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Not sure about selecting an RRSP or a TFSA? We dive into what you need to know about how they work.
Getting started with investing
With so much information about investing floating around, it’s easy for first-time investors to get overwhelmed. If you want to grow your money, retire comfortably and achieve your financial goals, you need the right investment strategy. This guide will take you through the basics.
Book an appointment with an advisor to help you prepare an investment strategy.
Your Guide to Investing
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Step 1
What is investing?Investing means putting your money to work towards your personal financial goals and ambitions.
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with an optional subtitleOur Scotia Advisor Farah El-Masri talks through the fundamentals of investing.
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Step 2
What are your investment goals?In order to accomplish your financial goals, an investment strategy is essential.
What are you saving for?
- Retirement
- Education
- A big purchase such as a home
- Keeping your funds secure
- Generating immediate income from your investments
- Funding travel or vacations
Understand the basic elements of investing
Here’s a cheat sheet to help you get comfortable with some more common investment terms.
Assets
An asset is a resource or value that generates cashflow. The home you own is an example of a personal asset, while bonds, stocks, and cash are some assets that make up your investment portfolio.
Mutual Fund
In a mutual fund, your money is pooled with other like-minded investors and invested on your behalf by qualified investment professionals.
Registered Education Savings Plan (RESP)
An RESP is designed to help you save for a child's post-secondary education. Any money deposited into this plan will grow tax deferred
Diversification
Having a diversified portfolio means having a variety of investments. This reduces the overall investment risk. Think of it as the opposite of putting all of your eggs in one basket.
Portfolio
A portfolio refers to all of your investments. It can be made up of stocks, bonds, and other assets.
Registered Retirement Savings Plan (RRSP)
An RRSP is a government-regulated investment account with special tax benefits to help you maximize your retirement savings.
Guaranteed Investment Certificate (GIC)
A GIC is an investment product that protects your principal investment safe and may have a guaranteed rate of return.
Pre-authorized Contribution (PAC)
A PAC is a regular contribution that helps you build your savings easily and automatically. Even small increases can help you reach your long-term goals faster.
Tax-Free Savings Account (TFSA)
A TFSA is a registered account that lets you grow your investments tax free. You don’t even pay tax when you withdraw funds.
High-Interest Savings Account (HISA)
This is a type of savings account that earns you more interest than a regular account.
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Step 3
Some of the tools you will use with your advisorWhen you start investing, your advisor will help you draw up a concrete plan for your money based on leading industry tools. Here are some examples of what you might look at together.
ARIA
If you are planning to use your investments to retire, your advisor may use our Aria Retirement Program to see how long your predicted investments may last. In this example, a customer’s target investments are shown with different monthly withdrawals over 10, 20, and 30 years.**
Investing Essentials
Your advisor will talk with you about your attitudes to investing, and help you understand some key topics using our Investing Essentials tool. This page helps you see how different asset classes perform very differently over the years, and how a diversified portfolio helps you benefit from each year’s top performers
Portfolio Analyzer
If you have an existing portfolio held elsewhere, it’s often good to get a second opinion. Your advisor will use our Portfolio Analyzer to determine if you currently have a suitable risk profile, sector weighting and regional exposure for your timeline, objective and risk profile.
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Step 4
Understanding riskRisk is almost always a part of investing. Understanding risk is key for new investors to guide your investment strategy.
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with an optional subtitleHow to navigate market volatility
Your Scotia advisor will help you through the process of managing risk by working through some key questions:
- What’s your attitude to risk in your personal finance?
- Which types of investments match your risk profile?
- How does your investing timeline affect your risk tolerance?
- How do you balance your portfolio to get the right blend of risk and security?
- How much time do you have to invest?
These charts help explain how staying invested over the long term is a solid strategy for growing your money over the long term.
The big picture
This chart shows how $1,000 invested in various asset classes over the past 84 years would have grown. Having a diversified portfolio across various asset classes and a long-term perspective has historically worked to the investor’s advantage
Investing keeps you ahead of inflation
Investing lets you grow your money beyond inflation. If you only keep your money in cash and savings, the impact of inflation could mean you’ll actually lose value in the long term.
Small contributions add up to big gains
Investing on a regular basis through regular Pre-Authorized Contributions can help you build your savings easily and automatically. This example shows how saving $100 every two weeks, and increasing that amount of money only 10% per year, leads to a huge growth in your savings if you stick with it for 20 years.
Growth after market downturns
Canadian stocks have consistently bounced back after major stock market downturns. While it’s normal to worry about market fluctuations, investors should be reassured that a balanced portfolio created by you with your advisor will balance risk and growth according to your risk tolerance.
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Step 5
Book an appointmentYour financial plan can start with a simple conversation. Book an appointment with a Scotia advisor near you.
Common investing questions
Ready to get started?
Now that you know the basics, you’re all set to meet with a Scotia advisor.
For your personalized financial plan, find an advisor and book a meeting at a branch near you.
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For illustrative purposes only. This example uses a hypothetical rate of return of 4% for Conservative Portfolios. 5% for Moderate Portfolios, 6% for Progressive Portfolios and 7% for Equity Portfolios. Rates of return are compounded annually and include a management expense ratio (MER) of 1.50% for all Portfolios and an assumed rate of inflation of 2%. The MER of each Scotia Aria Portfolio may differ. Transaction costs and taxes are not included. Cash flow simulations assume the portfolio is fully depleted to zero in the indicated year. The example does not reflect actual results or the returns or future value of an actual investment. Values are rounded to the nearest $100.
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Source: Morningstar. Priced in Canadian currency, as at December 31, 2019. Assumes reinvestment of all income and no transaction costs or taxes. Annual returns compounded monthly. The asset classes are represented by their indicated indices and the balanced portfolio is hypothetical in nature. This information is for illustrative purposes only. It is not possible to invest directly in an index.