In the May edition of The Informed Investor, Rajan Bansi shares one of the most important determinants of investment growth.

When is the best time to plant a tree? 20 years ago, of course. But the second best time is right now. The spirit of this adage also applies to how we think about investing. The best time to start investing for your future was almost certainly some moment in the past. Given the past is not actually an option, we instead focus our efforts on how the best time to start investing, even better than tomorrow, is in fact right now.

Nearly a year ago we published an article on how the COVID-19 emergency was the moment more Canadians should establish an emergency fund. The primary tenet of our advice at that moment was that it represented the present and there is no time like the present to start investing. Those who were able to establish such a fund at the time and invest some of the proceeds with RBC InvestEase have likely seen their portfolio benefit from a rebound in global markets as the worst case economic scenario of the pandemic has this far been avoided. For those who were not able to begin their investment journey a year ago, or 20 years ago for that matter, we have good news nevertheless – there’s no better time to start your investing journey than right now. Getting started on your investment journey sooner rather than later (why not today?) also helps you to benefit from what we believe is one of the most important determinants of how large your portfolio will become over time – the amount of time your money is actually invested. It is time in the market, not timing the market, that investors should focus on in our opinion.

Speaking of planting seeds, we also wanted to take a moment and share how the Bank of Canada might act on interest rates at some point in the future according to our colleagues at RBC Economics. RBC Economics1 notes that the Bank of Canada upped its projection for growth in 2021 to a blistering 6.5% pace at its April policy meeting, which compares to a far lower 4% pace that was forecasted as recently as January. The significant upward adjustment to the central bank’s view on growth can be attributed to the unexpected resilience of the economy through the second wave of COVID-19 infections, stronger demand from the U.S, and higher commodity prices. The central bank also announced (PDF) a tapering of its asset purchase program, which was in place to keep longer term interest rates anchored, as it sees (PDF) the economy returning to full capacity by the end of 2022. A lot can happen to economic growth over the course of 18+ months at the best of times, let alone in the midst of a global pandemic, but for now it seems the Bank of Canada has planted the seeds for a potential rate hike by the end of 2022.

Predicting the movements of financial markets over the short term is extremely difficult and not how we approach investing at RBC InvestEase. Instead, we help Canadians get started on their investment journey by offering a diversified portfolio that’s suitable in light of their personal circumstances. Canadians who choose RBC InvestEase to help grow their investments benefit from having a proven investment approach that is backed by a licensed and professional team of portfolio advisors. We make it easy to start online from the comfort of your own home with no papers to sign. Why not start today?