When鈥檚 the best time to invest? Some people say it鈥檚 when the market is low. For others, it鈥檚 when they have money to spare after a pay raise, an inheritance, or a big tax refund. But Associate Portfolio Manager Apurva Parashar from recommends a different strategy.
鈥淎s Portfolio Managers, we always champion the idea of 鈥榯ime in the market鈥� over trying to 鈥榯ime the market,鈥欌�� she says. That means the best time to invest is as early as you can, even if it鈥檚 only a small amount.
People in their 20s, 30s and 40s often overlook retirement planning 鈥� other expenses may feel more urgent, and many people assume they鈥檒l have more time and money later. But there are two major benefits to start saving early. First, you鈥檒l form good financial habits. Second, you鈥檒l see dramatic benefits from compounding interest.
鈥淐ompound interest on long term investments means you are earning interest on your principal investment and also on previous interest 鈥� you can think of this as 鈥榠nterest on interest.鈥� It means that even small investments can grow significantly if given enough time,鈥� says Harrison Brown, also an Associate Portfolio Manager at Alitis.
The benefits of investing a small amount on a regular basis
- Build good habits. 鈥淢y clients who鈥檝e stuck with this system for decades gradually changed their saving and spending habits. Even with a $2 million portfolio, they keep those good habits in place,鈥� Parashar says.
- Take the emotion out of investing. 鈥淲hen you make monthly contributions, you鈥檒l catch the highs and lows of the market, and if you stick with the process, you鈥檒l reach your investment goals. It鈥檚 a concept called dollar cost averaging,鈥� Brown says.
Tips for young investors
It can be intimidating to meet with a Portfolio Manager, but you don鈥檛 need a large amount of money or knowledge to get started.
鈥淲e pride ourselves on being approachable. You don鈥檛 need to have a cheque in hand to start the conversation,鈥� Parashar says. 鈥淪ometimes shame about a previous poor investment prevents people from scheduling a meeting. But we鈥檙e much more interested in your attitude toward investing now, rather than what you鈥檝e done in the past.鈥�
You may have friends or co-workers who are proud to invest independently 鈥� and they鈥檙e probably proud of their low fees. But low fees are only part of the story.
鈥淭he difference between high and low fees is usually only a fraction of a percent, which isn鈥檛 significant when your return is seven to 10 per cent. A Portfolio Manager brings a lot of extra value, and not just in your investments鈥� performance,鈥� says Brown, who volunteers with the program, teaching young people financial literacy. 鈥淧ortfolio Managers will take the time to understand your unique situation, family, and risk tolerance and use that information to guide you to help you focus on your long-term goals. Our strong client relationships and transparent approach coupled with our investment philosophy and process result in a customized experience.鈥�
Schedule a no-obligation, complimentary meeting with a Portfolio Manager today. Find Alitis Investment Counsel in Campbell River at , in the Comox Valley at ., in Victoria at , and online at . For more information, call 250-287-4933 or email info@alitis.ca.