Advertisements flood the airwaves, encouraging people to take control of their financial future, bypass the investment advisor, and jump into the world of stock trading.

There are certainly many new opportunities for the individual investor these days, but that world can be extremely challenging and confusing, particularly as the world of investments has transformed itself.

Colin Furr is the vice president, operations at Kast Investment Management Ltd. He explains some of these changes: “Yes, generally speaking, it has changed, simply because markets have become more complex. If you look at what defined investing 30 years ago, the answer was much simpler, from an industry and market point of view, than it is today. There is a whole spectrum of definition within the terms ‘investments’ and ‘investment business’.

“There is an area that manages money, and then there are those that advise clients on their money. You can be a money manager, an investment advisor or both. The point is, markets have become far more complex and it can be a challenge to understand the risks and the rewards in the market.”

Traditionally, investment choices for an individual included stocks, bonds, equities and CDs (certificates of deposit).

“Today, you can get involved in financial futures, options and complex derivative-type products, which are, generally speaking, for far more sophisticated investors, and not applicable for retail clients,” Mr. Furr elaborates.

“Mutual funds are often a better choice for individual investors.”

Before advising any client on an investment portfolio, Mr. Furr cautions that it is important to understand the clients objectives: “With every client we will sit and discuss their objectives and what they are trying to achieve; objectives in terms of performance, reward, growth and generation, as well as their risk tolerances within those objectives and the length of time they wish to stay invested.

“For example, somebody at age 60 is not going to have the same appetite and same time frame as someone that is, say, 20.

All these things need to be understood, discussed and agreed in order to fulfil the investment profile and objectives.

“We then recommend a portfolio that is designed to meet those particular objectives.

“Some people want to invest because they want to save for university tuition for their young children. If that is their goal and objective, fine; we need to invest accordingly.

“But if you are getting close to retirement, you will have a different set of objectives and a different risk tolerance. You do not want a lot of volatility. You cannot wait, say, 15 to 20 years for equity markets that have gone down to come back up.

“You have a lower risk tolerance and you want to be in less volatile investments within your income requirements.”

He suggests that sometimes the easiest and simplest way to start investing is through your bank savings account, allowing your money to earn interest.

“Then, as you accumulate savings, you may want to take out round amounts in multiples of say $1,000 or $2,000, and invest them accordingly,” says Mr. Furr. He adds that markets fluctuate on a daily basis.

“Equities, generally speaking, are more volatile. You need to hold a diversified set of assets, which are structured to achieve your requirements.”

It is also advisable to diversify the risk level of investments in your portfolio.

To help clients determine an investment plan for them, Kast offers an Investor Questionnaire to help them determine their risk level.

“It is structured in a way that each answer has a numerical value,” Mr. Furr explains.

“The total score then helps the us develop a portfolio proposal for the client based on the clients own objectives.”

Once the portfolio is approved, Mr. Furr recommends reviewing it on a frequent basis, in order to monitor developments with rebalancing annually, if necessary.