s impossible to get to the top – or anywhere else for that matter – without listening to suggestions or advice. When you’re put in charge of a team, it’s not because you’re perfect, but because direction is needed. But you can’t lead your team to success while operating in a vacuum; feedback is key.

A leader is responsible for making sure that their business has satisfied employees just as much as satisfied customers or clients. And there’s no better way to do that than by having a staff that feels empowered to speak openly and honestly.

But how does the person at the top learn how to listen to the people they’re charged with overseeing? Here’s a look at how to handle feedback as a leader while not taking it personally.

 

Think It Through

We’re often told not to be emotional at work, but most of us spend so much time at our jobs that it’s nearly impossible not to be. Whether you’re laughing at the water cooler (which fosters important bonds that strengthen collaboration) or having a disagreement, emotions are part of the job. But if there’s one time that you need to think more than feel, it’s that brief moment between hearing feedback and reacting to it. Take a moment to really listen to what the person is telling you, process it, and then frame your response in a professional manner, and as a leader it’s even more important to maintain control of your emotions. Remember, neither of you is trying to escalate the problem, you’re both working on a solution.

 

It’s Not About You

If you thought about your reply before reacting, then you likely know that the feedback, at least in most cases, isn’t personal. When people complain or express their concerns, it’s normally not for the sake of creating a problem; it’s often rooted in something, and as a leader it’s crucial to keep that in mind. It’s important for a manager to know how their workers feel and what they think of the business and how it’s doing. In a healthy work environment, what the staff is saying shouldn’t be seen as a personal attack, so there’s no reason to feel defensive or threatened.

 

Ask Questions

When receiving feedback, it’s important to ask yourself certain questions. Is there merit to what’s being said? Does the person have a point? Getting some constructive criticism should be seen as a learning opportunity, since no one is perfect. Debating each point raised will get you nowhere, and it can be exhausting, while also likely discouraging that person or others from providing more in the future. If the feedback is given respectfully and supported by evidence, then it’s important to reflect on it and find a solution. The point is to resolve the issue and grow, both as a business and a team. Take employee feedback at face value, instead of assuming that they’re wrong or being troublesome.

 

Say ‘Thank You’

Have you thanked your team, lately? When presented with good ideas, it’s important to give credit where credit is due. Taking ideas from your subordinates is never a good option and will likely lower morale and foster a hostile environment. The amount of good ideas coming from your team can actually be seen as a result of strong leadership; it’s not a competition. If you’re hearing good suggestions for how to improve the business, remember to thank those responsible – preferably in front of the rest of the team – and let them know they’re valued.

Managing a team isn’t easy, especially if it’s a group with different personalities working towards the same goal. Whether you’re giving feedback or receiving it, it’s always best to ask yourself why it’s needed and how it will help improve things. Letting others voice their opinions comes with the job, and it will make you a better leader and manager to simply listen.

 

Dontei Wynter | Contributing Writer

 

Bridging the Management Age Gap

Millennials are known as the generation of smartphones, over-priced coffee, and a reputation for entitlement and leisureliness. Despite this, the success of millennials is becoming increasingly apparent in the workplace. Look around your office and you’ll probably notice the ages of both employees and managers is decreasing significantly. A recent survey by office-equipment maker Pitney Bowes found that about 20% of mid-level corporate employees now report to a boss who is younger than they are.

However, in this age of entrepreneurial startups and advancing technology, different work styles and perceptions of those differences can create many challenges. For example, there is a stark difference between millennials and baby boomers. While older workers spend more time in the office within regular work hours, the younger generation often prefers getting their work done whenever, whether at home or from their laptop in a café. These kinds of philosophical differences can have negative effects on productivity. However, there are ways for younger people in authority to handle this gap. Below are a few tips on how to instill authority and respect in the workplace.

Be Mindful

Older employees can certainly be put off by having to report to a younger manager. It’s important to be aware of those feelings and acknowledge them. Don’t assume you have the upper hand due to your higher position. Express an interest in your employee and ask them for their opinions on how you can improve as a leader. They may very well have insights that can benefit you, and they will appreciate your respect for their experience and knowledge.

Give and Take

Give lessons, provide feedback, and offer firm and feasible guidelines for your employees. In return, take feedback as well. Older employees are often more knowledgeable about the company and its history. Take advantage of their deeper well of experience, both in the office and generally in life.

Do Your Job

It can be daunting being a young manager. However, instead of shying away from being an authoritative, strong leader, it’s important to keep your goals in mind and get the job done. Not confronting older employees who aren’t working to their full potential, or letting others take the lead merely to make them more comfortable, will only decrease productivity. You’re the manager for a reason; prove why.

Older employees should implement these tips in the workplace as well. Along with being mindful, providing feedback, and doing their own jobs, it’s important for older employees not to get too bogged down in ego and commit to working with a younger manager. The knowledge and experience of the older generation and fresh perspective and energy of the younger age group can be combined to contribute to the workplace in a positive manner. Getting past age discrimination – from both sides – will help everyone work together and be more productive.

 

Tasnia Nasar

More Than Just Resumes: How LinkedIn Can Benefit Your Business

A LinkedIn account may seem crucial for a job seeker, but less important for a small business. However, with more than 500 million members now on the professional platform, it’s worth it for all businesses, big and small, to create a profile.

LinkedIn is different from other social media platforms because it focuses on professional content while fostering connections between businesses as well as people. A company profile can draw in potential customers and attract new employees in addition to promoting itself and sharing various content.

A personal account is necessary to set up a company profile, but joining LinkedIn is free. Once the business account has been created, you can utilize ads to promote company news to specific audiences and get even more personal by dropping personalized ads into your customers’ inboxes. Posting videos on the platform is a new tool for reaching and expanding your audience. Videos are among the most popular forms of online content, and they allow you to convey your company’s message in seconds. Your subsequent marketing efforts can be improved by studying engagement analytics and website demographics, tools that allow you see what kind of LinkedIn users are visiting your page.

Customers aren’t the only people you’ll want to connect with on LinkedIn. Since the platform is designed for networking, tapping into the contacts of first-degree connections can grow your network and potentially even grow your business. Maybe the right partner for a joint venture you’ve been considering will be a second-degree connection, or you’ll find that new team member you’ve been looking for as a third-degree connection.

Or perhaps you want to meet like-minded entrepreneurs or managers for mentorship or advice. Joining a LinkedIn group can make you new friends, and there are groups for every niche. You might find the right person to bounce ideas off or simply build a new friendship. Be active in the groups, but don’t try to use them to promote your company’s services or products, as it’s considered bad form.

If you want to position your business as a leading brand in its industry, consider LinkedIn Publishing. You can write longform articles that connect people with your brand and help them understand what your company is all about. This not only builds your reputation as an expert in your field, but it also builds interest in your business as readers become potential customers. Make sure you post on a regular basis, share what matters to you, and provide glimpses of the company culture. You could even write about the causes your company stands behind. You can go as far as using original images featuring actual employees. LinkedIn Publishing provides the opportunity to show that there are real people behind your brand.

Your business may have a subcomponent or a specific initiative you want to highlight. LinkedIn’s Showcase Pages helps draw attention to those specific areas of the company and members can follow them.

There are more tools to personalize your company’s profile and build brand awareness. With a detailed page that fosters engagement from audiences and employees, LinkedIn remains a proven way to lure in potential clients.

– Josephine Mwanvua

Personality Tests in the Hiring Process

The vast majority of Fortune 100 companies use personality tests to separate the candidacy wheat from the employee-to-be chaff. What do these tests do? Are they worth the time and resources? And more importantly, are they effective?

Kathy Brizeli, the Senior Director of Member Services and Client Success at McLean & Company, worked in psychometrics for 12 years at Caliper. Psychometrics is one of many tests used to measure how an applicant’s traits relate to job performance. As an evaluator, Kathy interpreted assessment results and relayed them back to the potential employers for the candidate being evaluated.

“What we found out were the candidate’s innate tendencies – strengths and weaknesses,” notes Brizeli. “I would recommend their use as an additional piece of information, but never the sole determinant of a hiring decision; they should only be a piece of the puzzle. Assessments don’t necessarily consider experience or skill development.”

Personality testing is in the news: Merve Emre’s The Personality Brokers is the just-released book on how the Myers-Briggs Type Indicator was invented by a mother-daughter team in the early twentieth century. According to Emre, personality testing is now a two-billion-dollar industry.

The New Republic weighed in on the topic, saying that Myers-Briggs, taken by two million people each year “is used by universities, career coaching centers, federal government offices, several branches of the military, and 88 of the Fortune 100 companies.” CPP Inc. sells it for $49.95US. On the flip side, organizational psychologist Adam Grant wrote, “The Myers-Briggs Type Indicator is better than a horoscope but less reliable than a heart monitor.”

Robyn Knezic, Delmanor’s Director of Human Resources uses the Wiley – Global Assessment Profile XT.

“We are able to see areas where a candidate excels, and where they may have challenges. Some of those areas are: verbal skills, verbal reasoning, numeric reasoning, energy level, assertiveness, sociability, manageability, attitude, decisiveness, accommodation, independence, and objective judgment,” notes Knezic. But this comes with a caveat: “I think it is important to keep in mind that the personality profile is only one piece of the process and should not be relied on solely when making a hiring decision.”

With fifteen years of testing experience, Maryann Romano, Vice President of Human Resources at Distinct Infrastructure Group, also worked with Caliper, which she says costs $600 per test. “If you are limiting it for one or two candidates, fine. If you’re filling ten candidates over six months, the costs can get significant, especially if things don’t work out for whatever reason.” She claims that personality testing has shone light on, “knowing the warts, deciding if you can live with them, how to manage them, and how they like to work.”

Meanwhile, Mardi Walker, VP of Human Resources for the Ottawa Senators shares similar experience with personality testing. “Personality testing,” she says, “has worked out well for store clerks and store associates.”

In addition to Caliper, Walker used Gallup’s StrengthsFinder Personality Test – what she refers to as “very intense”. “It tested arithmetic ability, a person’s honesty and integrity, and how likely they’d be to ‘help themselves to the merchandise’.”

Vered Lerner cautions if the test is not administered properly, or if the tested individual isn’t honest, “the results may be misread or misunderstood.” The CEO and Founder of Bizstance Services has been working in HR and management for over 20 years.

The employer, moreover, ought to understand that a test doesn’t reveal everything. “Not all roles require testing, and employees are complex individuals with emotions, and the ability to change and adapt, given the right conditions and support.”

– Dave Gordon

How Does Your Company Measure Your Potential?

Understanding how your employer gauges your potential can have a major impact on your position at the company, and on your career. If you know what they’re looking for in an employee, you can improve your chances of advancement.

When a manager is evaluating an employee’s potential, they’re considering factors like motivation, skill, experience, and the willingness and ability to learn, and evaluating how that employee can or will impact the company as it moves forward into the future.

Clearly, there is variation in terms of what different companies and management teams look at when determining an employee’s potential. But some factors are common, even if they may seem obvious. Still, knowing how your employer measures your potential can be valuable information both for your own personal development and for your advancement within the company. Here are a few commonly-used indicators.

Quality of Work

There are many ways for an employer or manager to asses the quality of your work. It might be through a series of specifically stated goals they’ve set for you, or through subjective analysis from your direct supervisor or manager. There is also what’s known as the 9-Box Grid method of assessment, a graph with one axis representing an employee’s potential, and the other their performance. So, a high-performing but low-potential worker would be ideal in their current role, while a low-performing but high-potential employee would be in need of coaching to unlock that potential. Other factors companies use to measure performance can be as simple as tracking the number of errors an employee has made, or, depending on the nature of their work, quantitative statistics like the number or amount of sales made or units produced.

360/180-Degree Feedback

The concept behind 360-degree feedback is for an employer to get performance feedback from a staff member’s direct manager, colleagues, subordinates, and customers. This can be done through specific questions or as a more general performance evaluation. Alternately, 180-degree feedback is similar, but is limited to the employee’s co-workers and manager, and is typically utilized when the worker doesn’t manage people and/or interact with customers.

Leadership Potential

Many businesses will also consider their employees’ potential to rise to a leadership position. Part of management is being able to observe when employees demonstrate a knack for managing others, delegating duties, and taking responsibility for projects. In a small or medium-sized business, it’s often easier for management to get a feel for an employee’s abilities and potential to advance by direct observation. (It also costs a business more to hire and train new employees than to promote an internal candidate.) Factors like drive, organizational skill, the ability to learn quickly and think on their feet, and empathy towards colleagues are some of the traits a good manager will look for when assessing an employee’s leadership potential. The Korn Ferry Institute, an authority on leadership and recruiting, has its own test for measuring leadership potential that takes into account many of these traits and more.

Once you have an idea of how your company measures your potential, you’ll be able to adjust your behaviour accordingly and focus on the right things. Whether it’s making a point of being in the office early every day, contributing in meetings, helping your colleagues with their projects, or just putting in the extra effort when executing your duties, demonstrating your potential to management is a sure-fire way to get ahead.

 

Justin Anderson | Assistant Editor

How to Organically Get on Your Clients’ News Feeds

With Facebook’s ever-changing algorithm, it’s essential to adjust your strategy to land the most views and interaction on the social network. The organic reach of most Facebook posts doesn’t get to nearly as many people as it used to, so you might have to work a little harder. Here are some tips to land your business’ page on potential clients’ news feeds without having to shell out the money to pay for the exposure.

Publish Evergreen Content
If you post timeless content, then your audience will be able to “like” and comment on it for a longer period of time. As more people keep liking and commenting, the increased engagement probes the Facebook algorithm to ensure that your post gets distributed further, and that it appears in other peoples’ feeds for longer. If you plan on repeating blogs, come up with a new image, title, and description so people don’t get tired of seeing the same post over and over.

Engage
This is an obvious one, but don’t underestimate the benefits of engaging with your audience, including sharing the posts of others. As you read other blogs, like and share them with a one or two-line comment. Liking and commenting are obvious ways to engage, but also be sure to use and encourage emojis – they rank higher on Facebook than a like.

Tag People
Tag people in your posts, but don’t just tag any random profile. Tag people that you know will have an opinion or get pumped about the post. If you know that someone will be excited, passionate, or even angry about the subject, having them comment will create a conversation. If you can create conversation, the algorithm will automatically make it show up in more news feeds. If you don’t want to tag specific people, you can also ask a question that will immediately increase engagement while prompting others to respond.

Share Video and Image Content
Users prefer to engage with video and images, rather than text or link posts because they’re usually seen as boring and are generally more time-consuming than video and images. It’s easy to like and share a picture or video without having to click through to another webpage or read a lengthy article before deciding if it’s worth sharing. And if you can create your own video content, even better. Make sure there’s a clear call to action at the end of the post, such as “like this post if you agree” or “tag a friend who would like this”.

Make Use of Facebook Groups­
Facebook groups can be surprisingly supportive. Type your niche or business plus “group” in the search bar and browse through the results until you find some that might be interested in your posts. By posting links and a short blurb on these groups, you can increase your traffic and exposure.

Although the organic reach on Facebook has gone down significantly, you can still land on news feeds without having to pay a penny or harassing your audience for views. You just have to know what Facebook is pushing at the moment and strategize accordingly. To work with the recently updated algorithm, you can add an image if you’re going to use a link, actively engage with your audience, encourage conversation, and don’t be afraid to start making your own video content.

 

Helen Jacob | Staff Writer

How to Have a Difficult Conversation with an Employee

It’s never easy to have a difficult conversation in the office, especially if you’re deathly afraid of confrontation. However, it’s impossible to manage a company and not have to approach an employee at some point about their behaviour, insubordination, or work quality, and sometimes even terminate them. Brushing the issue under the rug or simply ignoring it can make the situation worse and negatively affect the workplace, productivity, and other employees. There are several different types of difficult conversations that you might need to have at some point, including policy breaches, coworker complaints, dress code violations, and even workstation cleanliness. As a manager or supervisor, it’s important to know the proper way to handle these conversations, or it could do more harm than good.

Prepare Yourself
Before deciding to have the conversation, get prepared by asking what the behaviour is that’s causing the problem, and what outcome from the behaviour is impacting you, the team, the environment, etc. You need to have an understanding yourself before providing clarity to someone else about the issue. This will also keep the focus on the issue and avoid derailing the conversation.

Choose an Appropriate Location
Before entering the conversation or even calling for a meeting with the individual, decide where it will be held. Finding the right location will set the tone of the meeting. Your office is usually the best place, but depending on your company culture, it might ease the tension if you talk over a cup of coffee or lunch at a food court in the building or nearby; this can lessen the chances of the employee feeling embarrassed. However, if it’s a more formal conversation, your office, a conference room, or a boardroom is probably the most appropriate place.

Leave Your Emotions at the Door
When starting the conversation, be straightforward and tell the individual what the purpose of the meeting is. Be sure to not get caught up in your emotions; keep your feelings in check and don’t let them drive the conversation. Focus on the facts and be careful not to say things like, “I feel disappointed,” which will only add biased emotional elements. It also helps to be aware of your preconceived notions about the situation and the person involved, so make sure to leave that at the door as well.

Be Open and Listen
Be calm and fair during the discussion. Don’t project anger or judgment because that may result in the employee getting defensive and things might get heated. Find a balance between polite and firm; be caring but remain professional. It’s important to be open to hearing what the other person has to say. Be mindful and treat them with respect, even if you completely disagree with them.

Brainstorm
It’s important that you brainstorm solutions during the meeting. Ask the employee in question what they think will work. Out of their ideas or suggestions, build on something you like. Asking for their point of view can create a safe atmosphere and encourage them to engage.

Always Follow Up
Following up after the conversation is a good way to smooth over the relationship between you and your employee. It’s also a good way to check up on their progress if there are any changes they need to make. Don’t micromanage, but keep track of how they’re doing, for as long as you think is necessary. If progress needs to be made, there is a possibility they might backslide.

Putting off a difficult conversation will only do more damage to your business. Holding off on speaking to an employee about their performance or attitude won’t help productivity and might even affect the rest of your team. Practice these tips and prepare your points so that you can mentally prepare and be more effective, confident, and comfortable with having difficult conversations. That way, you can get everyone on your team working together and at their highest potential.

 

Helen Jacob | Staff Writer

3 Absolutely Important Things First-Time Investors Need to Know

You finally have a steady income and you think it’s great that you can buy everything you’ve always wanted, yet you’re being advised by the bank, a financial advisor or a family member to start investing a part of it. You’re unsure where to begin and are afraid to invest your money.  

This is a common problem with many Canadians. According to Global Investor Pulse, 51 per cent of Canadians are afraid to hit unfamiliar territories with investing – they believe by placing their money into a savings account there would be no risk involved, and 46 per cent say they like the liquidity of cash.

But, depositing money into a savings account or holding onto cash is not beneficial in the long run because it will not provide any profitable returns. And, it could affect your retirement plans because Canadians can no longer rely on the government for a pension and benefits.

Look at it this way: the wealthiest Canadians are also investors. They don’t let their money become stagnant and earn zero profit; they invest in things that give the most profit in return.  If you haven’t begun to invest, then it is time to visit a financial planner or do some research and get started. The following are three important things a novice investor should know.

 

Purpose

As a novice investor, you should decide on the purpose of your investment. Do you want to buy a house in the next couple of years, or own your own business? Are you wanting to start investing for retirement, financial security or a college fund for your kids/children? It is important to know the purpose of your investment in order to recognise the type of investment that suits the need or purpose.

Time Horizon

Also, knowing the purpose of your investment will decipher your time horizon. A time horizon is the length of time an investment is “made or held before it is liquidated.”   It will help you, or your financial planner, know which investment vehicle to consider. Also, it will enable your financial planner to know when to move your money into a low-risk or high-risk investment.

Risk Tolerance

Thus, a time horizon determines an investor’s risk tolerance – if your investment should be a high-risk or low-risk. A long-term investment (investments that are 10 years or more) is considered to have a high-risk tolerance because it has time to recover and gain profits if the investment drops in value at any point-of-time. A short-term investment, on the other hand, will not recover in time. That is why short-term investments are often considered of having a low-risk tolerance.

 

Now that you’ve seen the importance of being aware of your time horizon, purpose and risk tolerance before you invest, book an appointment with a certified financial planner or do a thorough research and find out which investment is right for you.

What do you think first-time investors should know? Should we be educating Canadians at young age to have a positive mind-set towards investing? Should we show them the benefits of investing and how it can help their retirement plan, or plan to buy a house or own a business? Tell me what you think.

 

 

M. Policicchio | DBPC Blog