Over time, investing can help you grow your money faster than simply saving it in a bank account.
Investments typically offer returns that outpace inflation, preserving your purchasing power.
Whether it’s buying a home, funding education, or retiring comfortably, investing helps you achieve significant financial milestones.
Bonds are loans you give to companies or governments in exchange for regular interest payments plus the return of the bond’s face value when it matures. They are generally less risky than stocks but offer lower returns.
When you buy a stock, you’re purchasing a share of ownership in a company. Stocks offer high potential returns but come with higher risk.
These are investment vehicles that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. Managed by professionals, they offer diversification but come with management fees.
Similar to mutual funds, ETFs are collections of securities that trade on stock exchanges like individual stocks. They generally have lower fees than mutual funds.
Investing in property can provide rental income and potential appreciation over time. It’s a tangible asset but requires significant capital and management.
A type of mutual fund or ETF that aims to replicate the performance of a specific market index, like the S&P 500. They offer broad market exposure with low fees.
Understand how much risk you’re willing to take. If you’re more conservative, you might favor bonds and cash equivalents. If you’re comfortable with volatility, you might invest more in stocks.
The longer your investment horizon, the more risk you can typically afford to take, as you have time to recover from market downturns.
Don’t put all your money into one stock, sector, or asset class. Diversification reduces risk by spreading your investments across different areas.
Decide what percentage of your portfolio should be in stocks, bonds, real estate, and cash based on your risk tolerance and financial goals.
Invest a fixed amount of money at regular intervals (e.g., monthly) regardless of market conditions. This strategy reduces the impact of market volatility and lowers the average cost of your investments over time.
Set up automatic contributions to your investment accounts to ensure consistency and discipline in your investment strategy.
When your investments earn dividends or interest, reinvesting those earnings helps your investments grow faster through compounding.
The earlier you start investing, the more time your money has to grow. Even small amounts invested early can lead to significant wealth over time.
Maximize contributions to retirement accounts like RRSPs, TFSAs, 401(k)s or IRAs, which offer tax benefits. These accounts allow your investments to grow tax deferred or even tax-free in some cases.
Be aware of the taxes on profits from the sale of investments. Long-term investments (held for more than a year) are taxed at a lower rate than short-term gains.
Continuously learn about the markets, investment strategies, and financial news. This knowledge will help you make informed decisions.
Markets fluctuate, and reacting emotionally to short-term movements can lead to poor investment decisions. Stay focused on your long-term goals.
Periodically review your investment portfolio to ensure it aligns with your goals and risk tolerance. Life events and market conditions can impact your investment strategy.
If one part of your portfolio grows faster than others, rebalance by selling some of the overperforming assets and buying more of the underperforming ones to maintain your desired asset allocation.
If you’re unsure about your investment strategy or need help planning for complex goals, consider consulting a financial advisor. They can provide personalized advice and help you stay on track.
