Helping the next generation learn about saving and investing is one of the best gifts parents and grandparents can give. By focusing on smart saving habits, low-cost investments and keeping a budget, they can set themselves up for success without taking big risks.
Dave Lee, CIM, CFP, FCSI, Senior Wealth Advisor at Scotia Wealth Management in White Rock, shares five easy tips to help young investors make the most of their money.
1. Start with a TFSA or FHSA
The Tax-Free Savings Account (TFSA) and First Home Savings Account (FHSA) are powerful tools for young investors. TFSAs allow savings to grow tax-free, providing returns through tax-free interest, dividends and capital gains.
“Instead of waiting to pass on your wealth through inheritance, consider helping your adult children maximize their own TFSAs now,” Dave says. “Once in a TFSA, that inheritance has the opportunity to grow tax-free, giving your family members an early ‘nest egg’ or ‘golden egg.’”
For those saving toward their first home, an FHSA combines tax-deductible contributions with tax-free withdrawals, making it an ideal choice for building a home-buying fund. Encourage young investors to start contributing regularly to these accounts to take advantage of tax-free growth and to establish strong saving habits.
2. Save first, worry about returns later
The best thing young investors can do is to get into the habit of saving regularly. Even small amounts can add up over time. For example, putting money into a TFSA or FHSA and choosing safe investments like GICs (Guaranteed Investment Certificates) or savings accounts can help their money grow steadily.
“In the early years the amount you save is more important than the returns you get,” Dave says. “The key is to save consistently and focus on building a strong foundation.”
3. Choose low-cost, diversified investments
Investing doesn’t have to be complicated. Young investors should stick with low-cost options that offer reliability and consistency. These types of investments spread money across many different assets, which lowers the risk and helps their money grow steadily over time.
“New investors should look for low-cost, high-quality and well diversified investments,” Dave explains. “They’re easy to manage and also work well for the long term.”
4. Spend less than you earn
Learning to live within your means is one of the most important parts of financial success. This means saving first and creating a budget based on what’s left. Encourage young investors to keep track of their income and spending and avoid the temptation to borrow and spend.
“A good budget is like a roadmap,” Dave says. “When you spend wisely, you’ll have more money to save and invest for the future.”
5. Learn as you go
It’s important for young investors to take the time to learn about saving and investing. Understanding how accounts like TFSAs and FHSAs work, as well as how to choose investments, will give them the confidence to make smart decisions.
“Knowledge is one of the best tools for success,” Dave says. “It helps young investors feel more secure about their choices and avoid common mistakes.”
Banks and financial institutions often offer free resources, including workshops and online guides, to help new investors get started.
“The first $5,000 or even $10,000 isn’t just about making money – it’s about building habits that will last a lifetime,” Dave adds. “By starting with a TFSA or FHSA, saving regularly and focusing on simple, low-cost investments, young investors can set themselves up for a secure and bright financial future. Small, smart choices today can lead to big rewards tomorrow.”
For more information, contact Senior Wealth Advisor, Dave Lee CIM, CFP, FCSI, at Scotia Wealth Management in White Rock by email at dave.lee@scotiawealth.com or by phone 604-535-4743.
Read more from Dave Lee online at www.dave-lee.ca/publications