The RSP deadline is looming and once you’ve decided RSP or TFSA, how should you invest your money?

A certified financial advisor says there are some general rules of thumb about how much risk you should take. 

"The older you are the less you should have in the stock market," says Diane McCurdy from McCurdy Financial, “A good rule of thumb is 100 minus your age is the most you should have in the stock market."

Taking McCurdy’s advice, someone who is 40 years old could potentially risk 60 percent in equities, while someone approaching retirement at 60 should invest only 40 percent in the stock market. 

Your investment choices are also impacted by your life choice and how much money you expect you’ll need in retirement. A recent HSBC survey found 65 percent of Canadians aged 40 would like to retire in the next five years. 

“Some spend more. Some spend less. Some want a fancy lifestyle. Some people don't want to leave their doorstep so it's really unique to each person - and that's why planning is important," McCurdy told us.

The HSBC survey of world markets also found that Canadians are the most likely to say financial considerations such as lack of savings, too much debt or the need to support dependents are thwarting their retirement dreams. However, that doesn’t mean you should give up. 

Even small amounts of money invested at any time is money saved. For example, if you invested $200 a month for 20 years with an annual growth of five percent, you’d end up with $81,492,

In 2016, the combined maximum old age security and Canadian Pension Plan payout would be $1,663 a month, depending how long you worked. If you don’t have pension money or other income, you’ll need to make up the difference. 

McCurdy suggests taking advantage of any matching pension contributions from your employer.

"So many people think, ‘oh my company has a pension plan but I don't plan on being here a long time so I'm not going to bother joining.’ But you're missing out on an employer's free money,” McCurdy advised.

Depending on your needs, you can manage your portfolio yourself, seek advice from a certified financial planner and pay by the hour or have them help you manage your funds for a fee. 

The amount of risk you take depends on your personal circumstances, but a general rule of thumb is be more conservative and safe with your investments as you age – and make decisions that don’t keep you up at night.

To check your TFSA contribution limit click here.  

To check your RRSP contribution limit click here.