1,000 burning a hole in your wallet but you aren’t sure what to do with it—all you know is you want that money if i invest 1000 a month for 10 years grow. Chances are you recently finished school and, armed with a degree, you’re now working diligently at establishing a career. For the first time, you’ve got a steady stream of income coming in and you’d like to start investing, hopefully for the biggest possible return.
Tegan Alce certainly understands that feeling. Since graduating from veterinary school in April 2014, the 27-year-old Victoria native has been pursuing her passion for animal orthopedics in Dawson Creek, a small agricultural city in northeastern B. Alce is now completely debt-free and has a new goal: home ownership. If, like Alce, you’re anxious to start growing your wealth but aren’t sure how to get the ball rolling, read on. The following tips will help you get the most out of your first grand and lay the foundation for habits that will keep you motivated over a lifetime. Get on top of debt Although it may not seem like it, Alce’s decision to focus on paying off debt was her first smart investing decision.
For young people with modest amounts of money to invest, debt reduction and interest avoidance provide a guaranteed return that any investment would be hard-pressed to beat, says Jason Heath, a fee-only Certified Financial Planner at Objective Financial Partners in Toronto. A great way to keep on top of any future debt, particularly unexpected credit-card charges, is to have some money stashed away for emergencies like a job loss. Define your goal Now that you’ve squared away any debt and you have an emergency fund, you’re in great shape to start investing—but not until you’ve figured out what your goal is. Marc Lamontagne, a certified financial planner with Ryan Lamontagne Inc.
Is this money you might use in a couple of years? That would mean keeping it safe or liquid. Or is it for something you’re putting aside for retirement? In Alce’s case, Lamontagne says she should consider using an RRSP to save for both her retirement as well as for the down payment on her home. Because of her high income, Alce will get a big tax return from her RRSP contributions, which she could then reinvest in her RRSP.
25,000, she can start saving for her home in a TFSA. The only catch with the HBP is that Alce will have to the pay the money back within 15 years, starting the second year after the money was withdrawn. Invest cautiously Anyone new to investing should be fairly conservative with their investments until they have a better understanding of how the markets work, says Lamontagne. If something adverse happens, it might dissuade them from investing over the long term. At that age you can’t afford to lose that much money. Instead, he says to consider a short-term bond fund.