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Helpful Definitions Assets: refers to owned items, such as cash, stock, equipment, and real estate. Bond: a contract representing the terms of borrowing and repayment for a debt. Broker: a licensed person authorized to receive commissions. Brokers are always affiliated with a brokerage company, or broker-dealer. Brokers generally work for commissions. Diversification: refers to the number of securities held, and their types. Dividends: payments mabe by a corporation on earnings. In other words, part of the profits and income are shared with investors. Growth: refers to capital appreciation. Index: Indexes are numerical calculations, based on groups of similar investments, meant to convey the overall price level of a given market. Issue: A security made available to the public may be called an issue. Management: is a general term that refers to people who select the actual investments of a mutual fund. Mutual Fund: A broad term meaning an investment company, or trust, which is owned by investors and is subject to regulations as described in the Investment Company Act of 1940. No-Load: A general term applied to mutual funds that have no sales charges or commissions. Objective: the objective of a mutual fund tells what the chief goal of the fund is. Portfolio: a term denoting the overall collection of securities, or investments, owned by a person or company. Prospectus: a mutual fundıs offering memorandum. A small booklet that gives general information designed to disclose relevant facts that investors need to make an informed decision about investing in a given fund. Security: a document representing participation in an investment. Shares: units of ownership in a corporation. Stock: a type of investment security that represents ownership in a company. Trading: the buying and selling of investments, such as stocks and bonds, for a mutual fund. |
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It's that time of year again. Time to start thinking about doing your tax return. For most students that means come the end of March the government will be sending a check. For some, that check could be hundreds of dollars. Are you picturing all the gadgets and gizmos that you will buy with the extra money? Can you see you and your roommate deciding over a game on your new Foosball table who will do the bathroom cleanup? But wait. What about the future? Have you ever thought about investing some of that money -money you never counted on- in mutual funds or stocks and bonds? With the changing economy and the threat of the cutbacks to Old Age Security (OAS) and the Canada Pension Plan (CPP), many people are looking to the future with uncertainty and anxiety. Students graduating from university in the coming years will face a job market unlike the one of their parents generation. No longer will they be able to work at a job for thirty years, pay into a retirement plan, and retire comfortably at the age of fifty-five without giving a thought to the years ahead. The onus for funding retirement is now placed on the individual rather than the company. The term "life-long learning" means that the responsibility for your retirement is in your hands. Not only has the economy changed, but society is changing as well. In a recent book about financial survival, Graydon G. Watters says "In 1900 the average life expectancy for Canadian males was 49 years; for women 47 | years...By the year 2000 the average life expectancy for Canadian men will be about mid 70s, and for women early 80s." This means that the retirement you plan for might last as many as 20 or 30 years." The current situation makes it imperative that individuals start early and plan their retirement years so that they will be able to afford a standard of living equal to the one they had while they were working. Does this scare you? Are you not one of those fortunate enough to be getting a degree in business so the words "investment" and "mutual funds" send shivers of dread and confusion down your spine? Who do you go to for answers? Where do you begin? John Turtle, Professor of Administration at the University of Regina, believes that the first place a student should look when getting interested in investing is at the bookstore. "Most bookstores will have a section right now on RRSP's, just do a little bit of reading. After one starts reading and flipping through they will get a notion of what is good analysis." After you have done some reading and familiarized yourself with the terms and ideas of investing then it is time to think about talking to someone in a position to invest your money. Turtle stresses the importance of having a plan. "You want to find and build a portfolio that suits your needs. For example some people are willing to take more risks then others. If a person is | inclined to not want to take risks, they will be very unhappy with a portfolio that has a lot of risks in it. In most cases a somewhat balanced approach is best." The first step in planning for retirement is to make your money work for you and to pay yourself first. Paying yourself first means allocating 10% of your weekly take-home pay to your savings program. Have that 10% either directly taken off your pay check or taken out of your bank account at the beginning of each month. The concept behind this is that if you don't know the money was there then you won't miss it. Money that never reaches your hands is easier to part with, and this is one of the best ways to make your money work for you. But how does the University of Regina measure up? Have the students here started thinking about their golden years? Jason Toews, a computer science major at the University of Regina, is one student who has already started planning for retirement. "Yes, I do have some (mutual funds and RRSP's)." Toews is not alone, Rhonda Kawaleski, a Campion Arts student, has also started investing for retirement and plans to retire comfortably as a member of the middle class. The most important advantage that students have going for them when investing is time. By starting early, Toews and Kawaleski are making their money work for them in the most important way, by allowing it to grow over time. continued ... |