Interest rates are down, is it time to invest?

Q. The economy has been a very popular subject in recent months and that has me paying more attention to things like interest rates.

I hear that interest rates are at their lowest level in a long time and I am wondering, as a new investor with long-term goals, how I can take advantage of this? What kind of opportunities does this open up for me?

— Jenny C

A. Since you are a new investor with long-term goals, taking advantage of the current market has to be a well-thought-out and properly planned process.

Investments in the current equity market are considered to be on sale. This does not mean that it is a good idea to go out and purchase any and every type of investment, because the prices are low.

A well-thought-out investment plan is important. If your investment knowledge is great, then you are in a good position to make investment decisions that could be beneficial.

Should your knowledge be limited, a qualified investment advisor should be consulted to help you navigate this current investment jungle.

Your question as to whether it is a good time to invest is a very good one. I would say that the best time to invest is always now.

The three things you should know about investing for the long term is to invest early, invest regularly and to stay invested. How, why and what you invest in, is important and will determine if your decision is a good one.

Consider the current market as one that has its products on sale. Purchasing items on sale provides great opportunity for future gains.

Timing is always important. If the product is good but the timing is bad, it is a bad decision and vice versa — if the time is bad and the product is good, it is also bad decision.

Interest income is only one source investment return. Interest is received from income products such as bonds, guaranteed investment certificates, and high-interest accounts and other similar accounts.

Low interest rates are of more benefit for the borrowing consumers. This does not mean that you should not invest in products that give interest as a return because having a well diversified portfolio is very important.

The diversified portfolio comprises cash, income, and equity investments. The amount that should be invested in each of the classes will depend to a great extent on the level of risk you are willing to assume, based on your investment risk tolerance, and for how long you are willing to invest.

My advice is to visit your local bank and speak to a financial advisor who is well qualified to provide you with the right information to make an informed decision in this current market.

– Chris Alexander, MBA, BBM, PFP, FICB

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