Article provided by iA Clarington Investments
How much you save is important, but when you start can also have a big effect. The sooner you invest – even if it’s only a small amount – the more time your money has to reap the benefits of compounding.
Put simply, not only will the money you originally saved have the opportunity to earn returns, those returns can also, potentially, earn returns. And lest you be discouraged, remember that no matter what age you are, “starting now” will always be earlier than “starting later.”
Example: Starting at age 30, Cathy made annual RRSP contributions of $6,000. At 45, however, she found that between a mortgage and the cost of raising two kids and saving for their education, she couldn’t afford to contribute. Nevertheless, when she retires at 60, she will have a very attractive nest egg. Jay doesn’t begin contributing to his RRSP until age 45, but then contributes $12,000 per year until he’s 60.
In the end, Cathy’s portfolio is worth almost 60% more than Jay’s, even though Jay invested twice as much. That’s because Cathy’s contributions had so much longer to compound; her RRSP earned returns not only on her original contributions, but on the returns from those contributions.
So as you can clearly see, the sooner you start to invest- no matter the amount- the better it is for your financial future.
Contact us today to discuss setting up your investment accounts and designing a regular savings plan!
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This blog was prepared by Alison Cannell, for the benefit of Alison Cannell, Financial Advisor with Cannell Wealth Management Inc., a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this blog comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.
The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Fund Fact sheet or prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.
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