Janea Bellay

Here are a few tips to ensure you invest successfully and smartly!

• Spend 1/3, Save 1/3, Invest 1/3 — Determine your net cash flow that is available and start saving! Click here for a calculator to determine what you could be putting away into savings from your income. Normal people usually save about 10% of their income. Wealthy people save in excess of 15% of their income! How much are putting away into savings, RRSPs, Pension, or other retirement funds?

• Don’t Panic – Some investors tend to re-allocate their assets or redeem all their units based on market fluctuations. Even though the markets are not doing well this fall, this is no time to make any decisions on your portfolio. Mutual funds are long-term investments and studies continue to prove that clients who hold their fund for a longer term usually generate better returns while reducing risk. Regular shortterm trading activity in a mutual fund has potential to harm the client’s overall return and will increase the risk to the investor’s portfolio – LEAVE IT TO THE EXPERTS! THE FUND MANAGERS!

• The Latte Factor – What are you really spending your money on? Do you absolutely need that Starbucks Latte everyday? Think about if you cut it out, that’s $4/day, $20/week, $80/month you could contribute to your retirement plan. Find out what you are really spending and cut back on what you don’t need. What are the things in your life that you are attached to that you can consider letting go?  Click here for a great financial planning tool to help you get started.

• To Build Wealth, You Must Pay Yourself First — Take advantage of compound interest. The miracle of compound interest does note depend on how old you are. The only thing that matters is how long your money has been invested and at what rate it is growing at. The sooner you start saving, the less you will have to put away.

• Don’t Let the Government Get Rich – Think about this – the first 3.5hours of each day of work, that money goes straight into the government pockets by taxes. Take advantage of your RRSP contribution room and the new Tax Free Savings Accounts (coming January 2009). Make sure 1 hour of each work day is going into your savings, pay yourself first and don’t let the government get rich!

• Get Your Spending Under Control –

1. Know what you earn.
2. Estimate what you spend each month.
3. Track what you really spend.
4. Start paying CASH.
5. Give yourself a credit card haircut.
6. Never spend more than $100 without taking 48 hours to think about it.

• Don’t Assume You Are “Covered Through Work” – Chances are your group benefits plan at work doesn’t cover everything. Disability insurance is not critical illness insurance. Some Disability Insurance plans only cover you while you are at work. And remember, your life insurance at work is only as good as long as you are there and only until age 65…then what? Life insurance is very expensive for healthy 65 year olds.

• Take Advantage of Work RRSP and Pension Programs – This is what I like to call FREE MONEY. Make sure you are maximizing your group RRSP and Pension plans through work. In most cases your employer will match your savings up to a certain percentage. THEY ARE GIVING YOU FREE MONEY. I have never heard of anyone who would turn down free money. So why would you with your group RRSP and Pension plans? Even if you are in your job for less than one year, take advantage of it. It will always pay off. And in most cases, you do not have to pay taxes on this money until you need it in retirement.

• Write Down Goals — What do you want to do in 2 years? What do you want to do in 5 years? 10 years? What do you want to do with retirement? Will you achieve your goals on your current savings lifestyle.

• Build A Portfolio That’s Diversified — Make sure you have your money in a mixture of savings and investment vehicles such as RRSPs, Mutual Funds, Stocks, Real Estate, Cash. Don’t put all your eggs in one basket. As we have seen with the stock markets decline of August and September 2008, those with all their eggs in the stock market basket are sweating bullets!

• Do You Have Control Over Your Money — If you want to retire early and you have not maxed out your RRSP contributions, is there a way you can earn extra income? What about a 2nd business on the side? Consider e-Bay, franchising, network marketing, direct selling. There are thousands of ways to earn extra income so that you can retire rich early!