Summer’s over, which means it’s time for cool weather, beautiful colors and a countdown to the final stretch of the year. It’s also the time that most of us generally start thinking about our year-end finances, and planning for what lies in store next year.
Once you’ve mastered budgeting, debt payback, and savings, the next logical step is investing – after all, the best kind of income is one where your money works hard to make more money. Investing can be overwhelming though, as there’s always risk and the anxiety of parting with your hard-earned income into something you might not fully understand. However, being prepared, knowledgeable, and aware of what you’re getting into can mean the difference between making bank and breaking it.
1. Stop Putting it Off
Most people never really know when’s a good time to invest until it passes, which can prove to be discouraging – but if you’re able to put away a few extra dollars from every paycheck without compromising on your other priorities, then you’re ready to invest today. It’s simple, the longer you invest for, the more money you stand to make, so what wait any longer?
2. Start With What You Know
Unfamiliar territory is unsettling, so it’s a good idea to start your investment in something you have a decent understanding of. For example, if you’re getting into stocks, then invest in brands and services you know about. Think about it this way, you probably have a better idea of when the next iPhone is going to come as opposed to what innovations are launching in the transport and logistics industry.
3. Spread Out
For younger investors, especially those with limited funds to create a diversified portfolio, it might be a good idea to look into mutual funds – basically, this is essentially a ‘basket of investments’ where several investors pool their money together, and a mutual fund manager decides where it’s invested.
4. Get Good Advice
Connect with an investment advisor (or a friend who’s pretty good at investments) and see what you’re comfortable with. Learning is a big part of a solid investment strategy, and it can help you determine whether you should go for a TFSA (Tax Free Savings Account) or an RRSP (Registered Retirement Savings Plan). When you know what all the different types of accounts are and what’s good about each one, you can stand to make a better decision.
5. Practice Makes Perfect
Several online trading accounts offer start up accounts with virtual cash that allows you to invest in real world stocks. This is great practice for playing around with funds that aren’t real money, so you get a feel of what it feels like when you’re ready to invest with your own money.
Remember, no amount is too small to start your investment journey, and with time you can only get better at it. It’s also great to know that our range of TurboTax products allow you to include all kinds of investments so you can file your tax return with complete confidence.