Tag: money mistakes

DreamChasers: Making Mistakes to Make Dreams Come True!

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:

  1. Live below my means, aka: stay out of debt.
  2. 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.

I’ve Hit a New Money Milestone!

Indulge me for a moment as I pat myself on the back for hitting a pretty significant-to-me money milestone! When I was updating my various spreadsheets, I realized that I had done something I’ve only ever read about. In the first six months of 2024, the amount of dividend income that I’ve received exceeds the amount of dividend income I earned for the entire year of 2019! This means that, within the space of only 5 years, I’m on track to double my annual dividend income.

Not too shabby at all…

As long-time readers know, I’ve made many money mistakes. I’m a DIY-investor and I didn’t have the benefit of blogs, podcasts, and websites about money when I started. It took me a long time to course correct. Even still, the one thing I did absolutely right for the past 16 years of my investing journey was to invest money from every paycheque. (I will admit that I started investing in 2004, but then the stock market crashed in 2008 and I stopped investing for 6 months. While I didn’t sell anything, the fact remains that I completely missed the fantastic buying opportunity. I still think about what could’ve been had I not acted like a dummy…sigh…)

As my debts got paid off, I re-directed the lion’s share of those former payments to my investment account. As a teenager, I started down this path by investing $50 from my bi-weekly paycheque. By the time I had my first adult job, that amount was a few hundred dollars every two weeks. When my mortgage and SUV loans were paid off, those amounts meant I could invest atleast $1,000 every two weeks. I was still living below my means, instead of allowing money to burn a hole in my pocket. Trust me – there was still money being saved for short-term goals like travel, renovations, and annual insurance payments. Bottom line, I invested first and lived on what was leftover.

And I’ve always used a DRIP for all of my dividends. DRIP stands for dividend re-investment program. I’m nearly at the point where my dividend income matches the amount of money I contribute to my portfolio every year. If all goes according to plan, I’ll hit that particular money milestone in 2026. Until then, I will continue to revel in the fact that my DRIP is causing my portfolio to grow exponentially faster than it would if I were relying solely on my contributions to increase its value. At this point, I earn returns on my contributions and my DRIP units. This is so much better than only earning returns on my contributions.

Today, my choices are paying off. This year, I’m on track to have my dividend income exceed my planned spending. This is another spectacularly fantastic money milestone! According to the wisdom of the internet, I’m financially independent because my portfolio is covering all my costs. At this point, I can live off my dividends and I don’t have to work anymore, so long as nothing goes sideways. Is that amazing or what?

On some level, I knew I would hit this target eventually but seeing it on my spreadsheet has made it very, very real. In the first 6 months of 2024, my portfolio has covered every single purchase that I’ve made.

So what changes?

Not much. I’m going to bask in the joy of this accomplishment, then go back to my regularly scheduled life. I’m content with how I spend my money. There’s very little more that I want. And while I’m technically financially independent, the fact remains that I’m “only” Lean FIRE. I want a little more margin before I hang up my gloves. I’d like for my dividend income to exceed my expenses by atleast 20%. That way, whatever’s not spent can pile up and pay for those inconvenient and irregular expenses. In short, my cash cushion needs a little more padding before my employer and I part ways.

My plan was very simple, but it was never, ever easy. It took me along time to get here, mainly because of some mistakes I made along the way. When I learned better, I did better. On top of that, there were always temptations to spend my money on something. I remained laser-focused on my priorities and did what needed to be done to ensure that my money only went to that which was most important to me.

Now, my portfolio is paying me more money every year. Five years ago, I wouldn’t have imagined that I’d earn an entire year’s worth of dividends in only 6 months. Yet, here I am – hitting my goals way sooner than I’d thought I would and still sticking to my plan. This is a day to celebrate. Yay, me!

Mistakes I Made on the Way to the Double-Comma Club.

This week, I heard a statistic on YouTube that 49 is the average age for people to become a millionaire in the United States. I can only assume that it’s approximately the same for Canadians. Speaking from personal experience, that statistic is bang on. And I managed to do it while making some very big mistakes.

Mistake #1 – Buying mutual funds instead of exchange traded funds

When I first started investing, I bought mutual funds instead of exchange traded funds, i.e. ETFs. One of the reasons for this was that ETFs were not widely known in Canada at the time. I can’t be faulted for working with the information I had at the time.

Where I can be faulted is for continuing to invest in mutual funds after I learned about ETFs.

See, the only beef I have with mutual funds is their price. The management expense ratios, aka: MERs, of mutual funds is always higher than the MER of the comparable ETF. Investors have to pay MERs to the financial institutions that offer mutual funds and ETFs. Fine – people need to get paid. I understand that.

However, there’s no evidence that paying higher MERs results in better outcomes for investors. If anything, it’s the opposite. Paying higher MERs means smaller portfolio values for investors.

Over a long-enough timeframe, the difference in MERs can mean seeing hundreds of thousands of dollars less in my portfolio. That’s a very bad thing. It means that investors paid more for management expenses and wound up with less money. Check out this calculator and play with the numbers for yourself if you don’t believe me. Adjust the expense ratio and you’ll appreciate difference there is between an MER of 2% and an MER of 0.5%. The money that doesn’t go to the final institutions is money that stays in your portfolio.

Eventually, I realized that keeping my investments in mutual funds was only hurting me. So I sat down, completed the necessary forms (which took about 10 minutes), and sent the proper instructions to have my money moved into ETFs. I have never regretted my decision to make the switch.

Mistake #2 – Investing for dividends instead of for growth

This mistake happened because I’m an inherently lazy investor. The idea of passive income via dividends appealed to me! I wouldn’t have to work and money would still come to me?!?!! Once I’d understood what dividends were and how to get them, I couldn’t invest in dividend-producing assets fast enough.

So, instead of investing in equity-based mutual funds and ETFs, I invested in the dividend equivalents. Every month, I earned a few dollars. Eventually, I was earning hundreds of dollars each month. That sum crossed the 4-figure amount. Today, my dividends are enough to cover all of my basic annual expenses for food, shelter, transportation, and clothing. There’s even enough to cover some of my wants, stuff like short trips, concerts, and theatre tickets.

I try not to think about the fact that I would’ve been able to retire 5 years ago if I’d invested that same money into equity-based products. By investing solely in dividends, I missed watching my portfolio benefit from the 11-year bull run in the markets that happened between 2009-2020. If I’d invested in growth ETFS, my money situation would be so much better. I can only imagine that my portfolio would be worth double – maybe even triple! – what it is now.

I corrected my mistake in October of 2020. As the stock market was recovering from the pandemic, I tweaked my investment plan. (I should’ve made this move in April of 2020, but… coulda-shoulda-woulda, right?) Instead of investing in dividend-generating ETFs, my contributions are directed towards equity-based ETFs. The difference its made to my portfolio is remarkable. Even during the downturn we all saw in 2023, my portfolio was happily chugging along. I’ve more than recovered what I lost during the steep market declines of 2020.

Mistake #3 – Not understanding the 4%-rule

Admittedly, it can take me a very long time to understand certain things. For example, I still don’t understand the importance of the P/E ratio when assessing stocks. However, I’m not a stock-picker so I don’t worry about this blank spot in my understanding of investing. If I ever do decide to become a stock-picker, I’ll study the topic of P/E ratios and go from there.

One of the investment concepts that had me stumped was the proper application of the 4% rule to my portfolio. I didn’t understand how to use the percentage to fund my retirement. Sure, I could appreciate that 4% of $1,000,000 is $40,000. What I didn’t understand was whether that $40,000 came from the $1M-principal amount or did it have to come from the earnings generated by that principal? And what was I supposed to do if my portfolio had an annual return of less than 4%?

In other words, I always wondered what the 4% represented. Was I supposed to be taking 4% out of my portfolio’s principal every year in retirement? Or was I supposed to aim for an annual return of 4% and then only withdraw those earnings?

Roughly 5 years ago, I started to fully understand that the 4% rule traditionally means taking out 4% of the principal value of one’s portfolio and living on that amount. The 4% rule is meant to effectively decrease the value of one’s portfolio so that a person can pay for food, shelter, and living expenses in retirement.

So if I started with $1,000,000, then I’d take out $40,000 and leave the remaining $960,000 invested. Hopefully, the remaining $960,000 would still be earning 6% or more. Then, those earnings would be added to the $960,000. The following year, I would withdraw 4% of $960,000+earnings (whatever that amount wound up being)… The remainder after year 2’s withdrawal would remain invested to earn more money, and then I’d repeat the cycle in year 3.

This is not a bad strategy. It does mean that the portfolio is canabilized a little bit each year. Also, if the annual return is less than 4% in any given year, then the value of the portfolio decreases faster than the investor may want it to.

That said, my personal goal has always been to live on the dividend income earned from my portfolio. By living on the earnings, my portfolio remains intact. In other words, I don’t have to sell my portfolio in 4% chunks every year. The assets within my portfolio will continue to benefit from compound growth and my earnings should increase accordingly.

Mistake #4 – Ceasing my contributions during the 2008 recession

This one is a doozy. It’s one of the worst investing mistakes I could have made, aside from the two mentioned at the end. I try not to castigate myself too badly because I was young, and far less informed than I am now. The internet didn’t offer the same kind of information that it does now, and I had few real life examples to emulate. I made the decision that I thought was best at the time. I just happened to be very wrong.

When the stock market crashed in 2008, I saw the value of my portfolio go down. I stopped investing. I’d had an automatic transfer in place. Every two weeks, a certain amount of my paycheque went into my investment account where it would be invested into pre-selected mutual funds.

When the stock market dropped in 2008, I halted my automatic transfers. The mists of time have impacted my memory. I can’t exactly remember how long I stopped investing. Let’s say it was 3-6 months. I could kick myself for making that choice! During those 3-6 months, when the market was low, I should have been buying more units in my mutual funds when they were super-cheap. The stock market was on sale and I chose to wait until the prices went up before I resumed buying into it.

Who goes to the grocery store and says “Wait! This food is too cheap! I need the price to increase significantly before I buy some more”? No one says this, ever!

So when the pandemic delivered a gut-punch to the market in March of 2020, I knew not to make the same mistake. I continued to invest my money. I even scrounged up a few extra dollars and made an additional contribution outside of my regular investing schedule! Today, 4 years later, I’m so very pleased with Yesterday Me for sticking to my plan. Yesterday Me had learned from the past and ignored the Talking Heads of Doom who were out in full force as the coronavirus spread across the planet.

Conclusion

Making mistakes won’t prevent you from reaching your financial goals. I’m proof of that! I made 4 very big mistakes during my investment journey yet I’ve still earned my way into the Double-Comma Club.

Let’s be realistic. There are 2 big impediments that are definitely going to stop you from becoming wealthy. The first one is living above your means, which is to say that your expenses are more than your income. If this is the case, then you’re in debt because you owe money to creditors. If you don’t have money to invest, then you’re hooped.

The other big impediment to becoming wealthy is failing to invest. If you never invest your money in the stock market, then it will never grow for you. Do not let fear stop you from investing. Accept that you will make mistakes. At the same, realize that you will learn from them. We learn a lot more from failure than we do success.

Every baby stumbles after their first few steps. But you know what that baby does? S/he gets back up and tries again. And again and again and again until s/he figures it out. You can do the same thing with your investment portfolio. Make your mistakes. Learn from them sooner. Keep investing and you too will eventually become a member of the Double-Comma Club.

So start today.

Regretting Financial Mistakes Is a Waste of Your Time

Regret has no place in your financial plan. You’re not perfect and you will make mistakes with your money. Once you’ve identified a money mistake, don’t spend your time regretting it. Simply make a course correction to stop making that mistake and move forward. The past cannot be changed so learn from your mistakes and resolve not to make the same ones in the future.

When I started investing, I picked a dividend investment strategy. I started by buying into dividend mutual funds. Eventually, I learned about management expense ratios (MERs) and discovered that I was making the mistake of paying 10x as much for mutual funds when I could acquire the same assets through exchange-traded funds (ETFs). There was no way to recoup my time or those MERs, so I simply moved my money to ETFs. I made a course correction and moved on.

What is the point of spending time regretting choices that were made when I didn’t have the best information available to me?

Once I learned better, I chose better.

Dividends vs. Growth

A doozy of an investing mistake still hurts. I can only blame myself for this one. My belief in the wisdom of my own choices meant that I didn’t properly consider what was going on around me. I wasn’t learning the lesson, no matter how many times it was hitting me in the face…sigh…

Remember that phenomenal bull-run that was experienced in the stock market between 2009 and the onset of the pandemic in 2020? The one where the S&P/TSX Compound Index grew by 125%? The one where the S&P500 increased by 378%?

Guess who was still investing in a dividend strategy instead of investing in US-growth equities?

That’s right. Me.

It was a huge mistake in my financial planning. I had so much faith in my own choices that I missed out on a fantastic opportunity to invest over the long-term. I made sub-optimal investing choices for 11 years!!! At any point, I could’ve realized how I was missing out on growing my portfolio much, much faster… but I didn’t.

Instead, it wasn’t until October of 2020 that I finally saw that I was again missing out. I was determined to benefit from recovery that followed the pandemic-induced stock market plunge. So I course-corrected. I started investing in an equity-based, well-diversified ETF and I haven’t looked back.

Regret has no place in my financial plan. Of course I wish I had made optimal choices at every single point throughout my investment life, but horses aren’t wishes so this beggar can’t ride. I’ve done what I’ve done and I get to live with the consequences.

And all told, my choices weren’t the absolute worst ones out there. To date, I’ve been investing for 3 decades. My dividend portfolio will ensure that my retirement is nice and comfy. I chose to start young, which is always preferable to starting when old. As far as mistakes go, I could’ve done far worse.

Now, all of my investment contributions are going into the equity-based growth ETF. Its performance is giving my portfolio higher returns, which is always appreciated. I have no plans to stop investing in my ETF, even after I retire. It will continue to mimic both the volatility and growth of the stock market, which is a good thing over the long-term.

Taking a Break vs. Riding the Rollercoaster

I made another huge mistake during the crash of 2009. Instead of continuously investing, I stopped my contributions. Thankfully, I didn’t make the mistake of selling anything while the price was down! Yet, it would’ve been smarter to ride the rollercoaster of volatility during that crash. I would’ve been buying into my dividend-paying companies when they were all on sale!

Woulda. Coulda. Shoulda.

No regrets, remember? Instead, I resolved to never stop investing. As we all remember, the stock market took a huge plunge when COVID-19 was declared a pandemic. Between you, me, and the fencepost, I lost a third of my portfolio’s value on paper. I know because I checked my brokerage account daily during those first few months.

Truth be told, I really don’t know how many paper losses I suffered because I stopped looking at the number after I’d lost that first third. It was too painful.

But you know what I didn’t do? I didn’t stop investing! Even though the market plunged steeply between February 21, 2020 to March 23, 2020, I continued to buy into my dividend-ETFs. And throughout the recovery between March and October of that year, I stuck to my investing schedule and bought many, many, many units in my ETFs-of-choice.

The mistake of 2009 was not to be repeated! Instead of taking a break from investing, I rode the rollercoaster of the stock market. It paid off. Buying those ETF-units when the market was down allowed me to accumulate way more units that I would have otherwise. Each of those units pays more dividends today than they did in 2020. The end result is that my monthly dividend payment is much higher than it was before the pandemic.

Secret Sauce

Like I’ve said before, the secret sauce isn’t being bright. Rather, it’s being persistent. The genius of the secret sauce is following 3 basic steps, over and over and over again.

Make the choice to invest. Then invest. And don’t stop investing.

Everything after that is simply a detail. You follow the steps, and you course-correct when you make your inevitable mistakes. Don’t waste your time on regret. There’s nothing to be gained from that activity. Instead, always remember that you’ll do better when you know better.

Doing Your Best Is the Best You Can Do

This year, I will have been engaged in DIY-investing for 3 full decades. Wow! It sounds like a long time, doesn’t it? Believe me when I say it went by quicker than two shakes of a lamb’s tail.

Have I made mistakes? Plenty! Did I have too much hubris along the way? Probably. Could I have made better choices if I’d had more information earlier? Absolutely.

Lesson learned – downturns are a fantastic time to be investing in the stock market.

Looking back, I see now that I could’ve made better choices. During the 2008 financial crisis, I stopped contributing to my investment accounts for 6 months. The stock market was extremely volatile, and the value of my investments was decreasing on a weekly basis. I hit “pause” on my bi-weekly contributions to my non-registered investment account. Doing so was a huge mistake!!! This was the best time to be investing my money since the stock market was on sale.

As the pandemic took hold in 2020, my investments plunged. I stopped myself from checking my balances every day once my losses hit a quarter million. To this day, I still have no idea how low my investment portfolio sank because it was too stressful for me check the number. That said, I never stopped investing. Thankfully, my employment was secure so I continued to divert money from every paycheque to my investment account.

And I stuck to my investment plan in 2022, despite the market dropping and dropping and dropping some more. Last year was definitely not an easy ride in the stock market. All the gains I’d earned in 2021 were essentially erased!!! No matter – I did not repeat the mistake of Younger Blue Lobster. I did not “hit pause” on investing this time around. This is what I’ve learned: regardless of whether the market is up or down, investing in well-diversified, equity based ETFs for long-term growth is a good thing, .

Lesson learned – start today. Procrastination simply means that your money isn’t working for you.

Procrastination hurt my financial goals. After paying off my mortgage, I waited roughly 5 years before I started to invest in my non-registered investment account. I’d been very diligent about putting money away in my RRSP every single year, so I can pat myself on the back for that choice. However, I spent too many years thinking about starting an investment portfolio instead of just starting it.

In other words, I knew what to do… but I just didn’t do it.

Please do not make this mistake. Open the account today. Set up the automatic transfer today. The sooner your money is invested, the sooner it will start producing returns for you. Believe me when I say that 30 years goes by way faster than you think it will. You don’t want Future You to live with the regret that you didn’t start as soon as possible.

Lesson learned – invest in equities while you’re young.

When I started my non-registered investment account, I chose to invest in dividend-paying mutual funds. Eventually, I switched to dividend-paying exchange traded funds because ETFs are cheaper than mutual funds. Even today, it makes no sense to me to pay more money for essentially the same product.

I was quite proud of myself! Turns out, I should have been investing in equity-based ETFs like VCN or VXC or VUN. (Yes – I’m a fan of Vanguard Canada. No – I’m not being paid for mentioning them in this post.) Investing in equities means investing for long-term growth. And long-term means 10 years or longer. Hindsight is 20/20 as my father used to say. The stock market experienced very good returns 2009 and 2020. Had I invested for growth instead of for dividend income, I would be so much closer to my financial goals by now.

In the interests of transparency, I have since adjusted my investment plan. Since October 2020, I’ve been investing in VXC. I didn’t sell my dividend ETFs – they throw off a nice annual stream of income. I allow my dividends to compound via the magic of the DRIP, aka: a dividend re-investment plan. New money goes into my equity-based ETF. God-willing, I have atleast another 10+ years to live so I’m expecting to see good returns from my equity investment.

Lesson learned – get help as soon as you can afford it.

Remember when I said that I started my investing journey 30 years ago?

Well, I didn’t see a financial planner until 2020. First of all, I wanted to see someone who wasn’t paid by the investment industry. As far as I’m concerned, there’s a conflict of interest if the person giving me advice is paid by the people whose products are being sold to me. That person’s paycheque is dependent on selling products, and is not dependent on giving me the best advice for my particular circumstances. I wanted a someone who adhered to the fee-for-service model of delivering financial planning advice. Others may feel differently, and that’s their prerogative. I would only be satisfied if I could find someone who I knew was working for me alone.

In 2019, I obtained the name of an independent financial planner. His time and advice cost me a four-figure amount, so not exactly cheap but still a very good use of my hard-earned money. The financial planner did a full review of my finances and investments. He prepared a detailed binder filled with information and projections of how long my money would last. He told me that I could retire 2-3 years earlier than I’d planned. And he didn’t try to sell me anything. In short, he didn’t have any conflict of interest because he was working for me – not for an investment company.

Should I have hired a financial planner earlier in my investing journey? Yes – probably. If I’d had the same information at the 10-year or 15-year point in my journey, then I could have course-corrected earlier.

Had I met with him at the start of my investing journey, I probably would’ve gone off-course at some point. Remember that hubris I was talking about? Well, I had it in spades! I’ve still got quite a bit but I’ve also gained the wisdom to know that there’s still a vast amount of knowledge for me to acquire. Independent financial advice at the very start of my journey might have been wasted.

Lesson learned – I need not make every mistake myself.

Mistakes are learning opportunities. No one likes to make them. For many of use, mistakes have meant that we’ve been chastised, mocked, or otherwise bullied by others for making them. As a result, we’ve learned to shy away from these teachable moments.

The possibility of making a money mistake paralyzes a lot people. As a result, they don’t ever start saving or investing. It looks like procrastination, but it’s really just good, old eternal fear. Here’s a little tip from me to you. Not every mistake has to be mine in order for me to learn from it. I’m perfectly capable of learning from other people’s mistakes… and so are you.

Look around and ask yourself if you want to make the same mistakes that you see other people making. If the answer is “No”, then make the changes you need to make so you can do better. No one can guarantee that making those changes will be easy. As a matter of fact, I’m quite certain that it will be somewhat challenging depending on how much change you decide to make. Do it in bite-size chunks. Break the task down into manageable pieces, and do one task every time you get paid or on whatever schedule you choose.

The level of difficulty associated with change you want to make should never be a reason to deter you from making it. Do not continue to make mistakes simply because it’s the easier path. That route leads to disappointment and regret. You have one life so prioritize what you want out of it. Your dreams are important to you, so you should be doing what needs to be done in order to bring them to life.

If you only do one thing in 2023…

Those of you who’ve been around here for a little while know how much I hate paying bank fees. However, if you’re new around here, then welcome! Here’s my free advice to you – use it as you see fit. If you only do one thing in 2023 to make your financial life better, consider moving to online banking.

Paying a bank to use your own money makes little, if any, sense to me. It’s a great move for shareholders since it’s a continuous revenue stream which boost bank profits. Most people don’t hold shares in banks, so they’re not reaping those particular rewards. As a consumer, bank fees are an easily avoidable financial nuisance. They’ll run you atleast $100 per year. Ask yourself if there’s anything else in the entire world that you would rather pay for than bank fees. And if bank fees are still at the top of your list, then please continue to pay them and come back next week for more of my bon mots.

The Expensive Banks are plucking you.

I don’t much like being the bearer of bad news, but here I go. You are the golden goose. The Expensive Banks are plucking your money feathers, every single month. Money goes into your chequing account and they reach in, with your permission & consent, to take some out every single month. These were the terms when you opened the account. Good for the Expensive Banks, not so good for you.

At the time of this blog post, the major banks in Canada all offer unlimited banking for various monthly fees:

I’m forced to acknowledge that some of these banks will waive their monthly fee if you’re willing to leave $4000 sitting in your chequing account, earning no interest. In short, you have to leave several thousand dollars in your chequing account in order to avoid paying the monthly fee. I’ve always hated this requirement. In my personal opinion, I don’t think you should have to ransom several thousand dollars in order to keep your money.

Also, the monthly fees go down so long as you don’t go over a pre-determined numbers of transactions per month. For most of these banks, that number is 25 transactions per month. If you do more than 25 transactions, then you’ll pay a fee for each additional transaction.

To recap, the Expensive Banks allow you to pay them a couple of hundred dollars per year. For the low price of a couple of tanks of gas, you can have 25 debits, utility payments, e-transfers and/or ATM withdrawals. Should you need more than 25 transactions per month, you can pay for a more expensive bank account or you can get dinged atleast $1.25 for each transaction over the limit.

What if I were to tell you that there is a way for you to have unlimited debits, utility payments, e-transfer and ATM withdrawals without depriving yourself of access to several thousand dollars?

You have options, and you should choose to use them.

If you only do one thing in 2023 to make your personal finances better, please let it be doing some investigation into the following online bank accounts.

At the time of this post, two banks offer chequing accounts with unlimited transactions with no minimum balances required to have monthly fees waived. You can set up direct deposit with these accounts, just like you can with the expensive banks. These are great products! Why pay fees if you don’t need to? Unless it is your dream to pay bank fees, why not put that money towards making your actual dreams come true?

I’ll admit that online banks don’t have great interest rates. So what? None of the banks offer great rates on their chequing accounts! Besides, the truth of the matter is that your emergency funds should be in EQ Bank, where they will earn atleast 2.5%. Money for your retirement should be invested in well-diversified equity exchange traded funds (ETFs) so that they can benefit from the stock market’s long-term average growth, which is well above whatever rate your bank is giving you.

In case no one has ever told you this, you should not be keeping your emergency funds or your retirement money in your chequing account. Your chequing account is for daily transactions: debit payments, utility payments, debt payments and rent/mortgage payments. Money that is not needed for daily living should be in your emergency fund and in your retirement accounts, never in your chequing account.

Cease paying bank fees, unless you really enjoy doing so.

There’s no getting around the fact that you probably need a bank account. However, I’ve yet to hear a good, persuasive reason for why you should be paying several hundred dollars each year for the privilege of having one. There are equally good options available to you and they are free. Why do you want to pay for something when you can get the same thing for free?

Setting up a new online bank account is not hard. It doesn’t take an exceedingly long time either. You can probably do it on your phone. There are 365 days in 2023. If you only do one thing in 2023 to save money, find some time to save yourself a couple of hundred dollars.

And if you’re absolutely 100% committed to paying bank fees, then atleast buy yourself some shares in the banks so that you can recoup some of your fees in the form of dividends!

Full disclosure: I bank with both Simplii Financial and Tangerine. My accounts have been open for years, and they’ve served me well. If you open an account at Simplii Financial, please use my referral code: https://mbsy.co/6qqBSr We will both get paid money if you do.

HAPPY NEW YEAR!!!

Know Your Own Numbers

You need not be obsessed with personal finance but you do need to understand it.

Wisdom from the Internet

It’s long been said that information is power. This maxim is just as applicable to your money as it is to anything else. The more you know about your own finances, the better decisions you can make to create the life you want.

In the past few months, I’ve started following a channel on YouTube where people are interviewed about their money. They all have debt, which they say that they want to eradicate. Each of them says they want to live on their own, or start a business, or buy a house. Invariably, all of the interviewees reveal that they don’t know how much money they earn each month. Of the interviews I’ve watched to date, nearly all of the interviewees are paid hourly. Most of them have received a paycheque yet none of them know how much they bring home in a month. None of them!

It’s astonishing to me that they don’t know the most basic information about their financial lives. And it’s not an age thing. The interviewees I’ve seen have ranged in age from 19-32. These aren’t all fresh-faced high school graduates who’ve just left the nest. Most of them live with roommates, so they’ve had a taste of the adult responsibility of paying rent & making sure the lights stay on while putting a bit of food in the fridge.

If you’ve stumbled upon my blog for the first time, welcome! I hope you like it here and I hope you come back. Most importantly, I want you to know your own numbers. This is foundational knowledge. You need to have to this information when setting financial goals for yourself.

*** If you’re already a person who tracks their income, then the rest of this post might not be for you. ***

In order to build the life you want, you need to know your own numbers. I’ve written about the importance of tracking your expenses. The same importance should be placed on tracking your paycheques.

At the very least, know how much money you’re bringing home in your paycheque. This is your net income, aka: money you keep after taxes and deductions. When you spend less than your net income, then you have money to build an emergency fund and to invest for your goals. If you spend more than your net income, then you’re living in debt. This is a bad situation and it needs to be curtailed immediately. If your expenses are exactly equal to your net income, then you’re living paycheque-to-paycheque. Just like being in debt, this is a bad situation because you have no wiggle room. Any unexpected expense will push you into debt because you don’t have an emergency fund. You also don’t have any extra cash flow coming in from your investment portfolio in the form of dividends, capital gains, and interest.

I’m always baffled when people say they don’t know their net income. How can you make financial plans for yourself when you don’t know how much you have to work with?

Nearly everyone has a cell phone. They all come with calendars. Go into your phone, set up alerts to tell you when you’re getting paid. When you get your paycheque, track that amount. You can use a pen and paper, a spreadsheet, or an app. It doesn’t matter. You just need to know how much money will be in your pocket until your next paycheque.

Once you have that number, you can start subtracting your expenses from it. I would suggest that you always allocate money to your needs first. After that, every other expenses is a want. You’re human, therefore food and shelter are your top priorities. Given that you’re working for a paycheque, you’re probably not independently wealthy. So that means your next priority is paying for transportation so you can get to work. Life offers no guarantees. You need to put some money aside in your emergency fund.

Do you still have money leftover after paying for these four critical items? Great! Get busy figuring out which one of your many, many wants is the next most important to you. Cell phone or clothing? Gym membership or gifts for loved one? Pet care or charitable donation?

When your expenses have exhausted your paycheque on paper, then you stop spending. Wait! Are there still things that you want but can’t be covered by your net income?

Then you’ve learned something! You’ve discovered your shortfall amount, aka: the amount of money that you need to earn to pay for all the things you want to buy. Your next step is to figure out how to make more money to cover the shortfall. Maybe you get a promotion. Perhaps you sell some things that you no longer need or use. You could find a better-paying job or get a promotion with your current employer. Maybe you pick up a part-time job or offer your services to people who need them.

Again, information is power. It’s up to you to know your own numbers so that you can figure out what it will take to build the life you want. If you start today, then you’re one day closer to making your dreams come true.

Money Mistake #1027 – Finding My Community

As I’ve mentioned a time or two, I’ve made many mistakes with my money. One of my biggest money mistakes involved how I went about finding my community. When I first started to learn about financial independence, early retirement and investing, I made two mistakes based on arrogance. First, I mistakenly assumed that everyone was as interested in it as I was. Second, I believed that I was right.

So I would talk about money with everybody and give them unsolicited advice about how they should save and invest. I cringe when I think back on how I interacted with friends and family over this topic. While I still believe my intentions were good, the truth is that I had no business giving anyone unsolicited advice. I should not have been telling anyone what to do with their money!

As hard as this may be to believe, I failed to contemplate the extremely faint possibility that other people’s priorities and dreams weren’t exactly the same as mine!!!

If you’re here reading my ramblings, then I assume that you have some interest in personal finance. After all, I’m constantly talking about using money as a tool to build the life you want. Money should be allocated in a way that allows you to obtain your heart’s truest desires, atleast the ones that can be obtained with cold, hard cash. I exhort you to only spend your hard-earned money in ways that get you closer to your highest priorities, your most important goals.

In the real world, my family and friends were not willing to talk about money with me. They viewed my discussion of the topic crass, impolite, and – probably – judgmental. Save for one or two people, they were not my money community.

It took me a long time to accept that I couldn’t discuss a topic near and dear to my heart with those I was closest to. Truthfully, I felt hurt because I thought I was offering them help. Again, arrogance played a part in my hurt feelings. I have to admit that I thought my example of how to structure money was worth emulating. After all, that was one of the main reasons why I was sharing my thoughts about money. Despite the arrogance, my hurt feelings were also rooted in the belief that I couldn’t be my true self around those I loved best. I had to hide this side of my life, this part of my personality if I wanted to be with them.

I couldn’t be real with them. That sucked.

I set about finding my community, the ones who would allow me to be authentic in this area of my life.

Time has passed, and I like to think I’m a little bit wiser. Unless specifically asked for advice, I hold my tongue when other people bring up the topic of money. One of the fastest ways to alienate others is to make them feel judged. Sadly, I admit my guilt. I did judge people’s actions with money. I had too little respect for financial viewpoints that differed from my own. Now, I keep my mouth shut unless someone asks me what I think.

And when I am asked for my thoughts, I strive to be supportive when I share. Just because I don’t share someone else’s priorities and goals doesn’t mean that they aren’t entitled to pursue them just as ardently as I pursue mine. Racing in the Indiana 500, climbing Mount Everest, or becoming the world’s best potter might not be my dream, but I will help you figure out ways to fund it if that’s what you need from me.

Thankfully, I have learned. For some people, money is to be spent on the Now because it will create joy today. For them, spontaneity demands that one be willing to spend. Other people simply view life as completely unpredictable and that tomorrow will take care of itself. Everyone brings their own history to every money decision that they have ever made. I’ve known people whose illnesses were never disclosed to me, but they have lived far longer than they’d been told they ever would. For them, planning for retirement was not in the cards because they weren’t expected to live past age 35. What would be the point of saving for a future that they would never see?

Looking back now, it is easy to see why my exhortations to save fell on deaf ears. Everyone was coming at money from their own perspective, one built on their own goals and priorities. It wasn’t for me to change their mind. However, the onus rested on me to change my own viewpoint and to find the space where I could discuss these things.

Enter the internet. I’m old enough to remember chat rooms, so that’s where I started. Then I moved on to blogs, and stumbled upon the grand-daddy of them all – Mr. Money Mustache. And down the rabbit hole I went. Though there have been many wonderful blogs over the years, I don’t remember them all but here’s a quick list of the ones that stick with me:

Finally, I had found a place where others were talking about one of my favorite topics – money. The anonymous posters of the world wide web didn’t want me to shut up when I asked questions about how they invested. I didn’t feel that they were judging me for being curious about this part of life. If anything, I felt like I’d found my tribe, such as one can on this particular platform.

So I read more and more, learning a lot about so many things related to money: CoastFI, real estate investing, the housing bubble, geoarbitrage, early retirement, investment styles, crypto, income inequality, etc… I even found blogs that spoke to high income earners and opened my eyes to how their concerns differed from mine. The blogs that really got me thinking were the ones looking at the intersection of money and social justice. Once your personal needs are met, aren’t we ethically obliged to make the world a better place instead of engaging in further consumerism?

These were things that I could never have discussed with 98.5% of the people in my real life. It felt good to have found my community, even if it was online.

If it had to do with personal finance, I probably spent a fair amount of time reading about it and figuring out if it would work for me.

Finding my community online also helped my relationships in real life. I knew there were others I could talk to about money. That meant I could talk about everything else with family and friends. There was space for me to wonder why they weren’t interested in early retirement, automatic savings plans, the management expense ratios of mutual funds vs. exchange-traded funds. I was able to unload my thoughts about money elsewhere, with people who shared my financial point of view. That meant I didn’t have to work so hard to persuade my inner circle to share it too. I listened to them instead, and learned how they wanted to approach their finances.

And you know what? It was good for me, for our relationships. Their viewpoints helped me to improve my money-choices. I loosened the reins a tiny bit. An impromptu ice cream cone at the park wasn’t going to result in an impoverished dotage. However, it would create a great memory about a summer afternoon with loved ones. Watching how my family and friends spent their money, and the joy it brought them, forced me to question my own choices. Slowly, I realized that I had to find a balance between today and tomorrow.

Finding my community has been fantastic! I need not agree with everything every person posts online, but I have found like-minded people with whom to have discussions. As I’ve gotten older, I’ve also found people in real life who share my interest in money. I no longer need to change the hearts and minds of my family and friends on the topic of money. Finding my community has allowed me to be my authentic money-self without alienating those whom I love best.

Taking Stock & Making Tweaks As Necessary

One of the ways to ensure that you meet your goals is to review your progress along the way. Doing so involves taking stock and making tweaks as necessary. No journey is perfect for all people in all circumstances. That’s simply not possible. As a matter of fact, there is no such thing as a perfect journey for anyone. There will always be challenges along the way.

That said, I’m equally convinced that there are some universal mistakes. These mistakes have the power to derail everyone’s path for a very long time if not rectified as soon as possible.

Atleast once a year, you should be assessing your progress. The gyrations of the stock market are out of your control so don’t worry about them. Continue to invest into the market through dollar-cost averaging (my personal preference) or through lump-sum investing. However, you should be taking stock of the things that are in your control and tweaking them as necessary.

  • Have you increased the amount you’re investing from your paycheque?
  • Did you set up an automatic transfer from your paycheque to your investment account?
  • Are you eliminating subscriptions that you never use so that you stop wasting money?
  • Do you track your expenses so that you know exactly where all your money is going?
  • Have you ensured that the MERs you’re paying are all under 0.5%?
  • Are you using a no-fee online bank account so that you don’t have to pay service charges?

In addition to controlling what you can, you should also assess whether you are making any of the following mistakes. And if you are making them, then take the necessary steps to stop. Eliminating these mistakes from your life will allow your money to grow faster so that you can live the life you want.

Again, this is a personal finance space so I try to stick to personal finance topics. Here we go.

Mistake #1 – Never Getting Started

It’s hard to build wealth if every nickel is spent. In order to invest, you need to live below your means and send a portion of your paycheque to your investment account. You can start low and work your way up.

When I was still living in the bosom of the family home, I was able to send $50 to my savings account every 2 weeks. My parents were paying for the big stuff, so I had a leg up on that front. Once I moved out and started working, it was far harder to save that $50 every two weeks. However, I was used to it so I kept doing it even though all of my expenses were on my shoulders at that point. The savings habit had been ingrained.

Start today, where you are. If you can only set aside $5 for investing, that’s better than $0. You’ll increase the amount as you’re able. When a debt payment is finally gone, direct 80% of it to your remaining debts and send the other 20% to your investment accounts. There will come a day when all your debts are gone. Those former debt payments are yours to invest and spend as you see fit.

Mistake #2 – Paying Higher MERs Than You Should

Should is one of those words that invokes judgment. Good. You should be ashamed of yourself for paying more then necessary for your financial products. If there’s a mutual fund that charges a 2% MER and an ETF that charges 0.35%, and they’re both invested in the same things, then use the ETF to build your investment portfolio. Paying an extra 1.65% seems unimportant but it’s a serious blow to your ability to build wealth for Future You. Higher MERs compounded over long periods of time result in the eventual loss of hundreds of thousands of dollars from your portfolio. Money that could have been left to compound over decades was instead paid to someone else via MERs.

Mistake 3# – Failing to Master Your Credit

This one is tricky. Everyone needs credit at some point, but staying out of debt is extremely important if you want to build wealth. It’s extremely hard to invest money if those same dollars have to be sent to a creditor for a past purchase. Maybe you have student loans, credit card debt, veterinary debt, car loans, personal loans to family & friends. It doesn’t matter.

You need to get rid of it. Credit is a tool. It’s also the only way to go into serious, crippling debt if it’s not used properly. Always be very, very cautious about using credit. Pay the bill in full every month. If you can’t do that, then don’t use credit. Get a promotion to increase your income. Find a second job. Start a side hustle. Sell your stuff. Eliminate the fat from your budget and only spend on needs. Do what you have to do to pay cash.

Getting into serious debt is very easy. Getting out of it is very, very hard.

Mistake #4 – Ignoring Your Priorities

Just like the rest of us, you have one precious life. How do you want to spend it? Is there something that’s very important to you? What do you want to accomplish, experience, see & do before you shuffle off this mortal coil? How do you want to spend your time?

Once you have answers to these questions, you’re better able to plan how to spend your money.

Here’s the thing. It won’t always be easy to stick to your plan due to the influence of others. You have family and friends. They love you and they want to spend time with you. So they invite you to do stuff with them – concerts, travel, sporting events, poker night, whatever. And you love your family and friends so you want to be there with them too.

I’m not suggesting that you always say no to invitations, but I am warning you that it won’t always be easy to stick to your priorities. If you’re trying to get out of debt, others in your life might not understand why that’s important to you. Maybe you’re saving to pay cash for a used car. Others might try to persuade you that “everyone” has a car loan so why are you trying to be different?

Now You Know

When you know better, you do better. If you see yourself making mistakes, stop making them. They’re only harmful or fatal to your financial goals if you allow them to continue. Once you’ve rectified them, then you’re moving closer and closer to the life you want for yourself.

You’ve got nothing to lose by spending a few minutes each year taking stock and making tweaks as necessary.

Learning from my mistakes & doing better

You need not make every mistake yourself. There’s always the option of learning from my mistakes, or others’ mistakes, and doing better. It’s one of the better aspects of being a sentient being who can learn from the world around them.

Back in 2008/2009, there was a recession. I got scared and I stopped contributing to my investment portfolio. This was a huge mistake! (And I’ve made many mistakes over the years when it come to my money.) There’s no way to go back in time and change my choices. So, this time around, it’s incumbent on me to not make the same mistake.

Though the experts haven’t yet called it such, I’m pretty sure that we’re in the very beginning of a recession. The stock market’s gains from 2021 have been wiped out. My investment portfolio has suffered a 6-figure loss! I’ve stopped checking its value because it’s too alarming to see the numbers continue to drop day-by-day.

When my portfolio suffered losses in 2008/2009, I made a big mistake. My error was to stop investing my money while the stock market was on sale. The stock market, as a whole, was falling in value. That means it was on sale! I should not have stopped contributing money from every paycheque. Instead, I should have stuck to my plan and continued to buy units in my selected mutual funds. (At the time, I had not yet switched over to cheaper-and-equally-effective option of buying exchange-traded funds.)

Do not make this mistake with your own investment portfolio. Continue to invest your money!

This time around, I’ve stuck to my plan. A portion of every paycheque is still being re-directed to my selected ETFs. Since the unit price of my ETFs is down, I’m buying more units with the same amount of money. And when the unit price goes back up, which it will, the value of my portfolio will benefit from having bought the additional units at a cheaper price.

If you haven’t started, now’s the time.

If you haven’t started investing in the stock market, now is a great time to do so. Everything is down, which means everything is on sale. Don’t ever believe that the stock market only goes up. Its nature is to go up and down. This is normal. Right now, it’s going down. It will go back up at some point, but you need not worry when.

In my inexpert opinion, money that you don’t need for a long time should be funnelled into the stock market. I used to believe that a person had to be completely debt-free before investing. My views have become more nuanced. If you’re in your 30s, 40s or 50s, and you haven’t yet started investing, I would not suggest focusing solely on your debts. Even if you can only squirrel away $50 each month for investing, do so. As you pay off your debts, you can use 75% of your former debt payment to increase the size of the initial $50 contribution.

Your $450/month payment is finally done? Great! Add $337.50 (= $450 x 75%) to your $50 so that you’re now contributing $387.50 per month to your investment portfolio.

Time in the market is necessary for your portfolio to grow. Starting to invest during a recession is a good thing for you. It means you’re buying when prices are low. The more you buy now, the better your upside when the stock market starts growing again.

Also, you’ll have to develop a thick skin to deal with the volatility of the market. Remember, stock market investing is a long-term play. This won’t be the last recession that you’ll have to endure. Starting in a recession today will make the less volatile times ever so much more pleasant. You’ll also be that much more experienced when the next recession rolls around.

Stick to ETFs to keep your MERs as low as possible.

Learning from my mistakes and doing better means you can avoid paying higher-than-absolutely-necessary MERs. I used to invest in mutual funds. Canada has some of the most expensive mutual funds in the world, which means that people who own mutual funds pay more in management expense ratios that people who own ETFs.

When Vanguard Canada became an option for me, I compared their ETFs to the mutual funds in my investment portfolio. The ETFs were comprised of the same companies that were in my mutual funds. In other words, I could still invest in the same companies for a much lower MER.

I used to pay 1%-1.5% in MERs on my mutual funds. When I only had an investment portfolio of $10,000, the MER shaved off $100-$150 every year. That’s not a horrible amount of money. However, I knew that I would be investing for another 20 years or so, and that I wanted my portfolio to grow much larger than $10,000. The question was whether I wanted the investment company to siphon away more of my money every year. After all, whatever monies weren’t eaten by the MER would stay invested in my portfolio and have the chance to grow over time.

Put yourself in my shoes. Would you rather pay $15,000 or $3500 for nearly-identical investment products? What makes the mutual fund worth an additional $11,000 per year?

Today, my portfolio is brushing up against the Double-Comma Club of $1,000,000. It makes no sense to pay $10,000-$15,000 in MERs each year when I can pay MERs of 0.35% or less.

Save yourself from another one of my mistakes, which was needlessly paying too much in MERs for my investment holding. Invest in ETFs instead of mutual funds. If you’re currently in mutual funds, find a comparable ETF and move your money to the ETF.

Stock-Picking is not for me!

My suggestion that you invest in the stock market while it’s down is NOT for those of you who want to buy individual stocks.

I don’t do stock picking. Personally, I find it takes too much of my time and it’s a very good way to lose money. I don’t have the expertise to understand any given industry, nor how any one company can guarantee dominance in its industry. The only individual stocks I own are the ones my parents bought for me when I was a baby. Again, I don’t do stock picking. I choose to only invest in ETFs because they have built-in diversification and I’m not committing my money to any one company. ETFs allow me to invest in a variety of industries and a much larger number of companies than I ever could otherwise.

To me, stock-picking requires a level of expertise and commitment that I simply don’t care to develop at this stage of my life. There’s always a chance that will change. If you want to do stock picking, then do your research first and make sure you know what you’re doing.

In a nutshell, don’t stop investing in the stock market just because we’re going into a recession. If one of your money mistakes is that you haven’t started to invest, then this is a great time to rectify that error. The stock market is down, which means investment products are on sale. You need to get your money into the stock market, and you need to leave it there to grow over a long period of time. Don’t procrastinate any longer – start today!