As a young professional, you may be worried about the basics of your financial life, like budgeting and saving. While four in five millennials have started saving for the future, only one in two millennials are investing.1
Whatever your age, investing can be an intimidating endeavour. Because of this, it’s possible you’ve put off investing or haven’t given it much consideration. Regardless of where you currently stand with investing, here are five tips to help you get started and make sure that you are on the right track.
Tip #1: Start Early
You don’t need to be earning six figures in order to start investing. If you’re able to, start small with what you have. A modest amount of money can grow exponentially over time thanks to the power of compound interest. Starting a small investment now can create a big payout later down the road.
Tip #2: Invest Regularly
While it may be tempting, it isn’t productive to wait around deciding when the perfect time to invest is. This is called trying to time the market, and it has a reputation for not always being a favourable move for the investor. Instead, try investing small amounts of money on a scheduled basis, like clockwork. It’s also important to invest regardless of your recent returns, as past performance does not guarantee or indicate future performance. Instead, create a plan and stick to it.
Tip #3: Diversify
If you only invest in one company or sector, you could lose a lot of money if something causes those stocks to drop. Avoid putting all your eggs in one basket by keeping your portfolio diversified.
Tip #4: Enroll in Your Company's Pension/RRSP
If you’re a full-time employee, you may have the option to enroll in your company's group Registered Retirement Savings Plan (RRSP) or other company pension plan. After enrollment, you’ll likely have the option to automatically divert a fixed amount from every paycheck into the plan. Also, any income you earn in the RRSP grows tax-deferred until you make a withdrawal.2 Not only does this option have tax-saving advantages, but you also won’t even have to think twice about when or how much to invest.
Tip #5: Work With a CFP®
You are always going to have a certain amount of bias when it comes to your money. This can make it tricky to make fact-based financial decisions. A Certified Financial Planner® (CFP®)3 should offer unbiased, educated guidance to help you make financial decisions based on your long-term goals, not short-term worries. A CFP® can provide the dedicated time and know-how needed to properly manage a portfolio that you yourself may not have.
Hindsight is 20/20, and there are ways in which everyone wishes they would have handled their money differently in the past. If you’re just beginning to build your portfolio, take the advice we wish we could give our past selves. These five tips are just the beginning, be sure to speak to an advisor before making any big decisions regarding your financial future.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.