The markets are down; Stocks are falling; Ottawa projects a $34B defecit this year and $30B defecit next year. Although the world is experiencing a decline in the economy there are smart ways for you to keep a well-positioned money strategy and stay secure through this changing economy.
What can you do to keep investing in your future and take advantage of potential growth?
1. Pay Yourself First -
Do you have a pre-authorized monthly savings plan set up that follows your pay schedule? Setting aside part of your income, one for savings and one for retirement, even if its small amounts will grow significantly over time.
2. Realize the advantages of NOT having your money at the bank -
If you have all of your investments with the bank, when you die all of your savings, retirement accounts and chequing accounts will have to go through your estate to get passed down to your beneficiares. This can take MONTHS. And trust me your lawyer will take his fees off the top. However if you have your investments and savings with a licensed agent, when you die your savings and retirement funds get immediately passed to your beneficiaries bypassing your estate. This can take DAYS. No fees. Be a positive person and think of your family, be prepared.
3. Take advantage of Dollar Cost Averaging -
When you invest on a regular basis such as a pre-authorized monthly payment plan, you are taking advantage of different rates in the market. So for the same dollar, you buy more units when the value is lower and less units when the value is higher, averagining out to a lower cost over time. So although the markets are low right now, this is a great time to start up a monthly plan to start saving money. Take advantage of it now that the price is low.
4. Chip away at your mortgage -
By putting a few extra dollars on top of your mortgage can drastically chip away at that interest and principal saving you thousands of dollars overtime. Or, have you considered a home equity line of credit? Every month you pay down on the principal and the interest is caluclated at the end of the month. You can take years and thousands of dollars off your interest.
5. Use credit cards wisely -
Never never never carry a balance. Pay it off every month. If you have a balance, make it a priority to pay it off immediatly. Let’s say you purchase a $1,000 Plasma TV. You put it on your credit card that has an 18% interest rate. If you only make the minimum payments, that TV can end up costing you over $1,640. So not only do you get a poor credit rating but you end up paying almost double for your TV by putting in on your credit cards. Waste of money.
6. Claim all your tax credit and tax deductions -
Don’t leave any cash on the table. Take advantage of what you can claim and deduct. This may include the Children’s Fitness Tax Credit, your RRSP contributions, Tax Credit for Public Transportation, the Energy Savings Credit. For a complete list of what you can claim and deduct, click here.
