Start young – the value of saving and investing now!
It’s always difficult to save for the future – especially if you are a young Canadian with a student loan to pay and new expenses to support a new lifestyle. But it’s well known that starting young, even if you have to start small, is the key to investing successfully for retirement. Think of it this way: You’ll be working for between 30 and 40 years, so you should get your investments working for your retirement for as long as you are.
The longer you are in the markets, the more your savings will grow over time. Slow and steady can win the race to a comfortable retirement. Here’s why:
- Mary invests $2,000 at the beginning of each year between ages 21 and 29, for a total of $18,000 over nine years. Assuming a pre-tax return of 7%, by age 65, she will have $315,675 in savings.
- Lynn also invests $2,000 at the beginning of each year with the same pre-tax returns but starts at age 30. To get near Mary’s savings total of $315,675, Lynn will need to invest nearly four times as much - $70,000 over 35 years.
And here are some investing tips to get you going:
- Are you investing to buy a house or for retirement? Knowing where your money’s going will help you determine how to invest.
- Do your research. You need to be comfortable with your investments and the best way to do that is to become knowledgeable.
- Talk to a financial planner. Even if you only have a little money to invest, a financial planner will be happy to help you. It’s in their interest to establish a relationship with young investors who will be clients for a long time.
It’s always profitable to start investing early and developing good financial habits. That way, you’ll have more options for how you want to live your life from here to retirement.
Date reviewed: February 10, 2015
This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.