Note: this post was sponsored by Scotiabank for Financial Literacy Month, but the views and opinions are my own.
Last weekend when I was in Toronto for the Canadian Personal Finance Conference, I chatted with a few of my blogger friends about how we sometimes get caught up in our own little nerdy financial bubble. We often assume that our friends outside of the blogosphere understand the basic concepts personal finance, and so we tend to glaze over fundamental topics like paying yourself first, or even saving for retirement.
And that reminded me of a conversation I had recently with a friend about our work pension plans. Both companies we work for offer matching RRSP contributions to a maximum of 3% every year. I enrolled in my corporate plan on my first day. It’s free money – and I honestly assumed everyone did the same. So, imagine my surprise when my friend told me he had been at his job for over 3 years, and never contributed!
I asked why (since he knew he was leaving around $2,000 on the table every year), and he said that after all his monthly expenses are added up, he doesn’t have anything left over to save. I understood where he was coming from (living in Vancouver is super expensive), but I couldn’t help but think that if he looked a bit deeper into his finances, he could figure out a way to save for his future – or at the very least, get that 3% match. :)
Coincidentally, I had the chance to speak with Ahmad Dajani, VP of Retail Deposits and Investments at Scotiabank last week, and wanted to ask him some questions that could potentially help my friend get started on his path to financial independence.
Here are a few of the questions I was able to ask:
How would you suggest someone start investing when they have very little room left over in their budget after their monthly expenses?
AD: The best approach would be to Pay Yourself First. What I mean by this, is putting aside a portion of your income to save, before you begin to pay any other expenses. And, by making saving automatic using a pre-authorized contribution, saving becomes a habit. Even starting with a contribution of $25.00 will help set you up for success and you should revisit how much you contribute as your situation and goals change.
(Just as a side note – that’s exactly how I began saving for my future – with contributions of just $25/month when I was just starting out. Then as my salary increased, so did my contributions!)
When would you suggest someone start saving for retirement?
AD: As early as possible, as soon as you start your first job. Even a small contribution can grow to a surprising amount with compound interest over time. When using tax sheltered plans, such as an RSP or TFSA ensure you are eligible and have contribution room available as the rules are different for both. Please check with your advisor on other eligibility criteria and with CRA on your contribution room for each. There are lots of great tools online you can use to determine how much you’ll need to retire. Better yet meet with a financial advisor and they can work with you to figure out all those details.
What are the elements that make up a solid financial plan?
AD: A financial plan is dynamic and always evolving – just like you. It should take into account your current financial situation and provide you with strategies to help you stay on track to achieving your goals. It includes both borrowing and investing elements, and more sophisticated plans can include insurance and estate planning. Financial Planning does not have to be overly complicated however. A financial plan is available at Scotiabank at no cost and no minimum portfolio is required to ask for it.
What are the top things Canadians need to learn more about when it comes to their own finances?
AD: Canadians may be interested in learning more about the many resources available to help them prioritize their financial goals and save more. Finances do not have to be overwhelming or intimidating and there are many programs and tools available to help you save. Remember that even small changes can make a big difference in your savings. I would encourage everyone to do their research, start conversations and sit down with a financial advisor to learn about the options and free tools available. It could make all the difference in achieving your financial goals.
So, what’s the best financial advice you’ve ever received? Share it on Scotiabank’s Facebook page for a chance to win $1,000!
Note: this post is sponsored by ModernAdvisor.ca, but all views and opinions are my own.
A couple weeks ago, I sold the first stock I ever bought. I bought it back in 2013, it peaked in 2015, and then plummeted shortly afterwards. It was a good lesson in staying patient, because it began to slowly rise again until I was able to sell it for a 61% profit.
I have a small investment portfolio with Questrade – most of my money is in ETFs for long-term (retirement), but I have about $4,000 to $5,000 set aside to play around with individual stocks. I haven’t decided what my next stock purchase is going to be, but I’ve definitely got my eye on a few. :)
Investing is fun for me. I love tracking stocks, rebalancing my portfolio, cheering whenever I get dividends, and seeing my portfolio slowly grow over time. But you know what? Not everyone shares the same passion for investing as me. And that’s where I think a robo advisor like ModernAdvisor.ca can fit in.
Why would you use a robo advisor?
What a robo advisor does is provide you with an easy way to create a solid investing portfolio. And I think this is super important because I have met so many people who are intimidated by investing, or they just don’t have the time and energy to devote to learning about investing, and then managing and growing their own portfolio. So they give their money to a bank and their money gets put into mutual funds instead (the average mutual fund fee in Canada as of 2014 was 2.41%!).
ModernAdvisor.ca uses Exchange Trade Funds (ETFs) which charge much lower fees than mutual funds – most of their portfolios cost less than 0.20%! And after adding in ModernAdvisor’s fee, the cost would be between 0.55% to 0.70%. That could save you 1.71 to 1.86% per year – which may not sound like much, but compounded over 20 or 30 years, and that adds up to some serious cash.
Who would use a robo advisor?
Admittedly, I’m still a DIY advisor (and I think I always will be). Robo advisors are not for me because I’m very comfortable setting up and managing my own portfolio, and since I invest in index funds and ETFs, my portfolio would end up looking quite similar to anything recommended to me through robo advising anyway.
My boyfriend and sister, however, would be the perfect fit for ModernAdvisor’s services. It’s the right balance between DIY investing (which not many people are that interested in), and having to pay the high fees of traditional banking advisors.
They’re both comfortable with online banking, but neither of them know much about investing. They’re not interested in spending hours learning about index funds (and how awesome Dan Bortolotti is) or balancing portfolios, and neither have time to have face-to-face talks with a bank advisor. But they still want their money to go as far as it can. Robo advisors can offer exactly what they’re looking for – a simple portfolio that will grow with the market, with no commissions or sneaky hidden fees.
There are quite a few Canadian robo advisors, so what sets ModernAdvisor apart from the rest of them? There are a few different reasons that come to my mind right away – user friendly website, loads of transparency, and they also have one of the lowest overall fee structures out of all the Canadian robo advisors.
Another big plus about ModernAdvisor is that maintaining their client portfolios goes beyond just rebalancing once or twice a year. They are constantly monitoring their portfolios to make sure they’re investing in the best ETFs for their clients. That means if there’s a better ETF that comes along, they’ll swap their clients into the new fund if it’s appropriate for them. And if you have any questions? You’ll be able to talk to a real human through online chat, phone, or e-mail.
But what I love best is the ability to create a trial account with ModernAdvisor without actually needing to deposit money, or give them your banking information. They’ll even go one step further and will invest $1,000 of their own money on your behalf for 30 days.
If the $1,000 earns money in those 30 days, you will get to keep all of the gains if you decide to open up an account and invest your money. Pretty sweet deal, eh?
AND as a special bonus to GMBMFB readers, ModernAdvisor has agreed to provide everyone with a $50 bonus for opening up a new account in addition to the free 30-day trial and the gains on the $1,000 they’ll invest for you.
Does anyone currently use a robo advisor?
Note: this post was sponsored by CIBC, however the views and opinions expressed are my own.
Over the last few years, my banking habits have changed from writing personal cheques to switching to Interac e-Transfers. It just makes sense – the money comes out of my bank and into the other person’s bank instantly – no more waiting around for cheques to clear. I send e-Transfers to pay my rent, monthly parking (when I had it), and RD and I frequently settle up our bigger expenses through e-Transfer.
My only issue is that my everyday bank charges $1 per e-Transfer – which isn’t much, but can definitely add up if you’re transferring cash on a regular basis. In fact, I’d send more e-Transfers every month if it weren’t for the cost … meaning RD and I settle up our expenses less frequently than I’d like. :)
That’s why I was interested in CIBC’s new Smart Account. What’s interesting about this bank account is that it offers flexible fees (which are capped monthly) – and automatically adjusts based on each person’s banking needs during that month.
Here’s how it works:
With the CIBC Smart Account, you will pay $4.95 per month for up to 12 transactions. Each additional transaction costs $1.25 to a cap of $14.95 per month for unlimited transactions. What I like about this is the flexibility – my current chequing account merely acts as a way to pay off my credit card balance on a weekly basis. I don’t make any purchases, so I can see myself staying within 10-12 transactions per month. But even better – Interac e-Transfers are included as everyday transactions, instead of as a separate charge. I bet with the amount of e-Transfers I make per month, it’d come pretty close to the $4.95 basic fee for this account.
As a side note, the monthly $4.95 fee is waived if you maintain a minimum daily balance of $3,000, and have a recurring direct deposit, or two pre-authorized payments each month. AND you can actually open up a Smart Account without going into the branch – it can all be done through the CIBC mobile banking app. That’s my kind of feature! :)
Check out this cute video of Percy explaining how this bank account worked for him:
I love how there are more and more banking options becoming available to Canadians. It’s not just about free chequing accounts anymore, it’s about finding a product that works best with what you need. And the CIBC Smart Account could definitely work for someone whose banking needs change from month to month, or someone who wants to take advantage of frequent Interac e-Transfers.
For more information on the CIBC Smart Account, please visit CIBC.com
How often do you send Interac e-Transfers per month?
Do you think the CIBC Smart Account would fit your current banking needs?