Sarah is in her twenties, and she’s more concerned about focusing on her career than planning for retirement. She eventually wants to buy her first home and travel, but as soon as she deposits a paycheque it seems like it’s all gone. Despite this, Sarah’s age makes her an ideal investor.

Investing suggestions for Sarah

Who has enough disposable income to make investing worthwhile? Sarah does. Many people mistakenly believe if they don’t have enough money to invest now, it’s better to contribute more later. Yet one of the best ways to build wealth for the future is to invest now, even if it’s only $50 a month. Sarah should make the power of compound interest work for her by investing early.

RRSPs and compound interest

Starting at age 25, Sarah invests $100 every month in her RRSP for 30 years, a sum she barely notices. Sam, however, waits until he’s 35 before he begins investing his $100 per month. Both Sarah’s and Sam’s investments yield an 8% annual return, compounded monthly. See how each end up on the chart.

By starting 10 years sooner, Sarah’s investment is worth $333,012, while Sam comes away with only $150,030.

Sarah should consider a Co-operators Very Aggressive or Aggressive Portfolio for her RRSP as she will not be seeing the gains for many years to come and even a large market dip will seem quite small in her overall investment picture.

Socially Responsible Investments (SRIs)

Sarah has always been interested in environmental and social concerns. Sarah can apply these social values to her RRSP or TFSA by choosing one of our Socially Responsible Portfolio Funds. Sarah can make a difference as an individual with this one small action that will not only build her financial future, but put her money to work for the planet. 

Tax-Free Savings Account (TFSA)

While Sarah can take out money from her RRSP to buy her first home, a Tax-Free Savings Account can help her put some furniture in it, pay for a wedding, or take that dream vacation to Europe. She can save up to $5,500 (indexed annually) a year without any tax penalties, meaning that if her Versatile Portfolios™ TFSA realizes any dividends, interest income or capital appreciation, she is sheltered from paying any tax on the earnings within the TFSA account.

Best of all, Sarah can start her TFSA for as little as $50 a month. Her dreams are closer than she thinks.

Samina and Colin are in their late thirties, have been together for a few years, and have just bought their first house. They’re thinking about starting a family and are looking at merging their bank accounts. When it comes to their investments, they aren’t sure if they should be merging them or not.

Investments Samina and Colin need

If you are in a committed relationship, you should be considering how your finances tie together. You’ll want to keep your individual RRSPs and TFSAs in place, but see what you can do for each other to collectively take advantage of the tax benefits. If your partner doesn’t yet have RRSPs or TFSAs, there is no time like right now for them to start.

Spousal RRSP

RRSPs aren’t just a great way to save for retirement. They can also be used to reduce taxes for the higher-income earning spouse throughout the relationship. The funds must stay in the RRSP for three years for any withdrawals to be taxed in the hands of the lower-income earning spouse. Your contributions to a spousal RRSP are deducted from your own contribution limit, meaning you are able to put less into your own RRSP if you choose to do this.

Setting up or contributing to a spousal RRSP is a fabulous way to realize instant tax savings. The RRSP holder can also use the funds from the RRSP to buy their first home or to go back to school under the Lifelong Learning Plan.

Tax-Free Savings Account (TFSA)

Samina and Colin want a family, which can be a pricey proposition these days with things like car seats, strollers and many other baby accessories. TFSA accounts can help them save up for their bundle of joy tax free. If they use our Versatile Portfolios™ to grow their TFSAs, they’ll get more mileage out of their money than if they just let it sit in a bank account.

Stefanie and Ryan have a young son named David and a baby girl on the way. When they aren’t working, they’re busy running after David or preparing for the baby’s arrival. When they actually have time to think about things like investments, they usually think about setting up an RESP for their kids, and they know it’s a good idea. But how will they find the time or the money?

Investments for Stefanie and Ryan

Registered Education Savings Plans

Stefanie and Ryan don’t have to take the time to figure out their investments, because their Co-operators Financial Advisor will be happy to do it for them. All it takes is one phone call and some paperwork to get their kids set up with RESPs.

Because their kids won’t be using the funds for at least 12 years, they choose a Co-operators Aggressive or Very Aggressive Portfolio RESP. This will give them maximum growth, and they can dial it down to a Conservative plan as each child’s post-secondary education draws closer. With segregated funds, 75% of their capital is protected when the fund reaches its maturity at ten years, so their money is safe and well invested.

Keep up TFSA and RRSP contributions

Stefanie and Ryan have a lot of expenses right now, but they should still keep up contributions to TFSAs and RRSPs. Even if they can put in $50 a month, they’re still contributing to their retirement and saving for their dreams.

Jody and Frank have been saving solidly for years in both TFSAs and RRSPs, and are on target with their investments and savings. However, they are mostly invested in mutual funds, and they are starting to get a little nervous about their retirement money being tied up in the markets after the difficulties of the last few years.

Investments Jody and Frank need

Jody and Frank will want to look at moving some of their investment portfolio to the safety of segregated funds, which only an insurance company can offer. Because they deposited before they were 75, Jody and Frank’s principal investment is up to 100% guaranteed at maturity, meaning that after a minimum of ten years, they can mature the policy and take out 100% of what they initially put in.

If they put in $1000 in 2009, when the policy matures in 2019, they will be paid out $1000 reduced for any withdrawals, even if the fund(s) is only worth $500.

If there is a drop in the market, Jody and Frank are protected. All they have to do is pick which of our Co-operators Portfolios fit their investment profile, and they can take out RRSPs and TFSA accounts with the appropriate portfolio.

If they have already invested in Co-operators Portfolios, they’ll want to re-examine their risk levels to make sure they still apply, and look at increasing their contributions if they can. A dollar now can potentially turn into three at retirement.

Lucy has had a number of expenses over her lifetime that have kept her from starting an RRSP, including starting her own business and being a single mom. As retirement age approaches, Lucy is wondering if she’s going to have to run her business well into retirement to pay her bills. Like most of us, she’d rather slow it down in her golden years. How can she realize her goals if she’s starting so late?

Investments Lucy needs

While Lucy can get there, she will need to commit to putting aside a significant amount of her income per month. To find out how much that is, Lucy will need to identify potential retirement objectives. Does she want to maintain her current standard of living. learn a new skill, or travel?. Once that’s established, she’ll know how much she needs to save.

Lucy will have to look at her current expenses, determine how much she can trim off her budget, and invest the extra, or look at how she can grow her income in the short term so that she can invest. 

She should invest as aggressively as her risk tolerance will allow, but not carelessly.

Most experts agree that she should save at least 10% of her income should be saved with a portion of that held aside for emergencies. She should max out her Tax-Free Savings Account (TFSA) and RRSPs so she can benefit from their tax advantages 

Segregated funds are the perfect answer for Lucy, as they allow her to invest aggressively while protecting her capital. With either a Versatile Portfolios™ RRSP or a Versatile Portfolios™ TFSA, her savings will be protected and have excellent growth potential.

Marcia and Don are about to retire. It’s an exciting time, but the decisions they make now as to what to do with their money are very important. They are seeking the advice of their expert local Co-operators Financial Advisor to make sure they get it right.

Investments Marcia and Don need

Marcia and Don have come to the right place, whether they are invested in our Co-operators Portfolios or are coming to us for the protection on capital that only segregated funds sold by an insurance company can offer. We have multiple options for retirement income for them to choose from, and local advisors that are going to take the time to make sure they’re well taken care of at retirement.

Annuities

If you’ve got a good nest egg built up for retirement, it makes sense to roll some of your money into an annuity. An annuity sets you up with an income, usually monthly, that can replace your paycheque.

RRIFs and Retirement income plans

RRIFs are a simple way to keep the bulk of your money invested so that you are still earning investment gains while drawing an income in retirement. Other income plans we offer do the same thing, just in different ways. Whichever method you choose, your principal investment is guaranteed, reduced for any withdrawals, up to 100% after a ten-year maturity period, and 100% at death from day one, if your funds are deposited before age 75.