Regular investing is a strategy where you invest a fixed amount on a regular basis. Integrating this type of discipline into your investment approach ensures continuous investing regardless of market performance.
By investing regularly, you apply a “savings first” approach to managing your finances. Many investors find it easier to set aside a small amount on a regular basis rather than come up with a large, lump-sum investment.
Apply a savings-first approach to building wealth
A regular investment plan allows you to choose when and how often you make contributions to ensure that investing remains a priority throughout the year, not just during certain periods – like the yearly RRSP contribution deadline. Contributing regularly enables you to apply a disciplined savings approach to help successfully build wealth over time.
Investing regularly also allows you the opportunity to ease into any type of market (rising, falling or flat) and reduce long-term portfolio volatility. This is the case because regularly investing a fixed dollar amount gives you a chance to buy more investment units when prices are low and fewer units when prices are high, thereby potentially reducing the average cost of your investment over the long term.
Your Monthly Savings Can Really Add Up
| Number of Years Invested | Monthly Contribution Amount | |||
|---|---|---|---|---|
| $50 | $100 | $250 | $500 | |
| 5 | $3,489 | $6,977 | $17,443 | $34,885 |
| 10 | $8,194 | $16,388 | $40,967 | $81,940 |
| 15 | $14,541 | $29,082 | $72,705 | $145,409 |
| 20 | $23,102 | $46,204 | $115,510 | $231,020 |
| 25 | $34,650 | $69,299 | $173,249 | $346,497 |
Assumes a 6% Annualized rate of return.
Source: RBC Global Asset Management Inc.
The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund.
