There’s a lot to understand if you’re investing for the first time. With so many terms to learn and
different ways to get started, even the thought of moving your money out of a day-to-day bank account and
into investments can feel overwhelming.
But if you plan on retiring comfortably and achieving other financial goals along the way, the right
investment strategy is essential to growing your money and making this possible.
This how-to investment guide will take you through the basics, so you can feel confident working with
your Scotia advisor to create the right strategy for you.
Investing means putting your money to work towards your personal financial goals
and ambitions.
Our Scotia Advisor Farah El-Masri talks through the fundamentals of investing.
Step 2 What are your investment goals?
In order to accomplish your financial goals, an investment strategy is essential.
What are you saving for?
Retirement
Education
A big purchase such as a home
Keeping your funds secure
Generating immediate income from your investments
Funding travel or vacations
Understand the basic elements of investing
In order to accomplish your financial goals, an investment strategy is essential.
Assets
An asset is a resource or value that generates cashflow. The home you own is an example
of a personal asset, while bonds, stocks, and cash are some assets that make up your investment portfolio.
Mutual Fund
In a mutual fund, your money is pooled with other like-minded investors and invested on your behalf by
qualified investment professionals.
Registered Education Savings Plan (RESP)
An RESP is designed to help you save for a child's post-secondary education. Any money
deposited into this plan will grow tax deferred
Diversification
Having a diversified portfolio means having a variety of investments. This reduces the overall investment
risk. Think of it as the opposite of putting all of your eggs in one basket.
Portfolio
A portfolio refers to all of your investments. It can be made up of stocks, bonds, and other assets.
Registered Retirement Savings Plan (RRSP)
An RRSP is a government-regulated investment account with special tax benefits to help you maximize your
retirement savings.
Guaranteed Investment Certificate (GIC)
A GIC is an investment product that protects your principal investment safe and may have a guaranteed rate
of return.
Pre-authorized Contribution (PAC)
A PAC is a regular contribution that helps you build your savings easily and automatically. Even small
increases can help you reach your long-term goals faster.
Tax-Free Savings Account (TFSA)
A TFSA is a registered account that lets you grow your investments tax free. You don’t even pay tax when
you withdraw funds.
Tax-Free Savings Account (TFSA)
A TFSA is a registered account that lets you grow your investments tax free. You don’t even pay tax when
you withdraw funds.
High-Interest Savings Account (HISA)
This is a type of savings account that earns you more interest than a regular account.
Step 3
Some of the tools you will use with your advisor
When you start investing, your advisor will help you draw up a concrete plan for your money based on
leading industry tools. Here are some examples of what you might look at together.
ARIA
If you are planning to use your investments to retire, your advisor may use our Aria Retirement
Program to see how long your predicted investments may last. In this example, a customer’s target
investments are shown with different monthly withdrawals over 10, 20, and 30 years.**
Your advisor will talk with you about your attitudes to investing, and help you understand some key
topics using our Investing Essentials tool. This page helps you see how different asset classes
perform very differently over the years, and how a diversified portfolio helps you benefit from each
year’s top performers
If you have an existing portfolio held elsewhere, it’s often good to get a second opinion. Your
advisor will use our Portfolio Analyzer to determine if you currently have a suitable risk profile,
sector weighting and regional exposure for your timeline, objective and risk profile.
Risk is almost always a part of investing. Understanding risk is key for new investors to guide your
investment strategy.
How to navigate market volatility
Your Scotia advisor will help you through the process of managing risk by working through some key
questions:
What’s your attitude to risk in your personal finance?
Which types of investments match your risk profile?
How does your investing timeline affect your risk tolerance?
How do you balance your portfolio to get the right blend of risk and security?
How much time do you have to invest?
These charts help explain how staying invested over the long term is a solid strategy for growing your
money over the long term.
The big picture
This chart shows how $1,000 invested in various asset classes over the past 84 years would have grown.
Having a diversified portfolio across various asset classes and a long-term perspective has
historically worked to the investor’s advantage
Investing lets you grow your money beyond inflation. If you only keep your money in cash and savings,
the impact of inflation could mean you’ll actually lose value in the long term.
Investing on a regular basis through regular Pre-Authorized Contributions can help you build your
savings easily and automatically. This example shows how saving $100 every two weeks, and increasing
that amount of money only 10% per year, leads to a huge growth in your savings if you stick with it
for 20 years.
Canadian stocks have consistently bounced back after major stock market downturns. While it’s normal
to worry about market fluctuations, investors should be reassured that a balanced portfolio created by
you with your advisor will balance risk and growth according to your risk tolerance.
Your financial plan can start with a simple conversation.
Give us a call at 1-866-698-5927 and book a meeting with one of our advisors.
Common investing questions
I have debt. Should I still be investing?
Before investing, it’s best to pay down any debt you may have that is costing you in interest or fees.
This doesn’t include your mortgage, which is considered good debt. Once your other debt is under
control, you can start saving a little every month and investing it.
How much should I be investing each month?
This answer will vary depending on your life situation and what you’re comfortable with. Before you
start working with an advisor to help you figure this out, you can get a better understanding with our
Budget Planner tool. Remember that it’s okay to start small. Even setting up automatic contributions for
as little as $25 per month may not seem like a lot, but it can make a big difference over time.
When should I speak with an advisor about investing?
If any of this applies to you, it’s worth having a chat with a Scotia advisor :
You have money saved up that isn’t already invested or generating much interest
You have an existing portfolio and need a second opinion to make sure it’s performing well
You’re interested in starting a regular savings plan
You have questions and want to learn more
How do I know if my investments are working for me?
An advisor can help you figure out if your plan is on track to meet your needs. Depending on the length
of time you’re planning on investing, your needs may vary. For example, if you’re investing for a
short-term goal or planning on retiring soon, your advisor will adjust your plan to limit your exposure
to risk. If you can invest for a longer period of time, you can likely handle more risk in exchange for
greater returns in the future. If your life situation changes at any time, an advisor can help you
adjust.
Why is it important to diversify your investments?
Diversifying your investments is how you decrease your risk. Spreading out your investments over a
variety of geographies, assets, or sectors ensures that if one type of investment performs poorly, you
can still rely on the others, lessening any negative impact. Check out our Weather the unexpected through diversification
video for more
What can I expect in a first meeting with a Scotia advisor?
Meeting with an advisor means building a relationship. Your first meeting will likely be an hour. This
will provide the opportunity for your advisor to ask you questions, become familiar with your financial
situation, review any investments you already have, and go over your goals. It can take 2 to 3 meetings
to get your plan in a good place. After your first meeting, you can expect to feel confident knowing
that you’re in a better position to accomplish your financial goals.
How should I prepare for a meeting with a Scotia advisor?
Asking yourself these questions will also be helpful:
How much money do I have to invest?
What investments do I already have?
When did I last speak to an advisor?
How much can I spare each month for investing?
Do I have a financial plan and when was it last reviewed?
What are my financial goals?
How long before I need to reach these targets?
How comfortable am I with risk?
Do I have an emergency fund?
What if I already have an investment portfolio?
Even if you have investments at another bank or institution, a Scotia advisor can still give you a
second opinion and help you maintain your portfolio. You don’t need to transfer all your money to
Scotiabank to benefit from our advice.
**
For illustrative purposes only. This example uses a hypothetical rate of return of 4% for Conservative
Portfolios. 5% for Moderate Portfolios, 6% for Progressive Portfolios and 7% for Equity Portfolios. Rates of
return are compounded annually and include a management expense ratio (MER) of 1.50% for all Portfolios and an
assumed rate of inflation of 2%. The MER of each Scotia Aria Portfolio may differ. Transaction costs and taxes
are not included. Cash flow simulations assume the portfolio is fully depleted to zero in the indicated year.
The example does not reflect actual results or the returns or future value of an actual investment. Values are
rounded to the nearest $100.
***
Source: Morningstar. Priced in Canadian currency, as at December 31, 2019. Assumes reinvestment of all income
and no transaction costs or taxes. Annual returns compounded monthly. The asset classes are represented by their
indicated indices and the balanced portfolio is hypothetical in nature. This information is for illustrative
purposes only. It is not possible to invest directly in an index.
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