When it comes down to it there really are two fundamental types of investments: One type of investment helps you build your money to help achieve your goals. You know what your goals are – common goals many people have include saving for retirement, educating your child, buying a home or furniture, or taking a vacation. Financial companies like Sun Life Financial offer a huge range of investment "products" to help you build your money.
The other type is designed to return your money to you efficiently. Whether you've saved for retirement or a shorter-term goal, there are financial products designed to return your money in a way that helps you achieve your goal.
Segregated funds are very similar to mutual funds. Money is invested in stocks, bonds, or other securities with the goal of increasing its value. The main difference is segregated funds are structured as insurance contracts and therefore offer some benefits that mutual funds do not.
Dollar cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the share price. It's a good way to develop a disciplined investing habit, be more efficient in how you invest and potentially lower your stress level—as well as your costs.
Let's say you invest $100 every month. When the market is up, your $100 will buy fewer shares, but when the market is down, your money will buy more. Over time, this strategy could lower your average cost per share—compared to what you would have paid if you'd bought all your shares at once when they were more expensive than the average.
An RRSP – Registered Retirement Savings Plan – is a savings plan that you can contribute to over the course of your working life. When you retire, you can convert your account to a Registered Retirement Income Fund (RRIF) and withdraw an income.
In the meantime, you can treat your RRSP like a regular savings account by simply depositing the money and leaving it untouched (until retirement). Or, you have the option to invest your money in common RRSP investment vehicles, like segregated funds, mutual funds, and more
A Tax-Free Savings Account (TFSA) is a registered tax-advantaged savings account that can help you earn money, tax-free.
You can think of a TFSA like a basket, where you can hold qualified investments, that may generate interest, capital gains, and dividends, tax-free.
Whether you're saving for your dream wedding, a rainy day, your first home, or an extended vacation, a TFSA can help you reach your goals sooner.