Anokhi Buzz / Key Investment Tips For The Single Parent

Key Investment Tips For The Single Parent

Anokhi Buzz Jul 12, 2017

If you have a single-parent household, you’re likely to face unique investment challenges. Kunjal Mehta from Edward Jones breaks down each challenge with his key investment tips for the single parent. 

When it comes to investing, single parents face unique challenges. While they have many of the same goals as two-parent families — such as providing for their children’s education and their own retirement — single parents’ financial lives can be more difficult. In many cases, single-parent families have lower incomes than families with two working parents.

However, that difference doesn’t mean single parents don’t have suitable options to meet their financial goals. The right financial and investment strategies can help ensure a brighter future.

Investment Tips For The Single Parent
Investment Tips For The Single Parent: There are unique challenges to overcome when planning for your family’s future. Photo Credit: 99.co

Set Goals! 

It all begins with an investment plan. Setting goals and putting into place a strategy to reach them will give a single parent a good chance of meeting current and future financial needs. Saving and investing even a moderate amount at regular intervals can make a big difference.

For a single parent, time and discipline are valuable investment assets. The best time to start investing is now. Don’t be intimidated by how little you might have to invest! Any amount is better than nothing. Make a plan to invest regularly, and stick to it.

Investment Tips For The Single Parent
Investment Tips For The Single Parent: It’s important to set goals for your child and for yourself. Photo Credit: BrainDirector

Take the example of a 35-year-old single parent with a six-year-old daughter. The parent hopes their daughter will begin university or college at age 18, and they want to make a substantial contribution to her education.

If they invest just $100 a month and their portfolio earns an average annual return of 7%, those investments will be worth more than $21,000 by the time their daughter enters a post-secondary institution. That investment won’t cover all the daughter’s expenses, but it will be a big help.

Sure, Your Child’s Future Is Important — But Don’t Forget About Your Financial Future

This advice doesn’t mean the parent should ignore their own financial future. In fact, one of the biggest mistakes single parents make is putting their children’s future before their own. Many single parents delay investing for retirement, waiting for “the perfect time” to invest. This time is usually a landmark event, such as paying off the mortgage or when the children leave home.

Invest In Yourself Now 

If the 35-year-old parent in our example waits until their daughter enters college to begin investing $100 a month in a Registered Retirement Savings Plan (RRSP) earning 7% annually or a similar government-issued savings plan, they’ll accumulate almost $41,000 by the time they turn 65. If they start investing $100 a month at age 35, they’ll accumulate over $113,000. Plus, the parent will have more years of RRSP tax deductions (or other similar tax deductions, depending on the specific savings plan) and potential income tax savings.

Investment Tips For The Single Parent
Investment Tips For The Single Parent: Always smart to start planning your future now. Photo Credit: NEA Member Benefits

Remember, There’s Always A Solution 

This single parent would be better off putting money toward their daughter’s education and their own financial future at the same time. The daughter can always supplement education savings by working during her school years or taking out a student loan. On the other hand, the parent’s options will be limited by the time they reach retirement.

If you’re a single parent and you’re not sure where to start with your investment plan, seek help from an investment professional. With professional assistance, you can set realistic objectives, explore how much risk you can afford to take when investing and get started on a strategy that will help you reach your goals.

Speak with your financial advisor to create a long-term strategy that can help meet your needs today and into the future.

Reported by: Kunjal Mehta, Financial Advisor – Edward Jones Investments. 3621 Hwy 7 East, Markham ON, L3R0G6. Office: (905)947-1165, Mobile: (647)388-1391. [email protected]

Edward Jones, Member Canadian Investor Protection Fund.

* Insurance and annuities are offered by Edward Jones Insurance Agency (except in Quebec). In Quebec, insurance and annuities are offered by Edward Jones Insurance Agency (Quebec), Inc.

 Kunjal Mehta  is a GTA-based Financial Advisor serving the Province of Ontario in partnership with Edward Jones Investments. His vision for his practice is to help clients achieve their financial goals utilizing his skill and knowledge that have been developed over the course of a 10-year career in the Financial Services Industry and Capital Markets Trading.

 

Hina P. Ansari

Hina P. Ansari

Author

Hina P. Ansari is a graduate from The University of Western Ontario (London, Ontario). Since then she has carved a successful career in Canada's national fashion-publishing world as the Entertainment/Photo Editor at FLARE Magazine, Canada's national fashion magazine. She was the first South Asian in...

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