Why invest your money?
Whether you’re saving for retirement, to buy a home, for education, or simply to prepare for the future, investing can help your money grow. If you keep your funds in a savings account, they might not earn enough interest to keep up with inflation over time.
Knowing the basics of investing helps you lay the groundwork for setting your financial goals and deciding what types of investments will help you achieve them.
Invest independently
Self-directed investing refers to an investment approach where you can manage your investment portfolio on your own using advanced trading platforms or a simplified, goal-based application.
Other factors to consider include your level of investment knowledge, the amount of time you can devote to investing independently, and your tolerance for risk.
There is a wide range of educational resources, tools, market intelligence, studies and analysis that can help you.
Plan before you invest
Planning out your Investment Research Services time horizon, risk level, investment goals, and account types can help make your investing journey that much easier. Before looking at the types of investments, ask yourself the following questions:
How long will I be investing?
Your time horizon depends on your financial goals and how long you’ll be investing before you need the money. When you’re investing for the long term, to reach a retirement goal, for example, you might consider reinvesting investment earnings to achieve a compound annual growth rate, which can make your money grow faster.
What level of risk can I assume?
Your risk tolerance can be defined by whether you are a conservative, moderate or aggressive investor. Your tolerance can be used to determine the types of investments you choose. For example, if you have a short-term goal, you might favor low-risk investments (conservative approach). For long-term goals, your tolerance for market volatility may be higher (bold approach).
What is my goal?
You need to have a specific goal in mind before you start making investment decisions. Consider your lifestyle and the fact that your goals will likely change over time. For example, your current goal may be to invest X dollars in your Registered Retirement Savings Plan (RRSP) or to save for a specific purchase. However, life is full of the unexpected, priorities change, and your goals can change too.
What types of accounts fit your different needs?
Registered Retirement Savings Plans (RRSPs) are typically used to save for retirement. Contributing to an RRSP can allow you, on the one hand, to defer tax on the income you accumulate from the investments held in the account and, on the other hand, to access the funds during your retirement, when you could end up in a lower tax bracket.
A Tax-Free Savings Account (TFSA) can be used to save for short-term or long-term goals because savings grow tax-free. It can be used to save for different projects, such as a vacation or a major purchase.
A margin account 1 can help you increase your purchasing power by applying leverage to the value of your portfolio. You can borrow against the value of securities you already own to make other investments and access complex investment strategies, including option trading 2 and short selling. However, the use of leverage is not for everyone. With the potential for higher return also comes higher risk.
A cash account can be used to save for different purposes; it can provide you with the flexibility to easily access available cash in the account, and it allows you to trade securities in North American markets.
TD Direct Investing offers many types of accounts to suit different situations, including RESPs, RRIFs, LIRAs, LIFs and RDSPs. Below is a brief description of four popular account types.
RRSP account
The purpose of a Registered Retirement Savings Plan (RRSP) is to invest and grow your money tax-free until you retire and need to withdraw it. to finance it. Before the end of the year you turn 71, your RRSP must be converted to a permitted form of retirement income, such as a Registered Retirement Income Fund (RRIF) or an annuity, or you can withdraw the funds in cash . Because your income may be lower at this point in your life, you could find yourself in a lower tax bracket relative to the top of your earnings curve. With an RRSP account, you can:
Deduct your RRSP contributions from your income on your annual tax return.
Allow the value of your investments to potentially increase in your RRSP account without paying tax on your investment earnings or on the value acquired until the funds are withdrawn.