Couples and Money Management

In the last month or so, JP and I have been revisiting our life goals. Since relocating and finding work, we now have a better grip on our financial situation and therefore can make better projections on our finances.

We basically wrote down our goals in order of importance and plotted them along a timeline. Our plans are quite ambitious but within the realm of possibility. We figured how much money and time we’d need to achieve each goal. It’s not that we haven’t done this before, but after going through a big transition like moving, it was good for us to check in to see whether we’re still on track. When life gets busy, it’s easy to forget your ‘why.’ If you wander too far off from your plans, your spending gets sloppy and problems arise from there. It was a good exercise in getting refocussed on what we want.

We also made adjustments to how we monitor our spending. We created a shared spreadsheet on Google that we can each access on our phones and computers. Whenever we buy something or pay a bill, we enter it on the spreadsheet. We considered using mint.com to track our spending and savings, but it can’t properly factor in all of our investment accounts where we put all of our savings. I don’t really mind having to do things more manually as it’s more interactive. Doing things this way encourages us to talk more about our expenses, which ultimately has led us to make huge improvements in our strategies.

Couples have their own ways of managing money. Some couples split every shared expense down the middle to the cent, and save and spend the rest how they see fit. Some couples rely on one spouse to do most or all of the money managing. We try to do everything together. There isn’t one right way to do this, as long as it works well.

JP and I try to account for everything. When we want to buy something extra, we pitch to the other one like it’s Dragon’s Den. This, I recognize, is not how most people want to operate! Keep in mind that we normally use up all of our savings to invest. Anything frivolous takes away from each other’s ability to buy stocks, so it better be good. We still treat ourselves, as long as we budget for it. As much as we like talking about stocks and the markets, talking about our financial logistics is just as important.

Within days of determining that one of our goals is to invest in a snowbird property within the next year, we booked ourselves to go to Costa Rica to start looking around. I love goals!

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Having said all that, we both just transferred money to each of our TFSAs. We spent this morning looking for some decent picks, but we can’t find anything worth investing in this week. The only good ones were in the gold sector, but right now neither of us is interested in the goldies. The market has gone straight up for almost two months and needs to take a breather. If the market resets on the monthly or weekly charts, we might find better picks — at least we’ll be funded and ready for when the opportunity is there.

 

 

 

 

 

 

 

My Best Investment

Back to school

I always get nostalgic this time of year.

Once upon a time, in a faraway land, I was a fretting teenager about to finish high school. While all the other girls were obsessing over prom and what college they were going to, my own world was crashing around me. My boyfriend dumped me two weeks before prom, leaving me dateless. That was also the year my father became chronically ill and was ordered to go on medical leave. There would be no college fund to support me. I was admitted to the university I had set my sights on, but I had no idea how I was going to afford it.

Humiliated and defeated, I opted to lowball my expectations on everything. I wouldn’t go to prom and I wouldn’t go to university. I had some great excuses to stop caring, so I leaned into them. My friends became my fairy godmothers. One took it upon herself to find me a date. Through her grad date, she managed to set me up with a model/actor (or actor/model?). My other friend made me copy and study her year’s worth of notes for my Biology 12 exam, the most demanding subject I had to study for that year. Because of my friends’ clutch support, I was motivated to keep going.

With Starbucks’ chocolate covered coffee beans to keep me jacked, I crammed like a champ. I aced everything that counted and I finished with honours. My grad date, whom everyone ogled that night, turned out to be a seasoned partier. Instead of binge-drinking at a house party with the other grads after prom, my friends and I followed our dates to a rave in Vancouver’s Downtown Eastside where we danced until four in the morning. I took a cab home with my bestie as the sun was rising. I finished high school feeling like a rock star.

My next problem was going to be going to university. I got a job, but I couldn’t qualify for a student loan because the tax year prior to my dad’s medical leave stated he made a lot. The financial issue was moot as I didn’t even know what I was going to study even if I could afford school. With no money and no clear ambition, it made no sense for me to go to study at all.

I continued to work. Without any goals to anchor me, I spent my money faster than it came in. I was living the Gen X dream buying beer, candy, and cigarettes, watching movies all day, wondering about the future. I’ve told this story many times before and it’s because it was critical to everything I’ve ever done thereafter. My boss saw how much money I was quickly wasting after each payday. She gave me a talking to and told me how to start saving and investing. Her persuasive sisterly coercion got me going to the bank and getting started. Then after saving for a while, things changed. With money in the bank, I saw school as a possibility. Determined to go to law school, I reapplied to university.

I finished my bachelor’s in record time (thanks, Starbucks coffee beans!). By the end of it, though, I decided not to go to law school. With good financial habits and the benefit of going to university when it was still affordable, I graduated with no student debts. I traveled a lot and lived overseas for a few years but came back to Canada. Even though my studies in humanities was never directly applicable to any line of work I sought, having a degree gave me better job options.

After ten years of drifting, I was still by definition a slacker, but at least I had savings. I brainstormed many possibilities on where I was headed next. I found I was most curious about opening a business. This led to my part-time studies in business school and eventually, further studies and pursuits in investing and the stock market.

Today, I am once again a student. I am deeply curious about how the stock market works on the inside. I know what it is to be a trader/investor, but what happens behind the curtain is what I really want to know next. I am currently enrolled with the Canadian Securities Institute, working towards my Certificate in Equity Trading & Sales. I don’t know exactly where studying this will take me; whether I trade for others or still just myself, I will always be a trader, only a more educated one.

Whether you achieve your career peak and hit your financial goals, learning should never stop. You can take courses or just read books that will help you develop in parts of your life that you feel need focus. In the long run, being dedicated to your personal and professional development really is the best investment.

The Transparent RRSP: Post #2

Actions Taken This Week of January 9th

  • Deposited $150 into the RRSP account which increases my principal to $1150

After buying 50 shares of ZPR at $10.86 per share, I have $456.50 left in the RRSP (I paid 0.50 cents in commission). With another $150, I give myself a better chance to buy enough shares of something else when the opportunity arrives. Having more money gives me the ability to diversify my portfolio.


For most of my working life, I mainly saved any extra money that my expected budget permitted. While this allowed me to contribute more than I normally would from time to time, it still fostered sporadic saving rather than regular savings that could’ve compounded nicely in my investments. There is power in consistency. 

When you’re consistent, you’re better able to determine where you’ll be headed in the future. If you can figure out your rate of return from year to year and factor in your regular contributions, you can see the actual potential of your financial growth. This where a goal is more likely to become a reality, rather than just exist in the back of your mind as a half-baked wish.

The first fundamental concept of investing refers to the compounding effect of your invested money + its previously earned interest = more interest on top of your growing money. I, too, wrote about it in my book because it’s the most basic concept of growth. Interest on growing money is going to be more than interest on a static amount money.

It gets complicated when you try to calculate the rate of return on your portfolio of investments. Ultimately, you want your portfolio at the end of the year to be worth more than it was at the beginning of the year and not just because you’ve been putting money into it. 

So if you put $3000 in three stocks. The best-case scenario would be for them to be worth more year after year so that should you have to sell them at any point, you will make money. You buy stocks to make more money on the sale of them. Never forget this.

Another reason to buy stocks is to make dividend income. For some people, this is their primary reason to buy stocks. It’s a very good reason because if you buy enough dividend-paying shares, you can live off that money. Or it can be reinvested in a DRIP to buy more shares or you can use the cash to buy other stocks.

HOWEVER, you must keep in mind that dividends aren’t a company’s obligation and not all companies pay one. If a company does, it can increase, reduce, or stop its dividend payments to investors if it makes financial sense for them. So, if a company is in trouble and over the years you bought many dividend-paying shares, you’re not only out of income, you face a big capital loss once you sell your shares.

A lot of people can’t get over the varying outcomes that stock investing offers. I mean, you might not make a profit and you might not get your dividends! The reason why I feel it’s important to regularly pump money into your investment account is so that you have capital to buy more than the three stocks in my example. You need to diversify. 

Not all stocks go up and down at the same time. Just because a stock price is less than the price you got it at doesn’t mean it’s in trouble – it’s normal for this to happen and sometimes it’s even healthy. It could take a while before it shines and becomes the star of your portfolio.The nice thing about a well-diversified portfolio is that as performances may be cyclical, over time they should all be going up in value. Having different stocks can smooth out the negative effects of underperformance, capital loss, or a stop on dividend payments.

Having said that, if you diversify too much and have too many stocks from all the sectors, it could start to look like the market. It’s a lot of trouble (and commissions) to diversify only to look like the market (or worse) when you could’ve just bought shares of an index ETF. Don’t over-diversify or else you can dilute the overall performance of your portfolio.

My takeaway point is that you invest your savings regularly so that you can afford to diversify.

I believe investing regularly, reinvesting your gains, plus diversifying your holdings lead to a growth effect that transcends the old compound interest model. With lower interest rates and the negative impact of inflation on your money and investments, you must start thinking about stocks and their ability to do more for you than anything else.