Success Menu
I’m fascinated with restaurant menus. Long before my permanent career days, I worked in a lot of restaurants and hotels, and so foodservice has been a lifelong interest. You can usually tell the kind of restaurant by the layout of its menu. Lots of cute expressions and large photos of food on the menu? You’re probably at a casual diner or chain restaurant. Short explanations, no photos and higher numbers beside the food? It’s fine dining time. But here’s the thing about a menu – it isn’t always a predictor of the restaurant’s quality. People can make a menu sound fancy or sophisticated, but the chef better know what she or he is doing, or it’s going to be a culinary disappointment. Your financial menu for success is no different. Except you’re not the customer. You don’t just read the menu and choose something, hoping for the best. You’re the chef – the boss, baby! You’re in charge of what goes on your financial menu. And here at Moneymeal, I need to make some strong suggestions about what should be included, and what needs to go in the garbage bin, ASAP.
Menu Essentials
- A plan. You need a plan to save and invest, and that begins with a budget. I know, budgets are so boring and mathy (is that a word?) Except they’re not!
- Click Here to check out a handy budget that can get you started. I can’t emphasize this enough, YOU NEED A BUDGET! (Yes, I was yelling. Sorry.) The budget is going to kickstart your path to financial success, by helping you with the next step.
- A goal. Once you have a budget in place, you need to establish your monthly saving goal. I don’t care if it’s $100 or $923.47, the point is, you need to start saving, this month. This goal is a starting point. As your income grows, you can adjust this amount accordingly.
- An investment vehicle. No, I’m not talking about buying a new car (more on that later). You need a platform with which to invest. Something that allows you to make your monthly investment and doesn’t charge crazy fees in the process. This brings us to the heart of the menu, biggest factor in your journey toward financial success:
You need to understand how and where to invest.
First, how.
Rather than bore you with stats, graphs, stock tips and all manner of dull, I’m going to keep it brief, and refer you to an awesome resource that gets you started, right here. To summarize, investing and saving is simple! You don’t have to:
- pick stocks
- ‘play’ the market
- constantly monitor your holdings
- listen to some guy drone on about the next big opportunity
Get familiar with the couch potato strategy for investing, it has transformed the lives of thousands of Canadians just like you! Once you’ve embraced the beautiful reality that investing does not take guess work or stock picking, it’s time to take action.
And now, where to invest.
Once you educate yourself on the Canadian Couch Potato strategy, you’ll see that investing does not have to be complicated, time-consuming, or intimidating. So let’s summarize with some things that should be included in your investment menu:
*index funds, diversified according to your risk profile
*an online discount brokerage, like one of these top choices in Canada:
These are my top two picks in Canada due to ease of use, reasonable fees, and mobile-friendly platforms. They are both pure Canadian, and excellent choices for any Canadian investor. Just click the link above, and get your investing journey started!
Setting up an account with these folks is simple, and from there you can link your bank account, set up automatic monthly deposits according to your goal investment amount, and get the couch potato strategy going!
And here’s what should never, ever be on your investment menu. This is the rotten fish, the mouldy bread, the green roast beef that needs to go in the trash, STAT:
- Mutual funds. Don’t do it. Don’t listen to Skyler at the bank as he tries to tell you that they have amazing mutual funds that are going to do oh so well next year. Here in Canada, we have some of the highest management fees in the world for actively managed mutual funds. Why pay someone a huge chunk of your interest income, when you can do it yourself and outperform the bank virtually every time, with simple index fund investing in your own brokerage account? Mutual funds are a no-go for the Moneymeal investor.
- Individual stock picks. You’ve done your research. You’ve seen the headlines. You read that Warren Buffet is buying! Here’s the thing – you’re not the Oracle of Omaha! Don’t waste your time trying to pick ‘winners.’ The stock market is not a horse race, or a game. It is strewn with the financial corpses of countless people who thought they could ‘beat the market.’ Beware of anyone who claims otherwise. Picking individual stocks as your main plan is a recipe for disaster.
Now, some of you can’t resist. I get it! You want to play, just a little. So play! Take some money that you can afford to lose, without jeopardizing your stability. Maybe it’s a few hundred, whatever. And go play. Buy some stocks, have some fun. If they grow, yay! If they tank, you still have your dependable index funds, chugging away at making you a millionaire when you retire.
Final note on your menu for success. There is one big ticket item that should never be on your menu. This is not going to be popular, but here goes:
A new vehicle
But new car smell is so awesome! It’s 4.9% interest for 84 months! It’s employee family pricing month – the deals are so great! Don’t do it, friends. The dish looks great on the plate, but when you get the bill, oh boy.
There is no single purchase that has the power to harm your financial health, like a new vehicle. But why? It’s simple math. Vehicles are always a losing investment. With very few exceptions (collector vehicles, classics), cars and trucks lose value with every km driven, every month that goes by. And here’s the thing – most of that value is lost in the first few years! Up to 40% of the value is gone after 36 months of driving. So that $50,000 beauty you bought in 2021, brand new? It’s probably a $30,000 beast now, and you’re still going to be making payments on it for another 4 years! And that sticker price of 50k? At 4.9% interest over 7 years, that motorized madness is actually costing you over $72,000!
New Vehicle Payments – The Mortgage Approval Killer
And here’s where my expertise comes in. As a mortgage agent, I want to get you qualified to purchase your dream home. If you head out and commit to a $900 per month car payment, you’ve just seriously damaged your chances of approval. Your debt service ratio: think income vs. expenses, just got dealt a blow with that huge payment on a losing investment. Mortgage lenders don’t like car payments – and many people end up figuring ways to eliminate the debt before approval for the home purchase can be realized.
