Scotia Tips: first batch

Don't have a large chunk of money to invest today? Try dollar cost averaging -- investing money on a regular basis -- to ride the crests and waves of the stock market. The earlier you start investing, the more you can take advantage of the powers of compound interest.

Review your portfolio once a year. Have you diversified your portfolio well? Check to see if you've put too many eggs in one basket and make a few changes if you need to cut your risk. It's also a good time to reflect on your long-term financial goals and determine if your current portfolio is helping you work towards them.

To maximize your RRSP potential:

contribute every year
start early in life to take advantage of compound interest
contribute as much as possible
make payments at the beginning of the year or contribute on a monthly schedule

4. Starting an RRSP? Don't forget to shop around. Small differences in your rate of return can have a big impact on the bottom line. So check the prospectus carefully to see how your investment has done in the past. Determine what fees you'll have to pay. Make an informed decision.

5. Did you know you can overcontribute to your RRSP up to $2,000 without a tax penalty? You can't deduct the overcontribution until you have "room" in your RRSP, but paying a little extra one year can work in your favour down the road.

6. When budgeting, don't forget that some months will cost more than others. For example, if you know you'll be moving in July, you can budget for the extra expenses ahead of time. December is another big spending month. Think ahead to cut down budgeting stress.

7. Keeping receipts and bank records will help keep track of how you are spending your money. Look them over every month to see where the money is going -- and where you can improve your spending habits.

Being organized can go a long way to save time and money. If you wait until you have no choice but to buy an item, you'll probably end up paying more. The more expensive an item, the longer you should plan ahead.

Resist impulse buying. Look beyond the price before making a purchase. Consider how long it will last, how many times you'll use it, how many other people can use it and what other uses it can have. If you look at the big picture before slapping down the credit card, you might be surprised how often you'll put it back on the shelf.

Pay yourself first! Invest at least 10% of your paycheque each month. A small amount invested regularly could give you a higher rate of return than one lump sum invested periodically. Too much to worry about? Ask your bank to automatically withdraw a predetermined amount for a particular investment.

Do you keep accurate financial records? Knowing exactly where your money goes can help you stay within your budget and even save you money at tax time. Start keeping track today.

Give to charities you believe in. Not only are the gifts tax-deductible, but you'll be helping others at the same time.

Take care of your family and their future. If you haven't already, prepare a will and keep it updated regularly. And don't forget to tell someone where it is.

Stay out of credit card debt! Despite what many Canadians seem to believe, credit is not "free money." If you cannot pay your credit card in full each month, stop using your card. Pay your debt first.

Avoid surprises. Check out your own credit report two or three months before you apply for the loan. If it's good, you'll be in a better position to negotiate with your lender. If it's not, you'll have time to reverse errors. Contact credit bureaus, Equifax and Trans Union of Canada, to find out where you stand. Your report is free for the asking.

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