No one – and I mean no one – fulfills their dreams without making some mistakes along the way. Making mistakes is integral to the journey. After all, how are you expected to learn and grow if you don’t have mistakes from which to learn and grow?
You’ve heard me speak about my mistakes before. And they were doozies! If I had to choose, my biggest mistake of all was not investing in low-cost, well-diversified, equity-based exchange traded funds as soon as I possibly could. Instead, I stuck to dividend-generating ETFs for far, far too long. I didn’t correct this mistake until October of 2020… sigh… Some mistakes will bite you harder in the ass than others, and this one still stings.
My second biggest mistake was not appreciating that I had another 20 years of investing in my future after selling a couple of rental properties. Instead I took that money and I paid off my primary residence’s mortgage. That was a colossal error! When all was said and done, I had a nice six-figure cheque in my hand. I should’ve taken that money and invested it into an equity-based mutual fund. (I sold my rental properties right before ETFs started to become well-known in Canada. Before ETFs arrived, I invested into mutual funds.) Yes, I would’ve kept my mortgage longer. The flip side is that I also would’ve been fully participating in the bull market than ran at a steady clip between 2009 and 2020. There’s a good chance I would’ve been retired now had I simply kept my principal residence’s mortgage for a few extra years.
My third biggest mistake was listening to people who told me not to be too hard on myself. I’ve been investing since I was 21. I was fortunate enough to max out my RRSP early in my career, and I didn’t immediately know what to do with the extra money over and above my RRSP contributions. So I increased my mortgage payments each year instead of increasing my investment contributions. After I’d eliminated my mortgage, I took some time to treat myself to vacations and a few other luxuries. Given the benefit of hindsight, I can admit that I should’ve simply thrown a good chunk, if not all, of my former mortgage payment into my investment account. Listening to the advice to let up the gas on my investing was not in my best financial interest.
No sense crying over spilled milk, right? I eventually learned from my mistakes and I have since course-corrected. Despite some very big errors on my part, I’ll still be able to make my dreams come true.
Three instrumental decisions have led me to this place in my life. The catalyst for my current financial situation was the decision to start investing. I know that sounds trite, but you would be amazed at the number of people who never start. Those who invest $0 today will have $0 waiting for them tomorrow. It’s that simple. Maybe they get an inheritance, or win the lottery. But it’s more likely than not that neither of those things will happen. The vast majority of us have to invest our own money if we expect to have any in the future.
I made 2 more decisions that were instrumental in helping me get to this point with my money:
- Live below my means, aka: stay out of debt.
- Automatically invest a portion of my paycheque every time I got paid.
When I started my investment journey, I was in debt. I had student loans, vehicle loans, and a mortgage. I didn’t let debt stop me. Contrary to a lot of advice, I invested while I paid off my debts. Thanks to some bonuses at work, I was able to eliminate my student loans within a couple of years. Those former student loan payments were rolled into my car payment so that one disappeared fairly quickly too. And I was fortunate enough to pay off my mortgage in short order thanks to a couple of real estate investments that paid off due to an exceptionally hot real estate market.
Once I was out of debt, I stayed out. Was it easy? No. Did I have to delay gratification for a month or two? Yes. Was it worth the wait? Absolutely yes!
Staying out of debt hasn’t stopped me from doing any of the following things:
- travelling to Europe 4 times in 8 years
- going to concerts at home and abroad
- maintaining my theatre subscription to Broadway Across Canada
- updating my wardrobe as needed
- taking road trips
- dining out with friends and family
- renovating my home
- replacing my vehicles
- making new friends
- spending time with family and those I love best
In short, staying debt-free has allowed me to use my money to live life on my own terms. Since paying off my mortgage, I’ve never had to commit my future income to paying off debts. Big purchases are paid with a credit card and the credit card is paid off with savings. Yes – I’m old school that way. I save up for things first before I buy them. It’s old-fashioned but it works like a charm, every single time. I’ve yet to have a vendor say “No, sorry. We won’t take your money today because you didn’t give it to us yesterday.”
Vendors will be just as willing to accept your money after you’ve accumulated a pile of it to buy your preferred whatever-it-is.
When I switched jobs, I didn’t have to worry about missing any payments to creditors while I waited for my new paycheque to start. I had the luxury of having some money in the bank to pay for my life while I adjusted to a new pay schedule. There was no fear of what could happen to my credit score. As a matter of fact, I rarely ever think about my credit score because I don’t apply for new credit. I don’t need more credit. I have cash, which is superior to credit. Owing no one is a financial super-power, and it’s available to nearly everyone.
Automatically investing from every paycheque was the step that put the sizzle in my steak! It only took me a few minutes to set up the automatic transfers that I needed. As my income went up, I increased the size of my investment contribution proportionally. I started at $50 per paycheque and moved up from there. Never once have I regretted my choice to invest automatically. Truth be told, I’ve never even heard of anyone who has wished that they had saved less money for their future.
You know what I love best about automatic investing? I never have to think about it! Money is skimmed from my chequing account to my investment account every two weeks without any effort from me. I have enough other things on my plate to think about every week, so eliminating the bi-weekly task of transferring funds is wonderful. The money goes where it needs to and I can sleep peacefully, knowing that I’ve taken another step towards building Future Blue Lobster’s financial security.
The other benefit is that I can happily ignore the Talking Heads of the Financial Media. I don’t pay any attention to whether the stock market is up or down. Negative news doesn’t influence how or when I invest. My money is transferred and invested into broadly diversified, equity-based ETFs. There is little financial analysis on my part and I love it! I don’t want to spend hours studying the stock market to chase outsized returns. I’m quite happy earning the long-term average return and watching my money steadily grow over the long-term.
I have read The Simple Path to Wealth by JL Collins. It’s a great book! And the principles espoused in that book work, so that’s why I follow them. Consistent investing in the stock market over a long period of time is a highly effective strategy, regardless of how much money you invest. Obviously, investing more sooner means a higher final amount a few decades later. Don’t let the size of your contribution discourage you from investing as soon as possible. Remember, I started with $50 every two weeks. Had I known better earlier in my life, I would’ve started with $25 or even $10.
The most important thing is to start. The second most important thing is not stop. Making mistakes is part of the process. At the end of the day, your dreams will still come true.
