Investing - Make The Boss Work For You
Investing - Make the boss work for YOU!
By Jackie Yim
Our parents have all told us the golden rule to saving money. “Put 10, 20, or even 50% of your paycheque in the bank”. Although that is sound, frugal, and conservative advice which will cushion you for a rainy day, at the end of the day, the people who are really making money are the bankers who reinvest your savings.
Did you know the S&P 500 (an index of the world’s 500 largest companies list on the NYSE and NASDAQ) had an 32.39% total return including dividends last year? That’s its largest return in more than a decade. Did you also know that for a small (brokerage) fee, you could have cashed in on that investment? Of course, in hindsight, that is easy to say. But it’s an example of why everybody keeps on saying “The rich get richer”.
The richest households in North America own most the stock in the stock market. Chances are that you invested a small amount in a mutual fund or have no skin in the game at all. While you let your savings account grow at 1-2% last year, the wealthy invested their money on an average return of 32.39%.
By opening your own direct investing account online, at a bank, or with a financial advisor, you could have turned your $10,000 last year to $13,390 instead of a measly $10,200. But of course, direct investing comes with risks. 2014 will not likely follow suit with another extraordinary return, and returns through investing in the stock market is never guaranteed.
Many of us cannot afford the premium services of a Portfolio Manager, but we can invest in mutual funds at your local bank. If you are a DIY type of person, you can simply invest in ETFs (exchange traded funds). ETFs mimic the returns of the market (depending on which ETFs you purchase), and is the most cost-effective way to get market returns without paying management fees of a mutual fund or the large down payment for a Portfolio Manager.
Let your money make you money in 2014. In a different perspective, let the big CEOs make you money this year. Quit complaining that the rich get richer and start getting rich with them.
About the Author:
Jackie Yim is a finance graduate of Simon Fraser University. He is also a candidate of the Chartered Financial Analyst designation. He has two years of working experience in the finance industry and well as investing in his own personal portfolio.