The Learning Centre:
Investing: the undiscovered country.
A recent survey has found that most Canadians still have misconceptions when it comes to investing.
One of these misconceptions involves the type of person associated with investing. One survey1 showed that people visualized two types of investors: the wealthy individual who sits at their computer all day channeling their ‘inner ESP’ in hopes of picking the right stocks (as if they’re parked in front of a slot machine, waiting on that big win); or the financial advisor they see on an annual basis when they make their RRSP or TFSA contribution.
Education members may have other misconceptions about investing, which have to do with lack of cash flow (which can be a result of where you are on the pay grid and how much is left over after pension contributions, union dues, taxes, etc.).
Yet investing is something that is far more accessible to the average person (or educator) than you may think.
All it takes is adapting your mindset.
The disconnect in our perceptions of investing can potentially be attributed to the fact that ‘saving’ rather than ‘investing’ remains the highest financial priority for Canadians: 72% identified themselves as ‘savers’, while the remaining 28% considered themselves more of the ‘investor’ type. This doesn’t seem to have changed – another survey2 released by BMO Wealth Management showed that Canadian millennials considered ‘saving more’ to be their highest priority, followed by reducing debt and then investing effectively. So, while most Canadians are putting money aside, they may not be actively looking for opportunities to help that money grow. It’s just sitting in their savings accounts—and that’s a massive waste of investment potential.
That’s where a Pre-Authorized Contribution plan (PAC) from Educators Financial Group, for example, can ease you into the world of investing in order to get that money growing.
With a PAC, you contribute as much as your budget allows, so you don’t feel the pressure of putting in more money than you’re comfortable with. That amount is withdrawn from your account on a regular basis (weekly, bi-weekly, bi-monthly, monthly) and deposited directly into your investment account. That’s the beauty of a PAC. It’s affordable and automatic.
Another ‘PAC perk’: dollar cost averaging.
Market fluctuations make it difficult to determine exactly when to invest in order to capitalize on an investment. However, with a PAC, you can benefit from a useful investment technique called ‘dollar cost averaging’. With this technique, you’ll be investing a fixed-dollar amount at regularly scheduled intervals. When the unit price is high, your fixed investment will buy fewer mutual fund units. When the price drops, it will buy more units. As a result, your average unit cost will be lower, and you’ll be eliminating the risk of investing in the market at the wrong time.
If you’re looking for low-risk, guaranteed investment growth—a GIC could be the right choice for you.
Besides thinking they don’t have enough money, another barrier keeping individuals from becoming investors is the ‘uncertainty’ of it all. As an education member, you’re quite familiar with that feeling of uncertainty whenever contract talks roll around. So there’s a certain comfort that comes from keeping cash in a savings account. However, one of the greatest benefits of Guaranteed Investment Certificates (GICs) is that they offer predictable investment growth that, just like the name says, is guaranteed. Again, choose to invest as much as you want within a set term (they’re available in terms ranging from under a year 10 years)—the longer the term, the higher the guaranteed compound interest rate.
Your own journey from ‘saver’ to ‘investor’ starts with one educator-specific phone call.
Because we work exclusively with members of the education community, Educators Financial Group is in the perfect position to provide you with the right investment plan based on your specific financial situation.
Let us help you put together a personalized portfolio to take YOUR savings further.
12015 BlackRock Global Investor Pulse Survey of 2,000 Canadians
The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Please ensure to consult your accountant and/or legal advisor for specific advice related to your circumstances. Educators Financial Group will not be held responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a result of the aforementioned information. The information presented was obtained from sources that are believed to be reliable. However, Educators Financial Group cannot guarantee their completeness or accuracy.