Overcoming Obstacles to Saving

Obstacle - Man Jumping Over Word on Arrow

We’ve all said it, “tomorrow I’ll get to that”, or “maybe next week or next month when I’m not so busy and have a little extra cash”, but time passes on by and we never get to that one thing we’ve been avoiding – saving for our retirement. Here are some of the obstacles to saving that we may identify with:

  • Procrastinating – delaying savings or putting savings off for another time. Check
  • Poor Spending Habits – includes spending on unnecessary items; impulse buying and self-indulgent lifestyles. Check
  • Culture of Dependency – Being overly dependent on others for everything. Check
  • Lack of financial literacy – spending on liabilities or items that decrease in value over time; not knowing how to make your money grow or work for you. Check

Here are some ways by which you can overcome these obstacles:

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How Do I Build An Investment Portfolio?

You should establish your investment strategy by deciding on the mix of investment products (assets) that you seek to purchase. The saying Don’t put your eggs in one basket” is very relevant to investing success. In building your investment portfolio you can spread your money across different classes of investments, including:

1. Cash and Cash Equivalents 

  • High liquidity,easy to get your money when you need it
  • Provide lower return, but with almost no risk

Examples: Savings accounts, money market funds, and treasury bills. 

2. Fixed Income Investments 

  • Offer a fixed rate of return that doesn’t change
  • Provide a steady flow of income
  • Can lower your investment risk

Examples: Bonds, bond mutual funds

3. Equity Investments 

  • Buy a share of ownership in a company
  • Are riskier than fixed income investments
  • Offer the potential to make far more than a fixed income investment or cash equivalent

Future value is uncertain, and will be affected by:

  1. How well the company is doing now and its future growth
  2. News events specific to the company
  3. Economic trends

Examples: You can buy shares of an individual company’s stock, or buy units of a mutual fund that invests in the stocks of many companies.

To build your investment portfolio, choose from one or more of these asset classes to get the right balance of risk and return for you.

Remember, a well thought out asset mix is the key to your investment success. In most cases, when you mix your classes of investments, you reduce the risks associated with investing. 

The Do’s and Dont’s of Investing


  • Work out what your investment goals are before you decide on an investment plan;
  • Consider what balance of risk and return you are comfortable with;
  • Remember there is no such thing as a high return, risk-free investment;
  • Ensure that the financial services firm or adviser you are considering is registered with the TTSEC;
  • Shop around: It helps you get the best value and most suitable product for your needs.
  • Make sure your read all documents carefully;
  • Bear in mind that past performance is no guarantee for future returns;
  • Diversify your investment to reduce risk;
  • Make sure that you have access to some of your savings for emergencies;
  • Find out what charges (if any) apply and what commission (if any) is paid to your adviser;
  • Find out what charges (if any) apply if you need to withdraw your money before the agreed due date;
  • Find out what happens to your investment if you die; and
  • Make sure that you have access to some of your savings for emergencies.


  • Leave money doing nothing for long periods as inflation will eat away at its value;
  • Be tempted by offers that seem too good to be true. (Remember, if it sounds too good to be true, it usually is!)
  • Be rushed into making hasty decisions about a savings or investment  product;
  • Buy or invest in anything you do not understand;
  • Be put off or impressed by financial jargon. Ask for an explanation if you do not understand a particular term;
  • Commit to a long -term investment if you think you may need access to your money;
  • Make an investment decision based only on the advice of a friend or family member.

Money Management in Your Middle Years

If you are between the ages of 35 to 55 this means that you are officially in your middle years. Give thanks!

Now is the time for you to maximize your income generating potential.  At this time you should be taking deliberate steps toward managing your money. You have many competing interests for your money including managing from day to day, saving for tomorrow, providing for a child’s tertiary level expenses and your retirement.

Moreover, this is the time for you to focus on the issue of how to maximize your income during your remaining work years so that you are better positioned to retire, when and how you want. Here are some suggestions for minimizing stress and maximizing results.

Save as much as you can for your retirement

Look for savings that give you a tax advantage. When you reach the golden age 50, you can also make extra contributions to these retirement savings accounts. You should speak with a financial planner or personal advisor about a recommended investment strategy and mix for your age and stage of life. As time goes by you can always alter the mix of stocks, bonds, mutual funds to suit your risk/age profile.

Comparison shop for alternatives 

Look for savings plans or mutual funds accounts which offer a higher interest rate or other benefits for children/teenagers. Utilizing these products can help families and individuals save for higher education expenses. You should also see if you can qualify for a tax break on earnings from investments used for educational purposes.

Use any financial “windfall” you may receive

In the event you unexpectedly become the beneficiary of a large sum of money you should consider asking a financial or tax adviser about your best options, these may include starting or adding to a rainy-day fund for emergency expenses or putting money into your retirement accounts.

If you deposit a large amount of money in a bank account , make sure it is fully protected by the Deposit Insurance Corporation (DIC). You may also consider paying off high-interest debt, such as outstanding balances on your credit cards.

Plan a strategy for having a home and mortgage

If you don’t own a house, consider if it makes sense to buy one, especially if you don’t plan to move in for another two or three years. Home ownership can offer tax advantages and a stable place to live, but don’t take on more of a mortgage than you can afford to pay each month. If you do have a mortgage, periodically compare your interest rate to current market rates and, if rates have declined, calculate whether refinancing makes sense. Remember owning your own home makes you asset rich and you can use the value in your home (equity) from time to time to meet other financial needs.

Managing your money well in the middle years can make all the difference in how you retire, so start today so you can live better tomorrow!

The Young Adult’s Guide To Personal Finance

Managing your finances is not a subject that is taught in our nation’s secondary schools and may not necessarily be covered at the post-secondary or tertiary level either. However it is an area in which most young persons entering the job market for the first time, are fairly unaware. It is unfortunate that most persons believe that understanding personal finance is way above their heads and therefore create a mental block around the subject.

It’s easy to get started on the right path by looking at six of the most important things to understand about money if you want to live a comfortable and prosperous life.

1. Learn self-control

Our parents invariably taught us this when we were children. The sooner you learn to delay gratification, the sooner you’ll find it easy to keep your fiances in order. Although you can effortlessly purchase an item on credit the minute you want it, it’s better to wait until you’ve actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal? If you want to keep your credit cards for the convenience factor or the rewards they offer, make sure to always pay your balance in full when the bill arrives, and don’t carry more cards than you can maintain or monitor.

2. Take control of your financial future 

Instead of relying only on others for advice, take charge and read a few basic books on personal finance. Understanding how money works is the first step toward making your money work for you.

3. Know where your money goes

Once you see how your morning coffee or buying lunch every day adds up over the course of a month, you’ll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise. In addition, keeping your recurring monthly expenses as low as possible will also save you big bucks over time.

4. Start an emergency fund

Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly “expense”, pretty soon you’ll have more than just emergency money saved up: You’ll have retirement money, vacation money and even money for a home down payment. However do not just put these savings into an ordinary savings account. Do research on savings or investment instruments that can provide you with a high interest rate. (Make sure though, that you understand the risk factor involved in all investments).

5. Start saving for retirement now 

Most young persons do not appreciate the need to prepare for retirement well in advance.  However, because of the way compound interest works, the sooner you start saving, the less principal you will have to invest to end up with the amount you need to retire. Therefore, the sooner you will be able to call working an “option” rather than a “necessity.” Company-sponsored retirement plans are a particularly great choice because you can match the company’s contribution with an equal one of your own, thereby ensuring an even higher contribution to your retirement fund.

6. Understand how taxes work 

It is important to understand how income taxes work even before you get your first salary. When a company offers you a starting salary, you need to calculate whether that salary will give you enough money after taxes to meet your financial goals and obligations. You have to take your gross pay, subtract your taxes and see how much you’ll be left with as your net, or take-home pay.  Only then can you make informed decisions regarding how to grow your wealth.

Stay tuned for our next post on  how to manage your finances in your middle years!

Financial Tips For Teens

This week in our series on investing for life stages, we’re putting the spotlight on those critical teenage years where future financial habits can be nurtured and developed.

As you enter your teenage years you will begin to make some “grown-up” decisions about how to save and spend your money.  That’s why learning the best ways to manage money, no matter how small is one of the most important lessons that you can learn in life.  The first thing that you have to do is set goals for yourself. Then you must make the right choice with your money to help you achieve those goals.

Here are some suggestions to consider:

Save some money before you’re tempted to spend it

When you get cash for your allowance, birthday, or from a job, automatically put a portion of it, at least 10 percent, (or possibly more)  into a savings or investment account. This strategy is called “paying yourself first.” It comes from an old saying, “What the eyes don’t see the heart doesn’t grieve for.” Basically the premise is that if you don’t have it easily accessible you learn to live without it.  Making this a habit can gradually turn small sums of money into big amounts that can help pay for really important purchases in the future.

You should consider putting the spare change that you find when you empty your pockets at the end of the day, into a jar or any other container, and then about once per quarter putting that money into a savings account at the bank to earn you interest.

Keep track of your spending 

A good way to take control of your money is to develop a budget or spending plan. This is when you decide on the maximum amounts you aim to spend each week or each month for certain expenses, such as entertainment and snack food. To help manage your money, you should make a list of your expenses for about three months, so that you have a better idea of where your dollars and cents are going. If you find you’re spending more than you intended, you may need to reduce your spending or increase your income depending on which is easiest for you to do at a particular point in time.

Consider A Part-Time Job 

Whether it’s  babysitting, washing the neighbour’s care or a job in a “established” business, working outside of your home can provide you with income, new skills and references that can be useful after secondary school. Before accepting any job, ask your parents for  their permission and advice. Once you start to collect your pay cheque you need to determine how to apportion your earnings.

Think before you buy 

Many teens make quick and costly decisions to buy the latest clothes or electronics without considering whether they are getting value for their money. Before you buy any item you should ask yourself if you really need or just want the item. Based on the response to that question you should conduct research on where the item is available and engage in some comparison i.e shopping to get the best value for money. Remember that life is about choices, so sometimes in order to purchase a particular item you may have cut back on spending for something else.

Be careful with cards 

For those of you using a debit card, which automatically deducts purchases from your back account, always remember that bank cards offer convenience, but they also come with costs and risks that must be taken seriously.

Be smart about college 

If you’re planning to go to college or to pursue any post-secondary education, take advantage of any available government assisted programmes. Remember however that there are costs to be borne by you.  Start doing research on the major expenses which may include tuition, books, fees and housing.

If you’re a past the teenage years, it’s definitely not to late to learn how to manage your money better! In our next post we’ll talk about how young adults can better understand personal finance for prosperity!

Three Ways To Make Your Money Grow

Whether you’re saving for the short or long term, investing is all about options.  An informed investor is a safer investor.  You need to know your financial fundamentals so you can weigh the options best suited to you.

There are three types of investments that can help you grow your money, we like to call these the investing A, B, C’s – here’s what you need to know:

A. Investments that earn interest. Your regular savings account is a good example of this type of investment. The good news with a savings account is that you won’t lose your money. Whew!  However, it will likely grow much more slowly than other investment options. With a savings account you also have easy access to your money if you need it sooner than you think. This is a good option if you’re saving for the short term or if you’re buying time while you decide what to do with your money towards long term goals.  To maximize this option, understand that the interest rate on the savings account directly affects how much you earn so shop around!

B. Investments that pay dividends. Stocks are a good example of investments that pay dividends. Looking for a regular income from your investment? This may be a good option for you. The amount of the dividend depends on how well the company did that year and what kind of stock you own.  Companies that pay regular dividends are often mature and well managed. This makes them more likely to go up in value but stay informed and read those annual reports. Knowing the financial health of the company can prepare you for any unwelcome surprises.

C. Capital Gains. These are investments that you sell for a profit and includes stocks, bonds and mutual funds.  If you have long term savings goals like retirement or your child’s education this is where your money can work for you.  While there is an element of risk with investments of this kind, your money can grow faster over a longer period of time.  Keep your adviser close and pay attention to the financial market place.

Learn the investing A, B, C’s and you’re well on your way to financial maturity.