Reader Questions – Essential Saving and Investing Advice

Thanks good readers, I appreciate hearing from you and receiving your saving and investing questions.

I’ll be the first person to acknowledge our saving and investing approach might not be suitable to everyone however I believe things are working out for us so far.  Before I get into the latest set of reader questions to My Own Advisor here’s a brief look at our financial priorities:

  • Very high priority on saving, contributing and maxing out our Tax Free Savings Account (TFSA) every year.
  • High priority on contributing monthly to our Registered Retirement Savings Plans (RRSPs). I am out of contribution room now but my wife is not and so we’re working on that.
  • Priority on killing mortgage debt.

Our focus on these priorities is leading us to these financial goals:

  • Some decent tax-free passive income in our TFSAs.
  • A modest tax-deferred nest egg (RRSPs) to withdraw money from.
  • A paid off home that will provide us with some financial flexibility in 5-7 years.

A number of people have emailed me or commented on my site saying they disagree with our priorities and that is fine.  Everyone’s comfort-level with investing and debt is personal and no two financial plans are alike for that reason.

A few weeks ago a reader emailed me and asked me a bunch of saving and investing questions.  I cannot offer specific financial advice to any one reader for a number of reasons however I will offer my take on the financial path we’ve chosen, what’s working for us (further to my bullets listed above) and what my good reader might want to consider.  Reader questions are in bold, my answers follow.

Can you recommend a good brokerage for me?  Through my research (on your site and others) I learned Questrade and Virtual Brokers seem to offer the lowest fees but there are also other things to consider.  Help?

You’re right.  Lots to consider…

Maybe start with this (although a bit dated) free guide to Exchange Traded Funds (ETFs) and brokerages thanks to Rob Carrick here.  After reading this, I suggest some research and find out if you need a brokerage with the following needs in mind:

  • Do you need a U.S.-dollar TFSA or RRSP to hold your investments?
  • Do you want the option to reinvest all dividends and distributions paid?
  • Do you want the option of easily transferring money between chequing, saving and investment accounts (within the same institution)?

The June 2015 edition of MoneySense (no affiliate) also has some great information about finding the discount brokerage that’s right for you.

My wife and I are a bit younger than you.  I think we’re doing OK, we’ve got close to $50,000 invested for retirement but I’m not sure what I should be investing in?  I mean, I read about dividend stocks and ETFs and index funds and stuff but I’m not sure what to invest in.  More help?

Again, lots to consider for sure…

Congrats on saving so much.  Great work actually!  Personally I’ve been a fan of figuring out who you are as a spender and investor (risk tolerance, emotional reactions to money, etc.) as an important first step. Work at figuring out your financial goals and “where you want to be” long before you pick some products for your investing accounts.

Time Spent and Money Spent

Image courtesy of Behavior Gap

Then you’ll find the product selections line up quite nicely with your answers.  I realize this might be unconventional thinking but I suggest you give this a try.  If you need help on this, I can always write another blogpost!

My apologies for this lengthy email, I simply want to learn more since like your younger self I guess, I have dreams for my wife and I and now our 6-month old baby.  Your blog has inspired me and I just want to do what is right – get to financial freedom someday.  Anything else you can share?

Thanks for the kind words about the site.  I’m happy to hear it has motivated you.  I got the same motivation from some pioneers in the personal finance blogging community as well (Canadian Capitalist, Million Dollar Journey among others) so it looks like history is repeating in a very good way.

We’re working on our financial freedom journey and we hope to “be there” in less than 15 years.

There is a huge body of knowledge that comes with the personal finance and investing space. I can appreciate it is overwhelming at first.  However now that you have your inspiration, I suggest you read books and blogs to learn more. I’ll list some of my favourite books below for you to check out.  Even if you only read some of these books you’ll be well on your way to understanding more:

Millennials

All age groups

For a few bucks, these books could save you thousands of dollars. That’s a great investment.

In closing personal finance basics are very easy to understand but rather hard to keep up the discipline over time.  Spending less than you make, saving 10% or more of your net income, keeping financial costs low, staying invested and disaster-proofing your life will be your keys to success.  I’m confident with the resources above to reinforce these themes if you rinse and repeat those things long enough your financial plan will come together rather nicely.

Got a question for me?  Send it my way.  Thanks for reading.

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe and join the journey. Learn how I'm getting there and how you can get there too!

10 Responses to "Reader Questions – Essential Saving and Investing Advice"

  1. Hi Mark

    In regards to your #3 priority, what do you mean with the paid off home leading to financial flexibility? Are you thinking borrowing to invest or just freeing up the mortgage payments for other investing? We’ve been mortgage free for at least a dozen years and haven’t used any of the equity other than having a HELOC available for emergency purposes or very,very short term (less than a week) source of funds.

    Reply
    1. Thanks for the question Lloyd. I mean it from a couple of respects.

      1. It means we might sell our house, invest the proceeds, and travel (lots) – renting as we go.
      2. Any funds including extra mortgage payments going on the mortgage today will be put into investments/stocks/ETFs in the future.
      3. We might consider borrowing for investment purposes, as long as we are working, further increasing our nest egg for future spending fun.
      4. Keep the home and call it “home base” as we wind-down working full-time and start some part-time work in the area.
      5. Other options.

      We’re really not sure yet Lloyd but we figure being debt-free will open up many options.

      Reply
  2. Hello there I enjoy reading your blog. Do you happen to have any kids? Any plans for kids in the future? How will that affect your goals?

    Reply
  3. I think once the home is paid off it will lead to some nice flexibility with the cash flows. The money that used to go towards the mortgage payments can now go to a variety of things – paying down high interest debt (N/A in your case), emergency savings or investing and chipping away at the new TFSA limit

    Reply
  4. Your priorities make a lot of sense to me and I can fully relate to your goals.

    Regarding your answer to your #3 priority it can summarized as FREEDOM of choice.

    You can choose greater savings for the future or greater discretionary spending to upgrade your lifestyle, or any mix of the 2.

    Reply
    1. Thanks Deane. I figure no debt will allow us more choices when it comes to employment, we can choose to take a break, work part-time or stay full time. Financial freedom should provide some choice and that’s a good thing 🙂

      Reply

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