Managing Your Money: The right time to invest is ... now

At any time of the year, it can be tough to set aside money to invest – either in your investments held in an RRSP or to purchase shares to add to your nonregistered portfolio – and that is especially true in the wake of your holiday season spending. Then there’s your assessment of the ‘state of the market’. Will it go up? Will it go down? Should I invest now or should I wait?

All valid questions, of course, but there is one simple answer: Make your investments now. Here’s why.

- It’s impossible to time the market – just ask any knowledgeable investment professional. Trying to hit a high return and avoid a low one by jumping in and out of the market is a sure way to curtail your returns – and give you an ulcer. Time in the market is a much surer path to investment success. That’s because of this historical truth: Markets always move up and down but the long haul trend is always up. So, stay true to a long-term investment strategy for higher long-term returns.

- For most investors, the best long-term strategy is to make your investments immediately, regardless or whether the current market is up or down. Even better, invest regularly instead of holding off and making a lump sum investment once a year – because, by investing regularly, you will accomplish these important investment goals:

- You get the full benefits of dollar cost averaging – meaning you make your investment purchases (by acquiring more units of investments held in an RRSP or purchasing nonregistered stocks) regardless of whether the current price is low or high. Over time, the average cost of your investments will be lower and your potential for longer-term returns will be higher.

- You maximize the value of your investments held in an RRSP. Your money grows tax-deferred inside your RRSP. By making regular contributions, the magic of compounding can add thousands to your retirement fund. Here’s an example: Contribute $200 a month to your investments held in an RRSP (at an average compounding return of 5.5%) and you’ll have $127,562 after 25 years. But if you make a single lump sum contribution each year near the RRSP deadline, your 25-year accumulation will be only $120,366.

- Especially at this time of year, it’s difficult to find a lump sum to invest – but at any time of year, it’s much easier to come up with $100-200 a month through a Pre-Authorized Contribution (PAC) plan that automatically invests an amount you choose in investments you choose.

- Sleep easier by always looking at the big picture. Don’t worry excessively about the performance of one investment. View your investments from the perspective of your overall portfolio and your longterm goals.

By investing regularly and using a balanced investment strategy, you will achieve your financial goals. Your professional advisor can help design the plan that’s best for you.