How I Took Control of My Finances Through Investing

Chrissy*, a 44-year-old married mother of two, shares how she started her investing journey — and the lessons she’s learned along the way.   

I’ve always appreciated the importance of saving. Growing up, my mother taught me to save a dollar from each allowance rather than spend all my money on video games and toys. She stressed the importance of saving money, so no matter what happened, I would have something to fall back on. She helped me to see the value in saving and to plan my spending accordingly.

My parents were savers, and they didn’t buy something before they had the money to. If they couldn’t afford to buy something, they were candid about it. This helped me distinguish between wants and needs. 

But when it came to investing, I was completely in the dark. We never talked about it. Stocks, bonds and mutual funds were a mystery to me. Investing felt like something for the mega-wealthy — or for bankers on Bay Street — rather than for everyday families like mine. My husband had a similar upbringing, and investing wasn’t really a topic of conversation. So even though we saved consistently, we both felt intimidated at the thought of investing in the market. 

But as the cost of living kept increasing and my family took on new financial responsibilities, like saving for our kids’ education, we found ourselves increasingly worried about the future. How much would it really cost to retire, and were we saving enough? What about our other financial goals, like putting our kids through university? How would we ensure that our savings worked hard for us?

We were increasingly worried that we’d started too late in life, and we might not be able to reach our goals. It was all too much to navigate alone, so my husband and I reached out to a financial advisor for help. 

Upping my investment IQ

Let’s be honest: Investing can feel intimidating and unapproachable. It’s not something I learned about in school. And even though I knew investing was important, I had no idea how to actually do it.

The first step our financial advisor did was ask us questions to get to know us by understanding our goals. They then asked some simple questions to understand our comfort with investing and set us up with the right investment account. Our biggest concern was retirement planning, so our advisor recommended starting with a Registered Retirement Savings Plan, or RRSP, which is designed to help Canadians — you guessed it! — save for retirement. It’s simple and easy to open, and it’s a great account for people who are new to investing.

Understanding risk

We had our RRSP set up and made our first contribution. The next step was figuring out how to invest it. In general, our advisor recommended having a diversified portfolio— not putting your eggs in one basket, so to speak.  

Our advisor explained that mutual funds can be a diversified investment option because each fund is made up of hundreds, or even thousands, of different investments. There are plenty of mutual funds available for a range of investment goals. 

We also learned the importance of time horizon and risk tolerance when choosing how to invest. The time horizon depends on what you’re saving for and how long you need your money to last, and risk tolerance is basically how much risk you are comfortable taking in order to pursue growth.

The higher the risk rating, the larger the short-term fluctuations we’re likely to see. Our advisor explained equity mutual funds also tend to increase in value over the long term more than conservative investment strategies. In other words, you’re taking on more risk for the potential to earn more reward. 

We don’t plan to use our retirement savings for 20 years or more, so we opted for a higher-risk investment strategy — though our advisor also explained that we might want a different strategy for shorter-term investments because it could have a significant impact on our finances. And they suggested we may want to consider reducing our risk profile as we get closer to retirement. 

Forming new habits

It was tempting to overhaul our lifestyle to reach our investment goals, but my husband and I focused on consistency, starting with small goals that would give us early wins.

We started by focusing on Pre-Authorized Contributions (PACs), which allowed us to automatically transfer money into our investment account each week. And we started small: $25 a week. But after my husband got a promotion, we were able to increase that to $100 a week without impacting our lifestyle. 

We also created a budget so we could see where our money was going and where we might have room to invest. We both use the RBC Mobile App to manage our finances and NOMI Budgets, a tool that suggests a budget based on your current spending and saving habits. 

NOMI Find & Save is a feature that looks at your cash flow to identify extra dollars and automatically transfers those funds from your chequing to your savings account. At first, NOMI Find & Save helped us save about $20 extra each week. But as we became more aware of our spending, and kept following NOMI’s suggested budget, we saw that number rise to around $75 — and we ended up saving over $2,000 in our first year. 

Becoming ready for anything

Ideally, we wouldn’t touch the money in our RRSPs before retirement, so we were concerned about what would happen if we needed the money sooner than we thought? It was reassuring to work with an advisor to ease our anxiety around this, and it helped build our confidence.

They suggested saving some of our extra money in a TFSA. With this kind of account, they explained, we can save for retirement with the peace of mind in knowing that if we need the money, we can make a withdrawal and recontribute the following year. 

Ultimately, we decided to keep up steady contributions to our RRSP and invest any extra money in the TFSA for a mix of short- and long-term savings. We also stow any lump sum payments in our TFSA: Our Canada Carbon Rebate (CCR) and Canada child benefit (CCB) go straight into the TFSA, along with any end-of-year bonuses or refunds on our tax return.  This helps us invest for the long-term while providing savings if we need it

Revisiting our goals

I won’t lie — when we started investing, it was hard not to check on our portfolio performance every day. It was super satisfying to see our investments grow in value, but day-to-day fluctuations started to stress me out. 

When I mentioned this to our financial advisor, they recommended taking a longer-term view. Market fluctuations are normal, and the long-term results are what matters, so it’s wise to avoid looking at your investments every day — and perhaps check in quarterly instead. If market fluctuations are causing a lot of stress, you may be more comfortable with a lower-risk investment strategy, and it’s worth discussing with your advisor. 

They also recommended checking in annually to ensure our portfolio still worked for our goals. When our oldest child entered high school, for example, we shifted our investment strategy to a less aggressive portfolio. That helped protect our investments against volatility in the market, so we’d be ready to pay for tuition and other university expenses after graduation. 

My takeaways from this journey

As intimidated as we were to begin investing, my husband and I both wish we’d started sooner. Starting with a manageable savings goal and a single investment account helped us gradually build our knowledge and gain confidence in our strategy — and now we both feel empowered to reach our financial goals. 

My advice to would-be investors is: Just start. Find a financial advisor who can answer your questions and walk you through your options. You don’t need to reach a certain income; you don’t need tens of thousands of dollars in the bank. All you need is an investment account and a savings goal that works for your lifestyle today, which a financial advisor can help you set up.

Before you know it, you’ll have your own saving and investing routine — and you might reach your financial goals sooner than you think.

Ready to get started? Visit us online to find an advisor near you and set up the right investment account for your needs.   

*Names have been changed to protect anonymity.