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Investing regularly: The power of a pre-authorized contribution plan

A woman working by herself in a garage.

A pre-authorized what? A pre-authorized contribution plan (PAC) is an easy and effective way to save and invest regularly. 

With a PAC, you can automatically direct funds from your chequing or savings account into your MD Financial Management investment account on a regular schedule. You decide on both the dollar amount and the frequency — weekly, biweekly, monthly, etc. We’ll take care of the rest.

Build good habits

We can help you identify your vision for the future and set goals to achieve that vision. From there, it’s up to you to start saving and investing regularly, a habit we all want to develop. But we get it: sometimes life just gets in the way. A PAC, though, can help you stick to your financial plan. That’s because with automatic contributions, you never have to remember to contribute. Never miss the deadline for RRSP contributions again, for example.

Boost growth

It’s never too early to start investing, even if your financial goal is a long way off. A PAC can help you invest early and invest often. Regular investing over a long time period can produce dramatic results through compound growth.

30-year growth of a $5,000 initial investment plus $100 monthly contributions 

Assumptions: 6% annual growth (long-term expected return of a typical balanced-growth portfolio) compounded monthly.

Everyone’s circumstances are different, so create your own personalized example using the MD compound growth calculator.

Achieve your goals

With the automatic contributions of a PAC, you are paying yourself first — in other words, giving your financial goals top priority. What’s more, a PAC can help you maximize the tax-free or tax-deferred growth in certain account types. Invest toward your financial goals through pre-authorized contributions to your tax-free savings account, your registered retirement savings plan, a child’s registered education savings plan or your non-registered investment account. We can help you decide what makes sense for your specific needs.

Stay focused

PACs are a great way to save and invest because, once you’ve set up automatic contributions, you can stay focused on your financial goals rather than the latest ups-and-downs of the market. You can automatically take advantage of investment opportunities and avoid making decisions based on market headlines and emotions. Timing the markets is extremely difficult and getting it wrong can impact long-term results. When you invest regularly over time, the ups and downs of share prices average out — and you can smooth out the investment experience.

Invest your way

With the help of an MD Advisor*, you decide what makes sense. How much you contribute through a PAC and how often really depends on your current financial situation, your short-, mid- and long-term goals, and the type of investments that you hold. We’re confident that we can set up something that’s right for you. Just remember that you can adjust your PAC at any time, quickly and conveniently.

For more information about pre-authorized contribution plans or to get started, please contact your MD Advisor.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec).

Banking and credit products and services are offered by The Bank of Nova Scotia “Scotiabank”. Credit and lending products are subject to credit approval by Scotiabank.

Graphs are presented for illustrative purposes only and is not indicative of any investment. Past performance is no guarantee of future results.

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.