Scotia Investments

Financial Learning Centre

Scotia Investments Financial Learning Centre

Money Management Guide - Saving Towards Your Retirement

Taking steps to control your financial life can be a struggle at times, but this doesn't have to be the case. Some of us fail to stop and plan for retirement; others think it is far away and can afford to make the necessary savings nearer to the time. Unfortunately, many of us won't realize how unprepared we are for retirement until it is too late.

We don't know how much to save, how to build an investment portfolio, or how to take steps to making financial decisions that will provide us with the opportunity of enjoying years of retirement security and freedom. The longer we take to start, the harder it will be to achieve our goals. Whether you are 20 or 60, you must take steps now towards a better, more secure future.

Saving for retirement may be the biggest financial task of your life. If you are looking forward to a rewarding retirement, this is the time to put your finances in gear. You should take full advantage of the time you have, along with the savings options available.

Part of enjoying your retirement is having enough money to know that your needs and wants are covered. In planning for your retirement, your investment portfolio should have short–term and long-term investments, with a mixture of high-risk investment. Consider the following when saving towards retirement.

Step 1: Getting out of debt to student loan and utility bills

The first thing to do is to get out of debt. Don't even think about investing if you have colossal credit card debts. Paying of debts is one of the smartest investment moves you can make. Start by paying off the highest interest credit card bills. When they have been paid off, you will continue with your regular budgeted expenses on a monthly basis, mortgage payments, student loan & utility bills.

Step 2: Other important financial issues

Apart from saving for your retirement, you must also put in place your Life Insurance and a Will. These are not fun details, but are essential to your peace of mind and the future of those you love.

Step 3: What is it you really want?

Your goals need to be specific and clear. Do you want to retire with enough money to travel the world, or to send your children to college? Whatever it is, it is best to start as early as possible to achieve your goals with less pressure. Remember to match your goals to a realistic time period. "Rome wasn't't built in a day" and your future won't be either.

Step 4: Know your Risk Propensity

You want to take appropriate risks based on your comfort level, your time frame and the nature of your goals. If you have a short time before you will (or might) need the money, don't put it in high-risk securities. If you commit to a long-term plan, you'you'll be more prepared emotionally and financially to deal with a down market.

When the market is down, these is when most people panic and do foolish things with their money. Stay in for the long haul. Once you'you've made your choices, don't micro-manage your money. When you focus on the short term, you're apt to panic at temporary market dips and switch your money around, missing out on market rallies, and paying a lot of commissions in the process.

If you have chosen your investment allocation wisely, your investment portfolio should be able to keep going for years, with just periodic tune-ups. Once you are a long way off from retirement, you should take advantage of the down market and buy more stocks and be ahead once the market rebounds. One should also be aware of the fees or commissions because these costs can make a big difference in the long run.

Step 5: Diversify to increase your earnings

Don't put all your savings into one investment. Spread it out among several different investment options. If you allocate correctly, it means you have the right balance between stocks, bonds and fixed income investments. If you are diversified properly, poor performance of a portion of your investment won't damage the whole portfolio.

Step 6: Make a commitment and stick to it

Making a commitment each month towards your savings is important. For example, as soon as you receive your pay cheque, take out at least 10% and dedicate that amount to your savings. If it is that you cannot go as high as 10%, start at a percentage that is comfortable for you and build it up 1% at a time.

This is a sure way of starting to invest in your future. If you don't find it easy to save, the best thing to do is to get into an automatic investment program where your Human Resources Department arranges for a fixed amount to be deducted from your pay cheque monthly and invested. Another advantage is participating in the Pension Scheme within your company because the portion, which is invested in the pension fund, is taken out before tax.

Step 7: Financial advisor.

We encourage you to learn as much as you can. A little time spent learning basic financial strategies can go a long way toward making you more confident, and richer. But you might want expert personalized advice to help you whip your disorganized financial life into shape or to manage your money. Go ahead and call one of our financial advisors here at DB&G. We will sit with you and help you to achieve your financial goals.

It doesn't't matter whether you are still young or whether retirement is just around the corner. All that matters is that you start putting these steps into action. Careful planning, money management and saving will go a long way toward making your retirement years exquisite.