Saving & Investing

Why Save?  To buy something in the future  To have emergency funds  To build up money to invest  To have options – school, work, travel, etc. “Stow your money”

Ways to Save 1.Reduce spending on ‘wants’ 2.Pay yourself first – every time you get paid, pay yourself 10% of your net pay!Pay yourself first 3.Do your research 4.Read all you can 5.Talk to Certified Financial Planners 6.DO IT NOW!  Savings account  GICs  Bonds  Stocks/mutual funds

What is Investing?  Buying assets which you believe will increase in value  Make your money WORK for you instead of YOU working for your money  Afford things you want in the future  Be able to chose what you want to do – have options! “Grow your money”

Pros & Cons of Saving/Investing ExamplesProsCons Saving Savings account GICs, Canada Savings bonds  Extremely safe  Money is guaranteed at chartered banks up to $100,000  Different liquidity options – may have easy access to money if required  Very low return  If interest rate is less than inflation rate money loses its purchasing power  Interest paid on savings accounts is the lowest rate paid on all types of investments Investin g Stocks, mutual funds, bonds, real estate and collectibles  Often results in a higher rate of return  Investments can grow at or exceed the inflation rate  Can make a lot of money  Returns are not guaranteed  Risk of losing part of or all the money you have invested

3 things to keep in mind: Rate of Return or ‘Yield’ How much you get back from an investment. This refers to the interest or dividends received from a security (usually expressed annually as a percentage). Liquidity The measure of how fast someone can convert their investment into cash. For example, cash is the most liquid, whereas bonds and GICs may not be cashable for 1 year (or longer). Risk The uncertainty in how much of an investment could be lost.

Inflation As time passes, and the costs of goods increase, a dollar will buy less than it did ONE year ago. For example, the inflation rate in Canada in October was 2.4%. If you put your money in a savings account that makes less than the inflation rate – you are essentially LOSING money. Bank of Canada inflation calculator

GICs, CSBs What type of Saver/Investor are YOU?Saver/Investor

Stock vs Stuff

Stock Vs Stuff