Working with clients to help them save money is one of the most rewarding things I do as a financial security advisor. I’ve had a lot of experience doing so, meaning I know how to get started, and how to help them reach their goals.
After we complete a workable budget, the next step is to start a savings and investment plan. I have my own personal definition of savings and investing:
· Savings means you put aside a dollar today so you have a dollar in the future.
· With investing, you set aside a dollar today to potentially have $2, $3, or more dollars in the future.
I’ve worked with many clients on first-time investment plans, and there’s a common theme: people don’t have an investment plan because they don’t understand how investing works. I completely understand where they are coming from. When they watch financial news and hear terms like derivatives, inflation, dividends, etc. Investing can be an intimidating process, but it doesn’t have to be.
If you want to start investing, or review an existing investment plan, you have to remember these four simple principles:
1. Start a monthly plan and stick to it. Take a look at your next paycheque. You work all those hours and then taxes, union dues, health plans, office fees, are all deducted. You need to take control and pay yourself some of your paycheque, too. Setting up a monthly plan that works within your budget has many benefits over the long term. My clients continually tell me they don’t even notice the money gone when it’s moved to their investment account automatically.
2. The sooner you start the better. When clients ask me, “Is now a good time to invest?”, I always joke that I left my crystal ball home today, and don’t know what the future might hold. The answer is “It’s always a good time to invest.” This is because the longer you invest, the more time your money has to grow. I’ll discuss this more in the next point.
3. Time can be your friend. For example, let’s say you bought a house today and sold it in a year. Over that year, your house might not grow in value and might have even decreased. You haven’t owned the house long enough to grow more value. Now, let’s say you sold your house in 10 years. Chances are, you’ll be able to sell that house for more than you bought it for. This principle is similar to investing. By increasing your investing time, you give your investments a chance to grow.
4. A market downturn can be a good thing. Statistically, markets will go through a downturn every 10 years. This means stock values go down and this will affect everyone investing in it. At these times many people get out of the market, but they could potentially be losing out on investment opportunities. For example, let’s say you have $100 a month automatically go from your bank account to your investment account. For easy numbers we’ll pretend this $100 will buy you 5 shares (parts) of the market. Then there’s a market downturn. Your monthly $100 is buying the market on sale and instead of 5 shares you are buying 7. A down market can provide investment opportunities as long as your timeframe allows for a potential market recovery.
And those are my four investment principles.
Now’s the right time for you to start an investment plan and review any that you already have.
You work hard for your money and it’s time to make sure your money is working hard for you.
Please contact me and let’s start a plan together.