Money Wise Mom

My husband and I just topped up our TFSAs with our annual contribution and the “work” to complete the task took us less than 5 minutes. The process was literally “click, click, done”! Frankly, it’s so easy that it’s a little bit scary.

If you can shop online, you have the skills to buy and sell your own investments. Buying ETFs online is pretty much just loading up an online shopping cart. It’s not difficult and there are no fee options the make it basically free (minus MER, but we’ll save that topic for a deep dive post!). Managing your own portfolio is empowering and rewarding and it can boost your net worth by significant amounts. So why doesn’t everyone do it? Because lacking foundational knowledge is scary and uncomfortable. If you don’t know all the rules of the financial game, you can be frozen into inaction.

It’s fine for me to say how easy it is, now that I’ve done it for decades! I remember setting up my fist brokerage account and making my first purchase of ETFs though TD Waterhouse and it certainly didn’t feel easy, at the time. It felt terrifying! Hitting the “buy” button with my families life savings on the line made me sick to my stomach. I just didn’t want to mess it up.

Spoiler alert, I didn’t mess up my families finances. I actually did very well because I had done my homework by reading books and blogs to guide me through the process.

Taking your first step into the work of investments can feel like standing in a pitch dark room. You might be frozen with fear. As your eyes adjust to the darkness and your hands cautiously feel for the familiar, you eventually get a sense of the room around you, one small piece at a time, until it’s not scary anymore.

Allow me to turn on the lights for you. Over the next several weeks, I will do a deep dive on each of these topics to help you understand

Here’s a basic framework of what you need to know to manage your own investments.

Foundational knowledge you should understand about investing:

1. What is your Net Worth and how to track it
2. How investments grow through compound interest and dividends
3. The types of investment accounts that exist and when to use specific ones to be more efficient with your taxes (TFSA, RRSP, FHSA, RESP, Non Registered, LIRA)
4. Understanding the upfront and hidden fees, like MER, and how they can impact your net worth over time
5. The types of investment products you can buy inside your investment account like stocks, bonds, ETFS, and index funds
6. Recommended investment products for passive investments (diversified with low MER fees)
7. Common “Rules of thumb” like the 4% rule, the 25 times rule, the relationship between stocks and bonds, and the Money Wise Mom’s philosophy to “keep it boring”.

Systems you need to be prepared before you start investing:

1. An account at a no fee brokerage like Wealthsimple to create investment accounts in which you will buy and sell investment products.
2. A plan on how you will rebalance your portfolio

Also highly recommended:

1. A tracker spreadsheet to record your contributions to registered accounts (TFSA, FHSA, RRSP) so that you do not accidentally over contribute
2. Defined long term goals so you know what you are saving for (retirement, a house, or a kids educations)
3. Projections for when you will be debt free or how much your net worth will grow.
4. A plan to spend the money. You can’t take it with you. You can leave for others, but I’m assuming you want your money to cover your living expenses when you retire.

So yeah, the buying of products is simple. It’s as easy as click click done. Building up your foundational knowledge so that you have the CONFIDENCE to know that you’re not making mistakes is the hard part. But you can do it. And it’s worth doing. Your future self will thank you.