By Laura Wierzbicki
Living in this mountain paradise we often find ourselves enjoying the best life outdoors rather than having a healthy financial situation. The ultimate goal—of course!—is to find that perfect balance between fun and funds. My name is Laura Wierzbicki, Consultant at IG Wealth Management (Investors Group Financial Services Inc.). This is my first of many finance columns. I hope to make comprehensive financial advice easy and accessible with a few hundred words each month.
At any time of the year, it can be tough to set aside money to invest – either in your investments held in an RRSP or to add to your other portfolios – and that is especially true in the wake of your holiday season spending. Then there’s your assessment of the ‘state of the market.’ Will it go up? Will it go down? Should I invest now or should I wait?
These are all valid questions, of course, but there is one simple answer: Make your investments now. Here’s why.
It’s impossible to time the market – just ask any knowledgeable investment professional. Trying to hit a high return and avoid a low one by jumping in and out of the market is a sure way to curtail your returns. Time in the market is a better path to investment success. That’s because of this historical truth: Markets always move up and down but the long haul trend is always up. So, stay true to a long-term investment strategy for higher long-term returns.
For most investors, the best long-term strategy is to make your investments immediately, regardless of whether the current market is up or down. Even better, invest regularly instead of holding off and making a lump sum investment once a year – because, by investing regularly, you will accomplish these important investment goals:
You get the full benefits of dollar cost averaging – meaning you make your investment purchases (by acquiring more units of investments held in an RRSP or purchasing non-registered stocks).
Regardless of whether the current price is low or high. Over time, the average cost of your investments will be lower and your potential for longer-term returns will be higher.
You maximize the value of your investments held in an RRSP. Your money grows tax-deferred inside your RRSP. By making regular contributions, the magic of compounding can add thousands to your retirement fund. Here’s an example: Contribute $200 a month to your investments held in an RRSP (at an average compounding return of 5.5 per cent) and you’ll have $128,407 after 25 years. But if you make a single lump sum contribution each year near the RRSP deadline, your 25-year accumulation will be only $122,766.
Especially at this time of year, it’s difficult to find a lump sum to invest – but at any time of year, it’s much easier to come up with $100-200 a month through a Pre-Authorized Contribution (PAC) plan that automatically invests an amount you choose in investments you choose.
Sleep easier by always looking at the big picture. Don’t worry excessively about the performance of one investment. View your investments from the perspective of your overall portfolio and your long-term goals.
By investing regularly and using a balanced investment strategy, you will achieve your financial goals. Your professional advisor can help design the plan that’s best for you.
Laura’s advice comes with 10 years’ experience in financial services. She offers comprehensive, fully customizable financial strategies and solutions, working one-on-one with business owners, retirees, families, and individuals focused on building their net worth. Don’t hesitate to reach out for a holistic approach to investment solutions, insurance products, and mortgage planning.
Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.Investors Group Trust Co. Ltd. is a federally regulated trust company and the mortgagee. Mortgages are offered through I.G. Investment Management, Ltd. Inquiries will be referred to a Mortgage Planning (Agent) Specialist.
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact Laura Wierzbicki | Consultant | IG Wealth Management