Pro tips to invest better in 2022

No, this is not a get-rich-quick article.

Research shows that financial security and wealth are, for most people, created throughout their professional careers.

What sets the rich (over $ 1 million in invested assets, not counting real estate) apart from the crowd are two important factors.

First, rich people simply invest more in retirement than the average person – about 15 to 20 percent of their gross income for their entire career. They start this habit of investing as early as possible, which means they are simply living on less in order to fit that investment allowance into their budget. And they take advantage of all the corresponding programs through work.

You can do the same by reducing unnecessary expenses and automating your contributions so that they are paid the same day you get paid. If the job gives you free money, sign up for their savings program!

Second, financially independent people align their risk profile with their investments and adjust their risk exposure downward as they age. I teach my students the five point risk scale; one being low risk and five being high risk. It is essential to take an investor risk quiz at least every two years. Your score can be used to develop an appropriate investment strategy that matches your risk profile to investments that represent the same level of risk.

Now the key to managing risk in your investments is to make sure that you adjust your risk exposure as your risk score changes. Typically, this means less risk as you approach retirement.

Third, wealthy people keep their fees as low as possible (usually less than two percent) while monitoring their returns to make sure they are following the market.

Yes! You are going to have to pay fees for your investments. But the key is to avoid the double whammy situation where your costs are high and performance is low. You want the exact opposite. The rise of robo-advisers and low-cost ETFs is due to the fact that they respond to this situation of high-cost, low-performance scenarios.

The only way to know what your fees and performance are is to look closely. So open those statements. Note that if you are in the funds, you pay fees to your funds and possibly to your advisor as well.

Fourth, they take advantage of tax savings opportunities when they invest. Your tax-advantaged investment account options in Canada are RRSPs, TFSAs, and generally workplace retirement savings plans. Tax savings (now and in the future) can be used for other wealth-building activities such as buying real estate, investing in non-registered accounts, and clearing debt. debt. If you are not sure what tools you should use for investing, make an appointment with a financial advisor, financial advisor, or financial planner.

You can invest in any type of investment in your accounts – mutual funds, ETFs, stocks, bonds and more. You’ll just want to make sure that what you choose matches your risk tolerance and this is where your research into any investment before you buy can really pay off.

My top two tips to help you invest better in 2022 are not to do it alone and be patient. There are advisors, blogs, books, courses, and coaching that can help you be a great investor. I use all of these resources! Remember, building a strong investment portfolio will take time, so embrace learning as you go.