Published December 4, 2023 • 4 Min Read
How many times have you started shopping for someone else – perhaps for the holidays, a friend’s birthday or another special occasion – and while you’re at it, picked up a little something for yourself as well? Guilty!
While we all deserve to treat ourselves every now and then, those unplanned or impulse gifts can bite into our budgets and often don’t provide the long-term gratification we hope for.
However, there is one gift you can give yourself that can bring you a whole lot of satisfaction, and dare we say, even joy: Investing! Sure, it may not sound as exciting as a [insert last impulse purchase here], but stick with us for a minute. Here are five reasons investing is one of the best gifts you can give yourself.
1) Get your money working for you
You work hard for your money, so it should be working just as hard for you, right? Ultimately, that’s the basic principle of investing. It’s like taking your savings game to the next level – so your money can grow over time. The terms saving and investing are often used interchangeably, and while both involve setting money aside for the future, the goal of investing your money is to create greater returns than saving alone. For many, savings are focused on short-term goals (think emergency fund or that concert ticket), while investing is focused on longer-term goals (think retirement or education savings). Over the long term, investing can mean your money is working hard for you…so that eventually you don’t have to!
2) Stay ahead of inflation
Inflation is top of mind for everyone these days. When the rate of inflation is higher than the interest rate you’re earning in your savings account, your money could be losing value over time. While all investing comes with some risk, investing over the long term offers an opportunity to beat inflation, so that your money can be worth more in the future than it is today. Inflation can affect some asset classes more than others, so when inflation rises and market conditions change, it’s important to closely monitor the asset mix of your portfolio. Find out more in How Inflation Works and What Investors Need to Know
3) Set yourself up for success
Whether you’re saving for a home, trying to hit your first $100,000 or looking ahead to retirement, investing could help get you there. And the sooner you get started, the sooner you can take advantage of one of investing’s most powerful forces: compounding. Ultimately, that means that when the interest you earn on your initial investment gets added to your total investment, you start earning interest on your earned interest. The longer you have to invest, the more money you can make. Even small amounts, such as $25, $50 or $100 invested regularly each month, can multiply exponentially over time if left to grow and compound. When allowed to do its work over several decades, compounding can be an exceptionally powerful tool for building wealth. Find out more in Compound Interest: How It Works and Why It’s Amazing.
4) Save on taxes
There are a variety of account types that you can use to hold your investments — each with their own features, benefits and tax considerations. When you choose a registered account for your investments, you can take advantage of features such as tax deferral or tax-sheltered growth, and depending on the account, sometimes both. Learn more in Can Registered Accounts Help You Save on Taxes? Yes! Here’s how.
5) Impress your future self
Investing can be the gift that keeps on giving, and when it’s time to reap the rewards of your efforts today, your future self will thank you. Whether it’s that much-anticipated family vacation, living the life you want in retirement, helping your kids through post-secondary education or leaving a legacy for your loved ones, investing can play an important role in getting you there.
There are many accounts and products that can help grow your money. Learn about them at rbc.com/investments.
Mutual funds are sold by Royal Mutual Funds Inc. (RMFI). Guaranteed investment certificates and RBC Investment Savings Accounts are offered through Royal Bank of Canada and may be held in RMFI investment accounts where RMFI holds the asset in its name, as nominee. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
Investment advice is provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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