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Complete Financial Newbie looking for a solid financial strategy

2K views 11 replies 6 participants last post by  Spudd 
#1 ·
Hey everyone. Hope you're all staying safe.

I'm not really sure where to start in terms of my finances. So I'll write out my current life and financial situation in general.
I'm 36 years old, single, have an online business that pays the bills but barely covers my expenses.

I try to live within my means and spend wisely and slowly but surely growing my business to bring in more money.

I have a chunk of savings of around $30,000 but they're just sitting in a chequing account doing nothing and slowly dwindling year after year due to expenses and taxes. I feel like I need to do something with those savings before they're gone.

I have no idea where to start. TFSA? RRSP? Invest? (I know nothing about this), Spend on growing my business? All of the above?
I'm not even really sure how most of these things work. So any simple, straightforward advice with some explanation is highly appreciated.

I need actionable steps that I can take right now to improve my financial situation. Something along the lines of "put x amount into a TFSA, x amount in RRSP, x amount into Wealthsimple (any specific stocks or just automated?)"

I'm open to any ideas and suggestions.
Thanks!
 
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#2 ·
Welcome to the forum!

It sounds like your cash savings are needed for living expenses, because you're (somewhat) spending from there. If that's the case I think you really have to leave that money as cash, and not "invest" it anywhere. Investments have to be left alone for many years to work; you wouldn't be able to withdraw from it.

I run a small business as well and keep a significant amount of cash, for the same reason. Self employment income can be unpredictable and you really need to keep cash around for emergency needs, or if your income suddenly drops.

If you're able to grow your business income, that's the best thing to do. Somehow, you need to achieve a higher after-tax income than your living expenses.
 
#5 ·
Thank you!

Yeah I agree with keeping a good amount of cash on hand for emergencies. That's exactly why I've been hesitant to move that cash around or do anything with it.
At the same time, I think to myself, I can afford to put 5k-10k into wealthsimple for a few years and just let it do it's thing.

I'm basing this on the amount of savings I lose a year on average in the last 5 years.
My thinking is that at the very least I can offset some of the inflation and use the TFSA at Wealthsimple.

But again, none of this is based on any solid knowledge or experience. These are just my thoughts.
 
#3 ·
Most importantly, don't do things you don't understand.
If you don't understand, learn or simply don't do that.
Most things in finance are actually REALLY simple concepts that build.

Don't worry about details at first.
Make a budget.
Make a basic plan, with key points.

See if they match, then take action to see how to make them match.

Regarding investing and stuff,
1 Emergency fund.
2. Understand your risk tolerance
3. Consider time horizon with your investments.

As far as saving/investing strategy, Filling TFSA first is a good idea, you can do that immediately, and if you decide an RRSP is a better fit, it's easy to change.

Most importantly, don't do things you don't understand, or that don't fit your plan.
 
#7 ·
Most importantly, don't do things you don't understand.
If you don't understand, learn or simply don't do that.
Most things in finance are actually REALLY simple concepts that build.

Don't worry about details at first.
Make a budget.
Make a basic plan, with key points.

See if they match, then take action to see how to make them match.

Regarding investing and stuff,
1 Emergency fund.
2. Understand your risk tolerance
3. Consider time horizon with your investments.

As far as saving/investing strategy, Filling TFSA first is a good idea, you can do that immediately, and if you decide an RRSP is a better fit, it's easy to change.

Most importantly, don't do things you don't understand, or that don't fit your plan.
Yeah I'm quite keen on not throwing my money I things I don't understand, that's why
I've held off doing any trading or investing. I simply don't understand any of it.

That's exactly why I was looking into WealthSimple and my though process is I can afford to
maybe put 5k-10k for a few years there and try the whole Coach Potato strategy. Also,
maybe use WeathSimple's TFSA for convenience.

Do you have any recommendations for TFSAs?
 
#4 ·
#6 ·
There is a wealth (pun intended) of information and knowledge in Getting started - finiki, the Canadian financial wiki as a starting point.

MrMatt also offers good summary of things to ponder.

Solid investment strategies can be simple. Don't overthink it and make it too complex. Take a look at Eight with Weight: A Reading List for New Investors | Canadian Money Forum, to which I'd probably add The Wealthy Barber as another high-level introductory read.
Thanks I'll definately check all of those out. And I totally agree about keeping things simple. I read about the
whole "Coach Potato" Investing and I love that approach. What I like is knowledge of the tools to do that.

Like I have no idea where to buy stocks, or how to invest, or anything like that. That's why I asked
about WealthSimple and if I can do the whole Coach Potato investing using WealthSimple.
 
#11 ·
I'm with others.

Make a plan. Consider asking yourself some questions:
  • What are you saving for?
  • Why is money important to you or your family?
  • What goals or ideas do you have for your money?
Based on a similar reader question to me a few years ago, I wrote this on my site:

I believe answering those questions and more are key to knowing what to save, how you want to save, what ideas and considerations you might have for investing, and more.

The more you learn about your own needs, the better a saver and investor you will be....
 
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