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June 28, 2021 | Noob Talk

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

“Apart from reading your blog,” writes Kiren, “I’m a complete noob.”

So how did an 18-year-old from Winnipeg start visiting this pathetic, canine-addicted, heretical financial blog attached to a steerage section teeming with weirdos?

“I grew up watching my dad read your blog and became quite familiar with that blog photo of yours long before I myself finally started reading it a month and a half ago,” she explains. “My question is this: I have recently started receiving a steady salary of $1000/month, 35% of which I put aside for investing. My problem is that I have no idea where/how to invest this money. My dad told me to contact you to ask for guidance.”

Okay, kid. I’ll bite.

First, good on you for the job this summer and for saving a good chunk of what you’re earning. We live in a society where people would rather borrow to get what they want now than save to acquire it later and be debt-free. Low interest rates and FOMO have made them act thus (which many will regret), but over the course of your life things could be far different. You should prepare now (and it sounds like you are).

The cost of money will rise and so will taxes. The debt overhang from your dad’s gen (and mine) will frame your life. What worked for people in the past – living in the moment because government, inflation or bloating houses would look after things – is unlikely to work for you. Combined with a changing climate, far fewer jobs because of AI and the legacy of this pandemic, your middle-age could be a challenge. For sure, it will be different than that lived by your parents. Never before has humanity faced this cocktail of change. So, have courage.

Where to start?

The TFSA, of course. This year you can establish one with contribution room of $6,000. All gains made will be tax-free, plus you can withdraw funds if you need them and not lose the ability to replace that money later (can’t do that with an RRSP). Open this account through the online brokerage of your bank, or with an outfit like QuestTrade. You can always use a robo (like WealthSimple) if you want, but learning to invest will be more fun when all decisions are in your hands, not given to an algo.

What to put in there?

ETFs, of course. Exchange-traded funds. They’re cheap, liquid, easy to buy and research and you’re not paying some dude a big fee to pretend he’s smarter than Mr. Market. He’s not. Stick with the great diversification and indexing that ETFs provide.

What funds to get?

The yahoo stock-cowboy crowdies will tell you to go all-equity and high risk because you’re young, have a long time horizon and can afford to weather market gyrations. They’re wrong. So many people I talk to in later life (some of them are still alive at 50 or 55) have suffered for decades because of a negative experience and losses early on. Like that first romantic encounter, it’s something that sticks. People who took a flyer and landed on their butts never forget. They then eschew risk, do silly things like buy GICs or believe TNL@TB and suffer for it.

So be balanced. The first ETF you buy should be one with both equity and fixed income baked into it. Then as you build up the TFSA, add more positions. Canada is bound to do well in this reopening trade. Preferreds will protect against rising rates. REITs have been coming back as Covid fades. Biotech is a good play, for obvious reasons. Those things can come in time, so now just keep it simple (and trading costs low).

Finally, go on TikTok, do some vids on your financial journey, make a few million and you can come back and have a guest blogger spot. The rabble will hate you.

It was flag day at the wee bank. Iain, Yvonne, Chris, Eric and Arthur showed up, hoisted my ginormous Peace Tower drapeau aloft and nailed it in place

As I’ve recounted in the past, that piece of cloth is a prized possession, having flown on the 125th anniversary of the dominion (can I still say that?) above the Queen’s head (and mine) on Parliament Hill. I’ve hauled it around the country and always reveled as it’s been unfolded, unfurled and freed. This year, too. Maybe even more. Many need reminding of the relative paradise we inhabit. Maple up.


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June 28th, 2021

Posted In: The Greater Fool

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