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Are you a saver or an investor? The answer might surprise you

Change to Spare

Every time you break a bill and get change back, put it in a jar to act as a piggy bank. When the jar is full, take it to the bank and deposit it. Some banks offer free coin counting machines which alleviates the task of counting coins on the dining room table.


Would you consider yourself a saver or an investor? Chancesare, for most Canadians, the answer would be the former. But you may in fact really be an investor, and your mindset can have a big impact on your potential growth prospects, financial experts say.

“People who consider themselves savers are usually more concerned with capital preservation than with using their assets to increase their wealth,” says Robert Stammers, director of investor education at the CFA Institute ( The perception of being a saver could explain why some people are reluctant to take on additional risk to realize higher returns to reach long-term financial goals.

A defined contribution (DC) survey by State Street Global Advisors conducted last year found that only 31 per cent of US participants, 26 per cent of UK participants and 17 percent of Ireland participants said they feel confident that they will have enough saved through their employer sponsored DC plan to afford the lifestyle they want in retirement. At the time, Nigel Aston, managing director of the company’s UK DC said in a statement that the results highlight the fact that DC members principally view themselves as savers, not investors.

“We’re seeing consistently high levels of discomfort around market volatility, so it is more important than ever to ensure that pension plans offer investments that address this concern,” Aston said. “Default strategies that balance risk and return can help increase the effectiveness of long-term saving efforts.”

Part of the reason people may not consider themselves investors is that the collective understanding of the term is too narrow, according to Stammers.

“Defined contribution members are certainly investors,” he says. “What is an investor? The current definition is someone who employs capital with the expectation of financial return. That’s too limiting. Most home owners I know, their primary reason for buying a home was not the financial return they were going to get on equity but rather that they need a secure place to live, they didn’t want to pay rent or they were afraid rent was going to keep going up…The financial returns were secondary, and a lot of homeowners don’t consider themselves real estate investors. But they are impacted by what happens in the real estate market.

“People with any kind of financial asset are an investor, because their wealth and financial life is impacted by capital markets,” he adds.

Certified financial planner Tina Tehranchian with Assante Wealth Management Ltd. ( in Richmond Hill, Ontario, says that savers usually play it safe with products like high-interest savings accounts, treasury bills, and cashable GICs.

The trade-off for the security and ready availability of these savings methods is that you will earn a low interest rate on your savings and your money cannot work hard for you,” Tehranchian says. “CDIC [Canada Deposit Insurance Corporation] protection would be very important for savers to ensure they are not going to lose their savings as a result of the insolvency of the financial institution where they save their money.”

An investor, meanwhile, is more concerned about growth of capital than safety of principal.

“An investor would take a chance and withstand short-term volatility by investing in securities, mutual funds and similar investments that are not insured by CDIC in the hope of earning higher returns than would be possible by using savings vehicles,” Tehranchian says. “Investors have a greater chance of losing money than savers do but they also have a greater chance of earning significantly higher returns on their money over the long term….The longer the time horizon of an investor is, the lower the chances of permanent loss of capital would be provided that investor invests in a well-diversified portfolio of securities.”

The two extremes when it comes to a person’s financial mindset, Tehranchian says, are fear and greed, both of which will affect an individual’s bottom line.

“If you lose sleep over the mere thought of receiving a statement that shows a loss on your investments no matter how temporary that loss might be, then your feelings of fear of loss rule your mindset and will cause you to avoid any type of risk even if it could mean potentially higher returns in the long run,” she says. “On the other hand, if promises of high returns entice you to invest in the riskiest ventures with slim chances of real profits, then your mindset is that of greed and this could be as dangerous if not more so than a mindset of fear and no tolerance for volatility.”

For most people with a longer term time horizon, she says, the challenge is striking a meaningful balance between fear and greed and taking calculated risks.

“This is where the help of a CFP can be vital in helping calculate the rate of return that you need to reach your saving and investment goals and choosing the products that can help you reach your objectives with the amount of risk you are comfortable taking,” Tehranchian says.

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