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On this board, you will be linked to resources that will give you an understanding of investing in stocks, bonds, and mutual funds. Benefits and risks will be explored.

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Video #1 - Four Canadian Stocks Everyone Should Own

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Video #1 - Four Canadian Stocks Everyone Should Own

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This video from JP investing gives an overview on four stocks he believes every Canadian investor should own for the long term. The four stocks are TD Bank, Canadian National Railway Company, Shopify, and Algonquin Power Corporation.

I included this video here because I like these stock picks. They provide a good mix of growth, value, and security for a portfolio.

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Top 4 Canadian Stocks Everyone Should Own | If I could ONLY Buy 4 Stocks… (Canadian Edition)

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Video #2 - What's the Difference Between Bonds and Stocks?

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Video #2 - What's the Difference Between Bonds and Stocks?

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This is a great video that compares stocks and bonds. The video is too good to not include on the board.

I included this video because its very clean and straight forward in its presentation.

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What's the Difference Between Bonds and Stocks?

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This is a good video that covers 10 major points for beginner investors in Canada. It touches on research and the use of the TFSA and RRSP accounts to shelter your investment gains from tax. It also brings up the point that Canadian investors should not be limiting themselves only to the Canadian market.

I included this video because its a very well made video with a lot of good information. My favourite point from the video is that in investing, learning never stops.

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Investing For Beginners In Canada (10 THINGS YOU NEED TO KNOW!!)

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This video goes into detail on the comparison between Mutual Funds and ETFs (Exchange Traded Funds) and the benefits and risks associated investing in each one.

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Mutual Funds & ETFs (Exchange-Traded Funds) EXPLAINED For Beginners

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Money under the mattress vs. savings vs. investing

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Money under the mattress vs. savings vs. investing

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This image is a brief visualization comparing the annual return on your money depending on what you choose to do with it. Investing in stocks and bonds will always yield a higher return than a savings account. However, this picture does not show the risks involved.

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MarketWatch is a stock market and investment website that provides insight on a wide variety of topics. Topics such as personal finance, retirement, and politics are all covered.

I included this website because I really like the layout of it and the plethora of knowledge and up-to-date market information it provides. It also includes a virtual stock market exchange game that you can compete against your friends in.

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MarketWatch provides the latest stock market, financial and business news. Get stock market quotes, personal finance advice, company news and more.

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The Motely Fool is a Canadian focused investment website. It is smaller in scope in terms of what it covers when compared to the other sites I have on the pallet board. I usually see new Fool articles pop on my phone daily related to stocks on the Canadian market.

I included it on the pallet board because I believe that it is a great learning and information resource. It can provide good ideas for stock investments, but that doesn't mean you should buy every stock that they write an article on.

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Free TSX share market investing advice and stock recommendations from one of the oldest and most trusted names in the business.

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Bloomberg is a very well known and respected entity in the stock market investment zeitgeist. Mike Bloomberg, the cofounder, is estimated to be the twentieth wealthiest person in the world. The website's scope is similar to MarketWatch with its breaking news and personal finance advice.

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BNN Bloomberg - Canadian Business News, TSX Today, interest rates and Bank of Canada coverage

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BNN Bloomberg is Canada's Business News Network reporting on interest rates, inflation and the markets.

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Investopedia is not a stock market news website. Much like the name implies, it is very much a Wikipedia for investing. It covers a wide variety of topics and can likely answer in detail any specific question you have about investing, not just in stocks and bonds, but real estate too.

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If you asked the average saver if it's safer to invest $100 in the stock market or to put $100 in a savings account, most would pick the savings account. This makes sense in the short term; stocks can lose value, but the Federal Deposit Insurance Corporation (FDIC) guarantees savings accounts.﻿﻿ However, the long-term answer is the exact opposite - it is much riskier to continue to sock money away into savings than it is to invest it. It is certainly possible to make money in stocks.

This is one situation where short-term rationality does not equate to long-term rationality. The $100 put into a savings account will earn a very low interest rate, and over time, it will likely lose value to inflation; a real loss in purchasing power is almost inevitable. The $100 invested into the stock market may have up days and down days, but the lesson from history is that stocks outperform virtually everything else over a period of several decades.﻿﻿ (Caveat: Needless to say, we are not talking about putting all your money in high-risk penny stocks or similarly risky investment vehicles.)

Compounding Returns

Monthly contributions really begin to make sense when you understand the concept of compounding. Compound returns act like a snowball rolling downhill; it begins small and slowly at first, but picks up size and momentum as time moves on.

The two key elements of compound returns are reinvestment of earnings and time. Stocks generate dividends that can be reinvested, and over time this acts as a self-feeding source of financial growth. At its core, compound investing is all about letting your interest generate more interest, which ends up generating even more interest down the road.

Suppose, for example, that a 30-year-old individual has $5,000 invested in equities earning 8% a year, which is a little below the historical average of 10%, as of January 2020. At the end of the first year, the investor's portfolio earned $400 in interest ($5,000 x 1.08). If the investor re-invests the interest, the same 8% growth will yield $432 in year two ($5,400 x 1.08). Year three will generate $466.56, year four generates $503.88 and so on. At age 35, the re-invested portfolio is worth $7,346.64, all without any additional non-interest contributions by the investor.

Follow this pattern for another 25 years, and the investment reaches $50,313.28. This represents more than a 10-fold increase, despite a lack of additional contributions.

Investing $100 Monthly: An Example

Now suppose the same 30-year-old investor finds a way to save an additional $100 per month. He contributes the extra $100 to his portfolio and keeps reinvesting his dividends and interest payments. His investment still earns 8% per year. For simplicity's sake, assume compounding takes place once per year in January.

After a 30-year period, thanks to compound returns and a small monthly contribution, his portfolio will grow to $186,253.14 (as compared to $50,313.28 without the monthly contributions). While $186,253.14 is not enough money to retire on, especially after 30 years of inflation, remember that this is just with $100 a month in contributions and returns below historical averages.

Suppose the annual return is 9%, which is closer to historical averages for a 30-year period. With a $5,000 principal investment and $100 monthly contributions, the portfolio grows to $229,907.44. If the investor is able to save $200 a month for contributions, the future value of his portfolio is $393,476.48.

Why Invest in Stocks?

Equities (such as stocks or mutual funds) are the best investment option for those who are decades from retirement. Stocks are more likely to lose value in the short term than bonds, certificates of deposit (CDs), or money market accounts, but they have been proved to be a better long-term value than any common alternative.﻿﻿

This is especially true in low-interest-rate environments. CDs, bonds, money market accounts, and savings accounts all yield less when rates are low. This often pushes savers to equities to beat inflation and bids up the price of stocks and other equity assets.

Research by Dr. Jeremy Siegel and John Bogle, the founder of Vanguard, looked back over a period of 196 years and compared the real returns of stocks, bonds, and gold. They found that if an investor had started around the year 1810 (the New York Stock Exchange was actually founded in 1817) and put $10,000 in gold, his inflation-adjusted portfolio would be worth just $26,000. The same investment in bonds would have grown to $8 million. However, had the investor picked stocks in 1810, he would have turned his $10,000 in $5.6 billion.﻿﻿

Stocks are still the big winner if you select a more realistic time frame; most investors have a 30- to 40-year horizon, not 200 years. Between January 1980 and January 2010, the average annualized growth rate of the S&P 500 was 8.15%. The Dow Jones averaged 8.81% over the same period, while the NASDAQ jumped 9.51% per year. Bond returns averaged less than 3% between 1980 and 2010. Inflation robbed cash of 62.2% of its purchasing power over those 30 years, meaning that $1,000 in a savings account in 1980 would only have a real value of $378 in 2010.

The 30-year period between 1985 and 2015 was even stronger. The S&P averaged 8.73%, the Dow Jones averaged 9.33%, and the NASDAQ averaged an impressive 10.34% per year.

Ways to Save $100 Each Month

The first step in investing $100 a month is to save $100. There are a number of simple steps the average person can take to cut costs; it doesn't require drastic lifestyle changes.

Shopping at warehouse stores (Costco and Sam's Club are two good options) for bulk items is a good idea. Bulk purchases cost less per item, so maybe make one trip to Costco each month rather than three or four trips to the local grocer. If you eat out a lot or buy your lunch every day, this is probably a better place to start.

If you need a little more discipline in your checking account activity, set up an automatic transfer each month from checking to savings. Savings are more difficult to dip into, and this could end up saving you a lot more than $100 a month by preventing frivolous purchases.

If you pay for utilities, you can save on air conditioning by opening a window or buying a small fan. The opposite is true in the winter when you can close your blinds or throw on a sweater to help avoid high energy bills.

Younger workers can save by going out on the town one or two fewer nights a month, which could save at least $50 to $150 a month. Homeowners can refinance their mortgage to lower their interest payments. Credit card users can sometimes save by just transferring their balance to a card with a lower interest rate.

If you don't think you can save $100 a month, try tracking all of your purchases for a month. This is a healthy financial habit that can help you find extra savings by limiting impulse spending.

The Bottom Line

Investing $100 a month adds up over time, especially with compound interest. Making small sacrifices every day to consistently add $100 to your stock investments every month will benefit you in the long run.

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Investing $100 a Month in Stocks for 30 Years

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If you asked the average saver if it's safer to invest $100 in the stock market or to put $100 in a savings account, most would pick the savings account.

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1. The thing that surprised me the most when researching this topic is the level of information that is so easily accessible on the internet now. It has never been easier to get started. Also, when talking to friends and family, I'm often surprised that many don't understand the benefits of the TFSA (Tax Free Savings Account) completely.

2. I have been interested in this topic since late 2019 when I first was put onto it by a coworker. I wasn't aware how accessible the markets were. Since then, trading stocks and investing has evolved into one of my favourite hobbies.

3. The most important point I would pass on to friends or family is to simply just get started if they haven't already. Some friends would have to be told to keep their expectations in check.