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Retirement

  • Getting Started & Building Assets

    Tips for getting started with investing are really quite simple: just get going! The worst thing to do is assume that any little amount wonít help; in fact, every bit will help build up your assets and put you on the right path to a stable and secure retirement.

  • Nearing Retirement

    As you get closer to retirement, you need to start thinking about your long-term financial needs. Some useful suggestions might be to get back on track of your investment plan (if necessary) and set up further investments or savings accounts if possible. Keep a strategy so that you utilize your money as best you can, invest well (i.e., safely), keep your family ďin the knowĒ with your plans, downsize if expenses are still too high, and build up an emergency fund -- all of these tips will be essential as you move forward towards retirement.

Tips for Beginners

  • Start Now

    The longer you invest your money for, the more money youíre going to make: due to compounding rates of return, you will end up with more money than you anticipate.

  • Speak to Someone with Knowledge

    Find out your options. Speak to an investment advisor at your bank, for example, about whether you should open up a tax free savings account (TFSA) or invest in your registered retirement savings plan (RRSP). Once you understand all the different types of accounts, including their pros and cons, then youíre better prepared to make important financial decisions.

  • Start with the Familiar

    An easy way to get into the stock market is by buying things youíre familiar with and know (e.g., Apple or Starbucks shares). However, if youíre older and looking for something more serious, you might want to invest more for the long term.

  • Diversify

    Mutual funds and exchange-traded funds tend to be good products for young individuals who donít have enough assets to create their own diversified portfolios.

  • DIY

    Open up your own account and trade stocks yourself. However, if you go through a discount broker, no one will tell you what to buy, when to buy or when to sell. Youíll have to do your own research.

Types of Investment Accounts

There are two main distinctions in accounts: Brokerage and Retirement. Brokerage accounts can be accessed at any time to deposit and withdraw funds. Retirement accounts have restrictions on how much can be invested annually, and can usually be withdrawn upon retirement.

Both types also have their benefits. Brokerage accounts can invest in any investment product, and can also take on leverage and short positions. Retirement accounts are somewhat limited in what they can invest in, but they usually offer some type of tax advantage.

  • Brokerage Investment Accounts

    • Cash

      A cash brokerage account is the most basic of investment account. Itís also known as a standard brokerage account. This account type is funded by your cash, and you can only invest with the cash in the account. This account is limited in what you can do because you can only use your cash. For example, you canít engage in certain options trading and you canít short sell either. If youíre interested in that type of trading, you should look for a margin account. You should note that everything you do in a cash account is taxable so choose your investments wisely.

    • Margin

      A margin account is very similar to a cash account except you have the ability to trade on margin. This means that youíre able to borrow from the brokerage when you place a trade. It still requires a certain amount of capital, and you can usually borrow up to 50% of what you have. A margin account gives you the ability to place every trade possible- including options trade and short selling. This is all due to the fact that youíre able to borrow from the broker to conduct trade. Just like a cash account, a margin account is fully taxable.

  • Retirement Investing Accounts

    When it comes to saving for retirement, there are a lot of different investment vehicles. IRAs are the main type that you can go and open. 401Ks and 403b are employer sponsored plans and individuals donít open those accounts. For these accounts, it depends on whether you think youíre going to be in a higher tax bracket now or later. If you are paying higher taxes now, and think youíll pay less in retirement, a Traditional IRA makes sense because you get the tax breaks today. However, if youíre in a low tax bracket now and plan to be in a higher tax bracket in retirement, a Roth IRA is the better choice.

    • Traditional IRA

      A Traditional IRA (Individual Retirement Account) is a savings vehicle which allows you to save and invest for retirement. The benefit of using a Traditional IRA is that, in many cases, the amount you contribute is tax deductible. Once you put money inside the account, everything you do or trade is tax deferred. You only pay taxes once you withdraw the money in retirement, but you will do so at ordinary income tax rates.

    • Roth IRA

      A Roth IRA is similar to a Traditional IRA, except that you invest using after-tax money. Inside the account, both the Roth and Traditional IRA act the same. However, with the Roth IRA, when you withdraw your money in retirement, you donít pay any taxes on it.

Insurance

Purchasing life, car, renters, or other forms of insurance can save you from drastic financial loss. In fact, some forms of insurance are required by law. While paying the minimal bill every month or year can appear to never pay off, keep in mind that avoiding payment for a catastrophe can be the difference between going broke and being financially stable.