If the cost of tuition wasn’t enough, inflation means attending college or university in 2023 is even pricier than expected. What’s a first year to do? This story is part of a crash course in personal finance for students and parents. Read the full guide.
Turning 18 years old usually means the beginning of financial independence. Now, you can finally use accumulated savings from part-time jobs, gifts and allowances to tap into the stock market on your own.
While it might be exciting to see your money grow for the first time, investing can also seem daunting, especially because it involves assuming some level of risk. Below are tips from experts on how to dip your toes in the market without sinking.
Have an emergency fund first
It may be tempting to start investing right away, but financial planners recommend setting up an easily accessible buffer first to avoid having to withdraw money from your investments too early.
“If you are investing for the long term, then you should be continuing to invest, and essentially holding on to that money, not moving in and out of the markets,” Ontario-based certified financial planner Susan Daley said.
Having an investment objective can help resist the urge to pull your money out based on market moves. Some might want to have enough for a down payment for a home in 10 years, or afford a semester abroad.
“When you’re young and maybe in university or college, you don’t know what the future will hold. In that case, it might make sense to essentially balance out your investments and, say, invest for the short term as well as long term,” Ms. Daley added.
Curate your own investing knowledge from multiple sources
The internet is full of good advice on investing. Content creators can be found all over social media providing free and digestible knowledge about the space. The caveat? You can’t trust everyone.
“Sift through things, because you’re going to see some stuff that isn’t the most savoury given that it’s finance and money,” said Nathan Kennedy, a financial influencer based in Hamilton, Ont.
He advises students to spend time reading and watching videos on the subject until they can form their own judgment on investing. Another tip from Mr. Kennedy: The most followed “fin-fluencers” are generally the ones producing reliable content.
Be careful about investment frenzies
Crypto trading, apparel such as sneakers and so-called “meme stocks” can spark curiosity, especially because of their gambling qualities.
While keeping a diversified and balanced portfolio for the long term is recommended, dealing with “fear of missing out” by not investing in these stocks can be difficult.
For those who want to have fun while investing, they can allocate a small part of their portfolio to play around with riskier stocks, Mr. Kennedy says.
“Make sure that it’s inconsequential if it goes to zero, which it very likely could, if it’s a very speculative asset,” he said.
Make use of tax-sheltered accounts
Tax-sheltered accounts work in a way that any contributions or income made are not taxable.
Examples in Canada include a Tax-Free Savings Account, a First Home Savings Account and a Registered Retirement Savings Plan, in which you can typically hold Guaranteed Investment Certificates (GICs), stocks, bonds and mutual funds.
TFSAs are typically recommended to students because they don’t require a specific investment goal, whereas FHSAs are meant for first-time home buyers and RRSPs are for those saving for retirement, as money is taxed upon withdrawal.
Invest through robo-advisers, it’s cheaper
Robo-advisers such as Wealthsimple and Questrade are automated investing software that help you manage your portfolio from a “do-it-yourself” approach. They generally charge lower fees than banks, but give less personalized advice than investment advisers and wealth managers.
When picking a broker, students should look out for “the number of trades that they’re allowed to do with any specific account, the management fees that might be charged or even a minimum investment required,” said Natasha Macmillan, Ratehub.ca’s director of everyday banking.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
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