I’m married: should we have joint accounts?

Last week, I discussed why I thought couples dating should keep their personal and credit products separate . Today, I want to discuss if married couples should have joint accounts or credit products together. The short answer is no. Getting married doesn’t require you to have a joint account with you spouse. But it’s generally better to work together when you’re on a team than to work in isolation.

How to deal with personal account

When it comes to the personal account, married couples should have at least one joint chequing account and one joint saving account. The joint chequing account should serve as your main payroll deposit account and also your primary bill payment account. Having your pay cheque and bills being paid out of the joint chequing account will create accountability.

While bills and your pay cheque are paid into your joint account. It’s important you both still maintain a separate individual chequing account. Once you’ve completed your budget, whatever amount you’ve decided as your individual personal spending money should be moved into your respective individual account. This ensures you don’t have the big brother feeling all the time and also maintain individual freedom on that portion of the money. Yes, you can buy as many Tim Hortons as you wish and never have to explain anything to your partner.

The joint saving account should serve as a place where you place your emergency fund. Again, the reason for having this joint is to ensure in the event of an emergency each partner can access this fund without the other person being present. You want to avoid your partner being in a difficult position and unable to access the entire savings funds as you have the other half. The key again is to make the account accessible, open, and accountable.

How to deal with investment

Registered investment accounts cannot be joint. A married couple can open a joint non-registered account if they wish. Since the main investment accounts such as TFSA and RRSP cannot be joint, the important thing is to coordinate your efforts. I recommend you view both your investment as one single account. Yes, I’m aware this might create some rebalancing issue but given you’re working towards the same goals, you want to avoid duplication when possible. Duplication means additional fees, additional fees mean lower return, and a lower returns means your less likely to reach your goals.

How to deal with credit product

When it comes to credit products, it’s okay to have a joint credit card or line of credit. It’s equally as important for each person to have their own individual credit card solely in the name.

When a joint credit product is opened with your partner, it’s based on both your credit. In the event that one of you should die that credit product will have to be canceled as the other credit holder is no longer alive. This is where couples run into trouble as the living couple might have no access to credit product or might run into difficult getting obtaining credit. Therefore, it’s important each of your builds a strong individual credit history while ensuring you have access to your own credit product.

I will end things off on this note. If you currently have a system that works for you and your partner, I suggest you keep it. At the end of the day, the important thing is you have a system in place that enables you and your partner to work towards achieving your financial goals.

What most people don’t tell you about marriage

You’re probably wondering why I’m I writing about marriage on a financial blog. What does marriage have to do with finance? A lot actually, especially if you have the unfortunate experience of going through a divorce. There are two commonly cited reasons for divorce; kids and finances. I’m more interested in the financial side of things, as a divorce can have a significant impact on a person’s financial future.

From a statistical point of view, the odds of a long marriage are about as good as flipping a coin. According to a Statistic Canada report, the Canadian divorce rate sits at 40%. In addition to the high divorce rate, the report also found that the average age for divorce for men was 44.5 and 41.9 for women.

The report got me thinking beyond just finance as I continued to wonder why so many marriages end up in divorce. To be completely honest, I was alarmed by those numbers as a newlywed. Following the conclusion of the report, my biggest challenge as a newlywed isn’t the first 10 years of my marriage, rather it will be 20 or 30 plus years I should be more concerned about.

I always assumed the early years would be the most difficult in a marriage or any relationship. I based that assumption due to the possible challenges associated with learning to live with someone full-time or perhaps possible challenges associated with raising a family while balancing a marriage and career. But the report showed my assumptions, with respect to difficulty in the early years, was wrong and married couples are divorcing much later in life, not early in their marriage.

As I continue to think about the issue more, it occurred to me perhaps there was another contributing factor to married couples divorcing later on in their marriage. Perhaps before children or career challenges come into play there is a something newlyweds are not being told about marriage. That missing something, for me, is an unwillingness to be truthful about the challenges and benefits of marriage. We have a weird relationship with marriage and for the most part, we tend to highlight only the positive aspect of marriage. It’s as though we feel if we are too honest about the amount of work required for a successful marriage we might scare off the upcoming generation from wanting to get married.

A successful marriage isn’t a result of an over the top wedding or a super frugal wedding. Rather, a wedding is sufficient because it’s the starting point of your journey. It’s the point you decide to take a journey on a life long pursuit to finding out how your partner operates and how best to support them towards becoming the best person they can be.

But most people view their wedding day as the most critical day and while it is significant it’s not a critical factor to having a successful marriage.  We tend to see our wedding day as the finish line and that’s why we often celebrate as though we have accomplished something when in reality we haven’t really yet (other than some legal requirement). Said differently, we tend to stop investing in our relationships after our wedding day is completed and put our relationship in an unconscious auto-pilot. We take for granted that our partner will always love us regardless of what we do because in a weird way they are now stuck with us. This type of thinking creates complacency, which will guarantee a divorce at some point.

The simple truth is marriage is it’s a lot of work. There isn’t a secret formula, it’s just a lot of work. Period. The longer a marriage goes on the greater the chances of complacency with investment isn’t continued. If you do not understand this, it’s only a matter of time before your relationship becomes another statistic. Do not fool yourself into believing a great wedding day will secure you a great marriage or starting a family will secure a long and healthy marriage. Great relationships or marriages are hard work that requires constant investment.

You can not put your marriage on auto-pilot. Ever. You have to continue to invest in your partner and your marriage to ensure it continues to grow and face the challenges ahead. A successful marriage enables you to be a better spouse, mother, father, daughter, son, brother, sister, cousin, uncle, aunt, friend, partner, employee, or business owner. My point is everything starts with your marriage being on built on a solid foundation. And if you fail to realize this, cracks will start to show up in your foundation and over time they will not be fixable unless the entire thing is demolished.

That’s why it’s important we offer newlyweds a balanced review of marriage. Yes, it’s hard work. Yes, it requires constant investment. Yes, it can become more difficult over time. Yes, it can be challenging at times. But it’s also extremely rewarding when done right. To acknowledge the challenges of something doesn’t mean it isn’t worth pursuing. Rather the acknowledgment of both the positive and negative attribute of something enables you to make an informed decision, while also enabling you to put a plan in place to address the negatives in order to increase your chances of success.

As a newlywed, I will end on what I’ve come to learn about marriage. The wedding day is just your starting point. There is no correlation between an expensive wedding and a long and happy marriage. To have a successful marriage you have to continue to invest in your relationship and your partner. It’s not good enough to love your partner. Instead, you should strive for your partner to love you, and equally as important, for them to like you. We all love our family but we tend to avoid hanging out with certain family members because we don’t like them.

Love can sometimes come easy but liking someone requires a constant persistent effort that can fade if that investment isn’t sustained over time. And lastly, this isn’t an easy journey and your true test will not be the first 10 years of  your marriage but rather much later in your life and marriage. To ensure you’re ready for the later challenges of your marriage, continue to invest in your partner and your relationship.

A successful marriage requires constant and frequent investment in the relationship to ensure it’s longevity.

 

What is the difference between speculating and investing?

Investing can be a difficult and challenging process. Successful investing requires the right set of behaviours and habits. A behaviour is an action you take towards something. When a behaviour is repeated consistently it becomes a habit. Most young people, including myself at one point, fail to truly understand this concept. It’s what makes investing difficult and eventually leads to most young people speculating about the market rather than investing in the market.

To avoid such making such a mistaken, it’s important to understand and know the difference between speculation and investing.

What is speculating?

I define speculating as the act of purchasing or buying something not based on the factual information available to you at the time. Speculative purchases are often based on a hunch you’ve got either by word of a friend, family, or worse a TV personality. While you might use some facts in your decision-making process, it normally only the facts that support your assumed believes about the purchase. You avoid looking at any other information that might contradict your assumed conclusion.

You have no interest in the long-term viability of the investment. You’re more concern with short-term viability with the aim to sell the investment in a short time frame in order to make a large profit.

Speculation can be difficult to identify a first as it can take on a herd time mentality. If everyone believes the investment can continue to grow in the short term and long term indefinitely at an unsustainable rate, it’s not perceived as speculation.

That was a contributing factor to the 2008 financial crisis with the asset class being housing. Everyone believed house values and prices had nowhere to go but up and as we now know that wasn’t the case.  As interest rate increased, many homeowners found themselves being unable to afford their mortgage payment and they started to default (missing payments) on their mortgages.  As millions of homeowner realize they had either paid too much for their home or the true value of their home was less than the mortgage they had on the home, they simply walked away realizing the value would never exceed the mortgage.

As I said, speculating is only speculating when a majority of the investors start to believe the value of the asset can’t go up in value indefinitely. Speculating is like a game of hot potato with all speculators trying to ensure they are not the last one left with the potato when everything finally crashes.

Speculating can catch anyone and does not discriminate against anyone. The 2008 financial crisis impacted everyone from various social classes and backgrounds. Doctors lost their homes. University professors lost their homes.  Teachers lost their homes. Realtors lost their homes. Journalists lost their home. Financial advisors lost their home. Retail workers lost their home. Janitors lost their home.

It doesn’t matter how smart you think you are or what type of work you do, anyone can fall to speculation if they let their guard down.

What is investing?

I define investing as the act of purchasing or buying something based on factual information available and taking a long-term view on your purchase. You take a real interest in the business or stock your buying. You review the investment not only for its short-term viability but also for its long-term viability. If that sounds like a lot of work that’s because it is. That’s why most people end up speculating. Investing in something means you try and get a fair and accurate price for the investment’s value.

Your goal is to purchase the investment at its true value, not at an inflated value.

When I speak with friends about investing the conversation always soon turns into speculation talk about a great stock, while others simply shy away from the conversation because they believe investing in the stock market is too risky.  They say things like “I wish I had money to buy Apple stocks, it had a great quarter.” Investing isn’t about making a purchase decision based on short-term performance. Assuming you had the money, you would buy Apple stocks on the assumption their next quarter would be better than the last and could make a quick profit. Naturally, that type of thinking makes you a short term investor and means you often buy an investment without every looking at the long term viability of the investment.

When you purchase an investment, you become a co-owner of the business. It’s a concept most young investors forgot. Most young investors do not see themselves as a co-owner of businesses they invest in. Rather, they see themselves as individuals who own shares of a company. If you do not have an ownership interest or stake in something you’re likely to cash out the minute things don’t look good, which creates a short-term view when investing in the stock market. An owner of a business is invested in business viability both in the short and long term with the understanding that the true profit is the long-term viability of the business.

I will end on this final example to illustrate a common speculating vs investing example. Most workplaces have some sort of lottery pool contribution. An investor would take the monthly contribution from their office lottery pool and put the pooled contribution into a diversified basket of stocks and take the profit upon retirement. A speculator would continue to use the monthly pooled contribution to purchase lottery tickets in the hope of a huge before they retired.

The investor is making a decision based on the available information that the odds of their office winning a lottery is slim to none. And while the stock market has some risks, when compared to the risk they’re taking each month by playing the lottery, the stock market risk is much lower over the long term with a higher probability of success when compared to playing the lottery each month for the next 20 years. The speculators, on the other hand, are pinning their hopes on being lucky while failing to understand the true risk their taking because everyone does it and its innocent office fun to play the lottery.

Don’t speculate. Become an investor.

 

Which is better: renting or buying a home?

The debate about buying a home versus renting a place is an old age debate that’s been around since mortgages were created. And for the foreseeable future, it will continue to a topic we debate. Purchasing a house is one of the biggest investment decisions most people make along with the biggest debt they will take on.

To be transparent, it’s important I let you know I own a property.   Whether you’re purchasing a home or renting one, the decision-making process for both is similar. Most of our purchase/ renting decisions are 80 % emotional while 20% is rooted in simple math. We like to believe it’s the other way around, particular on such a big decision, but the ratio is still an 80/20 split with our emotions making the bulk of our decisions.

This debate is particularly important for my generation. Why? My generation wants the same things their parents provided them. A home to create memories and a decent job to provide for their kids. The problem for my generation is while there are tremendous opportunities available to us we also face increased difficulty in starting our home ownership dream. Naturally, renting isn’t such a dirty word these days given the Canadian housing market. But let’s dive into the debate.

Rent vs Buy Overview

Preet Banerjee is a financial commentator, who did an excellent video comparing renting vs buying. I love video because it both balance and makes the numbers side of the debate less intimidating. Rather than reading my breakdown, I want you to watch the video and then review my comments after.

 

As you can see from the video, from a numbers point of view, the homeowner isn’t guaranteed a clear win. The renter isn’t a clear winner either as a lot of variables need to line up for the renter. What is clear though is our assumptions about either side isn’t entirely rooted in facts or even supported by facts. The more accurate answer to this old age question as to whether renting is better than buying is; it depends. It depends because there are many assumptions and variables at play in order to determine which option is better. If the correct and honest answer is it depends, then why do we continue to believe one side of the argument is always correct? From my observations, there are 3 potential reasons why one side of the debate continues to be portray as the clear winner.

Herd mentality

Our economic system makes the assumption that given all the necessary facts on a topic, we will make the logical decision based on the facts provided. In the real world though people do not make logical conclusions based on the facts available. Just think about the last major decision you made. It was probably an 80/20 split. When a large group of people are making decisions more on their emotions rather than looking at the facts, then you create a herd of irrational decision makers who actually believe they are making a rational decision because everyone else is coming to the same conclusion.

Whether you’re purchasing a car, a home, or stocks it critical you spend some time looking at the facts and trying to come to a conclusion based on those facts. The debate about renting vs buying is clouded as the herd mentality means getting factual information about which is better is hard and honestly we don’t want to really know the truth.

Timing matters

When it comes to renting vs buying; timing matters a great deal. It’s possible to make a great decision but if the timing is wrong it could be a poor decision. If you purchase a home too soon it might become too much of a burden as you’re unable to save up for an emergency fund, travel, relocate for a job, or build up your investment account early in life. A home purchase too late in life can also make homeownership unappealing. Timing doesn’t get enough attention on this debate. This isn’t timing in the sense of market timing or purchase timing. This is about the individual trying to ensure the timing makes sense for a home purchase. The assumption is usually that getting a home at any point is a great investment. But as the video illustrated that’s not always factually true.

False premises

If you rent, the belief is that you’re wasting your money as you’re giving away rent each month when you could be owning your own place. This argument appears to have a logical premise at first glance. But in reality, it has nothing to do with numbers and more again about emotions and reconfirmation of our decisions. Renting isn’t throwing away your money unless you assume the individual has no other savings plan other than the money that he or she is currently using as rent.

On the other side, you have people who say home ownership is a losing game when you factor in ongoing upkeeping costs and interest cost. Again, the assumption here is that an individual will keep the mortgage for 25 years and the owner has bought a house at their full capacity. It’s unreasonable to assume every homeowner who buys a house does so at their full financial capacity. Some homeowners purchase a home and still have enough cash flow to save towards their retirement or raise their family. The bottom line is we make the wrong assumption about the renter and buys. These false assumptions are made to reinforce the decisions we’ve already made.

My conclusion

The one thing you should take away from this debate is, renting vs buying isn’t a slam dunk for either side. There are a lot of variables that need to line up for either side to claim victory. Secondly, this is an emotional decision/ debate and as such the numbers matter little. Said differently, we avoid looking at the numbers side of things because ultimately we know buying a home or renting is less about the numbers and more about our emotional need that buying or renting fulfills. And at the end fo the day, it’s those feelings of security, pride, ego, flexibility or shelter that matters to us.

Lastly, you probably should air on the side of caution regardless of what side of the debate you side with. If you own a home, you should ensure you have enough money left over to invest and create an emergency fund. This means you don’t view your home as your sole retirement plan. The same goes for renting. Don’t simply rent and then spend your disposable income on vacations or eating out every day. Rather put your leftover money towards investments and perhaps consider buying a home when the timing is right. Diversification is the key to this old age debate.

I’m dating: should I open a joint account with my partner?

If you’ve been in a relationship for some time sooner or later sharing of account comes up for debate. Deciding to have a joint account or credit product can be of great benefits but it can also be a disastrous decision. I dated my now wife for a long time and we also debated this question. We opted to keep things separate when dating because we had different income levels at the time and wanted to maintain our independence.

While it might be tempting to join accounts or open joint credit facilities while dating, I strongly discourage this for couples who are not married or in a common-law relationship. My main reason for this is a married or common-law relationship has laws that oversee or come into place during a divorce or separation. A marriage is a legally binding contract between the two parties. Some provinces also treat common-law relationships in the same as marriage with respect to property division.

When it comes to dating relationships there are no such laws. If there is a dispute regarding the money in the event of a breakup, you are left mostly on your own to resolve the issue. For example, you and your partner open a joint saving account to save towards your next vacation. You put in $3000 while your partner puts in a $1000. A few months later, you guys get in a fight and decide to break up. A day later, your ex-partner goes into your joint account and withdraws the $4000 to put towards a trip for just them. Since the account is joint, they haven’t done anything legally wrong by pulling the funds from the account. However, you have an ethical argument which you can pursue in civil claims court.

No one expects their relationship to end poorly, which is why people often think it’s okay to have a joint account or credit card. Opening a joint credit product is even worse as both partners have to agree to the cancellation of the credit product if dating. Relationship breakups can be nasty and the involvement of money can take things to another level of nasty. It’s in both your interest to air the side of caution and avoid complicating things should the relationship not work out the way you both envisioned.

While it’s smart to keep accounts separate while dating that doesn’t mean you can’t plan and coordinate saving goals or future plans. That’s the approach my wife and I took while dating. We set goals collectively but then divided those target into our respective responsibility based on our income level. Every couple of months or annually we would do a check up to ensure each person is doing what they are said they would do. If my wife and I didn’t end up getting married, we could walk away without the added financial stress or complication.

Keep your accounts separated while dating but feel free to coordinate your long-term savings goals.

Take years off your mortgage with this payment option

I’ve yet to meet someone who likes having a mortgage. Once the honeymoon phase of home ownership fades the focus quickly turns to how best to pay off the mortgage.

The key to getting rid of your mortgage may come down to the type of mortgage payment you select. Before I go any further, it’s important to understand a couple of things about mortgages. The interest on a mortgage is not calculated in advance and the compounding period for  mortgages are semi-annually.  What does that mean for you? It means frequency along with additional payments are critical to cutting years off your mortgage and saving on interest cost.

What types of mortgage payment options are available?

There are 6 different types of mortgage payments available. They are monthly, semi-monthly, bi-weekly, weekly, accelerated bi-weekly, and accelerated weekly. When deciding on a payment option most people pick the one that matches their pay schedule. If you’re paid monthly, you’re likely to lean towards a monthly mortgage payment. Picking a payment option that matches with your pay schedule might be convenient but could  result in you having a mortgage longer and paying more in interest costs.

What’s the best mortgage payment option?

The best mortgage payment is one that enables you to make more frequent payments within a year while also making extra payments within the year. As such, the best mortgage payment option would be an accelerated weekly payment as you make payments every week. While it’s the best mortgage payment options to taking years off your mortgage, most of us do not get paid weekly. Therefore, the most common payment option selected by most people is biweekly or monthly still as it more convenient with their pay schedule.

What’s the difference between a bi-weekly and an accelerated bi-weekly payment?

Most people select a bi-weekly payment option when they are seeking the effects of an accelerated bi-weekly payment option. Bi-weekly payment takes the equivalent yearly monthly mortgage payments and divides that figure by 26 to determine your bi-weekly payment amount. The actual dollar amount you pay with a monthly or biweekly payment will the same, however, you will reduce your amortization slightly and save some interest due to the frequency of bi-weekly payment.

Accelerated bi-weekly payment calculation is slightly different. To calculate your accelerated bi-weekly payment you take your monthly equivalent mortgage payment and divide that amount by two and then make 26 equal payments throughout the year. As a result, you end up paying more per year with an accelerated bi-weekly payment option compared to bi-weekly payments.

A case study to illustrate the effects of mortgage payment options

Let’s assume you get $100, 000 mortgage and put down 5% on a 5 year fixed term mortgage. The interest rate on the mortgage is 3% and there is mortgage insurance since it’s a high ratio mortgage. The chart below shows all the different payment options available and the impact they would have on the amortization.

Payment Frequency Monthly Semi-Monthly Bi-weekly Weekly Accelerated bi-weekly Accelerated weekly
Payment amount $465.77 $232.89 $214.97 $107.49 $232.89 $116.45
Amortization 25 years 25 years 24 years & 11 months 24 years & 11 months 22 years & 2months 22 years & 2 months
Term Interest Cost $13, 650.19 $13, 631.46 $13, 579.70 $13, 571.00 $13, 399.43 $13, 390.02
Amortization interest cost $41, 310.21 $41, 180.14 $40, 940.82 $40, 878.81 $36, 040.74 $35, 984.02

 

After reviewing the chart, you can see a monthly payment option is the least effective payment option for reducing your amortization and saving on interest cost. The best option is an accelerated weekly payment option which cuts a 25-years mortgage down to 22 years and 2 months. A bi-weekly payment will reduce your mortgage amortization to 24 years and 11 months, which 1 month less than a monthly payment option. If you selected an accelerated bi-weekly payment frequency will take almost 3 years off the mortgage amortization.

The difference between a bi-weekly and accelerated bi-weekly payment is $17.92 biweekly. Yet, the payment made with an accelerated biweekly payment at the end of the year is $465.90 more than a bi-weekly payment. That works out to an additional $2, 329.50 by the end of the 5-year term simply by selecting an accelerated bi-weekly payment option.

The takeaway is clear. Accelerated payments are the way to go.  Since most of us get paid bi-weekly you should be select an accelerated bi-weekly payment frequency for your mortgage. Avoid selecting a monthly or a bi-weekly payment option for your mortgage due to the long term costs it can have.

How to make the most of your employee share program

Employee stock option plans offer a way to participate in your employer’s success while saving towards short or long term goals. But what exactly is an employee share program? In short, an employee stock option plan allows an employee to buy their company’s stock up to a certain percentage of their salary. The employer then provides a matching contribution up to a certain percent and annual limit. For example, an employee may contribute up to 6% of their annual salary while the employer might offer to match 50% of all contributions up to a certain annual limit.

While it’s a great program, it can result in a reduced retirement income or losing your money if you fail to plan properly. Part of the problem is most employees sign up for the program and that’s the end of it. Once they hear a matching contribution is being offered that’s good enough for them. To avoid such a situation, here are some things to consider and do to maximize your employee share program.

Identify the purpose of the funds

This is an important question to answer. What do you want to accomplish with the money? Is it for short term saving needs or retirement savings? By identifying the purpose of the fund, you can then determine how you should manage your contribution and employer’s matching contribution.

Select the right account that matches with your goal

On a general level, employee share programs offer 3 types of accounts that your funds can be placed in. These accounts are TFSA, RRSP, and a non-registered account. Your contribution along with your employers matching contribution can be set up in one of the three accounts.

Each account has its benefits and tax implications. For example, if the funds are for short term needs such as saving for a vacation, it might be better to place your contributions in a TFSA or non-registered account to enable you to pull the funds without tax implications. Alternatively, if the purpose of the fund is part of your retirement saving plan. You might consider placing your contributions along with your employer’s matching contribution inside an RRSP account.

The takeaway is to spend some time to determine which account is best for you based on the purpose of the account. Lastly, pay attention to each accounts tax implication. RRSP have a withholding tax on withdraws while you might have to pay capital gains on the sale of your shares if it’s in a non-registered account.

Set up an annual review date

It’s great that you’ve decided to enroll in the employee share program to take advantage of your employer’s matching contribution. However, deciding to enroll in the program is just the starting point and not the end of your work. You need to review this account annual for any changes to the program and also to ensure its meeting your saving goals.

Contribute as much as possible

Whatever the maximum contribution limit is, max it out if possible. If you’re allowed to put 3% of your annual salary, do so. Remember the company is matching a percentage of what you contribute, which is the primary reason for doing this program. You want to take advantage of the free money to help you reach your saving goals faster.

If the account is for retirement, avoid planning in isolation

If the purpose of the account is to save towards your retirement, you want to view this account along with your other retirement accounts as one giant account. That means you have to be mindful of your asset allocation, diversification, and fees. The next two points further explain why you have to be careful with using your employee share program as a retirement saving vehicle.

High risk with poor diversification

Using your employee stock plan option as a retirement vehicle carries a lot of risks if done incorrectly. The risk is due to you working for the company, are paid by the company, get benefits from the company, and now you’re betting your retirement on the company’s success. That’s a lot of things you’re depending on your employer for and that puts you in an extremely vulnerable position. As such, you’ve got to secure better diversification to reduce you risk should your employer hit financial difficulty. This means you should have another investment account set up outside your employee share program. Your employee share program shouldn’t be your only retirement account.

Set up an annual date to move funds to your diversified holdings

To follow up on my last point. Since you’re buying a single stock, you have poor diversification as a result. If the funds in your employee shares account are part of your overall retirement fund, then it should be sold and moved every year to a more diversified portfolio holding. Be sure to review any costs and tax implication before moving your funds. You should be able to move the funds once’s the funds have vested.

Do this consistently. Remember having a basket of diversified stock can be risky but betting your retirement saving on a single company is dangerous. Remember Enron and Nortel? I’m sure former employees of those organization learned the hard lesson of betting your future on a single company no matter how great it seems.

There are few times anyone will offer you free money. Employee share program is an effective way to save towards your short and long term goals. The important thing is to spend some time to plan out your goals and objectives to ensure you maximize all the possible benefits while reducing your risk exposure.

Why Millennials aren’t happy at their jobs

The dream is simple. Find a job that’s both engaging and purposeful and pays well. The problem. It’s much easier to think about the perfect job then to find the perfect job. As such, it should come as no surprise that most millennials are unsatisfied with their day job. The World Economic Forum recently published an article that highlighted some possible reasons as to why millennials are dissatisfied with their job.  What’s interesting about the article’s finding is the increasing role social media plays in how millennials feel about their job.

  1. Misrepresenting achievements on social networks

Social media such as Instagram, Facebook, Google Place, and other similar social sites are more or less now branding tools for most of its users. It’s rare to see someone posting something that’s of a negative nature. That’s a conscience design feature by the creators of the platforms. We’re less likely to visit a place that we expect to see negativity.

It’s hard for people to be completely honest about how they feel about their relationships, life, or career on social platforms. You will not see a post about someone who makes a lot of money but hates their job. You will not see a post about someone doing something they love but struggling and on the brink of bankruptcy. You will not see a post about someone who’s depressed or having suicidal thoughts. What you see instead is an unrealistic portray of how people proclaim to be living their lives. No one’s life is perfect but if you view social media you might start to think your life sucks or perhaps you’re the only one who’s working a job because it pays the bills and allows you to take care of your family.

As a result, constant checking in on social media can create a feeling of constant pressure and constant comparison with your peers. The problem is that those comparisons, for the most part, are based on unrealistic expectations.

  1. Media stories of hyper-successful millennials

 I’m a competitive person and while I don’t play competitive basketball anymore, securing a career and advancing within a field of interest is about as competitive as any high-level sports competition. That feeling is further compounded when the media continues to feed stories about young successful millionaires and giving the impression as though millionaire millennials are a norm and not an exception.

Millionaire millennials are an exception, not a norm. Furthermore, it’s impossible for everyone to be exceptional. We are uncomfortable with the idea of being average not because it’s a bad thing but because we’ve convinced ourselves we have to be exceptional or nothing else. The key I’ve found to deal with this pressure is learning to be comfortable with who you are. It sounds like an obvious advice but when it comes to your career you have to be comfortable with the limitations of your skills and abilities. Most of us are of the believe our abilities and skills have no limitation if only we work harder. Therefore, we believe we can be exceptional in every aspect of your job or life, which is frankly ridiculous.

  1. The number of possible career path and constant striving to achieve potential

 Millennials are tech savvy and have a lot of choices when it comes to career options today.  We often think to have a lot of choices to be a good thing, but sometimes that can be a bad thing.

When it comes to career options today, there seem to be so many possibilities and that often means we become quickly feel dissatisfied with a job. I think it’s important to strive towards doing something you ultimately enjoy since we spend more time at work than with our family and love ones.

I’ve learned this the hard way, which is you have to provide time for your career to develop. Most millennials want their dream job right off the bat. The truth is you only know a good job when you’ve done enough bad jobs. Time is critical for career success as it enables you to go through the full work circle to determine if a job is right for you or not.

You should strive to be the best you can be given the skills and abilities you have. Avoid thinking millionaire millennials are a norm as they are exceptions. Be comfortable with who you are and avoid trying to be what people believe you should be.

3 ways to make money

 

Broadly speaking there are 3 pathways to making money. You can exchange your time or skills for money (employment), turn an idea into a business (work for self), or a hybrid approach (employment and self-employment).

Each pathway is undergoing some changes due to our changing economy. The vast majority of us will start on the employment path, which means we exchange our skills and time in return for compensation in the form of wages and benefits. Traditional employment is changing in terms of the type of jobs available and also the type of skills that are in demand. Individuals who are tech-savvy will benefit tremendously in the early period of this change. Traditional skill sets are still of value but there’s a far greater focus on knowledge. In short, you can’t simply get a job and then turn off your brain for the next 30 years. You will have to continue to invest in yourself and that doesn’t mean going to college, it just means you will have to continue to learn and adapt throughout your career in order to demand top wages and more importantly, ensure your job security.

If you take the entrepreneurship pathway it involves higher risk but the rewards could well justify the risk. If successful, it could result in an unlimited on-going stream of income assuming people continue to buy your product or service. What’s interesting about this pathway is the type of opportunities that’s being created with the help of technology. Today, it’s possible for an individual to be self-employed by simply playing video games online and uploading them to Youtube while making 6 figures in the process. Technology has also helped to reduce the business start-up costs. Starting your own business is much easier today and requires far less capital depending on the type of business you’re starting. Perhaps the biggest benefit technology has made to this pathway is the access to global markets. Selling a product to Africa, China, Brazil, Russia, India, and many other countries has never been easier. As a result, raising capital is no longer just restricted to your own market. You can reach out to investors in other countries to get funding for your idea.

The hybrid pathway is a combination of some form of employment and also doing some sort of business on the side. This pathway has increased in popularity due to the technology (hopefully, you’re starting to notice a theme). The internet has made it possible to have a full-time job while also run a business on the side . Your store is your website and your customers are anyone who has access to the internet. Once you go live, you’re open for business.

There’s no universal pathway that works for everyone. What’s important is you work towards discovering the right one or combination for you. You might spend the first 15 years of your career working for someone and later on in your life decide to become a business owner. You might spend your entire life working for an organization or you might spend your whole life running your own business. It doesn’t really matter the path you take as long as it’s the one that allows you to maximize your abilities and skills to generate the most income possible.

Lastly, regardless of the path, you find yourself own, it’s important you own it. Do not let society or anyone box you into a particular pathway. Learn to be the creator of your own life and create a path to success that’s unique and customized for your skills and abilities.

We tend to feel unsuccessful because we often let other people set and determine what success should mean for us. Be confident, be open to new experiences, and always remember to take the left turn when everyone is taking the right turn (unless it’s in a dark alley). Success is what you make it!

Brexit outcome: What you should do with your investments

Brexit vote will go down as another historical day for a continent that has no shortage of historical events. On June 23, 2016, the United Kingdom held its referendum on whether to remain a member of the European Union or to leave it. 30 million eligible voters  participated and the result where close. But in the end, 52% voted for leaving the European Union while 48% voted to stay.

The United Kingdom is officially leaving the European Union once they tender their request to the European Union. On a personal note, I was disappointed with the result. I’ve been fortunate to be able to do some traveling around the world and I’ve been to Europe several times now. I think this was less about economics and more about expressing frustrations and fears.

I’ve had a couple of days now to really digest the result and trying to figure out what exactly what it will mean for my investments, job, economy, and on a selfish level travel plans. As I thought about it more over the weekend, I identified 4 things to do and expect as a result of the Brexit vote to reduce the impact on your investments.

  1. Don’t do anything for now- Stay the course

The pound dropped to its lowest level in 31 years after the vote and markets had a major freak-out, to put it mildly. Fear and the unknown tends to make us act irrational and the market is where those feelings play out. As a result, it’s important to avoid impulsive decisions by staying the same course for now.

When things are uncertain or we feel fearful it’s natural to want to act or do something. This is not the time, at least, in the short term. You might have to act in the future but right now you just simply need more information and time. There isn’t enough information yet to fully understand the impact the vote will have on the European Union or the global economy as a whole. Don’t worry, you’re not alone as businesses are also waiting to get more clarity before they act as well.

Continue your normal investment purchases and provide yourself time to gather more information. Don’t act out of a need to do something when doing nothing is the smartest thing right now.

  1. Prepare for short-term volatility

Some experts are advising the divorce between the European Union and the United Kingdom could take up to 10 years. That’s a long time. The degree of volatility will depend on your portfolio make-up. If you’ve got a lot of holdings in the United Kingdom or Europe, then you’re likely to experience a greater volatility within your portfolio in the short term. As a result, prepare for greater volatility within your European holdings over the next couple of years while expecting broad volatility across your entire holding in the short term as well. Things over the long term will iron itself.

  1. Diversification is your best defensive

Brexit once again proved the importance of not betting your entire investment or retirement on a single country, continent, or company. If your current portfolio is skewed towards more Canadian holdings, this might be a good time to rebalance your portfolio. It’s critical your investment is properly diversified across different sectors, geography, industries, large cap, small cap, emerging, and developed markets just to name some examples.

Diversification allows you to spread your risk and during economic uncertainty you will be thankful you’re properly diversified.

  1. It’s on sale- but don’t try and time this purchase

When the market is red, I see for sale signs all over the place. I see an opportunity to purchase a BMW car for the cost of buying a Kia Forta. While the Brexit has shown a couple of days of hard discount sale on the market, do not try and time your purchases.

If you have the funds available,  I recommend you dollar average your purchase either on a weekly basis or monthly to take advantage of the sale. Avoiding trying to time your purchases because you become a gambler, not an investor. And gambling isn’t investing.

 

To recap.  Stay calm, do nothing for now, and continue to invest as per normal. Avoid the temptation to act and continue to gather information to see if any further action is required in the future.