As an investment advisor with a growing practice, I recently reached a significant personal and professional milestone: my first billionaire client. The relationship looks promising and, so far, my client is always delighted to see me. There are challenges, of course, including his habit of regularly calling me at 3 a.m. But I wouldn’t trade it for anything.

The client in question is our family’s newest addition, my second son, who was born ten months ago. He may not have many assets yet (in fact, he costs his parents quite a bit), but he possesses something far more valuable: time.

According to actuarial tables, there’s a 50% chance that a young person today will live to 90.¹ That’s over 2.84 billion seconds.  Time is the currency of life, and in finance, it’s the key ingredient that unlocks the power of compound interest.

Consider this: if you invest $25,000 today at an annual return of 8% over 65 years, and factor in 2% annual inflation, that investment could potentially grow to an inflation-adjusted value of $1,019,868 by the time my son reaches retirement age. For younger clients still building wealth, I stress the importance of starting early and letting time do the heavy lifting.

Time is also an important consideration for mature investors, who often have more of it than they realize. This presents both opportunities and challenges. For a couple aged 65, combining their probable lifespans means there’s a 43% chance that at least one partner will live to age 95.² This gives them an investment horizon of at least 30 years, and potentially even longer if they wish to leave a legacy for the next generation. A longer timeframe allows them to benefit from compound interest, but they also need to invest in a way that ensures a steady cash flow to support their retirement throughout the years.

Time is our most valuable asset.  Use its power to your advantage.

Stay disciplined,

-Andrew

Sources: 1) Statistics Canada 2) JP Morgan

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.

This commentary is for informational purposes only and is not being provided in the context of an offering of any security, sector, or financial instrument, and is not a recommendation, an endorsement, or solicitation to buy, hold or sell any security.

Please note that rate of return projections are for demonstration purposes only. They are based on a number of assumptions and consequently actual results may differ, possibly to a material degree.

Andrew Pittet is an Investment Advisor with CIBC Wood Gundy in Calgary. The views of Andrew Pittet do not necessarily reflect those of CIBC World Markets Inc.

If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.