↓ Archives ↓

Tips on Personal Finance: How and Where to Invest your Money

One of the critical but necessary decisions you must make to safeguard your future is on investment. There are several investment options available for pen-paperCanadians but every investment option comes with its own strong points and downsides. The common personal finance investment strategies include RRSPS, tax-free savings, RESPs, equities and bonds. Investing in RRSPs (registered retirement savings plan) offers two major benefits that include tax-deductable contributions and growth of money sheltered from tax. You may also get hefty tax refund depending on your contributions. The challenge with RRSPs investment is that returns for people in lower tax bracket is very small.

Investing in RESPs (registered education savings plan) allows you to benefit from 20-percent matching grant for every dollar you invest up to $500 annually or $7200 over the life of your investment plan. The downside for investing in RESPs is that if your children fail to join post secondary school you will lose the grant money. Investing in TFSAs (tax-free savings account) lets you save $5000 tax free annually throughout your life. The downside of TFSAs is lack of upfront tax deductions. Investing in bonds offers you peace of mind as they are government secured but the returns will be low. Investing in Equities offers you potential to enjoy high returns but they are also risky for a short term investor.

When making your decision on personal investment, you must realize that there is no one investment option that is best. You must diversify over a large portfolio to minimize risk and also increase your chances of better returns. The best way to diversify your investments is to ensure your money is spread across a variety of sectors. The other important factor is to think and invest long term. You should always avoid short term investments plans. The other thing that you should consider is to invest in an asset mix that works for you. You should make plan on how much and where you should invest and stick with your plan.