Trevor Abes: Writer

Tag: stock market

Young Canadian Investor #29 — Delineating Your Relationship With Money

As an investor, you’re somewhere between the person who doesn’t lose sleep over their investments and the person who can’t rest knowing they’re at risk of losing money. The former is able to take on riskier investments with the potential for a higher return. The latter will accept a lower return, so long as it means their money is protected from substantial loss. You see the trade off here. More security means less money in your pocket, and vice versa.

The key to making your investing life as easy on yourself as possible is recognizing where you fall on the spectrum and why. That way, you’ll hopefully be able to make adjustments to how you invest to make room for who you are. Let’s try and gauge where you stand with a couple questions.

Are you living paycheck to paycheck or are you able to save some money, however little, at the end of the month?

If you’re not able to save, investing is out of the question for the moment. Your basic expenses take precedent. If you’re able to save, it’s important to build up an emergency fund first—aim for a few months of expenses—before investing the remainder. Depending on your answer here, you may feel worried about putting your money to work in the stock market. While stocks offer you a positive expected return over the long term, they go up and down a lot day to day, which can cause investors to become distressed seeing the value of their investments move so wildly. The solution here is educating yourself about the stock market so you don’t get spooked by how it’s supposed to work.

Are you a saver or a spender? 

To put it another way, if you have a little cash in your pocket, will you end up treating yourself to a nice meal at your favorite mom-and-pop brunch spot, buying books, clothes, or your version of a treat, or will you stash the cash in your savings account? If the money is likely to disappear into instant gratification, you’re best advised to automate your savings and investing by asking your bank to transfer a certain amount of money every month into the appropriate accounts. We all have personal histories that determine why we behave with money the ways we do. If you can stomach it, go back in time and see if you can identify your money triggers and the patterns they nudge you into.

In my case, I buy lots of books and take pride in hauling 30 or so boxes of them around every time I have to move, so I have to keep that habit in check. I have a sweet tooth, meaning a considerable portion of my grocery bill goes to chocolate, sour gummies, and other such base pleasures. I also grew up fairly well off, while the last 10 years have been a struggle financially, making me prone to save all the money I have when I should be setting some of it aside to have fun and enjoy myself.

In the end, if you can afford your indulgences while saving enough to buy yourself the future you want, you’re on the right track.

How does living in a capitalist society and having to make money to support yourself make you feel?

Are you happy to rise and grind every day to compete and earn your place in that society, or are you hell-bent on avoiding the rat race and forging a different path?

Let me know in the comments!

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

Young Canadian Investor #25 — Why You Can and Should Invest on Your Own

As you’ve learned over the last 24 articles, there’s a lot to absorb before you can invest your money comfortably and confidently into the world’s stock and bond markets. You need to make decisions about which financial goals to pursue, for example, as well as how long you have to save before those goals can hopefully be met. That means taking a stand about how your future’s gonna look a few decades down the line and committing to it, even though you’ll likely be slapped around by life enough to periodically reconsider your priorities.

Then there’s the whole technical side of things where you get a grasp on what stocks, bonds, and index funds are, and how the different investment accounts on offer may or may not suit your situation.

It adds up and I get how the overwhelm can start to creep in. That’s why I understand if, after all this reading, you’re still feeling hesitant about opening your account and investing. Even though you know how fortunate we are as Canadians to have access to TFSAs and RRSPs, and you can see the benefits of saving money that’ll grow on its own over time, such as fulfilling dreams of all sizes, it’s still somehow not as easy as just doing it.

To that end, I came up with a list of aspects of the investing process that might cause newbies to give up or lose confidence + my own two cents as to possible solutions.

  1. The mechanics of inputting buy and sell orders for your investment funds is not everyday knowledge. You need to type numbers in that represent real money and you don’t want to make a costly mistake. That’s a normal feeling. Thankfully, portfolio manager Justin Bender has got you covered with his instructional videos on that exact subject. He has videos for pretty much every major brokerage in Canada and you’ll benefit from his approachable explanatory style.
  2. It can be a tall order to demystify how the stock market actually works. All those stock tickers, performance metrics, and constantly changing prices can be hard to crack. You should always seek out educational help tailored to how you learn. If you absorb knowledge more efficiently by reading, you can take a look at my investing guide for young Canadians. If you’re more of a visual learner, this TED video might help to fill in some gaps.
  3. Another scary part of tackling the craft of investing on your own is not having an expert check over your work and give you the go-ahead. If you can’t seem to get past this barrier and take the plunge, set up an appointment with a financial advisor in person to open your account when covid allows and have them run you through the investing process. If you’re a customer with their bank, it’s their job to help you. Just be wary of any sales pitches and stick to your plan, whether that’s engaging in active investing or setting up your portfolio of diversified index funds.

Forever is quite the stretch and the prospect of having to tend to your investments on your own for that long can seem daunting. But I know you can do it. You know why? Because you’re taking time out of your day to read an article about investing. That means you’re already part of the chosen few who are capable of investing for themselves. You wouldn’t be here otherwise. So long as you take your time and give yourself room to learn, you will prevail.

As always, if you have any questions at all, fell free to drop them in the comments.

I’m also available to teach you 1-on-1 over Zoom if you prefer.

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

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