Growing Wealth Through Investing with the Sassy Investor

Growing Wealth Through Investing
with the Sassy Investor

 

The money journey is a long road for some. We know that it’s best to pay off debt as fast as possible, but then what? Do you know where to start saving for retirement, a home or other big value goals?

 

How do you know where to start investing, and what if it's too late? Michelle Hung of the Sassy Investor shares her advice as a CFA. #investing #wealth #advisor #money #investor

 

I reached out to Michelle Hung, an Chartered Financial Analyst and advisor in Ontario, and asked her some questions. My questions are in bold, and her answers follow.

 

Who is Michelle Hung? 

 

Michelle Hung is the founder of the Sassy Investor.  An advocate for financial literacy, she is on a mission to spread the word on the on the importance of financial independence and how to achieve it.  She graduated from the University of Waterloo in 2008 with a Bachelor’s of Mathematics, with a specialization in Finance.

She spent seven years working in investment banking and venture capital in Toronto.  Through her experience in advising companies in capital raising, mergers & acquisitions, and initial public offerings, she has a rich understanding of capital markets and how it all ties in with the average investor.  In 2014, she obtained the Chartered Financial Analyst (CFA) designation, a globally recognized investment management credential.

 

savvy Investor

 

What does your designation of being a Chartered Financial Analyst represent?

 

The CFA (Chartered Financial Analyst) is a globally recognized investment management designation that holds its charterholders to one of the highest fiduciary standards in the world.

 

Do you often work with new investors?

 

Yes, I teach women, specifically, how to invest, step-by-step, what they need to know and what they need to do to be able to build and manage their own investment portfolio.

 

What is the first area you suggest new investors start with?

 

I always say, you have to start with YOU. That is, looking at:

  1. What you owe
  2. What you own
  3. What you make
  4. What you spend
  5. So you finally get to what you want

 

It starts with looking at one’s personal finances because there are a few things they’d have to tackle before starting to invest, like clearing consumer debt.  Then they’d have to look at what they want and when they want it, because money being allocated to an upcoming wedding in a year, for example, will not be invested, but instead, put into a high-interest savings account.

 

What advice do you have for people who are starting late?

 

It’s never too late. Too late is never starting! Many people over-estimate their age and when they should start investing, and then give up. I’ve had people in their early 30s believe they were starting too late. There are solutions for every age, every stage in life – they just need to seek good advice.

 

It’s never too late to start investing.There are solutions for every age, every stage in life – they just need to seek good advice. - Michelle Hung, The Savvy Investor Click To Tweet

 

Do you believe in paying off debt before investing?

 

Yes, particularly consumer debt (credit card debts), or any debts that bear a high interest rate.

 

Do you recommend using real estate as an investment vehicle?

 

It depends on your situation. To throw all of your eggs in one basket, like real estate, is not smart. Real estate has its risks and many people see it as the only solution to wealth building, but it’s not the case.

 

I bought my first house in university and rented it out to students and I discovered how labour-intensive it was! And then when I was selling it, I had to bear all of the carrying costs while it was being listed and shown to potential buyers.

 

On the other hand, there are alternative solutions to adding real estate into your portfolio mix, and that is investing in REITs (real-estate investment trusts), where you get the exposure to real estate, both commercial and residential, but you don’t need to be a landlord and fork out your labour and tons of cash.

 

What else do you recommend for new investors?

 

Diversify geographically. North Americans tend to have a “self-centred” mentality where we only deem Canada/ US as the only “safe” countries. Imagine, you’re American, get paid in US dollars, your employer is American and maybe you get some stock-options or bonus pegged to the performance of your employer – it’s a huge bet on your home country, especially if your investment portfolio is comprised of American companies as well! No single country is immune from an economic downturn, so it’s important to diversify geographically.

 

Countries like Belgium, Switzerland, Singapore, Japan, Panama – we embrace travelling to these countries, so why not invest in them as well? Each country offers a different type of economy and adding that to your portfolio mix can have some great benefits, like when the markets at home experience volatility from political issues, for example.

 

How can people reach you? Are you on social media?

 

You can reach me on:

Instagram: https://www.instagram.com/thesassyinvestor/

Facebook Group: https://www.facebook.com/groups/sassyinvestor/

Website: https://thesassyinvestor.ca/

Also, stay tuned for my book coming out this winter!

 

Thank you, Michelle, for sharing these important words with our readers. It’s critical to know it’s never too late to start, no matter what your age is. Hopefully we will get a chance to talk to Michelle again when her new book is out! 

 

If you are interested in real estate investing, I recommend:

Real Estate: 10 Simple Steps on Buying and Selling Property in Ontario

411 on Home Inspections: 5 Experts Weigh In

Save My Rental: What You Need To Know About Tenant Selection

 

New to TFSAs and RRSPs? Check out my e-Book on Amazon:

investing in RRSP & TFSA

 

This post may contain affiliate links, meaning, at no additional cost to you, I may earn a small commission if you choose to purchase through these links. Please see my disclosure for more information. Amazon Affiliate Disclosure: I am a participant in the Amazon Associates Program, an affiliate advertising program designed to provide a means for me to earn fees by providing links to Amazon.ca and affiliated sites.

Does Money Breed Insensitivity?

Does Money Make You Insensitive?

 

Many of you may have listened to Paula Pant’s Afford Anything podcast with Suze Orman where Orman completely destroys the idea of FIRE (Financial Independent Retire Early). I was utterly speechless at the comments that she made.

 

Orman’s Perspectives

 

Orman speaks of the money she has, her private island, her prior 5 houses and 5 cars, and the tens of millions (or more) that she has made over her lifetime. She thinks retirement requires millions of dollars, and that $80 thousand a year is not enough to live on.

 

She goes so far as to talk about extremes, like what if a pole goes through the front of your windshield and you are disabled? She also thinks parents should pay for private school and post-secondary education for children.

 

When did people with money forget what it’s like to not have money?

 

What Orman did not realize was that she was so opinionated, she made listeners like me absolutely sick. From the idea that lower income earners can never dream of FIRE, and that FIRE will break our economy, it was demoralizing.

 

Orman is not the only one who forgets what it’s like to not have a 6-figure income. My background of working for professionals reminds me of the differences between the haves and the have nots.

 

Does Privilege Breed Insensitivity?

 

Some people find it encouraging to see others who have amassed a large income, but there are others who simply did not have the means to attend a post-secondary education institution for the extra years it takes to become a doctor, lawyer, or other professional designation. What bothers me the most is when the assistant/employee/lower-wage earner is clearly an important and necessary part of the foundation of a high wage earner’s enterprise, and yet they are treated as unnecessary, and paid either under a living wage or just at a living wage.

 

I want to ask them, was there a time when you did not know how you were going to pay rent? Did you ever have to decide between going on a vacation or investing in your retirement? Did you ever stop to think that your employees do not have the same options as you in life? And yet, without them, you would not be as successful as you are today.

 

I spoke about the inequalities in my minimum wage post, and still wonder what it will take for people like Orman to realize that the options for her and the options for the rest of us will never be the same.

 

Some of us will be fortunate, and may have a successful career, minimal health issues, and be able to plan for retirement. Some of us will always be playing catch up; hoping we can work long enough to save for retirement.  But for those who are extremely wealthy, why do you forget the struggles? Why do you discount the privilege?

 

While I am not saying that those who are wealthy beyond their needs should give handouts to others, I am really hoping that they consider paving the way for some others to find opportunities. Many wealthy people use charitable donations to minimize taxes, but when was the last time they stepped out of their private island comfort zone and gave a hand up? Got their hands dirty, and blessed people who work hard and may never have enough to travel their continent, never mind the world?

 

Callout to the Wealthy

 

This is a callout to all those who have had tremendous success. Please reach out to someone and help them on their way. People like Orman need to stop putting others down for not having as much as she was blessed with, and she is not a matriarch or model for the rest of us. She is someone who has been fortunate and forgets that our life doesn’t need to be 45 years of steady work in the event of a tragic accident or dire straits.

 

The FIRE movement will still pay taxes, and will open up other jobs that may not otherwise be available. It’s all about options, and when people like Orman tell you that it’s stupid to desire the freedom of options, and that her words are “truths”, she forgets that there may be other paths, and other roads which can lead to the same place.

 

Are you pro FIRE or do you think Orman is right that it’s a slippery slide to the end? Do you think privileged folk forget the rest of us? I’d like to hear from you.

 

This post may contain affiliate links, meaning, at no additional cost to you, I may earn a small commission if you choose to purchase through these links. Please see my disclosure for more information. Amazon Affiliate Disclosure: I am a participant in the Amazon Associates Program, an affiliate advertising program designed to provide a means for me to earn fees by providing links to Amazon.ca and affiliated sites.

31 Ways to Max Out Your TFSA (or IRA)

TFSA savingsWhy $5,500? 

$5,500.00. This is the amount that you can contribute to a TFSA or IRA this year. Let’s talk about how you can max it out, or if you don’t have a TFSA or IRA in your country, how you can max out your savings and investing power as well.

If you aren’t sure what a TFSA is, start here. If you do not have TFSAs in your country, scroll down just a little more.
(IRA information can be found here. Remember, I’m a Canadian gal, so IRAs are not my forte.)

TFSA 31 ways to save

TAX FREE SAVINGS ACCOUNTS

A Tax-Free Savings Account is an account that is designed to help you save money. The funds that are deposited into a TFSA account can be invested, and the earnings from the account are tax free. Since you do not get a tax deduction for contributions to a TFSA, the benefit is from the tax-free earnings, and the ability to withdraw from the TFSA at any time without penalty.

There are guidelines and rules as to how much you can contribute into a TFSA, and how much you can withdraw and re-contribute.

Here’s the example from the CRA:

“Since opening her TFSA in 2009, Jenny has contributed the maximum TFSA dollar limit in each year. By the end of 2016, she has accumulated a total of $46,500 in her TFSA account. In 2017 Jenny makes a $5,500 contribution, the TFSA dollar limit for 2017. Later that year, she withdraws $3,000 for a trip. Unfortunately, her plans change and she cannot go. Since Jenny already contributed the maximum to her TFSA earlier in the year, she has no TFSA contribution room left.

If Jenny wishes to re-contribute part or all of the $3,000 she withdrew, she will have to wait until the beginning of 2018 to do so. The $3,000 will be added to her TFSA contribution room at the beginning of 2018.

If she re-contributes any of the withdrawn amount before 2018, she will have an excess amount in her TFSA and will be charged a tax equal to 1% of the highest excess TFSA amount for each month that the excess remains in her account.”

TFSAs are not only for retirement savings, but are also great vehicles for saving for a house purchase, a trip, a new car, or anything else you are working towards. 

TFSA 31 ways to save

How to find $5,500 over the year:

Now that we are clear on how to use a TFSA, let’s focus on how to max it out. In 2018, the maximum contribution amount is $5,500.  This the goal to contribute.

The Simple Way:

There are 52 weeks in a year. $5,500 divided by 52 = $105.77/week. You could set up an automatic transfer for $105.77 weekly.
Are you paid bi-weekly? Your automatic withdrawals should be set at $211.54 to save $5,500.00 a year.

How to fill that account without using your weekly income:  

Bonus Pay

Let’s say you receive a bonus each year of $1,000.00 as part of your performance package. If you directly contribute that to your TFSA, your weekly savings would decrease to $86.54. That’s a lot more manageable, but you need to know yourself and make sure that bonus goes directly to your savings account: do not pass go, do not spend $200!

Raises

If you receive a raise at work (congratulations!), immediately calculate the difference between the previous pay amount and the new pay amount. Set up an automatic transfer to deduct that amount from your account and move it to the TFSA before you see it in your chequing account. Resist the urge to inflate your lifestyle – those few dollars will serve you better if saved for a future time.

Overtime

Did you stay to finish a project, or to complete paperwork? Maybe you signed up for a few hours here and there. Move that money immediately to your TFSA. More money for savings, and no change to your weekly pay. Win Win!

Expenses

Do you get reimbursed for gas for running errands at work? Bank it. Do you get tips? Bank it. Anything extra, bank it.

Tax Refunds

Tax refunds is the government’s way of returning the excess money it collected from you throughout the year. At the same time, it’s a great feeling if you have a few bucks (or many bucks!) coming your way. Since a tax refund is not part of your weekly budget, bank it. You will not miss it, and it will go a long way to filling up your TFSA.

Declutter for Profit

My method for decluttering includes four boxes. I have a KEEP box, a TOSS box/bag, a SELL box and a RELOCATE box.
Without going into a lot of detail:
Keep: things that I want to keep
Toss: things that are garbage, and things that have no value to someone else
Sell: things that are still in good condition and are unwanted. I start with a sell box, and anything not saleable is donated.
Relocate: things that belong in another room or part of another project that need to be dealt with at another time.
When your sell box is full, it’s time to decide the best way to sell these items. You could have a yard/garage sale, vendor sale, sell online with Craigslist, Kijiji or Ebay, or any other method of posting your wares. (There are tons of resources for how to price your used goods, but the easiest way I find the going rates is to look at what others are selling it for.)

Any profits that you receive, you know what to do. Bank it!

No Spending Challenge

Challenge the family or your partner or yourself to not spend money in a category for a period of time. That’s the equation. What you save, bank it.

Example:
For two weeks, your budget usually includes eating out 2-4 times. Instead of eating out, challenge yourself to make from the pantry. Take the money from eating out, and bank it!

For a month, challenge yourself to find no-cost entertainment. Take that amount saved, and bank it.

TFSA 31 ways to save

Hustle a little

Have you looked into any side gigs? Most common side gigs for cash:

  • Listings for one-time assistance, like handyman items or snow shovelling/grass cutting
  • Errands for seniors or housebound individuals
  • Haul loads to the dump
  • Caring for children, pets or houses
  • Clean houses or offices
  • Be a (paid) companion or assistant to someone with a disability or to a senior 

These are just a few examples of what you could spend a couple of hours on, and make some extra dough.

Hustle a bit more

These ideas tend to be more permanent or may require more preparation time to set up:

  • Start a landscaping/grass cutting business in the neighbourhood
  • Sell products from home (see more about that here)
  • Drive for Uber or Lyft
  • Seek out a part time job
  • Build an online business
  • Resell goods online or in consignment stores
  • Tutor or teach a skill

Cut the fat

By making changes to what takes the money OUT of your wallet, you can start directing more to your savings. Think of what is automatically withdrawn from your accounts as these are likely to be missed when considering where to tighten a budget. Here are some ideas where you could save (up to) enough to fill that TFSA:

    • Switch to no-fee banking
    • Move emergency funds or other savings to a high interest savings account
    • Cancel credit cards with annual fees in favour of one without
    • Music subscriptions: do you use this? Can you get it for free? Can you do without for a while? Is there a family plan instead of paying individual rates?
    • Television: consider downgrading or cancelling cable and subscription programs in the summer. A lot of people are outside most of the time, and wouldn’t miss the programming.
    • Cell phone: are you paying for any extras? Have you called and asked for a lower rate? As cell phone services are changing all the time, look around for a cheaper option. If you can’t find one, then negotiate to keep a rate the same in exchange for your contract. (If you are signing a two-year contract, you could ask to keep your rate plan from before and avoid the new customer increase.)

TFSA 31 ways to save

BIG ways to save:

  • Do you need a three-bedroom house? Could you live in a two-bedroom apartment? Consider the cost of utilities, rent, taxes, etc. Can you downsize and live as well?
  • Depending on the needs in your house, do you need multiple cars? Are you living somewhere that you could downsize and save? Could you use occasional services and save as opposed to paying for maintenance, gas, insurance and/or car payments?
  • Do you have a collection that you are no longer interested in? Are there other collectors that would pay for your collection? (Hard questions: do you have anyone to pass it on to, and would they appreciate it? If not, then you might be kinder to your children by liquidating it now for what it’s worth, instead of forcing them to feel guilty and not knowing the true value.) Do you have a room full of Beanie Babies, vinyl’s, model cars, Barbie Dolls, etc?
  • Do you have a second home, like a cottage or trailer, that you do not use as often as you once did? Can you rent it or sell it?

Do you have collections? Do you have anyone to pass it on to who would truly appreciate it? If not, then be kinder by liquidating it now for what it’s worth, instead of creating survivor's guilt about selling it for less than its… Click To Tweet

DID YOU KNOW?

If you save $5,500 in your TFSA account annually, and invest with a modest 6% return, here’s your savings over twenty years: (source)

 
Year:  Contribution 6% Return
Year 1 $5,500 $5,830
Year 2 $11,000 $11,680
Year 3 $16,500 $17,881
Year 4 $22,000 $24,453
Year 5 $27,500 $31,421
Year 6 $33,000 $38,806
Year 7 $38,500 $46,634
Year 8 $44,000 $54,932
Year 9 $49,500 $63,728
Year 10 $55,000 $73,052
Year 11 $60,500 $82,935
Year 12 $66,000 $93,411
Year 13 $71,500 $104,516
Year 14 $77,000 $116,287
Year 15 $82,500 $128,764
Year 16 $88,000 $141,990
Year 17 $93,500 $156,009
Year 18 $99,000 $170,870
Year 19 $104,500 $186,622
Year 20 $110,000 $203,319

WOW

In twenty years, your money has nearly doubled – and that’s with a modest 6% return. If you invested with a 10% return, you would have $318,376! 

There are more than thirty ways to save and make money in this article. Between that and a weekly automated savings, and the motivation from you to do the work, there is a 100% chance of success.

AND… if you fill your TFSA to the brim, then move on up to door #2: Your RRSP!  Follow me on Twitter, Instagram and Facebook for more how-to money advice. You can also sign up for email updates here (it’s free!).

TFSA 31 ways to save