In order to make 2019 your best year yet, take some time to review your finances so you’re on track for success. Here are five ideas for how to start investing your money, exploring everything from high-interest savings accounts to managed funds to stocks, with special insights from Servus Credit Union!
1. Start by putting investment funds aside.
Review your budget to figure out what you can afford to put towards investments. “Talk with your financial advisor and look wholistically at your goals to ensure your investment plan is tailored to your specific needs,” advises Jennifer Ryan, Assistant Branch Manager with Servus Credit Union. One of the great things about banking with a credit union is that many offer online appointment booking or secured email with one day response times, so talking with an advisor is a breeze.
Funds for investments should be separate from your fixed expenses and emergency savings. Start tucking away money each month using automatic withdrawals so you can’t spend it!
2. Try out a Tax-Free Savings Account (TFSA).
A TFSA is a good way to save without having to worry about paying tax on interest you earn. TFSAs are appropriate for long and short-term goals.
With a TFSA, you can try out investing without getting in over your head. If you can commit to contributing $50 a month for six months, you’re ready to move on to more advanced investments.
3. Sample Mutual Funds.
Mutual Funds are a good place to start as a newbie. A type of investment made up of a pool of money collected from multiple investors, with a Mutual Fund you buy a mixed portfolio in one transaction. The biggest benefit? “Mutual Funds are professionally managed, so you don’t need advanced knowledge to start out. It’s one less thing to worry about,” says Jennifer.
Mutual Funds often have lower minimum investments than other products, but be sure to ask about any operating or shareholder fees you may have to pay upfront or yearly so you know what to expect. Many credit unions offer some of the lowest fees out there, so you can rest assured that you won’t be gouged.
4. Investigate Guaranteed Investment Certificates (GICs).
GICs are a low-risk way to invest, as they pay a set rate of return. GICs can be a good place to put funds you want to save for retirement without risking big losses. They usually have low minimums and options around term length, so you can pick the best match for your needs.
Some GICs may have upfront or yearly fees (although many credit unions, such as Servus, do not charge fees on GICs). Don’t forget that because they’re low-risk, they earn lower returns than high-risk products.
5. Dabble in stocks and bonds.
A bond is a loan to a corporation or government in exchange for periodic interest payments, plus the return of the bond’s face value when it matures. A stock is a share in a company, influenced by the success (or failure) of the business. With stocks and bonds, you’ll pay tax on any earnings you make.
Does this all sound confusing to you? You don’t have to go it alone. Every Alberta credit union has investment professionals who will sit down with you, learn about your goals, tolerance for risk and available budget, and help create your investing plan. And for many credit unions, the more you invest, the more profit-sharing – money back in your pocket – you’re eligible to receive each year. Find your local credit union to learn more today.