Are you in the know when it comes to growing your bank account? Do you understand how investing works? And do you invest your money on the regular? Well if you answered “No, no, no…” don’t worry! In this episode of Building Better With Brandon, we break down everything you need to know about investing your cash!
Investing is something everyone should be considering, but it’s important to know the basics before you get started, that’s why we brought in Jermaine Dacres, a financial planner with TD Wealth, to give us the scoop.
“[When] you’re thinking investing in relation to finances specifically, you’re thinking about you taking your capital, using it to purchase assets, whatever that asset may be, with the intention of having more money in the future than what you initially put in,” Dacres explained, adding that the time to start investing is yesterday!
“You need a lot of time for investments to appreciate, for the value to grow, so the sooner you can get in the better.”
He shared that if you have money left over after paying for your monthly expenses, that money should be invested.
So what are some of the most common mistakes when it comes to investments? Dacres says that many people start investing without an actual plan, which can cause problems.
“Essentially they have no sense of direction but they’re putting money into an investment vehicle. That usually leads to people investing and making emotional decisions as opposed to analytical and strategic ones.”
The financial planner shared that before you start investing your money, it’s important to be clear as to why you’re doing it and do some research. But if research isn’t your strong suit, Dacre says it’s a good idea to speak with a professional who can provide you with guidance so you’re not wandering aimlessly through the investment world.
Popular Investment Vehicles
TFSAs (Tax-Free Savings Accounts) and RRSPs (Registered Retirement Savings Plans) are two popular investment vehicles. Dacres says if you already have been saving money, you’re in a good position to put that money into a TFSA to start growing your cash without paying taxes on it.
An RRSP is also a great way to save for the future. Dacres explained that if you have a pension plan, this is a good way to supplement your income after you retire. However, he warned that if you don’t have a pension, you need to open an RRSP.
“You actually need to have a retirement savings strategy,” he shared, adding that both accounts allow you to grow your wealth as an investment.
However, unlike a TFSA, Dacres explained that with an RRSP you will have to pay taxes eventually.
“The tax is deferred, so later on when you’re retired and you’re ready to take that money out, you will have to pay some form of tax.”
Dacres shared that diversification is a big topic when it comes to investing, but what does the term mean?
“Diversifying simply is you spreading out the types of investment vehicles you use in your actual investment strategy,” Dacres shared, adding that investing and diversification go hand in hand.
The financial planner explained that different vehicles can help you achieve different goals over time. Spreading out your investments across multiple forms of investing can help minimize your risk as much as possible, and make investing more comfortable.
We were also joined by Latanya Monteith Housen, Regional Manager, Black Community Business Development Metro West at TD, who shared some of the different tools available for those looking to get into investing.
Monteith Housen explained that at TD branches, those looking to invest can work with a professional who will create a customer investment profile by asking the client questions to create manageable goals for investing.
She shared that TD also offers direct investing, geared towards people who are interested in directing their investments themselves. TD has an online platform that includes videos and other training materials to support the process of investing for yourself through TD Direct Investing.
Dacres and Monteith Housen broke down everything you need to know about investing, including how to get started, what you can invest in and more in this episode of Building Better With Brandon.