{{r.fundCode}} {{r.fundName}} {{r.series}} {{r.assetClass}}

You are currently viewing the Canadian website. You can change your location here.

Terms and conditions for Canada

Welcome to the new RBC iShares digital experience.

Find all things ETFs here: investment strategies, products, insights and more.

It’s not surprising that the world of investing can seem complex. Investors today face often-changing market conditions.  An endless supply of market news. And many, many investment choices.

On top of this, investors’ reactions to markets can lead to costly mistakes. In fact, over the past 20 years the gains of the average equity mutual fund investor have been 2.9% less than the average market return – mainly due to investor behaviour.*

So what guidelines can investors follow to achieve better results over time?

The principles of successful investing are quite simple. These five tried and true principles can help you build an effective long-term strategy designed to achieve your financial goals.

*Source: DALBAR’s Quantitative Analysis of Investor Behavior, 2019. Based on U.S. data. U.S. equity market is represented by the S&P 500 Total Return Index. Returns are for the period ending December 31, 2019. Average investor = Average large-cap U.S. equity mutual fund investor. Average equity investor performance results are calculated using data supplied by the Investment Company Institute. Investor returns are represented by the change in total mutual fund assets after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. After calculating investor returns in dollar terms, two percentages are calculated for the period examined: Total investor return rate and annualized investor return rate. Total return rate is determined by calculating the investor return dollars as a percentage of the net of the sales, redemptions and exchanges for each period.

Starting early is one of the best ways to build wealth. Investing for a longer period of time is widely considered more effective than waiting until you have a large amount of savings or cash flow to invest. This is due to the power of compounding.

Compounding is the snowball effect that occurs when the dollars you earn investing generate even more earnings. Essentially, you grow not only the original amount you invested, but also any accumulated interest, dividends and capital gains. The longer you are invested, the more time there is for your investment returns to compound.

Investing early can pay off over the long term

The "early" investor gets a head start, accumulating an additional $140,791 by age 60

The chart represents an “early” investor who invests $200 per month for 40 years and a “late” investor who invests $400 per month for 20 years. Both investors have invested a total of $96,000 by age 60.

Assumes a 5% annualized rate of return. Used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of any particular investment.

Source: RBC Global Asset Management Inc.

Investing often is just as important as starting early. This way, investing remains a priority for you throughout the year – not just around certain deadlines, like the yearly RRSP contribution deadline. Having a disciplined approach can help you build more wealth over time.

When you invest regularly, you can also ease into any type of market (rising, falling, flat). You don’t have to worry about trying to find the perfect time to invest. By simply investing a fixed dollar amount on a regular basis, you can buy more investment units when prices are low, and fewer units when prices are high. This can potentially reduce the average cost of your investment over the long term.

Investing small amounts of money on an ongoing basis can help smooth out returns over time and reduce overall portfolio volatility.

Your monthly savings can really add up
Number of years invested Monthly contribution amount
$50 $100 $250 $500
5 $3,400 $6,801 $17,002 $34,003
10 $7,764 $15,528 $38,821 $77,641
15 $13,364 $26,729 $66,822 $133,644
20 $20,552 $41,103 $102,758 $205,517
25 $29,775 $59,551 $148,877 $297,755

Assumes a 5% annualized rate of return. Used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of any particular investment.

Source: RBC Global Asset Management Inc.

Achieving your long-term financial goals begins with saving enough today. Saving for a major goal like a house, post-secondary education or retirement requires significant thought and decision making. It is vital to know how much you need to begin saving today to have a large enough investment portfolio for your future goals.

In general, the more you save today, the less you will need to save in the future to achieve the same goal as someone who invests over a shorter period of time. Your current income is a useful starting point for calculating certain long-term goals, like your retirement savings needs. The more you make today, the more savings you will likely need to fund your lifestyle in retirement.

What is your goal (e.g. retirement lifestyle, cottage)?

What is the time horizon required to reach your goal?

How much will you need to attain your goal?

What savings do you currently have in place to meet your goal?

When it comes to investing, one of the easiest ways to manage risk and improve your probability of success is to have a variety of investments. You can diversify your portfolio across different asset classes, geographical markets and industries. Why is this so important?

Different financial markets do not move in the same way at the same time. At various points in the market cycle, different types of investments or asset classes – such as cash, fixed income and equities – will lead or lag. They may respond differently to changes in environmental factors: inflation, the outlook for corporate earnings, and changes in interest rates for example.  

When you diversify, you are better positioned to tap into opportunities across different investments as they emerge. This tends to create a smoother investment experience. How? Investments that increase in value can balance out those that are not performing as well.

A strong case for diversifying your investment portfolio

{{ year }}
{{ quiltTranslateMap[yearData[y][k].key] }}
{{ formatCurrency(yearData[y][k].value, 'en', 1, '%') }}
Equities
{{ col.title }}
{{ col.subtitle }}
{{ name }}
Fixed income
{{ col.title }}
{{ col.subtitle }}
{{ name }}
{{ col.title }}
{{ col.subtitle }}
{{ name }}
.halfOpacity { opacity: 0.3; font-weight: normal; } .yearHeaders { border: 2px solid white; background-color: #002750; } .yearHeaders:hover { background-color: #0051a5; } .quilt-tile, .yearHeaders { transition: 0.15s; }

Balanced Portfolio represented by 2% Cash, 43% Fixed Income, 19% Canadian Equities, 20% U.S. Equities, 12% International Equities and 4% Emerging Market Equities. All performance is in C$. Source: RBC Global Asset Management Inc. as of December 31, 2019.

When markets turn choppy, even experienced investors can become too focused on short-term movements. This can lead to hasty decisions, especially trying to time the markets. For example, investors see markets rise and jump in – buying high. Or, they see markets fall, lose confidence and sell at a loss. The key to avoid making rushed investment decisions is to maintain perspective and focus on the long term.

With a well-structured plan in place, you can confidently stay committed to it. And you’ll know that day-to-day market fluctuations are likely to have little impact on your longer-term objectives, or on the investment strategy designed to get you there.

Remember: there will always be events that affect equity markets in the short term. But over the long term, markets have historically moved ahead.

crisis opportunity chart en

The growth of $10,000 since January 2000. An investment cannot be made directly in an index. Graph does not reflect transaction costs, investment management fees or taxes. If such costs and fees were reflected, returns would be lower. Past performance is not a guarantee of future results. Performance data as of December 31, 2019.

Source: RBC Global Asset Management Inc.

Is well positioned for the long term

Successfully navigates temporary periods of market volatility

Takes advantage of opportunities as market conditions evolve

Thinking about how to save or invest your money? Your advisor can help you put these investment principles into practice and keep you focused on your long-term plan.

Ready to get started? Invest now.

† The rate of return or mathematical table shown is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund.

Disclosure

This has been provided by RBC Global Asset Management Inc. (RBC GAM) and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. RBC GAM takes reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when provided. Information obtained from third parties is believed to be reliable but RBC GAM and its affiliates assume no responsibility for any errors or omissions or for any loss or damage suffered. RBC GAM reserves the right at any time and without notice to change, amend or cease publication of the information.

Please consult your advisor and read the prospectus or Fund Facts document before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. RBC Funds are offered by RBC Global Asset Management and distributed through authorized dealers. Five principles on how to invest your money successfully

Five tips on how to successfully invest your money