Sunday, 1 February 2015

Financial Basics 1 - Stuff I wished I knew when I was 22

I've had this blog up for a couple of years now.  All I have posted so far are some spreadsheets that I wish to share with others.  Two are related to my profession and two related to retirement planning. Spreadsheets eh?  Yes, I am an Engineer.

I'm thinking that it is time to broaden my horizons and actually write posts about subjects other than spreadsheets?  Will anyone care?  Maybe not, but I'll let the readers decide that. 

This post is about summarizing in a simple way the basic information one needs in order to save and invest for retirement or financial independence.  I now wish that I would have both received and heeded this advice when I was starting out in the working world, mainly because I would have worried less about investing and would not have made some mistakes that cost me a bit of money along the way.  Not losses per se, but more like gains that were missed.


Why am I writing this when there are so many other resources on the internet regarding the very same subject?  For the following reasons:
  1. This is a letter to my sons on how to save and invest.  We have had many discussions over the dinner table and exchanges by e-mail, but I would like to gather that information into one place. 
  2. Identify what I believe are the best resources available on the internet.  You will see two of them mentioned below.  
  3. Many of the resources on the internet are good, but many of them have become very commercial.  I see advice on those sites that I don't necessarily agree with. By identifying which ones are the best, the implied advice is to avoid many of the others.  
  4. Many of the sites have a lot of fluff or distracting information mixed in with the useful.  I know when I was 22 that I would not have been able to discern between the truly useful and useless information.  I hope to identify which is which. 
  5. Some of the great sites are US centric, so I hope to fill in and give a Canadian view. 
  6. One of the spreadsheets I share on this blog is a retirement forecast spreadsheet.  It does a pretty accurate job of handling the different accounts, investments, taxes and government benefits.  It can be used to determine the optimal strategy for saving, investing and withdrawing funds.  I hope to share results of studies using this tool. 
I will accomplish this by writing a series of posts.  Mainly as I don't have the attention span to do it all in one, and secondly because I haven't yet figured out what all the subjects of the posts are going to be. Hopefully after reading all of this and other blog posts and resources you will become confident and happy in your saving and investment strategy. 


Why the pictures of pets?.  Even though my sons are grown ups now, if I put in pictures of cats and dogs, it increases the probability that they will read this.

There are some great resources out there and I will reference the ones I have found useful and informative as I go. But first I would like to mention a few of my favourites.  If you have found my blog, I am sure you have found these already, but I would like to recognize such great blogs.

Jim Collins' blog is a wealth of information, especially his Stock Series.  He has some really good articles on why you should invest in index funds and being patient through market downturns,
Jim Collins
Even if you never read any of my posts, you should at least read this one from Mr Collins:

Mr Money Mustache (MMM) is well known and there are over 400 posts.  Advice on many aspects of life from living frugally to building a waterproof shower.
Mr Money Mustache
This link is to a list of all his posts:
MMM - All Posts

The third favourite thing I would like to point out at this time is a book.  It is "The Drunkard's Walk: How Randomness Rules Our Lives" by Leonard Mlodinow.  The book is about how the mathematical laws of randomness affect our lives, including the stock market.  There is even an example regarding financial experts and proof that a fund manager beating the market for many years in a row is shown to be mathematically likely but purely as a result of randomness.  I have also used examples from this book many times in my employment as an engineer to help explain to people the effect of randomness on technical aspects of my work.
The Drunkards Walk on Amazon

Here's a list of my future posts.  I will come back and update this as I change or update posts. 
  • Basics of income taxes.
  • How different savings accounts work:  RRSP, LIRA, TFSA and taxable accounts.
  • Self-directed accounts (and other accounts). 
  • Types of investments
    • Stocks
    • Bonds
    • ETFs
    • Mutual funds
  • Types of investments that are worth considering over others - Index ETFs.
  • Investment Portfolio.
  • Investing and re-balancing.
  • Strategy - buy and hold, don't sell on drops but consider buying more.
  • How much to save?
  • Investing small amounts.
  • Planning tools.
  • Strategies
    • Which to invest in, RRSP or TFSA?
    • Which funds in which accounts?  How this changes over time?
  •  Others?

Disclaimer:  These posts are not fully comprehensive financial advice.  You should seek your own qualified investment, tax and legal advice.

1 comment: