GUEST COLUMN: Starting young

You could spend money on a great vacation, a new car … or you could start investing in your retirement portfolio.

You’re newly graduated, with a great job and a solid future in sight – and you’re making your own money for the first time.

You could spend some of it on a great vacation, a new car … or you could start investing in your retirement portfolio.

When you’re a young Canadian strapped for cash, with student loans to pay off and lots of new lifestyle expenses, it’s difficult to save for the future. But the experts, and the life experiences of many investors, tell us that without a doubt, starting young is the key to investing successfully for retirement.

Even if you start small, start now – because the longer you are in the markets, the more your savings will grow over time. Check out this example:

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 seven per cent, by age 65, she will have $292,828 in pre-tax 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 $292,828, 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 is going will help you define 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.

For your best financial outcome, start investing early and develop good financial habits. That way, you’ll have more options for how you want to live your life from here to retirement … and beyond.

Andy Erickson is the division director with Investors Group, Vernon. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.