One of the most common mistakes that a person can make while saving for their future is waiting too late until investing. The opportunity cost of not investing while one is young is the lost of poential interest that could have been earned. A good opportunity to put money aside to save for ones future is when one receives GST or Tax return payments from the government. These amounts are outside of ones regular budget and should be used wisely. Often, one uses these earnings to pay down current values owing to creditors. It is important to weigh the possible gain from investing vs. spending on debt. Consider the example of student loans. The interest a student pays on his student loans is related to prime and does not incurr any interest until six months after the completion of their study period. Using money from a tax return to invest for the future would have a much greater gain over the long run via compound interest than paying down debts with little interest would. Consider the simple example of prime being equal to 2.5% whereas an average medium risk mutual fund might pay around 8% interest. This would mean any money invested would create earnings to cover student loan interest and yield a 5.5% premium! This does not even take into consideration the no interest courtsy period of student loans or the compound interest of longer term investments.
Saving for your future
Taking the time to sit down with a financial advisor at any bank will also help to outline these benefits and is a free service. Everyone likes to get something for free, right? It would be easy for one to argue that one cannot afford to put money aside each month for ones future, but this is simply not true. A small tolken contribution of $25/month can easily be set up automatically into an RRSP or a TFSA and will accumulate to a large amount over the long term. Putting away $25 a month would mean eating out one night less or buying one less shirt. The compound interest earned in ones younger years makes a significant impact on ones long term financial goals and does not require a large change in a persons standard of living. The sooner you start to invest, the sooner you can retire!
Jumping on the junk bond band wagon
Often certain investments receive high amounts of public attention and trigger an impulse for investors to buy. This does not always necessarily mean the investment is wise. Gold is a prime example of this. Gold has become over inflated because of the recent economic recession and, as a result, many have began to buy it in copious amounts. It is important to always do proper research into any potential investment and never to simply buy because others have been.
Putting extra cash where it counts
One of the most common mistakes that a person can make while saving for their future is waiting too late until investing. The opportunity cost of not investing while one is young is the lost of poential interest that could have been earned. A good opportunity to put money aside to save for ones future is when one receives GST or Tax return payments from the government. These amounts are outside of ones regular budget and should be used wisely. Often, one uses these earnings to pay down current values owing to creditors. It is important to weigh the possible gain from investing vs. spending on debt. Consider the example of student loans. The interest a student pays on his student loans is related to prime and does not incurr any interest until six months after the completion of their study period. Using money from a tax return to invest for the future would have a much greater gain over the long run via compound interest than paying down debts with little interest would. Consider the simple example of prime being equal to 2.5% whereas an average medium risk mutual fund might pay around 8% interest. This would mean any money invested would create earnings to cover student loan interest and yield a 5.5% premium! This does not even take into consideration the no interest courtsy period of student loans or the compound interest of longer term investments.Saving for your future
Taking the time to sit down with a financial advisor at any bank will also help to outline these benefits and is a free service. Everyone likes to get something for free, right? It would be easy for one to argue that one cannot afford to put money aside each month for ones future, but this is simply not true. A small tolken contribution of $25/month can easily be set up automatically into an RRSP or a TFSA and will accumulate to a large amount over the long term. Putting away $25 a month would mean eating out one night less or buying one less shirt. The compound interest earned in ones younger years makes a significant impact on ones long term financial goals and does not require a large change in a persons standard of living. The sooner you start to invest, the sooner you can retire!Jumping on the junk bond band wagon
Often certain investments receive high amounts of public attention and trigger an impulse for investors to buy. This does not always necessarily mean the investment is wise. Gold is a prime example of this. Gold has become over inflated because of the recent economic recession and, as a result, many have began to buy it in copious amounts. It is important to always do proper research into any potential investment and never to simply buy because others have been.Table of Contents
Just a light video to remind you to save your money!