I had the best time as a panelist for Tangerine‘s Breaking Down Investments event in Toronto a few weeks ago.
My personal finance pal Barry Choi was a fabulous moderator as always, and the co-panelists, which included David McGann (Director, Tangerine Investments), Casie Stewart (Award-Winning Content Creator) and Matt Basile (Chef and Creator, Fidel Gastro’s and Lisa Marie) were the most energetic and inspiring people I’ve been around in a while!
One of my favourite parts of the event was the Q&A section at the end. Because the panel was live streamed to Facebook, we got a number of questions from audience members at the event and online.
There were some really great questions too, which is why I wanted to take this opportunity to break down some of the most important questions we got into 5 simple takeaways.
And of course, if you have any other questions about anything regarding investing, leave them in the comments!
1. You Don’t Have to Wait Until You’re Out of Debt to Start Investing
One topic we touched on during the event was debt vs. investing.
I hate debt, and when I was fresh out of university I set a goal for myself to get out of debt in less than a year. At the time, I only owed $5,000 on a student loan. But I was still a broke and under-employed post-grad living in my parents’ basement, so $5,000 was a ton of money to me. Nonetheless, I scrimped and saved and was debt-free before my 24th birthday.
I’m fully aware that I’m an anomaly, not the norm. These days, it’s more common to owe 5 figures with many years (if not decades) of debt payments ahead.
That being said, you don’t really need to let debt prevent you from investing.
Yes, it may mean that you’ll be debt-free a bit longer since you’re diverting some of your income into your investments, but that can will help you form a powerful money habit. A habit that can help you stay out of debt and continue to grow your net worth after you become debt-free.
2. You Don’t Have to Be Rich to Start Investing Either
One huge misconception I find, especially amongst millennials, is that you need to be rich in order to invest. This is absolutely false.
I started investing at the age of 24 with only $1,000. I was making $30,000/year at my full-time job, another $5,000 from my side hustle as a news teleprompter, and my total net worth was a sad $8,000.
So ya…I was not rich by any means.
But I still started investing. I knew it was important and I wanted to see my money grow. So, I opened up an RSP with Tangerine and started making contributions of $100 every paycheque.
If I can do it as a flat broke 24 year old, so can you.
3. The Best Time to Start Investing Is Right Now
This is a question I hear a lot: “When’s the best time to start investing?”
And my answer is always the same: “Right now!”
Just like you are never too poor to start investing, you are never too young to start either.
And a major benefit of starting early is compound returns. The earlier you start investing, the more money you can make in the long run…so get to it!
4. Don’t Want to Deal with a Suit? You Don’t Need to
The main reason I started my investing journey with Tangerine was because I was terrified at the prospect of going to a bank at 24 and talking to some suit about investing. I was afraid they’d judge me for my lack of funds, lack of knowledge and my age.
So, I chose to invest with one of Canada’s first direct bank and it took me a few minutes to do everything online.
I only wish I’d continued down that path as I got older. Instead, after I got married my husband and I moved our investments to a traditional bank and went to go see some guy in a suit. We thought since that’s what both our parents did, it must be the smarter choice…right?
After a few years, we realized that our investments weren’t necessarily better off. Which is why I’m now once again moving my money someplace suits don’t exist.
5. Paying Higher Fees on Investments Doesn’t Guarantee Higher Returns
First of all, if you aren’t aware you’re paying fees on your investments, I hate to break it to you, but yes you are. Luckily, this will become clearer on your investment statements soon thanks to CRM2 coming into play, but it’s definitely something you need to be aware of.
Now, if you are aware that you’re paying fees, why are you ok with paying such high fees? A big reason I decided to shift my investments from mutual funds to index funds and ETFs with the help of a robo-advisor is because I just couldn’t stand paying such ridiculously high fees!
If you were at the event or watched the live stream, this topic was brought up a bunch of times because it’s just such a point of contention for so many people (myself included).
Here’s the thing, paying high fees on your investments doesn’t mean you’re getting a better value for your money. It just means you’re paying higher fees than maybe you should be.
Typically, mutual fund fees will cost you 2-2.5%, but if you were to invest in index funds or ETFs, it could look closer to 0.50%-1%. Depending on how much you’re investing, those small percentage points could mean thousands of dollars over the long term.
Personally, I like a good deal, so if I can save thousands of dollars by investing in products that have lower fees, that’s exactly what I’m going to do.
What else do you want to know about investing? Leave your questions in the comments for a future blog post!