Benefits of periodic investments

Did you know that the easiest way to invest for your retirement is to do it all year round with pre-authorized debits from your bank account?

Investing small amounts periodically makes saving much easier

It’s not always easy to be disciplined enough to put thousands of dollars aside toward your retirement savings at the end of the year. If this money is in your savings account and is easily accessible, it makes withdrawals that much more tempting…

With pre-authorized debits from your bank account, $100 every two weeks for example, you could save $2,600 by year’s end without giving it a second thought. Gone is the temptation to spend now and put off saving to another day!

Are you familiar with the magic of compound interest?

It’s worth repeating! The sooner you save, the more time you’ll have for your investments to grow. How? Throughout the year, the returns on your investments are reinvested in your fund and in turn generate more returns. For example, by saving $50 every week for five years, with an average return of 3%, you will accumulate $1,030 in returns on your initial amount!

Spreading investments and market ups and downs

Some investors watch the markets, buying fund units when the price is low and selling them off when the price is high. Then there’s the average person, who doesn’t know where to start! The thing is, most people don’t have the time and knowledge to follow the markets and make investments at a time when they are most profitable.

Investing periodically serves to spread out variations in unit values and prevents you from investing all of your annual savings at the least optimal time. When the markets are doing well and funds cost more, your weekly $50 will purchase less units, which is a good thing because the probability that the value of these units will increase is lower. On the other hand, when the markets are not doing so well, fund units cost less and your $50 will buy more.

This is an excellent strategy as there is a very good chance that the unit value will increase.

In short, investing periodically is a smart and easy way to save

Call your advisor to set up a pre-authorized debit program and determine the withdrawal amount and frequency. Your advisor will help you select the right product based on your investor profile and choose the investment plan that suits you best.

Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ Insurance cannot be held responsible for any decision made as a result of reading this blog post.