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You’re Never Too Young to Plan and Invest for Retirement—Just Avoid These 6 Mistakes

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If you’ve got a few extra dollars in the bank, you’re not too young to start planning and investing for retirement. (OK, piggy banks don’t count.)

Knowing that it’s time to start planning and actually going about it the right way are two very different things, of course. Start by avoiding these six common, preventable money management mistakes.



  1. Believing You Can Do Everything Yourself

You can handle all your investing needs—perhaps—if you’re a licensed, professional money manager. If not? Do your research and select a trusted asset manager. Your older self will thank you.

  1. Slacking Off on Due Diligence

Whether you realize it yet or not, selecting a money manager is one of the most important things you’ll do before your 40th birthday. Your choice can quite literally make or break your retirement plans, so it’s absolutely not something to cut corners over. (Save that for the drive home.) Make sure any companies you consider have websites that clearly explains the who, what, where and when and offers finance-related educational resources. Examples are Fisher Investments Canada’s website doesn’t just tout its services, but also provides educational resources for its Canadian readers, and RBC Wealth Management, which offers market commentary and research insights.

  1. Thinking You’re Too Young to Get Started

This one is huge. Sure, the average young adult doesn’t have a lot in the bank: According to Money Sense, the average 35-year-old Canadian’s net worth is about $150,000. That figure is heavily skewed by home equity, which isn’t liquid. Many under-35 Canadians—perhaps most—have less than $100,000 in liquid assets to their name.

In the bad old days, investment managers passed over young people with sub-six-figure nest eggs. “Thanks, but call back when you’ve saved a bit more,” was the refrain. Investment managers need to eat too, so their reticence to serve under-capitalized investors was understandable. But the world has changed, and there are now plenty of opportunities for young people who wish to plan for retirement as soon as they’ve stopped living paycheck to paycheck (or even before). Today, “I’m too young to get started” is not a valid excuse.

  1. Failing to Get Ahead of Debt

Thanks to a far more equitable and well-managed higher education system, Canada has largely escaped the looming student debt crisis that threatens a generation of strivers in the States. Still, the average Canadian graduate’s debt load is too high for comfort: In late 2014, the Canadian Federation of Students put the figure at approximately $27,000, per the CBC. For students graduating into an unsteady economy, that’s a high hill to climb.

Student debt isn’t the only type of obligation that can hamstring young people, of course. Credit card debt is easy to rack up in a hurry, but it’s far harder to slough off when you’re barely earning enough to stay afloat. If you can avoid needless debt, you’ll find yourself far better positioned to grow your wealth and retire comfortably when you’re still spry enough to enjoy it.

  1. Focusing on Retirement Only

Retirement planning is important—perhaps the most important type of financial planning the average person can do. However, diligently dropping funds into a tax-favored retirement account isn’t the only way to grow wealth. Investing through a traditional after-tax brokerage account is a great way to diversify into assets that employer-sponsored retirement accounts de-emphasize or ignore altogether. If you have sufficient liquid assets and a greater tolerance for risk, you can look for other asset classes or opportunities—including rental real estate and early-stage equity—in close consultation with your financial adviser.

  1. Running Scared From the Stock Market

If you don’t have access to an employer-sponsored retirement plan, you might be inclined to simply drop your excess funds into a savings account and accept the meager, if predictable, return. Unfortunately, the miracle of compound interest breaks down when interest rates are super low. If you want to grow your wealth over time, stocks almost certainly have to be part of the equation.

What’s the biggest obstacle standing between you and your financial goals?