There are many reasons why people choose to invest, but one reason is to meet personal and financial goals. For example, a specific goal may be:
- Save $25,000 for a down payment on a house over the next 3 years.
- Save $40,000 for your child’s education by the time they turn 18.
- Save to create an income of $50,000 per year in retirement.
Setting specific goals allows you to determine what you need to do to meet these goals. Investing your savings may help you reach these goals faster. For example, if you put $1,000 in a chequing account that earns no interest, in one year, you will have $1,000. If you invest that same $1,000 in an investment that earns 5%, in one year you will have $1,050. In 2 years, you will have $1,102.50. This is because of the power of compound interest.
No on investment strategy is right for everyone. Speak to a financial advisor to learn how to make a plan and set your financial goals, and to understand which investment products may fit your life and risk tolerance.