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Helping You Feel More Informed and Confident About Investing

Rajan Bansi

Hi, I’m Rajan Bansi and I’m the head portfolio manager at RBC InvestEase. I spend a lot of time thinking about how we can empower you as an investor and help you reach your investment goals.

My team and I want to help improve financial literacy while also professionally managing your portfolios. To that end, here’s the first in a series of upcoming pieces I will share that I hope will help you feel more informed and confident about investing.

Here’s A Story About My Colleagues To Get Us Started:

Michael has procrastinated saving for his retirement, like many of us do. Today, at the tender age of 42, he has decided to open a retirement account at RBC InvestEase. Michael splurges with a $10,000 initial investment and a pre-authorized contribution (PAC) of $200 a month. At the same time, a much more diligent investor – let’s call her Rebecca – also opens an RBC InvestEase account at the age of just 25. Since she’s starting earlier in her life, resources are a little more constrained.

Rebecca opens her account with only a $1,000 initial investment and a monthly PAC of $100. Thus, both Rebecca’s initial investment and her PAC are notably lower than Michael’s…but, her time horizon is longer. Assuming all else is equal, and assuming a 5.5% annual return is earned in the “Balanced” profile:

  1. Who has more money at retirement, assuming both retire at the age of 65?
  2. How much more money does the “smarter” investor have?

The Breakdown:

Many people would probably guess that Rebecca’s investment approach is better, as they recognize the power of compound returns and steady contributions over a much longer time horizon, even if you don’t have much saved up to begin with. But, what’s also worth noting is the magnitude. Her portfolio would be more than 25% larger than Michael’s at retirement, which in this case amounts to nearly $40,000!

Here’s what that looks like:

Image of investment chart comparing investment for Michael and Rebecca. Rebecca started her investment at age 25 and Michael at 42. At the age of 65 Rebecca's compounded interest is $183,084.00,while Michael's is $145,854 Image of investment chart comparing investment for Michael and Rebecca. Rebecca started her investment at age 25 and Michael at 42. At the age of 65 Rebecca's compounded interest is $183,084.00,while Michael's is $145,854

So what does this mean to you? Simple. The earlier you start the better – be glad you’re on your way!

Rajan Bansi is the Head of Investment Advice and Head Portfolio Manager at RBC InvestEase. He oversees our team of Portfolio Advisors who are responsible for delivering expert investment advice to our clients and also chairs our in-house investment committee. A CFA charterholder, Rajan obtained his MBA from Pepperdine University (Los Angeles) in 2003 and earned an undergraduate degree in economics at the University of Toronto.

Before joining RBC InvestEase, Rajan Bansi was Head of North American Fixed Income Strategies and co-chair of the Global Portfolio Advisory Committee at RBC Dominion Securities. Rajan previously served as a Research Associate with RBC Capital Markets before joining RBC Dominion Securities in 2007. Prior to joining RBC, Rajan worked at a U.S. investment bank and in a product management role with a Canadian asset manager.

An active member of the community, Rajan currently serves on the board of the Toronto Public Library Foundation. Rajan was a recipient of the University of Toronto's Arbor Award in 2015 and Pepperdine University's Golden Torch Award in 2012 in recognition of his contributions to each university's respective community.

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At this time, RBC InvestEase is only available to residents of Alberta, Ontario and Saskatchewan who are 18 years old and over.

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By Rajan Bansi, Head of Investment Advice and Head Portfolio Manager, RBC InvestEase

July 2018

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This document was prepared by RBC InvestEase Inc. and is for your general information only and is not intended to provide legal, investment, financial, accounting or tax advice. The projected returns are for illustrative purposes only and do not represent the results of any RBC InvestEase Inc. client past, present of future and is not indicative of actual or potential market conditions If you require any such advice, you should retain the services of a competent professional. RBC InvestEase Inc. provides online discretionary investment management services and is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase.