For those new to investing, planning to be financially secure for your retirement might be the last thing on your mind. Between student loans, increasing rent costs across Canada, and just starting out in the workforce – planning for retirement may not seem like an immediate priority.
But we’re here to tell you it’s time to make it one because investing early can make a huge difference later in life. Luckily, our trusted friends at Wealthsimple are now offering automated investing to Borrowell clients, with up to $10,000 managed free for one year! You can learn more about that sweet offer here.
So why are we recommending Wealthsimple? Because Wealthsimple is the largest, most trusted automated investing service in Canada. Basically, investing is finally simple and affordable. Whether it’s with Wealthsimple or not, here are a few reasons why you should at least start investing early in life.
Time is on your side
Money is tight when you’re young. However, we do have time on our side, although definitely not the “free-time” kind (trying to establish yourself = very time consuming).
When you start putting money away early, it has the rest of your life to compound over time. For example, say you started investing $100 each month at age 20. This would equate to more than $88,000 by the time you turn 60, based on a 2.8 per cent rate of return.
The earlier you put your money away, the more it can do for you.
You’re a tech-savvy millennial
If you’re in your 20s, you’re tech-savvy, or you at least have a vague sense of technology. Being able to easily use Uber, Snapchat, and Bunz with relative ease is a gift that many don’t have and should be capitalized on like it’s your birthright.
Wealthsimple is a wholly online (much like us over here at Borrowell) investment manager. They help people build smart financial portfolios by using technology because historically, it’s more effective than picking stocks manually.
But don’t go calling them “Robo-Advisors” either, as they combine a human element with technology. The algorithms behind their trading philosophy are designed by humans, and then technology takes over to remove all the biases that human behavior can bring in. This “investing on auto-pilot” works, and of course, you can call and talk to a human anytime.
You’re alive at a time that you can utilize technology to help you make better financial decisions. Why not embrace it?
You can take on the risk
By investing early, you can take a longer term perspective on investing. You can focus more on long term performance instead of short term fluctuation. Beginning early gives you the ability to have a higher risk tolerance if you so choose.
Later on in life, this will change. Let’s say you turn 55 and you make a bad investment. It wipes out a huge sum, and also leaves you less time to recoup those losses. Would you rather have your $6,000 portfolio shrink to $3,000 at age 25, or see your $600,000 portfolio fall to $300,000 at the retirement-ready age of 55?
When you’re young, mistakes do much less damage and the winners produce some great results.
We know what you might be saying, “I’m too broke for all this auto-investing stuff.” But fear not, because best of all, you can open an account with any dollar amount! It’s important to start investing early, and Wealthsimple is here to give you the tools to do so – successfully.
Borrowell clients get their first $10,000 of investments with no management fees for a year when they sign up for their first account at Wealthsimple. Learn more.