“I sometimes got distracted easily and allowed my mind to wander when I needed to be focused. It’s quite subtle, really, and just being aware of it helps.” — Payne Stewart.

In July I found myself going out pretty often. I didn’t feel bad because everything else was going well. I had been making good money, saving money, working out, and eating well. Short term I had no issue. Long term, I was losing tracking of the big picture. Once in a while I need to remind myself of longer term and not just today.

What’s the “big picture?” This is your long term plan. This is where you want to be in the medium-to-long term. You won’t be there tomorrow morning. You won’t get there by next Saturday either. However, with consistent effort and a little determination you can get there in six months perhaps. If it’s a more audacious goal, then you might not get there until five years from now.

My long term plan is to live life on my own terms. I want to make decent money while being able to help as many other people as possible. I don’t want to be forced into a job that I hate to pay for things that I don’t really need. Yet I often myself spending money foolishly and falling behind on important work. The short term often trumps the long term for many of us. This can be highly dangerous. We don’t want today to negatively impact tomorrow too much.

The big picture is different for everyone. A few ideas of what the long term plan can be for you:

• Retire early and live in the countryside.
• Travel the world with your partner.
• Start your own business.
• Quit your job.
• Become debt free.
• Move out of your parent’s place so you can finally have dates over.

We all have long term plans that we need to stay focused on. How can you prevent yourself from losing track of of the bigger picture?

Keep a daily reminder.

We need daily reminders to stay focused. If you want to buy a home you can put a picture of your dream home up in your room. Every morning that you wake up and every night before you go to sleep you’re reminded of your ultimate goal. My friend keeps a picture of his daughter and a Hummer in his locker at work. He knows that if he works hard he can reward himself with a Hummer one day. He also keeps a picture of his daughter because he wants a better life for her. He wants to pay for her college education and her wedding.

Reminders (pictures, videos) are important because they help us gain focus when everything seems to be going wrong. Whenever you ponder why you’re working so hard or running on little sleep, all you need to do is look at that physical reminder of your long term plan. This got me through many all-nighters in college.

When I was working long hours and running on little sleep I was reminded that one day I would be renting out a piece of property while I traveled. Now as I type this I’m sitting in Poland and my condo is rented out at a good price. It took me longer than expected to reach this one goal, but I eventually made it.

Get your friends/family to hold you accountable.

An accountability partner is like a workout buddy. When you go to the gym alone you can slack off because you won’t have anyone pushing you. When you go to the gym with your workout buddy you know that you have to give it your best or you’ll be letting this person down (assuming that you care about them). I personally fall on both sides. I can be that person pushing you to wake up at six in the morning to get work done after a night out. I can also become complacent and in need of a kick in the butt. That’s why accountability partners are important.

Whatever your long term plan is, it helps to get your close friends and family on board. You don’t need to keep your plans to become debt free or to quit your job by 2012 a secret. If your friends judge you or try to discourage you, you might be associating with the wrong crowd.

Think of the worst case scenario.

When I wrote this post I was debating going out on a Wednesday night. The best case scenario was that I would have a good time. The worst case scenario was that I would be tired the next day, behind on my work, and I likely wouldn’t feel like going out with my friends when the actual weekend came along.

I would also be diverting my energy from my writing. My writing is very important to me write now because I’m on my first vagabonding sting through Poland. The harder I work now, the more fun I can have on future trips. I would much rather hang out in Budapest with new friends then go out in Toronto and pay $7 a drink.

What’s your worst case scenario? You need to be brutally honest and think of what will happen if you lose focus of your long term goals. Will you be in debt forever? Will you have to wait another few months to purchase that dream home because you wanted the newest iPad? The worst case scenario can be a swift kick in the butt.

Ask the readers– I’m curious to hear if any of you have lost track of the big picture in the last little bit? How did you recover? How did you reignite your focus?

(photo credit: jennnster)

Where can you store your money? I wanted to go over the five most common options for where you can keep your money now that you’re making more than ever before.

Savings account.

Unless you have a ultra high net worth, the simplest and safest option for storing your money is in a savings account. You can easily find an online savings account where you can transfer over a certain amount of money off your paycheck every payday. This way you’ll earn more interest than by keeping your cash in just a checking account.

Pros of a savings account:

You can sleep at night knowing that your money is safely stored in a savings account. When your money is in savings you can go on with your life and be very passive with your money management. This plan is ideal for those of us that place higher value on other things in life and just want to save some money up without really thinking about it.

Cons of a savings account:

You earn very little interest on your hard earned money. It will take you much longer to accumulate any real wealth. With a savings account you’re not taking the chances that you can get away with in your 20s. As a young professional you can handle a little more risk because you likely don’t have a family or any real responsibilities.

Stock market.

If you feel that leaving your money in a savings account is just too boring for you, then you might want to try your hand at the stock market. Just remember that you’ll be taking on additional risk and anything can happen. You’ll be smiling when the stock goes up. On the other hand, you might be crying when the stock price tanks due to general market issues.

Benefits of the stock market:

You have the potential to earn money on your money. I can only say that over the years I’ve been fortunate enough to make some decent stock purchases that earned me much more money than I could have earned with a savings account. If you know what you’re doing and you take the time to conduct your research, you can make a few wise investment decisions with the stock market.

Setbacks of the stock market:

You take on much more risk. If you start investing in small start-up companies you’ll be taking on much more risk than usual. There’s the potential to earn more money, but with this potential comes more risk than most can handle. This risk will lead to lots of unnecessary stress. You also have to keep in mind that investing in the stock market can be very time consuming. You need to track the companies you own shares in and the surrounding market just to stay on top of things.

Real estate.

After saving up for a while it’s going to get tempting to purchase a home or a condo. It has been ingrained in us to think that renting is “throwing money away.” This leads us to thinking that buying a piece of property is just the next logical step in growing up.

Pros of real estate:

You’re investing your money in an asset that will likely appreciate over time (depending on where you live). A home shouldn’t be viewed as an investment, but for some of us it could be the best financial decision that we ever make. For many young professional a home is also a “forced savings tool,” in the sense that it holds you accountable for your finances.

Cons of real estate:

You totally kill your flexibility when you’re stuck with a home mortgage. You’ll be stuck with making your mortgage payments. This means that you’ll have less money for fun, you might have to stay at a job that you really don’t care for, and you might not be able to travel as much as you had planned. You need to keep these cons in mind as the euphoria of owning a home starts to hit you.

Experiences.

If you’re like me then you believe in spending your money on experiences. I love to save up for different trips and events, as opposed to filling my home up with crap. I really enjoy going on many trips throughout the year. This forces me to work harder and to find more ways to save money.

Positives of experiences:

You get to hold on to less crap and you can see things that you normally wouldn’t have. When you travel to a new part of the world you broaden your horizons and you see things that you never thought existed. New experiences really open up your mind and change your perspective on most stuff.

Negatives of experiences:

It may never feel like you’re getting your value in money. I personally have learned to treat every trip payment and cost of an experience as a sunk cost. Meaning that once I pay for it that’s it. For some the thought of how much they spent on the experience will always linger on their mind. This in turn creates a feeling that the experience never reaches its full potential in value.

Spend it all.

It’s not rare for those new to the workforce to spend all of their money. There’s so many options out there for spending money that makes it really easy to stay broke. At times it also might feel like saving money simply isn’t even worth it.

The good side of spending your money:

You don’t have to worry about saving your money and always feeling guilty. When you’re young you don’t have to stress as much as saving up money. It’s not recommended that you frivolous spend all of your money. At the end of the day it’s your money and you can do whatever you want with it.

The bad side of spending it all:

You have nothing to show for your hard work. In my opinion it doesn’t make much sense to put so much effort into your work only to have nothing to show for it at the end of the year.

It’s time get the readers involved: Where did you start storing your money when you first started to make real money in life?

(photo credit: dramatic)

The financial crisis is the greatest thing that ever happened to our generation.

- Suze Orman.

When I first read this statement in Generation Earn I was pretty surprised. Why is this? How can a financial meltdown and credit crisis be a good thing? What about all of those people that lost jobs? There’s solid reasoning behind this, because according to Suze: we would still be buying expensive stocks and overinflated real estate. As much as we’ve gotten adjusted to complaining about the recession and blaming every little problem on the economy, it doesn’t have to be all negative. And what if we could turn this into young investor tips?

What we can learn from the recession and the economic crash of late-2008 moving forward?

To accept reality.

It is what is it. Recessions happen. Just ask your parents. The financial crisis has taught us that we need to accept the reality of the situation no matter how good or how bad it is. Instead of looking for a way out or complaining about it to anyone that will listen, we need to be proactive and productive. Proactive in the sense that we try to prepare ourselves as best as possible for economic downturns that can happen at any time. Being productive is all about working to make positive changes during a negative time instead of dwelling. The reality of the situation can’t be changed. Your attitude and how you approach things can always be changed fortunately.

Rebalance your investment accounts.

Put more money into bonds, GICs (Canada), and CDs. If you feel that the stock market is too volatile and you can’t handle the market swings, then this might be the a sign that you should rebalance your investment accounts so that you don’t lose your mind. Perhaps a significant portion of your savings were in stocks. If you lost a size-able chunk of money during the crash then proceeded to panic for the next few months, then this is a sign that you need to switch up your investing style.

Don’t give up on the stock market.

Not to contradict my previous point, but too many investors started bashing the stock market after the crash. There are still many strong management teams out there. Just because your portfolio decreased in value it doesn’t mean that you should give up on your stocks or your investments in the stock market.

Now that we understand the lessons learned from the recession, what can we do about it? What can we do moving forward from the recession that hit the globe in late-2008?

Learn from your mistakes.

You need to take a step back and look at where you went wrong. If you lost a scary amount of your retirement savings, you need to try to figure out why you were so vulnerable in the first place. I personally learned that I couldn’t handle the market swings. This is why I decided to keep only a tiny portion of my savings in the stock market. What did you learn from the financial crisis? What will you learn moving forward?

Pickup new hobbies.

Instead of stressing about the economy and reading about every new conspiracy theory out there, you can pick up a fun hobby. The most effective hobby for getting your mind off all of the negative hype of the economy is usually something physical. I find that when you push your body by picking up a new sport, you get your mind off whatever is stressing you out at the time. Regardless of the hobby that you pick up, remember that there’s many fun ways to fill up your evenings.

Avoid cable news.

Watching the cable news can only add to your stress levels. What good will come out looking at ambiguous charts and listening to so-called “experts” predicting global doom? I have friends that are probably leading experts on “market conspiracies.” They always inform me of new and emerging theories of global doom. That’s interesting and all, but who wants to live a life like that? Not me. Being informed is beneficial. Being cynical will not do much for you.

As devastating as the recession has been, there’s a lot that we can learn from it. What impact did the financial crisis have on you? What have you learned from the recession?

(photo credit: robhowells87)

Yesterday, I discussed what I want to put in place before I turn 30. This magic number makes me act on the financial aspects of my life because I feel a sense of urgency to have a solid plan in order to reach my ultimate goal; retiring at 55.

25 years left to become a multimillionaire

Hoping to retire at 55 is almost a utopia in North America. While governments consider extending the normal age of retirement closer to 70, I want to pull out the plug 15 years prior. If I really want to reach my goal, I need to figure it out by 30 before it’s too late to act!

I need to invest more

While I want to use additional money to pay off my debts before I reach 30, I want to do the opposite afterwards. I strongly believe in the force of compound interest and this is why I only want to build a small level of equity as a safety net before I switch to a more aggressive investing mode.

During my 30s, I will concentrate on increasing my Smith Manoeuvre (some other expenses prevented me to start it in August as planned… the project is still on ice for September… arg!).

If I could reach near $1,000 per month to be invested in my account while I pay interest only on my mortgage, I think I will be able to build an interesting investment account. At a 6% rate, I would create 163K within 10 years while my mortgage will still be around 250K. And if I keep using the same strategy during 25 years, I’ll end-up with 692K in my account.

Doing major projects with my bonuses

When I was talking about stabilizing my income during my latest post, I also wanted to try to pay all my living expenses with my base salary while using my bonuses toward debts.

At 30, I want to be able to manage my budget with my base salary (plus my company’s income) and use my bonuses (plus my company’s bonuses) for major projects such as renovations and vacations. This should be considered as gravy stuff and I should only treat myself to a garage if my bonus permits it. Therefore, I would not resort to more debts to finance my project. If I want to buy another car, I would have to get rid of my current payment and not have a higher car payment once the change is made. Keeping the same level of lifestyle will be very important to reach retirement at 55.

Think about my pension plan

I have a pretty decent pension plan where I work. If I would ever plan to leave and start working full time on my company, I would need to be able to draw a salary over 100K in order to maximize my RRSP (about 20K per year) in order to enjoy a similar pension at retirement.

By investing 20K per year for 25 years at 6%, you get the magic number of 1M$. Unfortunately, 1M$ won’t be enough to generate the equivalent of my current pension plan. I would probably have to increase this amount to 30K per year (using my TFSA account + my wife’s) to reach the same level.

So the day I leave my day job, I will be sitting on something providing me with enough money to cover my pension plan…

Concentrating on my children’s education

I haven’t started an RESP yet. Not that I don’t find it important. It is VERY important. However, I have had other priorities first. Starting at 30, I want to invest a few thousand per year for my kids’ education to make sure they have enough money to pursue the diploma they want.

I think the RESP is one of the best way to help your children pay their tuition. An RESP is a safe and effective way to save for your child’s education, so be sure to consider looking in to one if you need to start thinking about that. Ultimately, I would like to buy a duplex or a triplex in Montreal so they can live in it while studying.

What are your financial projects during your 30s?

What about you? Do you have any special plans for your 30s? Do you think I am crazy to think that 30 is an important number in financial planning?

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Yesterday was a special day. Well, it wasn’t that special, but it was special to me; it was my birthday. Nope, I haven’t turned 30 yet… only 29 . But being so close to 30 got me thinking about my goals and financial planning. Funny enough, I create financial plans for my clients daily but I have barely touched my own so far. Turning 30, it is now time to talk about serious money management.

In part 1, I want to talk about what I want to do before I turn 30. There are a few financial goals I want to reach before I reach 30 so I can make more plans. In fact, 30 is a big number for me but not because I feel old, but because it tells me that I am not young anymore and that I have to seriously think about retirement.

Escaping from a few debts

The funny part is that when you reach 30, normally you have bought or are about to buy your first house, you have or about to have your first offspring and you have or are about to land an interesting job.

I bought my (third) house, got married and have (2) children before hitting 30. I already have a very interesting job and I am financially stable. This is the fruit of hard labour. However, at 30, money is required for several projects at the same time:

- RESP for kids

- RRSP for retirement

- Mortgages and car loans

- Renovation (garage?) and vacation (going south with the whole family is pretty damn costly!)

This is why I’ll be trying to get rid of my low interest rate balance transfer credit card before I turn 30. I’m already paying off my car loan at a good pace but I would like to benefit from low interest rates to reduce my mortgage a little bit.

Paying down more debt during the upcoming year will be a great challenge since I am really in the mood to enjoy life with my wife and kids and benefit from the results of my sacrifices.

Stabilizing my income

I have been increasing my income steadily for the past 7 years (since I started working). While I reached the 6 figure income mark last year and I will be making more this year, I would like to make sure that I can count on such an income level for several years. This is why making even more and diversifying the sources of my income will guarantee that I can count on a steady 100K per year for several more years to come.

In order to achieve this, I have to work on my network at the bank to make sure I maintain my level of annual bonus. Having a strong development plan will help me reach my objective and maintain a high level of bonus for a third year in a row. Since I can’t count on a major raise next year, I’ll depend on my bonus to reach 6 digits on my Notice of Assessment in 2011.

Working on my company will be the other part of stabilizing my income. While I don’t plan to take much out of it, I want to make sure that the company is generating enough money to pay my day off at the bank while continuing to grow.

Generating more cash flow in my budget

The last point will be a combination of the 2 other points above; making more money, paying off debt and freeing monthly cash flow.

At first, I will use all my extra income to pay off more debt (snowball effect). But next year, I’ll know that I’ll need this money for other projects. Turning 30 will definitely affect the way I see my personal finance. After all, I will only be 25 years away from retirement .

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During my day job (J), I meet many clients to look at their personal finances. More precisely, my mandate is to create financial plans and help clients with more than $250,000 invested with the bank. So, most of them are in their 50s. Unfortunately, I come across a lot of people who don’t have a financial plan and have never discussed retirement planning. At one point, it’s like they feel that it’s too late or they are too ashamed to talk about retirement planning. Like most things we don’t like to do, we all hope that time combined with magic and prayer will take care of our retirement planning .

So if you don’t have a plan at 55, is it too late for retirement planning?

The quick answer is no (especially since you might not even retire at 65 but perhaps closer to 70 or 75 ). However, some things may need to change if you want to have a comfortable retirement:

Look at reality

The very first thing is to look at your net worth, your budget and how much you are saving in your retirement account right now. Like an alcoholic, you need to acknowledge that you have a problem before starting to solve it .

Once you have your statements in order, make an appointment with a financial advisor that is able to create a retirement plan. He will key your information into his software and be able to tell you about how much you have to spend annually during your retirement years. Warning; this will be a reality check!

Make a real effort

Some people talk for years about the day they will stop smoking while others don’t say a word and just do it. This is similar to retirement planning. Making a genuine effort will be the key point in your plan. It will hurt, I swear it will. Therefore, you will have to bite your tongue and put the damn credit card away if you want to pursue your dreams.

Change your lifestyle

Instead of living in a state of constant frugality (read frustration), you can deliberately decide to change your lifestyle. Instead of cutting out things, try doing things differently. Don’t cut out your morning coffee from Starbuck’s, but bring it from home. Eat out only once a week and bring nice meals instead of a stupid sandwich in your brown bag . Consolidate your debt, look for lower interest rates (transfer your balance on a 1.99% credit card ). By slowly changing your habits, you will see the difference of making progress in your retirement plan without being frustrated.

Don’t be a gambler

The temptation is great but you must resist. If your financial advisor does a projection at 7, 8 or 9% returns, don’t buy his BS. If you try to invest seeking the equivalent of a home run, you will more likely end-up striking out. Invest steadily with good investment strategies instead of trying to find the next RIM or the next mining company about to explode. This will only distract you from your original retirement plan and delay you ability to retire.

Respect your asset allocation and retirement plan

Making efforts, avoid gambling and establishing a retirement plan is only good if you stick to it and follow it to the letter. Review your retirement plan once a year to make sure you are making progress and that you are not late. Doing this exercise once is not enough, you need to revise your retirement plan annually .

If you want to learn about how to find a good financial advisor, try this series I wrote a while ago:

How to find a good financial advisor

And if you are looking for asset allocation advice, I am currently writing a series over at Green Panda:

Asset allocation basics

Image source: boliston

“Hello Mike, nice to meet you, tell me, what are you doing in life?”

A)   I am me.

B)   I am a father.

C)   I am a passionate man who loves watching hockey, playing golf, blogging, play soccer with my son and making pony tails to my little girl, and.. and.. bla blab la…

D) I am a financial planner / web entrepreneur

I can tell that most people will answer “D”. So if we define ourselves according to our job, what do we become if we quit working?

75 is the new 55

I don’t know if you remember this advertising campaign by London Life but I really liked it!

Many baby boomers dreamed about freedom 55. However, now they have reached this age, they realize they are in a much better shape than their parents or grand parents, that they are at the peak of their career (or close to be) and…. That they still have a mortgage!

Not so long ago, reaching the age of 65 meant that you had not much longer to live. Therefore, retiring at 55 while you are still able to get into a plane to travel down south (forget about backpack trips ) seemed logical. Now, we know that most people will live till 80…85… and probably 90! My own 2 grandmothers are still alive and they are 88 et 89. The worst part is that they are “top shape”; one of them take the plane twice a year, the other one only takes half a pill per day.

Retiring at 55 brings a lot of problems

Funny enough, retiring so young can bring it loads of problems:

#1 Money

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How can you finance 35 years of retirement if you have start working at 30 and start saving at 45 once the kids are old enough and that your mortgage payment is not struggling you to death anymore. Unless you have a bullet proof pension plan, you will need more than 1M$ in cash at 55 if you want to retire.

#2 Society disconnections

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As I mentioned before, we all fine a great part of our life in our job. If we don’t have it, what will we become? Stats show that several young retirees go back to work or fall into a small depression 12 months after they left.

#3 Economic issues

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Having to finance your own retirement is one thing, but the “system” still needs 55 years-old workers. Who will finance the Government pension? The healthcare system? Our schools? For one of the very first time on this blog (and in my life in general), I am talking about a left wing idea. But seriously, if we want our kids to grow in the great country that we know as Canada today, we better keep working and pay our taxes… sigh… it still feel awkward to see those words written by my fingers

#4 Too many people golfing!

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Hey boomers! Think about us! If you all quit at 55, how can I be able to have a place on a golf court! You must stay at work while I can enjoy life

Your take: When do you want to retire?

As I mentioned previously, my goal is to end the rat race sooner than later, however I don’t think I will stop paying taxes and make money that early. But what about you? When do you want to retire? Do you think you will be able to retire at 55? 65? Or never?

Being a financial planner, I create retirement plans for my clients every week. I speak with them to know about their goals, their dreams and their fears about retirement. We look at where they are right now and how they can achieve their financial goals for the next 10, 20, 30 years.

Having money to realize your dream is a prerequisite. Money doesn’t buy happiness? Well let me tell you that if you have some, you will surely be able to buy a few happiness coupons here and there .

All these discussions got me thinking about my own retirement. Having started working 4 days a week at the age of 28, I now make the joke that I will be retiring at 35… This is actually the foundation of our online company: becoming millionaires by age 35. While this is a huge challenge (huge is actually a small word ), I think it is important to have dreams if you want to achieve something in life!

Do I really want to retire at 35?

If retiring means not working, going down south and drinking Strawberry Daiquiris all day, I will not retire at 35. However, I have discovered through discussions with my clients that retiring doesn’t necessarily mean to stop working. It means the end of being forced to do something.

Most of my clients are wealthy and they intend to work until they are 65 or even older. While several of them could afford to retire at the age of 55 (yup, freedom 55 still exists!), they want to work. The only difference is that they will do what they really want most. Many of them have side projects or new careers in mind. This is what brings me to my definition of retirement.

To me, retirement means…

-         Not having a boss looking over my shoulder. Being  financially independent and be able to make my own decisions.

-         Working but not all day, everyday, week in, week out. If I can work 20-30 hours a week, I’ll consider myself as retired.

-         Doing what I want. I don’t mind working on my stuff since it doesn’t feel like working. It’s like being paid to do a hobby. While I would love to be paid to golf or to play with my kids, I still have to find something that will actually bring home the bacon .

-         Definitely quitting the 9 to 5 job. I am already not doing the 9 to 5 every day, so I just don’t want to do it anymore .

-         Spending more time with my wife and children. Life is too short to not spend quality time with the ones you love!

-         Be able to work around the world. My online company provides me this option, I can work anywhere in the world as long as I have a functional laptop and a reliable internet connection.

I don’t really see retirement as not working at all, waking up at 9 or 10 am every day and wandering around all day… this must be quite depressing!

In the end, I guess that I am not looking too much toward retiring young but more towards financial independence!

Your Take: What do You Expect from Retirement?

I would like to know if you aspire to Freedom 55? Or if you think that you will never retire? Do you have any projects for your retirement?

image source: kevin dooley

Now that I have more time since I am done with my MBA, I can make more researches and find some interesting stuff for my blog . There was a recent survey done by TD Waterhouse (their 9^th annual survey) revealing interesting facts about how men and women handle their personal finance. Apparently, we, men, are as dumb as our ancestors (read monkeys!), while women seemed to learn from history and become smarter (I hope my wife won’t read this post!).

Women want more and they are willing to take the risk to get it

Remember I told how women want more? Well they are also willing to take more risk to get it! According to TD Waterhouse survey, 73% of women surveyed didn’t change their investor profile nor their asset allocation. Regardless of the current economic situation, they are willing to take the bet the market will come back up. So here’s my first question; Women didn’t change their investor profile because:

a) They are smart and know that the market will come back up before their retirement.

b) They receive their investment statements and use them for the kids so they can make some drawing without looking at their returns.

c) Their spouse took their investment statements away from them because they have been trading with their RRSP account and they don’t want her to see what they have done.

More seriously, I think women are more responsible and are able to make the difference between a moment of panic and bad investments. Actually, 52% are worried about their investments and only 21% of them have sold a part of their equities to find piece in bonds and other fixed income.

The recession has changed their spending habits.

However, while most of women didn’t touch their investment portfolio, the economic situation has made them change their way of living:

- 48% have postponed a major purchase

- 46% have spent less on their credit cards

- 40% have stopped buying non-essential goods

Then again, they seem more responsible than men (I actually bought a brand new truck and keep spending money on non-essential goods such as a laptop bag and a Black Berry ).

They aim for their goal:

97% of them say that a comfortable retirement is one of their major goal but only 20% say that they feel confident of achieving this financial goal. I guess that most of them are looking for a good financial advisor these days

Savvy women:

It is impressive to see how women can be savvy when they put their shopaholic super hero suit in their wardrobe . The following stats surprised me:

- 97% easily manage their budget.

- 96% save money in case of an emergency.

- 90% are reimbursing their credit card balance.

3 sound financial advices:

Those savvy and smart investor women have 3 great financial advices for us, stupid and emotional men :

- Spend according to your means.

- Start investing sooner than later.

- Do not get indebted.

Fortunately, I already follow the first 2 advices while I seem to not be able to quit leveraging. You are making money with other’s people money, isn’t that right?

Note: This survey was done with 1432 women of 45-65 years old that have exclusive or joint financial management habits.

It has been less than a year since the TFSA was created by the Federal Government and we are already generating a completely new set of strategies with this new tax saving tool. I just came back from a financial planning class where we got a few additional facts and tricks to be used with a TFSA.

The TFSA mixed with the HBP

Don’t we love acronyms? The TFSA, HBP and RRSP can now team up to efficiently create a healthy down payment when buying your first home ;-D

Instead of contributing directly into your RRSP and then use the Home Buyer’s Plan (you can see a very nice description of the HBP over @ Million Dollar Journey), you should now consider using your TFSA first.

Accumulating cash down for a property may take a few years. If you start accumulating at a young age, you may not earn much and your tax rate is usually lower. Therefore, it would a better idea if you start accumulating money within your TFSA.

Then, once you are close to purchasing your property, withdraw from your TFSA investment to contribute into your RRSP in order to trigger a higher tax return. You can now benefit from the HBP by withdrawing from your RRSP (after waiting more than 89 days), you receive a nice tax return and you just created additional space in your TFSA (assuming you made money with your investments). Isn’t that great?

Parents can help boost your TFSA

It can be even better if parents want to help. As there are no tax implications with the TFSA, no attribution rules either. As such, parents can fully contribute to their children’s TFSA (starting age at 18) and nobody will ever get taxed on the investment return

When should you die?

When considering the best timing for death, I would choose January 2^nd. In this way, my estate would benefit from an additional 5K to invest in my TFSA (which will be rolled over to my wife). Your estate liquidator will be able to use your previous year’s income to contribute to your RRSP as well. Since we all have to die one day, I reserved my date already

Creating contribution room or avoiding high tax investments?

There is a big debate about the TFSA with regards to its usage. Should we invest in bonds and CDs since they become tax free (instead of being taxed in the highest tax bracket) or should we invest in the stock market in order to create additional contribution room upon withdrawal?

I say it depends on your goal. If you do not plan on using your TFSA funds for several years, you may want to invest in the stock market and hope for the best. On the other hand, if you want to buy a house in 12 months, you might consider safer investment products such as bonds

The TFSA was created for poor people in the first place

Did you know that the TFSA was created to protect poor individuals? At retirement, all sources of income are calculated when it comes time to decide if you are entitled to receive additional subsidies from the government or to know if you qualify for tax credits.

So, if you withdraw a 2-3K per year from your 20K RRSP, you may pay up to 50% in taxes (considering the loss of tax credit and additional government support). This is why transferring money from your TFSA to your bank account can be very interesting for low income individuals.

So, this is what we had looked at during our TFSA class… Do you have any other strategies you want to share about your TFSA?