Saving For The Future
Today, I’m sharing something a little different on the blog and that pertains to a topic that most of us try to avoid — retirement. It’s not the hottest conversation especially when you’re in your 20s and have just found a career. After paying off student loans, we’re now just making enough money to cover living expenses and credit card bills. Saving for the future is definitely a luxury that many millennials can’t afford, especially because a lot of us are also trying to live in the moment. We’re young so we want to splurge on travel and things for ourselves (and I’m totally guilty of this too). It doesn’t get any easier when you’re a fashion blogger and you’re trying to keep up with the latest trends. Investing in the bags and shoes that we've been lusting over is pretty much the only type of investment that we’re making. Terrance and I recently purchased our first home in the city and while it is a great investment, it also comes with a big cost. It’s no longer just a monthly rent cheque that is coming out of our pockets, but instead a down payment and regular mortgage payment and taxes. We need to be mindful of our spending decisions and also start planning for our future. I had the chance to visit the Meridian Credit Union branch located in the Beaches and speak to an advisor about my career and what I am doing to save for retirement. I loved how tailored the conversation was and tips that could help me and others who are going through this as well.
What I learned is that there are a few simple steps to help secure your financial future and that all comes down to the 4 Pillars of Investing:
If you start saving for retirement in your early years, you will benefit from this in the long run. When I learned that my company matches a portion of my registered retirement savings plan (RRSP) contributions — this is equivalent to a 401(k) if you're from the US, I took that opportunity to start putting away a little from every pay cheque. With the exception of a few key milestones in your life (e.g., buying a home), it is a savings account that you cannot touch so you’re not tempted to dip into it. I also opened a TFSA (tax-free savings account) with my bank when I first started working so I make sure to set aside a portion of my pay to go into my TFSA. This is an account that you can deposit and withdraw from at anytime so I like to treat it as a rainy day fund and keep my spending money in a separate chequings account.
There are also a ton of options when it comes down to investing. Depending on how comfortable you are with risk, you can choose to invest in GICs, mutual funds, stocks or bonds. GICs mean that your investment is guaranteed to provide a return on your money, but the reward is often low. Stocks are more risky, but like they say the higher the risk, the higher the reward.
It’s tempting to put your investments on hold when markets are down, but if you do that, you might miss out on the good days, too. It’s important to stay invested through market ups and downs. Especially when it’s an RRSP, you know that you won’t be touching this until your 50s or 60s so you can leave it alone.
The lesson here is not to put all your eggs into one basket. Certain types of investments tend to move higher when others are declining so set aside your money into different types of investment products to protect yourself.