Did you know that a household that has used an advisor's services for more than 15 years generally has 173% more assets than a household that has not worked with and advisor1?
Compound interest
Let's take a look at Sarah, 25, and Anthony, 35, who are starting to save. The scenario below illustrates how early savings can be beneficial.
Even by contributing a smaller amount monthly, Sarah will have saved significantly more than Anthony by age 65.
|
|
Sarah |
Anthony |
|
Age |
25 |
35 |
|
Retirement |
65 |
65 |
|
$/month |
$100 |
$150 |
|
Rate of return |
5% |
5% |
|
Capital invested over the period |
$48,000 |
$54,000 |
|
Total capital at age 65 |
$153,238 |
$125,359 |
Suggesting a plan that evolves based on your clients' age, situation and objectives could make all the difference! This will help them minimize the impact of market fluctuations and inflation and maintain their desired lifestyle.
Systematic and a winning solution
During the pandemic, many people have realized that it's possible to save without feeling deprived. Systematic saving is a simple strategy that makes it possible to create an emergency fund (TFSA), an established retirement fund (RRSP), or pay for a child's post-secondary education (RESP). In addition, they can demonstrate autonomy thanks to the contribution tool, with which they can increase the amount of their contributions or schedule periodic contributions!
In Canada, before the crisis, the percentage of money people saved had a tendancy to be quite low, between 2% and 4%; however, today, we're seeing 10%. Why not try and maintain these habits with your clients?
1 Source: Investment Funds Institute of Canada
