Thinking About Investing – Here’s Why It’s So Important

05/17/2021

Written by Gillian R.

Thinking About Investing – Here’s Why It’s So Important

Even though I have an educational background in finance, I’ve always had trepidations about investing. It is always a rule of thumb for me to UNDERSTAND what I’m getting into financially and know the risks involved. I would say that I’m not an aggressive investor, following trends and religiously checking the next best virtual piggy bank to pool some money into.

Nevertheless, I can explain the meaning of investing and why it is important to start now rather than later. I wish I was consistently investing all of 20 years ago, but here’s the Good news: it’s never too late. I consulted with my insurance company’s financial advisor and got some really great insights.

Thinking About Investing

Investing means essentially putting a sum of money into a financial entity with the expectation of achieving a profitable result or return in the future. There are a few major investments to achieve this profitable end goal.

I bet you have searched the words “how to get rich” in Google. Almost all of the results always mention INVEST. You don’t need a six-figure dollar amount to start investing. As long as you have as little as $1 or even $100 and TIME, your investment can potentially grow to that six-figure. When should you start investing? TODAY! Let me tell you how:

Invest in STOCKS

The aim is to make search cleaner, more relevant and friendly to levitra online no prescription the users. It will be delivered to generic viagra canadian you in a matter of few days. It plays an important role in reducing adrenal stress and nervous tension when used levitra vs viagra in conjunction with other herbs, such as licorice, gokshura, Siberian ginseng and licorice. It is important however that you order viagra online get your Kamagra only from an online pharmacy.

Having stocks means you have shares in the ownership of a company, the more stock you acquire or purchase, the higher your stake ownership is in the company. How do you make money from this investment? Whenever this company makes a profit, they pay you the shareholder a part of this profit in the form of DIVIDENDS. Or you can sell these stocks for a profit.

Before investing in this company, be sure to research information about their finances such as trends in how they earn, how their strengths stack up against other companies in the same field, look at their performance over time, their earnings, their sales, and even how they pay their dividends. A company that pays out dividends is a good sign of its stability.

You can purchase stocks through a brokerage company called QUESTRADE.

Thinking About Investing

Invest in MUTUAL FUNDS

A mutual fund is when a company pools its shareholders’ money to invest in stocks, bonds, and other assets. The combined assets owned are put in holdings called portfolios, they are managed and invested by professionals called portfolio managers. You can now buy “units” in the fund to increase your asset holdings at any time. How do you make money from this investment?

If the NAV- Net Asset Value (value of the fund less all of its liabilities) makes a profit, you can get dividends from the invested stocks, or sell these stocks for a profit, interest from the bonds, or if the securities have increased in prices, you can then potentially earn from it.

This is a great investment as you are buying into multiple holdings of stocks, bonds, and securities. If you only invested in NIKE for example, and their stock did not perform well this quarter, you stand to lose a great deal of value in that stock.

But if you had purchased shares in the mutual fund that happened to also invest SOME of the stock into NIKE, some stocks invested in BELL, and some from GOOGLE, your loss will not be as significant as it was only a small portion of the fund’s pooled portfolio. You can invest in mutual funds online through https://canadian-investment.net.

Thinking About Investing

Invest in BONDS

Bonds can be looked at as lending money. Government or corporations offer bond investments, they then repay you at a fixed percentage for a fixed period of time. The longer the period, the more interest is earned.

How do you make money from this investment? Bonds that are issued by the government, have 100% secure backing, if they run out of money, they can just print more. The same can’t be expressed for corporations, so you know where to invest.

How do you make money from this type of investment? Let’s say you agreed to lend $1000 (face value) in a bond agreement to the government/corporation, at a 5% coupon rate (the amount of interest the bond will pay out). When it matures (the length of time you agreed to lend the money), let’s say in 5 years, the bond will pay $50 per year, a total of $250 will be earned in 5 years. After 5 years you will get your initial $1000 that you lent plus the $250 you earned during the time.

You can purchase bonds directly from the issuing government CANADA SAVINGS BOND PROGRAM on their website https://www.csb..gc.ca or through a reputable online broker company like QUESTRADE.

Invest in ANNUITIES

Annuities are long-term contracts that insurance companies offer. You are essentially investing a lump sum of money or money paid over a specific period of time, toward your retirement or other long-term goals, from which the insurance company pays you a sum of money.

How do you make money from this investment? While the annuity grows with time, the insurance company pays you a sum of money from it in return. This can provide a steady stream of income, you can decide the frequency, length of time you wish to invest, and amount of the payout.

Thinking About Investing

You can purchase annuities through mainly all Insurance Companies. I recommend SUNLIFE as their annuity plans are really flexible and I love the personalized service and professionalism.

These are just a few options that I have researched and also invested in, mainly because they were easy to understand and didn’t require a ton of money to get started. Less worry about a potential loss, knowing how the market can be volatile (likely to change unexpectedly and at any time) for some investments.

Whichever route you decide to take, do your research, get the appropriate financial advice so you can make an informed decision. After all, you worked hard for your coins, you want to make sure that they are invested wisely.

Here are some of the books from Amazon that I recommend to read if you want to get a better insight into investing:-