Invest early and regularly: the key to financial success
When it comes to saving and investing, two principles can make all the difference: starting early and contributing regularly. These habits help maximize the growth of your investments and reduce long-term financial stress.
Saving consistently is one of the most effective strategies for building solid wealth. With an automatic contribution plan (PAC), you can:
- Avoid forgetting: No need to remember to contribute—it’s done automatically.
- Benefit from cost averaging: By investing regularly, you reduce the impact of market fluctuations.
- Develop financial discipline: Contributing becomes a habit, like paying a subscription or a bill.
By setting up automatic contributions, you ensure your savings grow effortlessly, without having to juggle your finances every month.
Paying yourself first: an essential habit
When preparing your budget, view saving as an essential expense, similar to paying your rent or buying groceries. Setting aside a portion of your income as soon as you receive your pay ensures that your financial future is a priority. This habit also helps you avoid spending everything by month’s end, which is often the case.
2. Start early: the power of compound interest
The earlier you start, the more your money works for you. Here is a concrete example that illustrates this reality:
- Lynn starts investing at age 26 and contributes $300 at the beginning of each month until she turns 65 (for a total of $140,400 invested).
- Simon waits until age 42 to start investing the same amount, $300 per month, until he turns 65 (for a total of $82,800 invested).
Assuming an average annual return of 6%, here’s the difference between the two scenarios*:
- Lynn will have accumulated approximately $539,031.
- Simon will reach only $174,635.
Even though Lynn invested only $57,600 more than Simon, she ends up with an additional $364,396. That’s the magic of compound interest. Her early contributions had more time to grow and generate gains on gains.
Choosing a fund with a lower management expense ratio (MER) can represent significant savings over the life of your investment, and allow your savings to grow even faster.
FÉRIQUE Funds offer some of the lowest MERs in the industry compared to their reference universe in Canada, according to Fundata Canada Inc.
In addition, when you work with FÉRIQUE Investment Services, you have access to advice at no additional cost.
Compare the MERs of FÉRIQUE Funds with the industry average for comparable funds, or calculate the impact of an MER using our calculator.
Take action now!
Whether you're just getting started or thinking about increasing your contributions, the key is to take action now. Set up an automatic contribution plan and let time and consistency work in your favor. Your financial future will thank you!
- Get a personalized financial plan (or a retirement plan)
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*Since payments are made on a monthly basis (at the beginning of the month), the hypothetical rate of return of 6% has been transposed to a monthly basis with a rate equivalence and the number of years has been converted to months (periods).
FÉRIQUE is a registered trademark of Gestion FÉRIQUE and is used under license by its subsidiary, Services d'investissement FÉRIQUE. Gestion FÉRIQUE is an Investment Fund Manager and assumes management duties in relation to the FÉRIQUE Funds. Services d'investissement FÉRIQUE is a Mutual Fund Dealer and a Financial Planning Firm, as well as the Principal distributor of the FÉRIQUE Funds. Please note that for commercial purposes, Services d'investissement FÉRIQUE is also known in English as FÉRIQUE Investment Services.
There may be brokerage fees, trailing commissions, management fees and expenses associated with investment in the Funds. Management expense ratios vary from one year to another. Please read the prospectus before investing. Any hypothetical return or growth is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund. Mutual funds are not guaranteed, their values fluctuate frequently and past performance may not be repeated.