In February, I wrote about my attempts to learn about finance and investing. Two months later, and I’ve taken the first steps towards securing my financial future — I set up a savings account with automatic deposits from my paycheques, and on the advice of a colleague, got myself a practice investing account.
Maybe it’s my mother’s frequent talks about how “I know you’re only 24 and it seems like you have all the time in the world, but you really need to save for retirement,” or just the climate of working at a business magazine, or possibly the growing suspicion that Canada’s Old Age Security program is going to be in no position to help me out 41 — I mean, 43 — years from now. But I’m determined not to end up like some of the Baby Boomers I know, who have nothing saved and no idea what they’re going to do aside from just working forever. That means I need to make some kind of a plan — and right now, the plan mostly consists of learning.
Royal Bank Direct Investing offers free practice accounts that mirror the real thing, with “for educational purposes only” disclaimers on every page. There are also a plethora of stock market simulators on the net – Investopedia’s simulator is one of the most popular. Most of these programs give new investors $100,000 in fake money to invest with, using real-time data to track how well you’re doing.
Since opening my account early last week, I’ve lost $10.95 on the 10 ETF shares I bought as a trial run to see how ordering worked — and that’s both what makes practice accounts so great and what makes them slightly less effective than the real deal. It’s not real money, and I have another $99,800 in my account just waiting to be invested. And should I somehow lose everything, I can simply open a new account with another $100,000 in it. It’s completely risk-free, so it doesn’t provide me with an idea of how well I keep my cool while investing. There’s not the same emotional reaction as there would be if I were investing my own hard-earned money.
That said, it’s a good way to get acquainted with how the system works, and provides an opportunity to make mistakes without losing the nest-egg I’m trying to build. When my savings grow enough — my shiny new savings account currently has a balance of $0.00 — I’ll hopefully have the confidence to start putting money in the real markets.
