Quote:
Originally Posted by calumniate
I have a question with regards to CPP. Apparently the fund has been taking a hit of sorts, and my employer has been matching my contributions for 3 years.
My dad mentioned that it's actually a good thing to contribute to CPP in this downturn, as the 'units' or stock of CPP will be less expensive so technically I'm buying more stock right now then I would be otherwise? Are there any wheels to this argument? Honestly I haven't paid much attention to my CPP - sorry if this question isn't that clear.
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I assume CPP stands for Company Pension Plan, not Canada Pension Plan in your question?
The missing factor in your question is your time until retirement. A downturn in the unit price of your investments will result in you purchasing more units. Over time this will mean more money at retirement, so the younger you are the more time these extra units will have for compound interest to work it's magic. This is very good.
However if you're close to retirement age then a downturn can seriously affect your retirement income. It's because of this that people getting close to retirement age will start moving money into 'safer' investments, to minimize the effects of downturns.
I'm not a financial expert by any means. I know we have some experts at CP so please feel free to add corrections.