So you’ve got some money. Maybe not a lot, but some. And you want to see it grow, like those Sea Monkeys you had as a kid. But where should you put it?
Investing can be a nerve-racking but super rewarding experience. Whether you’ve finally taken that first step to make an investment or have been confidently investing for years, it’s important to do your research and re-evaluate where your money is going (and when!) depending on the stage of life you’re in.
But with the amount of financial advice and information floating around, how do you weed out what’s fact and what’s fiction? Here are five common investing myths, and how to break through them.
Myth 1: Once I have my financial plan set up, I’m all set until retirement.
Sadly, no. As you move your way through your twenties, thirties, and beyond, your priorities change. As you hit important milestones, like having a baby or buying a house, you’ll want to review your plan to make sure it still reaches your goals.
A retirement planning calculator can be a good preliminary tool to tailor your retirement investment plan so it’s relevant to your present circumstances and future goals. But annual check-ups with your Financial Planner are just as important as an annual doctor’s visit (hold the apple).
Myth 2: I’m too young to invest.
It’s never too early to start working on a plan that will give you financial security twenty, thirty, or forty years down the road. Because retirement may seem like it’s eons away, many Canadians will exclude it from their financial plan earlier on. But a good rule of thumb is ‘earlier is better than later, and now is better than never.’
With investments, having time on your side is great thanks to a wonderful thing called compound interest. Invest early to take advantage of it. And it’s okay to start small and increase your investments as you’re able to.
Myth 3: I need lots of money to invest.
Nope! It’s easy to forget that nobody starts out as a money expert. Nor do they start off with a lot of money. The key is just to find money to invest. The sooner you start, the more time you’ll have compound interest working in your favour.
If finding even small amounts of money is a challenge, reviewing and tracking your spending, as well as maintaining a budget can help you identify funds that you could direct towards your investment goals. Our Take Charge Money Manager™ is an easy-to-use personal financial management tool that could be helpful with this process.
Myth 4: Investing is very risky.
It can be, but it also doesn’t have to be. There are lots of different types of investment products, some with a certain degree of risk, but others with guaranteed returns on investment. Your Financial Planner will work with you to help you find the right balance that works for you, your comfort level, and your goals.
Myth 5: Once I make my RRSP or TFSA contribution, I’m done!
High fives for making your contribution! But you’re not done quite yet. Often the most obvious next step after getting the tax return from your RRSP contribution is to put it straight into a low interest savings account or another short-term account for spending. But the result is little-to-no compound interest. That new leather bag might seem like an investment to your wardrobe, but the compound interest from putting that money into a higher earning account will give you longer-term satisfaction – promise.
All set to invest? Let’s do this.
It can be tricky to navigate the investment waters alone. Whether you’re an investing newbie or seasoned pro, our accredited Investment Team can help you achieve what’s important in your life with the perfect combination of investment expertise and the right products for your needs. Plus, they’ll do it in a way that’s easy to understand – because investing shouldn’t be complicated.
Give them a shout. They’re happy to help.