The title of this article speaks for itself.
Who wouldn’t want to make money effortlessly?
While not everyone’s focus in life is money, we all need a certain amount to live, period. Our character, lifestyle, and wants versus needs determine how much money we will require.
Moving beyond that, the majority of people want to move ahead, often we get caught in the routine of our lives and either chose or end up settling into a life we know. What if you want more, though? If your goal is to secure a comfortable retirement, or to leave something to your loved ones down the road? Investing is never the wrong choice.
So How Do You Start The Process?
First, determine your investment personality. To do this, you need to look at whether you are typically a risk-taker or do you prefer to play things safe. You will also need to determine your risk tolerance. Things to consider when you are determining your tolerance are your goals, the amount of time you can assign to building and monitoring your investments, and lastly, your resources, how much you can comfortably afford to invest. One other thing to consider when setting your goals is your age. This will play a role in when you likely start to consider your retirement.
Getting started can be daunting; some simple suggestions can take some of the fear out of getting started.
RRSP Contributions
A great place to start is with maximizing your RRSP contributions. This is a great option, especially if you work for a company or firm that has a pension match program. You will grow your retirement funds quicker and with the added benefit of tax savings. One should never say no to free money.
Index Mutual Fund
Another good place to start is by investing in an Index Mutual Fund. The benefits here are it is one of the easier options and less costly as you are less likely to pay heavy commissions or trading fees. Diversifying your portfolio is always a good idea. We have all heard the old saying, “Never put all your eggs in one basket.” So just like the old saying, when investing, don’t put all your resources in one investment. With this thought in mind looking at investment bonds is not a ridiculous idea. Although the yield is low, a high quality bond can help offset losses somewhere else in your portfolio. A keynote when diversifying is to not over diversify, you need to track your investments and over diversifying can make this difficult.
Investing or Speculating?
An important question to ask yourself when you embark on your journey of making your money work for you is, are you in this to invest or speculate? You may start out just with investment in mind, and as you gain experience and confidence in watching your money work, you may venture into speculating. It is important to know the difference between the two, so let me explain this briefly. When you purchase stock in a company that particular company is profitable, you are investing in the long term success of this company. On the other hand, if you purchase stock in a company that is not yet showing a profit, you are speculating, in other words, gambling with the hope that the company will prove profitable in the future.
However, you chose to put your money to work for you, it comes down to a number of personal decisions. Just know that it is never a bad idea to have your money working for you and your future.
Another way you can make your money work for you is by making sure your taxes are paid on time, so you don’t end up with penalties and interest. If you need help with your tax matters, then be sure to contact me at 416-398-1700.
