A guide to retirement investing for self-directed investors

13 October 2023 by National Bank Direct Brokerage
An older couple consulting their investment plan for retirement.

If you are a self-directed investor the power to shape the future of your retirement is in your hands. Whether you are just beginning your career or nearing retirement age, this guide will walk you through the 5 essential steps to craft a tailored retirement investing plan that aligns with your financial goals and risk tolerance.

What is a self-directed retirement investment plan?

Navigating the world of retirement investing can be an exciting but also an intimidating experience. Unlike managed accounts, where financial professionals make investment decisions on behalf of investors, self-directed accounts empower the account holder with absolute authority over their investments.

By assuming full control over your retirement funds, you have the freedom to make strategic decisions based on your financial goals and risk tolerance. Whether you're an experienced investor seeking greater flexibility or a newcomer looking to harness the potential of your retirement savings, self-directed investing can be a way to help you shape a secure and prosperous future.

Don't forget that as your professional situation stabilizes, and particularly if you are younger with unclear retirement aspirations, you'll gain a clearer understanding of your retirement goals over time. So, it’s important that all self-directed investors, and those following a financial independence retire early strategy (FIRE), refine their calculations and retirement investment plans as they move closer to retirement age.

Here are 5 easy steps to plan a successful, flexible, and comfortable retirement!

1. Set clear retirement goals

Setting clear retirement investing goals is a critical first step towards building a secure financial future. Start by envisioning the kind of lifestyle you want during your retirement years and consider factors such as living expenses, travel, hobbies, healthcare, and any other significant expenses.

It is also important to think about what you want to do during your retirement: Do you want to move to the countryside? Will you want to sell your current home and downsize? Will your mortgage be paid off? Lifestyle choices, such as travelling, or home renovations are all important to consider when you think about the resources you will need once you stop working. Having a clear picture of your desired retirement lifestyle will help you estimate the amount of money you'll need down the line.

You will also want to have an idea of when you want to retire. The amount you've saved and the number of years you've been working can have a significant impact on the size of your retirement income and how aggressively you will need to invest.

How much money do I need when I retire?

Once you've determined your retirement lifestyle and age, you can use National Bank’s calculator to assess how much income you'll need annually to support yourself during your retirement years. Consider any potential sources of revenue, such as social security, pension plans, or rental properties.

How much to save for retirement?

The critical factor in determining how much you will need to save while you are still working is based on how much money you think you need during retirement. Many investors turn to two well-known "rules of thumb” to determine how much to save out of their regular income:

  • 1. Saving 10% of your gross salary annually, and
  • 2. Saving enough to maintain 70% of your salary each year during retirement.

The second factor assumes that retirement needs will be lower, and also factors in the pension benefits and any other government benefits you might receive on a regular basis once you stop working.  You also need to keep in mind that many expenses that you currently have will decrease or disappear, such as RRSP contributions, clothing for work, bus passes or gas spent to drive back and forth from work.

2. Assess your current financial situation

Assessing your current financial situation is a critical step in planning your retirement investment strategy. It gives you an indication of how much money you have, what you will be able to save, and what your investment goals and targets should be.

  • 1. Start by gathering financial information, such as bank statements, investment account statements, and records of any outstanding liabilities or debt.
  • 2. Then, calculate your net worth by adding up the value of all your assets, such as cash, investments, and real estate, and subtract your liabilities, such as mortgage, credit card debt, and student loans. The result is a key indicator of your overall financial health.
  • 3. Analyze your current income and expenses to understand where your money is coming from and where it’s going. Identifying your cash flow patterns will help you determine how much you can realistically save for retirement.
    Lastly, assess your debt situation and evaluate any outstanding credit card, student loan, and mortgage debt you are carrying. Determine the interest rates you're being charged and prioritize paying off the high-interest debt as quickly as possible.

Did you know that an investment advisor can help you assess your financial situation and help you determine how much you should set aside for retirement? Make an appointment with a National Bank expert.

3. Assess your risk tolerance level

Once you have determined your current financial situation, it is time to determine your level of risk tolerance. Your risk tolerance is unique to you, and there is no one-size-fits-all approach. Creating an investment portfolio that aligns with the level of risk you are comfortable with and with your retirement goals will help you work towards a secure financial future.


Risk is perceived differently from person to person. While some view it in relation to the possibility of market losses, others factor in broader elements like job security, income stability, and insurance coverage.

You can also consider risk in the context of opportunity costs, acknowledging the potential of passing up on a lucrative investment opportunity. Ask yourself questions like: “Am I comfortable with market fluctuations?” or “Does the idea of potential losses make me anxious?”

Reflecting on your personal attitude towards risk will shape the type of investments you are willing to include in your investment portfolio.

Time horizon

Consider your time horizon until retirement. Generally, a longer time horizon allows for a more aggressive approach because there is more time to recover from potential losses during market downturns. Moreover, investors with longer time horizons can add funds to their portfolios during rough periods. Retired investors or those approaching retirement typically lean toward low-risk assets, whereas younger investors favor high-risk investments.

Preparing for retirement emergencies

Housing needs may also change with age, requiring a transition to assisted living or a retirement community that offers a blend of housing and support. These residences can be expensive.  It is important to keep in mind that long-term care costs are frequently cited as a significant reason why retirees end-up exhausting their financial resources. Your investment strategy and risk tolerance are critical to making your money grow and realizing your retirement goals.

Still unsure about your self-determined risk tolerance level? Find out more about your investor and risk tolerance profile on the NBC website.

4. Select Your Investment Accounts

In addition to selecting and managing your investing choices based on your risk tolerance, time horizon, and financial goals, self-directed investors also need to consider accounts and financial instruments that offer tax savings. Investing using the right type of accounts can make a significant difference in how your retirement savings grow.

Here are different types of accounts that can offer tax incentives and can be used to save for retirement:

  • Registered Retirement Savings Plan (RRSPs) -
    An RRSP is a tax-advantaged retirement savings account available to Canadian residents. It is designed to help individuals save for their retirement years. Contributions made to a RRSP are tax-deductible. Taxes are only payable when funds are withdrawn from the RRSP, typically during retirement.

  • Registered Retirement Income Funds (RRIFs) -
    A RRIF plan acts as an extension of your RRSP. When you retire, or by the end of your 71st year, your RRSP is converted into a Registered Retirement Income Fund (RRIF). RRIFs provide a regular stream of income during retirement, and minimum annual withdrawals are mandated based on the account holder's age. It allows your investments to grow tax-free. While contributions to an RRSP are tax-deductible, RRIF withdrawals are considered taxable income.

  • Locked-In Retirement Accounts (LIRAs) -
    LIRA is a type of tax-sheltered account that allows you to transfer funds from your employer's pension plan or group RRSP to an individual plan when you leave your employer before retiring from your job. You cannot make contributions to a LIRA or withdraw funds until retirement, tax-free. However, withdrawals from a LIRA during retirement are considered taxable income.

  • Life Income Funds (LIFs) -
    A LIF is a Canadian retirement income account designed to provide a steady stream of income during retirement. Like RRIFs, LIFs are an extension of your LIRA. Account holders can choose from a range of investment options such as stocks, bonds, mutual funds, and other investment vehicles. Withdrawals are considered taxable income.
  • Tax-Free Savings Account (TFSAs) -
    Another retirement savings strategy to consider is a TFSA. One of the main benefits of a TFSA is that all investment growth, including capital gains, dividends, and interest, is entirely tax-free. Unlike traditional retirement accounts like RRSPs, withdrawals from a TFSA are not taxable. This means that any earnings within the account can compound and grow, and unlike RRSPs there is no age requirement for TFSA withdrawals. They do not count as income for tax purposes, and you can contribute to and withdraw from your TFSA at any age.

5. Start saving and investing early

The final and most important step to creating a retirement investing plan is to start saving and investing. Many self-directed investors, particularly those beginning their investment journey, wonder when is the right time to start. Many fail to start thinking early about investing, but once you are an adult and you are generating revenue, you can begin your self-directed investing journey: the best time to start investing is now.

The power of compounding interest can work wonders for your financial growth. With compound interest, the interest you’ve earned generates additional returns, creating a snowball effect over time. Compound interest is especially useful for retirement, because small but regular contributions to an investment account while working can help your money grow significantly over time. Investing as soon as you are able to maximizes the growth potential of your money.

Reassessing your finances and adjusting your retirement investment plan as circumstances change will keep you on track towards a secure and comfortable retirement. Planning for retirement earlier in life and staying disciplined can increase your chances of achieving your retirement goals.

Stay informed, seek professional advice if needed, and remember that the journey to financial independence begins with that initial step. So, seize the moment and embark on your investment voyage today for a brighter and more secure financial tomorrow. 

Key takeaways :

  1. Setting clear goals is a vital first step to creating your retirement investment plan.

  2. Assess your current finances by evaluating your net worth, analyzing income and expenses, and prioritizing paying off high-interest debts.

  3. Determine your risk tolerance by assessing your comfort level with market fluctuations and potential higher returns with higher risk.

  4. Explore tax-advantaged options such as RRSPs, RRIFs, LIRAs, LIFs, and TFSAs to optimize your retirement savings.

  5. Invest now. The power of compound interest makes early investment crucial for long-term financial growth.

Legal disclaimer

The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information may belong to the National Bank of Canada, its subsidiaries or other persons. Any reproduction, redistribution, communication by telecommunication, including indirectly via a hyperlink, or any other use thereof that is not explicitly authorized, of all or part of these articles and information, is prohibited without the prior written consent of the copyright owner.

The content of this Web site is provided for general information purposes and should not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice in any way. In addition, the information presented on this Web site, whether financial, fiscal or regulatory, may not be valid outside the province of Quebec.

This article is provided by National Bank Direct Brokerage (NBDB) for information purposes only. It creates no legal or contractual obligation for NBDB and the details of this service offering and the conditions herein are subject to change.

The hyperlinks in this article may redirect to external websites not administered by NBDB. NBDB cannot be held liable for the content of external websites.

Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of NBDB.




Finance is a funny



Our Webinars can help

you understand it.


View the calendar