ARE WE READY TO BE LONG TERM INVESTORS?

I have been working with Andrew for six years as his Financial Advisor.  I met Andrew when he was a 24-year-old university graduate.  Andrew had a large OSAP loan, a student line of credit and a credit card with a balance.  He was recommended to me by his mother whom I had been working with for a number of years.

When Andrew and his wife Kathy  came to see me for their annual financial check up and asked me the question “Are We Ready to be Long term Investors,”  my  reply to them was “Yes  you are both most certainly ready to become  serious long-term investors.”

When Andrew and I first met we worked on a Financial Plan.  Preparing the Financial Plan took one month before we were certain that was what he wanted to achieve. During that period we met weekly.  The following month we met every two weeks which we continued to do for one year.  Soon after our first year of meeting Andrew introduced me to his finance Kathy. We had to revise the plan Andrew had as a single man to include his then fiancée Kathy.  Kathy also had a credit card, student line of credit and an OSAP loan.    For the next two years we met once a month and then switched to meeting annually.  Working with a Financial Planner requires time and dedication. The planner will be there, but you will have  have to also be present, and by present I mean do the things you said you would do and show up on time and keep your appointments.

Here is a list of Andrew’s and Kathy’s goals.

  1. Open an emergency savings account.
  2. Open two Registered Retirement Savings Plans.
  3. Make payments to credit cards and do not add any more purchases to the credit cards.
  4. Transfer credit card payments to the student lines of credit, once the credit cards were paid in full.
  5. Make regular payments to Student Loans.
  6. Save for their Wedding.
  7. Save to purchase own home.
  8. Purchase a car.
  9. Open a joint vacation account.
  10. Open a joint Long term Mutual Fund non-registered account.

Six years later Andrew and Kathy have met all of the above goals and now want to be serious long-term investors.  They are well prepared, and understand the process of long-term investing.  You will notice that Andrew and Kathy did not start long-term investing until they had achieved their short-term and some of their mid-term goals.  Both Andrew and Kathy are ready to work with an Investment Specialist or Broker.

Andrew and Kathy wanted to know why I am referring them to an Investment Specialist.  The reason for not getting involved in investments is because there are thousands and thousands of Investment Specialist all over the place, but very few advisors who are passionate enough to move you from where you are to where you want to go, or to get you ready to work with an Investment Specialist.

I have recommended Andrew and Kathy to an Investment Specialist who will work with them to build wealth.

My job as always is to enlighten, educate and encourage you at the beginning of your financial journey.  I choose to help you to make the proper plans to manage your money and to stay out of revolving credit which will contribute to your financial success.

Andrew and Kathy are going to be in good hands and we will be meeting every year for a financial check up.

If you are ready for long-term investing, consider working with a financial advisor.

Tessa-Marie

 

WHAT DO YOU REALLY, WANT?

Whenever I facilitate a workshop on finance the very first question I ask the participants is WHAT ARE YOUR FINANCIAL WISHES?      Most of the participants are stumped by this question.

In The story of Aladdin’s Lamp the Genie once released from his imprisonment in the bottle asks Aladdin. “WHAT DO YOU WISH’   I refer to this fable to illustrate a point.  When Aladdin was confronted with this question he hesitated, and like most of us, he did not have a list of specific wishes.  He had a vague idea of what would provide the most immediate pleasure and comfort.  He did not have a working plan and he did know what he wanted.  I ask, the Genie’s question a little differently. What is it you to accomplish financially?  The common response is “You know I have never really thought of that.”

At the beginning of a workshop on finance I get those same reactions. So let’s see if I can help guide you to achieve your financial goals

It is Tuesday night and you are watching reality television wishing you were one of those rich people or one of those getting rich doing their show.  You wished so hard that the Genie appears,   “Give me a list of the ten things you want now and they all will be yours in five years.  You will receive the first one in January and the second one in June and every year after this for the next five years.  There is only one catch; you must name these ten things in 120 seconds.”

How many of you are able to do this now?  Stop reading and get your, I phone, I Pad, purple, yellow or blackberries and begin writing taking only 120 seconds to complete the list.  How was that for you, did you complete your list in 120 seconds or were you mystified, dumfounded, and exhausted, well you are not alone you are just like 90% of the population over the age of 20.

Kids know what they want; we have all seen or experienced with a child who wants a particular toy, they know the name of the toy, they know where it is sold, what colour it is, how much it cost and they also know you will move heaven and earth to get it for them.

The Genie feels sorry for you and decided to give you another chance.   He tells you “I will be back in seven days and if you have those ten things listed they will be yours.”

What are you going to do, are you going to turn off the television, and get your note-book or one of those berries and begin writing or are you going to do it after this particular show is over?  It is all your choice, remember. The decisions you make today determines the life you live tomorrow.

You decided you are starting now.  The first list you created you set aside, NO! You say out loud as you jump out of your chair, this is not what I really, want.   You start again.  This time you date and time the second page and begin, using the previous list as a reference, you look at the list again and will see the things you know you need, also what you don’t want.

Here are  some things you might have on that first list.

  1. Be happy,
  2.  Have good health
  3. Travel
  4.  Have a fancy car
  5. Eat at superfine restaurants
  6. Have a big House
  7. Buy designer clothes and shoes
  8. Want to be comfortable
  9. Get married
  10.  Have a family

Now here is a list of the things you need and want to accomplish.

  1. Stop borrowing money to buy things
  2. Bring my current debt up-to-date
  3. Pay off all my debt Buy a Home
  4. Create a small only God knows fund
  5. Create a Big emergency fund
  6. Buy a house
  7. Open a  Registered Retirement Savings Plan
  8. Save my children’s education
  9. Have an annual vacation
  10. Pay off the house

A very different list from the previous one.  Are these better choices?

Try creating your own list using the above as a reference.

When you have these things in place, peace of mind, happiness and contentment will follow, and your Financial Advisor aka Genie will have guided you to reach your financial goals.

It requires some practice and it will definitely take much more than 120 seconds to get it right but it is worth doing.

Let me know how you felt before and after the exercise.

Tessa-Marie

TEN STEPS FOR CREATING A SPENDING PLAN

                                                                                                                                      

Creating a SPENDING PLAN may not sound like the most exciting thing in the world to do, but it is vital in keeping your financial house in order.

Before you begin to create your SPENDING PLAN it is important to realize that in order to be successful you have to include all your financial details, no spending is too small to be listed.  It is imperative all spending is listed.

Ultimately, the end result will show where your money is coming from, how much it is where it is all going.

  1.  First, at the top of the page write down the date and amount you bring home each week, bi-weekly or monthly.    By that I mean the amount you receive in your account which is your net pay,  this is the amount you have to live on.
  2. Write down EVERYTHING you spend each day.   Most people remember their mortgage or rent payment,  but often forget the impulsive things they buy,   like a chocolate bar, the lottery tickets they buy on their way to work each morning.    I recommend that you carry a small notepad with you and write down everything you spend money on,  including lunch, magazines, and your morning coffee.    By keeping track of everything you spend money on, you will have a complete list of all your expenses, which will make it easier to create your Spending Plan.
  3. Savings:  Your savings must be included in your list of expenses?  Remember to pay yourself first;  consider it a debt you owe to you.    Have your bank do your savings automatically for you.
  4.  Your weekly,  bi-weekly or monthly income should equal the same as your expenses.   If your expenses are greater than your income, you will need to revamp your spending plan.
  5. Once you have created your spending plan your job is to make it work for you.   What are you willing to give up, to make your spending plan work?    I do not recommend stopping or modifying your savings,  if you do you are again putting yourself last. Look at the amount you spend on groceries,  cable TV, eating out.    Groceries are usually the bigger culprit; make a list of what you already have and shop accordingly, not because it is on sale.
  6. If you choose not to decrease your spending, are you prepared to take on a part-time job?    To spend more than you are making is to dig a hole while standing in the same spot,  eventually you will not be able to toss the dirt over your head and out.   You will need to go over your spending plan several times, before you get it right. Keep at it,  it is worth the effort
  7.  If you have a spouse you will have to work together to produce a spending plan that will benefit both you and your partner.
  8. Even if one person manages the day-to-day of the spending plan the partner should be aware of what is going on in that plan.
  9. After you have your spending plan as you want it,  your next step is to implement the plan.   
  10.  Set up weekly, bi-weekly or monthly meeting where you and your partner go over the plan,  you will need to visit the plan often in e beginning.    Then you can go over it at least once a month to make sure you are on tract.

Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com