I realize that sometimes thinking about retirement is hard… it’s so far off in the distance that it’s easy to forget about it and push it under the rug. But if you start doing a little bit of leg work now, you will set yourself up for success in the future. Not to mention doing a little bit of work now means that you get go on autopilot for a while with your savings.
The first and most important thing to do is set up an automatic transfer to your retirement account. If you have the option to invest in a tax deferred or registered account you should prioritize investing in this before an unregistered account. Once you decide on an amount you want to contribute each month, set up that transaction to automatically deduct from your account. It doesn’t matter how large or small your contribution is, just as long as you start contributing soon!
The next thing to do is determine your risk tolerance, and how much you should be investing in fixed income versus equities. A good rule of thumb is to invest your age in fixed income and 100 minus your age in equities.
If you’re 32, then 32% of your retirement portfolio belongs in fixed, non-volatile investments and the other 68% should be invested in equities. Make sure you aren’t just investing in in one countries equity. If you live in Canada, like I do, then make sure you are investing in international stocks and mutual funds, as well as ones in your own country.
Now that you’ve invested in some equities it’s time to take a long term mindset. Remember that these stocks, bonds, ETFs and whatever else is in your portfolio is invested for the long term. Check back on your portfolio every once and a while, but don’t obsess about it every day or week.
Over the course of saving for your retirement you should continually add to your holdings. Purchase new stocks that further diversify your portfolio and check back every 6 months to a year to make sure the companies you are invested in still align with your values, and are still performing in your portfolio.
The stock market is volatile, and it’ll go up and it will go down. When things appear to be taking a turn for the worse, just remember to take a moment to breathe and remember that the general trend of the stock market is upwards. If you are invested in solid companies for the long haul you will be just fine. Patience is a virtue when it comes to investing, slow and steady will always win the race!