INVESTMENTSCALM 20

What is Investing?• The act of committing money or capital to an

endeavor with the expectation of obtaining an additional income or profit.

• It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a different way to think about how to make money.

Where to Invest??• There are so many different ways you can Invest your money.• Here are a few Examples…

High-interest savings accounts• How does it work?Instead of leaving your money in a low-

interest regular savings or chequing account, you can open a high-interest account and get a bigger bang for your buck.

• You can effectively grow your money in this type of account and it’s a safe, easy-to-access alternative to the risky investment routes. Since this type of account is often offered through online banks, it typically takes a couple days to transfer the money back to your regular account – a bonus if you’re trying to monitor your spending.

Saving Bonds• How does it work?• How they work: A low-risk way to save; when you buy one

you’re loaning money to the government for a set period at a fixed-interest rate. The Canadian government offers Canada Savings Bonds and Canada Premium Bonds.

• If you have extra money that you won’t need for a while and want it to grow without the risk, this route is for you. Savings bonds are 100 per cent backed by the Canadian government, so you’re guaranteed to get back the original amount you invested. The interest rate on your bonds can only go up – they can never go down.

Mutual Funds• How does it work?• A mutual fund is a type of investment fund that includes a mix of

investments, like stocks, bonds and other funds. When you buy a mutual fund, you’re pooling your money along with other investors, and your money is going toward shares or units of the fund. This type of investment can be risky – it all depends on the type of fund you invest in. Mutual funds also come with fees that affect your investment return.

• Mutual funds can be a good choice if you don’t have the skill, knowledge or time to manage your own investments, because a portfolio manager makes all the investment decisions.. Mutual funds also have built-in diversification and are an affordable way to own a variety of investments. Most importantly though, they’re easy to buy and sell – a bonus if you need quick access to your money.

Exchange-traded Funds (ETFs)• How does it work?• Similar to a mutual fund, it’s an investment fund that is also a

collection of investments, such as stocks, bonds and other funds. ETFs are also comparable to a stock since they’re traded throughout the day on a stock exchange. The downsides are that, depending on the type of ETF, it can be risky.

• According to Masters of Money blogger Rob Carrick, ETFs are ideal for “twentysomething go-getters with a job, a decent salary and an interest in getting started in investing right now.” He believes ETFs are great because they’re flexible, simplistic and have low maintenance costs.

Tax-Free Savings Accounts (TFSA)• How does it work?• TFSAs are available to Canadians age 18 and older. You can

contribute up to $5,000 per year and even withdraw it and put the same amount back in later. The only downside is that you’re fined if you go over the yearly deposit limit.

• You get the benefits of a tax-sheltered account without permanently locking your funds into anything. Unlike registered retirement savings plans (RRSPs), savings bonds or other investment options, you can take the money out at any time and put it toward anything you want.

Registered Retirement Savings Plan (RRSP)

• How does it work?• An RRSP is a registered account with the federal government

that can be used to save for retirement. Anyone who files an income tax return and has earned income can open one, and you can deduct RRSP contributions from your income tax every year.• Although retirement may be more than 40 years away, if you

start saving now – even $100 a month – because of the magic of compounding interest, you will have saved thousands of dollars more than if you start saving in your 30s.

• These are just some examples of ways you can invest your money. There are many other options out there

• DO YOUR HOMEWORK/RESEARCH!

• Do what is right for YOU!

• Ask Lots of Questions! Talk to your parents/family about their experiences with investments.

• RISK associated with some investments-Keep that in mind!

Exit Slip

•What investment would you choose out of the options we talked about today?•And WHY?