More Money Podcast - 199 How to Level Up Your Money - Jessica Moorhouse, Erin Lowry, Barry Choi & Diana Stoparic

Episode Date: May 16, 2019

Last Tuesday, I had the pleasure of joining forces with Erin Lowry (author Broke Millennial and Broke Millennial Takes on Investing) in Toronto for a special event we called Level Up Your Money! It was a sold-out event sponsored by TD Direct Investing and was all about how to inspire and educate millennials about how to get started with investing. We were joined by money expert Barry Choi and TD Direct Investing Education Facilitator Diana Stoparic for a panel discussion on the key things we all need to know about getting started with investing. Here is the live recording of our panel discussion, and as promised in this episode I’ll be doing another episode with the Q&A! For full episode show notes visit https://jessicamoorhouse.com/199 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome to episode 199 of the Mo Money podcast. I'm your host, Jessica Morehouse. Welcome back for a special episode of the show. I'm so excited to share this episode with you. So if you have been listening to the podcast, or maybe you were there, I recently did a live event in Toronto called Level Up Your Money. It was me teaming up with Erin Lowry, who was on the show yesterday, author of Broke Millennial and Broke Millennial Takes On Investing. She is a pal of mine, but I also think she's such an amazing person because she really is so passionate about educating young adults and millennials like you and me about personal finance and breaking it down in real terms and making it

not scary. And she's just a dream. And I was so, so lucky and happy to team up with her to do this special event. And of course, because I know lots of people like yourself may not have been able to attend. I mean, I know you all don't live in Toronto. You live all over the world. So I wanted to make sure that we recorded the panel discussion of the event so you could feel like you were there in spirit with us. So this is that recording of the panel discussion. Aaron was the moderator. And then on the panel was myself, Barry Choi, who's been on the podcast. He also blogs at moneywehave.com. And Deanna Stoparik, she is part of the client education team at TD Direct Investing. And so all different point of views. Erin's obviously American. So it was a really cool conversation

that we all had. So I know you're going to love it. And also just, again, big shout out to TD Direct Investing for sponsoring this event. I came to them because I'm a big fan of their discount brokerage and said, hey, we want to do this financial literacy event. Do came to them because I'm a big fan of their discount brokerage and said, hey, we want to do this financial literacy event. Do you want to partner with us? And they're like, hell yeah. And basically said, do whatever you want. We'll be very hands off and see you there. And yeah, it was awesome. So I hope you enjoy this. And also I'll mention this at the end of the episode too. There was a Q&A at the end of the episode too. There was a Q and a, uh, to the end of the panel, which I'm not including in this recording. Cause then there'd be like an hour and

also we didn't really, uh, get to record some of the questions. And also after the Q and a, cause there's only so much Q and a we could do on the panel. There's so many people that came up to me and Aaron individually to ask questions. So I am going to be doing another special episode to really actually just answer all of those questions that we got. And that being said, if you have a specific investing question, maybe you didn't attend the event or you did, but you didn't ask me a question and you want to make sure that I address it, shoot me an email, Jessica at JessicaMorehouse.com or hit me up on Twitter or Instagram or wherever to uh, to get your question in and I will do my best to give you a really good answer. So with all that being said, let's get to that recording of the level up your money event that happened in Toronto.

Welcome to level up your money. Thank you so much for coming. So freaking excited that you've all made it. Packed house, sold out event, and on a Tuesday. So appreciate it. Yeah, I forgot. I've really kind of lost track of my days, but it is indeed a Tuesday. Way to show up, Toronto.

This is amazing. Yeah, we do. Wow, guys, come on. Way to show up. This is amazing. So should I introduce you and you introduce me? I mean, we could. I feel like a lot of you know who we are, but...

Yeah, I'm Jessica Morehouse. I'm Erin Lowry, author of Broke Millennial Takes on Investing, and Jessica is... A millennial money expert in a bunch of other things, and you may know me from my podcast. But we're here to talk about investing. We're going to talk about how to level up your money, and I'm so excited. So we are going to be bringing up some amazing panelists here shortly and engaging in a panel discussion. If you don't know already, I am an American, so I'm not going to try to translate over. So everyone who's up here talking to you about investing will indeed be Canadian. I am just the moderator. And we are so excited. Also, we're going to have a Q&A. So have some questions in your mind. If you have your burning investing questions or just want to ask anything of us, we'll be sure to

mention that. So before we bring up our panelists, I just wanted to give you a little bit more of a background about why I wrote Broke Millennial Takes on Investing in the first place. And while I am American, I would say about 65% of the book still completely transcends borders. So don't worry about that. And that what doesn't, Jessica has you covered with her investing course. But what happened is Broke Millennial Takes on Investing is actually the second book in my series. The first one being Broke Millennials Stop Scraping By and Get Your Financial Life Together. And in that book, towards the end, I had a very short chapter on investing because that's a foundational piece of getting it together. And at the end of that chapter, I had some recommended reading. I'm like, hey, if you want to keep learning more,

here's a bunch of examples of places to go. And then I started getting DMs and tweets and emails from folks that said, okay, I checked out those books you recommended. They say beginner, but they are very complicated. And that's a big persistent problem when it comes to investing education. And luckily, a bunch of sources are starting to work on that pain point. But I wanted to create a book where it was all right there, easily accessible for you, plus starts to actually hit on certain things that are more relevant to us millennials. I know you guys have student loans too. It's not just on the other side of the border. So student loan debt and investing, how do I handle that? Micro-investing

apps, robo-advisors, this is all the stuff that's changed since those original books were written, some cases 50 plus years ago. So this really is an updated text. And I'm so excited for the conversation that we're about to have here today. So I'm going to introduce our panelists. First, we have my wonderful co-host, Jessica Morehouse. Jessica, yeah, give it up. You're going to have to keep that energy level, though, for everyone, just so we're clear. Jessica is a millennial money expert, accredited financial counselor and Canada speaker, sorry, messed up a comma, award-winning personal finance blogger, and host of, as many of us know, the Mo Money podcast. Aside from being a regular guest on CTV's Mind the Gap, she is also frequently featured by

major media outlets like The Globe and Mail, CBC, and Global News. Jessica is also the founder of the Millennial Money Meetup. Thank you so much. That's it. I know. I know. Thank you. Next up, we have Barry Choi. Barry is a personal finance... Yeah. Yeah. I told you I had to get it up.

I appreciate it. Barry is a personal finance and travel expert at moneywehave.com. He makes frequent media appearances in Canada and the U.S. and writes a regular column for Money Sense magazine. When he's not talking about money or travel, he shares too much information about his 22-month-old daughter, who's adorable, by the way. Oh, my ovals.

And finally, we have Deanna Steparek, who's from TD Direct Investing. She is a client educational instructor at TD Direct Investing who facilitates online webinars and masterclasses on a variety of topics related to investing. She is passionate about helping clients to become more confident investors, why we're all here tonight. And she's also a millennial DIY investor herself. So thank you all so much for being here. Woo! So I don't know about you guys, but for me, when it came to starting to learn about investing,

language was the most intimidating factor. And it just feels like a foreign language. The way I describe it in the book is I remember sitting in algebra class and feeling super overwhelmed that I couldn't solve an equation because I frankly didn't understand the language that the teacher was using. And investing isn't that different. So the first question we are posing to this panel is if you had to define one term for a rookie investor that they absolutely need

to know to get started, what is that term? And yeah, please define it. I'll start. And I totally agree. If anyone's read an investing book, and I remember being in my early 20s, I'm like, let's do this. No idea. I read entire books, had no idea what they were saying. It's because of the language they used. And one thing that they say a lot is time horizon. And you're like, time horizon, what the hell are you talking about? All that means is how long is it going to take you to reach your investment goal? Easy peasy. Yeah?

It's on me now. So I think the most basic concept you need to understand is compound interest. It's weird because a lot of people know what interest is, but compound interest is interest you earn on the interest you've already earned. So at the basics of it, the earlier you start investing, the more money you'll have in the long term. And a lot of people just don't get that.

But once you realize that, you're like, oh, I've got to start investing now. Great terms. There's also a lot more than three that we can start off with. So this is just beginner. I would say diversification. Quite simply, don't put all your eggs in one basket. That stock might be a great idea, but do you really want to put all of your money into one stock? So maybe a little bit here, maybe a little bit there. Look into different options as well.

So yes, don't put your eggs in one basket is really the easiest way for diversification. Now, Jessica, you work with financial counseling clients. I do. Some are here today. Yeah. And, you know, investing is kind of the sexy piece of your financial life and it can be really exciting. So a lot of times we just want to jump right in. But as I outlined at the beginning of the book, you have to, as I call it, put on your financial oxygen mask first. So what do you think people need to achieve before they jump into investing? Oh, so many things. I feel like, and this is similar to kind of your scenario, the oxygen mask. I think you need to have, just like building a house, have that foundation, a financial foundation. So you need to take care of all the other elements of your financial plan or your financial life

before getting to that part of investing. Investing sounds exciting. It means making money. Who doesn't love making money? But you have to take care of, so what's your debt repayment plan? Do you have one? Do you have an emergency fund?

What's your tax plan? What's your cash flow structure? What kind of credit cards do you have? What's your credit score? There's a lot of other things that you need to take a look at to know where you're at right now to find out, okay, now I know where I am, how to get to where I want to go. That's another element. And then you're kind of ready for

investing. That's kind of what I feel like that is the best way to kind of express the foundation. Well, and Deanna, you work with clients as well, and a lot of people who are in the same stage as many of us in this room that are beginners. Now we're going to have a chance to hear what your questions are later, but what are some of the really common ones that you get from clients? So I work with a lot of different clients, definitely a lot of beginner clients, but also clients who definitely know their stuff as well. When we're looking at beginner clients, they tend to ask a lot of the same questions. So, you know, what's a market? What's a market order?

How do I place an order? What's a stock? What's a bond? And those are all black and white kind of questions and answers. There's not really a gray area. The gray area is definitely the important question, the one everyone wants the answer to, and the one that I can't give an answer to. And that is, what do I buy?

Well, I can't really give you advice, but that is, what do I buy? Well, I can't really give you advice, but what I can do is I can tell you how you can do your own research, right? What are some important things that you might want to look at? What are some values that speak to you? Do you want to invest in maybe ethical companies? What do you think is going to happen with the markets? What do you think is going to grow? That is really how I would describe it as. You have black and white questions, and then you have the best question with the worst answer that I can give you, which is it depends on each individual. So that is kind of how I would answer that. Now, we all have kind of competing factors, I guess, that are trying to get our attention when it comes to all of our money goals. And Barry, you live in an expensive city. You own a home. You're a dad now. That's a lot of big life

goals and changes that have happened in the past couple of years. So what are some of your recommendations for how to balance in investing with short and medium term goals? Yeah, that's a really tricky question when you think about it, because I think a lot of us were taught at the beginning, you got to save 10%, you put aside that amount, and you're good. Yeah, that was probably good for my parents, like, you know, 40 years ago. But like you said, now it's like, oh, I live in an expensive city and all these things, right? So for me, it's like, I'm always looking forward of what my goals are, you know, short-term, long-term. People don't realize short-term is like five years, even though it seems like so far away.

So number one, it's like, okay, what do I want to do in five years? What am I going to do with my money? Kind of like how we're talking about time frame. And then 10 years from now. But to me, it's always like, you know, if I don't let my lifestyle creep up and spend more money, the way I see it is when I started my career, I would just save any additional money I got whenever I got a raise. So to me, it was more like, okay, if I can just keep increasing my savings rate, in theory, I can get what I want down the road. Obviously, things have changed. Real estate pricing, I was like, it's not such an easy answer.

But also, the way I look at it now these days, I can't have everything I want. So even though I'm married, I got a kid, yeah, that's great. But I can't go buy that new car. I can't take that trip all the time. Sometimes you've got to make those sacrifices. Now, you mentioned that very commonly quoted 10% number. And usually that's referring to putting money into your retirement accounts. Well, investing is scary because what goes up must come down. Part of the process is the cycle

of the market. So I'd love to hear from all of you some of your best strategies for how do you handle that fear factor when you see those numbers going down? You want me to take this one first? I feel nothing with my money. I don't know if I buy that. But it's like, here's something. You have to get used to it. As new investors, you're constantly... Like, here's a good example. I guess everyone here is, like, starting to get into investing, right? So the end of 2018 in Canada, it was like the world was going to hell.

Like, all our investments have gone down, blah, blah, blah. Like, everyone's got to pull out of the market. Well, what you're doing there is you're selling at its lowest part, so you're guaranteed to lose money. So now we're in what? We're in May. And I think the stock market returns, if you're in a diversified portfolio, so you're guaranteed to lose money. So now we're in what? We're in May, and I think the stock market returns, if you're in a diversified portfolio,

is like up 10%, and the TSX is like near its record highs. So if you had just kept your money and done nothing, it would have gone up. But those people who pulled their money out, they basically lost. So to me, it's just like,

you just got to stick to your plan. Like once you've figured out investing and what your strategies are, your short-term, long-term, you kind of need to set rules for yourself and be like, hey, you know what? Don't do anything. Or sometimes you got to talk to someone

who knows what they're doing. Hopefully it actually is someone who knows what they're doing as opposed to, you know. Not just your friend. Or like, you know, like marketing scams or whatever. But just to talk you down from those cliffs.

Because we all go through it. It's like you don't want to see your money go down in value because you're like, oh, no, I need this. But here's a better example. If you're saving for your retirement and you're not retiring for 30 years, who cares if your portfolio has gone down 3%? Like, it makes no difference.

Yeah, no, I agree. And I think if you have been investing, you remember the end of December or early January, it was a very trying time. And for me and my husband, we have our monthly money meeting where we take an account. Monthly? Monthly. Yeah, monthly.

And we take an account of our net worth at the end of every month. And we took a look. We're like, so we're ending the year not on a high. Definitely plunged. And we both looked at each other. We're like, no, no, no. We have the year not on a high. Definitely plunged. And we both looked at each other. We're like, no, no, no. We have the plan.

We know about this. We know about the psychology and the emotions in investing. And I think we just hadn't experienced it for a while. Things have been really good lately. And so we had to kind of keep each other accountable. Like, don't touch it. We're not going to look at our investments for another month. And then end of January, everything was back up. It is one of those things you need to continue to educate yourself, understand your plan, and also remember the psychology part of money, where we feel when it dips, we're like, oh my gosh, I'm losing. You

don't want to be invested in a loser. And so you panic and you feel like you need to save your baby. But that's, just don't touch it. If anything you could do, just don't touch it. Just log out, log out. That was exactly what I was going to say, which is log out of your accounts and just leave them alone. It is very painful to be looking at your accounts when they're in the red. Today was not a good day. If anyone was looking. I was not. Oh, don't look. Don't go check now. Don't go check, yes. A few things.

So number one is understanding that you are saving for two years down the line, five, 10 years. This is a small blip in your long-term goal that you're looking at. As well, when you are investing, the only things that matter is when you buy and when you sell. Everything in between is noise, okay? So if you buy at $10 and you sell at $20 and all in between there, it's this absolute roller coaster, that

doesn't matter because you bought at $10 and you sold at $20. So making sure that you understand what your long-term goals are, that this is what the markets do. So understanding that there will be ups, there will be downs. But again, you are saving for something down the line. And it's important to just log out. And something else as well is misery loves company. So if you guys have friends who invest, I love to complain with them. That is definitely something I enjoy doing. I don't know if you guys are a little bit different than me. But yeah, definitely log out of your accounts. It looks like you guys are a little bit more different than I am. I'm going to actually throw in a bonus fourth tip.

And that is learn how to decode what the media is telling you. Because what sometimes happens, I don't know if you're familiar with the term, if it bleeds, it leads. Very common in newsrooms, which means if it's a negative thing, honestly, it's great clickbait. You're probably going to click on it. Now, 2018 was referenced. I'm going to speak more in the context of the American markets. Same thing was happening over for us. Things were going down. The Dow Jones, which is one of the index that we always quote, dropped 1,100 points in a day. Largest drop in the history of the Dow Jones. That was splashed over every financial media. Words like

free fall, plunge. It's just everyone was freaking out. Except here's the thing. The Dow Jones was also at the highest it had ever been in the history of the market. So an 1100 point drop actually still had it higher than it had been just six months prior. But the media was using words that were terrifying. So you do sometimes also have to contextualize what's happening, not even in the terms of, you know, decades and decades of history, but just a year, two years, three years, and try to settle in that a little bit to take some comfort in as well. Now, Barry, you said something very interesting in your answer. No, I'm not picking on you. It was a great point.

And that was about this idea of vetting people. You mentioned seek advice from someone, but it needs to be someone who's trusted. So I'm curious to hear from all of you, how do you determine whether or not someone is trustworthy when it comes to investing? I feel like I should answer this first. You know, it's really tough, I'll be honest with you, like, you know, especially when you're younger and I fell into this trap myself, it's like, you know, you're coming out of school, you're starting to make money, you want to start investing. So you're thinking people are out there to help you because you just don't know any better. So, you know, your friends become a financial advisor at some place and you're like, hey, you know what, this is a buddy. I'm going to go work with them. And then you quickly realize

it could be a market, a multi-level marketing scheme or they're just a glorified salesperson at a financial institution and they're trained to do certain things and that's fine but the nice thing about these days now is there's just more voices out there where you can really learn and at the same time we joke about this even though there's a lot of influencers

sometimes you kind of really need to know are they actually talking things that make sense are they actually talking things that make sense? Are they actually talking something practical? But more importantly, it's hard to get a book deal if you're making it up. I think so. Thanks for the endorsement. Yeah, yeah. So there's a lot of great Canadians and Americans out there who have the credibility and have written books.

So from there, it's just a good starting point, in my opinion. And then once you've got that base knowledge, you can know who around you is actually following a similar pattern. Then you just kind of know. It's like, oh, I don't need to say much and this person kind of gets it. And the easiest way to say

is the people you don't trust or the people who are like, oh, I'm in so much credit card debt and then they take the three modifications. You're like, I am not coming to you for money advice. It's just like, do you just know it? I'd say for me, because I get a lot of questions, be like, I want to learn more about investing.

Can someone help me or manage my portfolio or whatever? I think it's very important, as you kind of mentioned, to know who you're speaking to. Because I'm sure many of us in the room, myself included, just thought you could go to any old bank or financial institution and be like, hey, can you help me? They're like, totally happy to. But really, depending on who you're talking to,

it could be they're more interested in selling you a particular product and not so much educating you, helping you create an investment plan. So I think the key thing is trying to find someone with that objective voice that cannot sell you something, that can only guide you or advise you or point you in a direction. And I think there's something to be said about that gut test. You kind of know when someone's being like, I feel like something's not quite right here. But again, you pick up any investing book and all of them say, when you're looking for an advisor or a portfolio manager, definitely ask them how they're being compensated.

That's the really, really important thing to do. And if they start sweating, maybe just be like, noted, you're sweating too much. Can you expand on some of the different ways people might get compensated? Yes. So typically with a bank or an investment firm, they can be just salary or it could be commission-based or a combination. And now there's also fee-only planners that will help you create a financial plan when it comes to investment part. They will just guide you, educate you, help you develop a plan, never advise, never specifically tell you buy this stock or this ETF or this index fund, but help you understand how to build your own portfolio or direct you to a robo-advisor or how to use a discount brokerage like TD Direct Investing. So it's important to kind of

understand the different rules out there. And I know that can be complicated and that could be a whole panel on itself because there's so many different titles out there. But I'd say the key thing is, in my particular opinion, if you want someone to help you, look someone that is fee-for-service and someone that does not actively sell products and does not have an affiliation with a specific product company. Lots of points there. So I will start off by saying that because I work on the client education team, my role is to educate individuals like yourself with learning about the markets, team, my role is to educate individuals like yourself with learning about the markets, stocks, bonds, et cetera.

And with TD Direct Investing, you don't get advice. So we teach you how to do it on your own, and then you will ultimately make the decision. So with that being said, there is no fee for the services of anyone on the education team. All of our information is free and available. So if you guys want to hear me chat a little bit more, then feel free to join us in our masterclasses and webinars.

But then going back to the original question with, what was it, who do you listen to? Ultimately, again, because I am a self-directed investor, do your own research. So if a lot of people are giving you different advice, they might be on to the right thing. But don't take everything they're saying and go, yes, you are 100% correct. I'm going to put my money into that stock and not look at anything else. There's so many things you can look at. You can look at things like fundamental analysis, if that means something to you. Analyst reports. You can look at technical analysis, news, so many different things. I know I'm spewing a lot of words over here.

But ultimately, like, yes, you can talk to people. I'm a big person who loves chatting with people about the markets. And they might throw out some stock names for you. And maybe if you want to grab a look, but I would definitely not say don't just buy the stock without looking into it yourself. Because I have had people say, look into this stock, and I'll look at it and be like, listen, you can buy that, but I'm not buying that for my portfolio. I was once on a panel. So I just got one anecdote that just popped into my head about a year ago is on a panel. And one of the questions

so random was, what's your favorite ETF? I'm like, what is this panel right now? Who has a favorite? And no, yeah, exactly. And that's, that was my answer. I'm like, uh, it depends on my investment plan and what makes sense and fees and all these elements. I think spewing out like, this is my favorite stock. This is my favorite ETF. I think that you'll be like, okay, understand. I need to do more research. I can't just buy something because someone said that's their favorite ETF. Get groceries delivered across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points.

Visit superstore.ca to get started. You know, I'm going to actually go a little rogue on a question now because that inspired me and because I'm going to head it off from anyone potentially asking this question later. A lot of times in these type of discussions, people do want prescriptive and you mentioned earlier, people want an answer to what should I be investing in, but explain to them and to me why we should not be asking you guys that question and why you can't just blanket tell everyone in this room what they should be investing in? First off, I cannot guarantee you any returns because the returns that I get aren't guaranteed. And what's right for me, like my risk profile or my plan is probably

different than yours. So there's no kind of way or template that we can all just use to get rich. Like if it was that easy, we'd all be doing it. I know you might be thinking, but what are robo-advisors for? Those are prepackaged portfolios. Yes, but all robo-advisors are a bit different. Some do have a set five or they have, oh, actually we do kind of do lots of different alterations depending on you specifically. And so they're not even all the same.

So I know as much as everyone would, because I've gotten those questions too, what should I invest in? What's a good investment? How can I double my money? It is not as simple as answering that. There's so many other questions you need to answer first. Yeah, for me, it's not like you shouldn't be looking at what I should invest in, but you got to look at your strategy and your long-term goals, short-term goals, or anything else. So, like, you know, if you're going to ask me what weed stock or what Bitcoin I should buy, I'm like, whatever you want, as long as you're willing to lose that money, right?

Go ahead. Go nuts. It's gambling, right? Yeah, like, that's really it. There's no set strategy. There are strategies, but you have to adjust it based on your individual circumstances. I don't think there's too much more I can add to that. I mean, ultimately, it depends on each individual. For example, I might be okay with losing 10%, 20%, 30-plus percent. You guys might be losing your minds.

So I can't say, yes, buy this, or no, don't buy that, because you can be saving for something in five years, whereas I'm saving for something in 40 years. So we definitely cannot give a blanket statement. But yes, there's tools and resources available for you to kind of make your own decisions. And I feel like that also ties into, you know, goal assist has been mentioned already from TD Direct Investing. And I'd love for you to just further expand on this idea of why goal setting is just the foundation of everything when it comes to investing and why it's so critical. And we're all a little bit different, but if you have some suggestions of common early goals that investors are setting. Yes, absolutely. So TD launched

something called Goal Assist quite recently. And what it is, is you pretty much put in some information and what it is that you are looking to have a goal for. Goals are obviously important. You don't want to just save money. You want to save money and work towards something so that you can use it to have fun, right? To enjoy your life. Don't just have money so it's sitting in an account. That defeats the purpose of it. So we have Goal Assist and pretty much you can put in a few kind of pre-created ideas. So your age, what it is that you're investing towards, that could be a vacation, right? It could be $5,000. It could be $150,000. It could be five years away or 30 years away.

And we'll let you know, depending on your risk tolerance, if you should maybe increase your monthly contributions, if maybe you should look for a riskier portfolio. Riskier portfolios tend to do better. There's also a chance that you might be losing money, but they tend to do better in the long run. So there'll be a few questions there for you, and I'll let you know if you're on track to reach your goal, and if you're not, what you can do, small adjustments that you can change so you can be on the right track. Now, I feel like for a lot of us, investing for retirement is the very first way we get into the game. So much so that I actually want to make the point, and I'm going to keep hammering on this

point over and over and over. We use the language save for retirement a lot. And really, that's a bit of a misnomer. You are investing for retirement and I think it's so important that people recognize that when you have a retirement account, you are indeed an investor. Now, from what I understand about your retirement accounts here in Canada, and I'm going to make sure I get the acronyms correct. So if everyone on this panel could tell me

TFSAs and RRSPs are different accounts. What are some of the common misconceptions that people have about these accounts? Do you want to go first? You can do this. You take it. Yeah. Well, I'd say the most common question I get about TFSA is because it's branded poorly. Tax-free savings account sounds like a savings account. So you think that savings account, well, you put cash in that because you're slowly saving for something,

but you want to keep it liquid. Do your research. The best way to optimize your TFSA is to actually put investments in it. And yes, you can put investments in a tax-free savings account. And so many people have no idea. You wouldn't believe so many people come up to me.

They're like, oh, I just use it as my emergency fund. I'm like, that's the worst thing you could probably do with it. I mean, it's not like the worst thing, but you probably shouldn't. You just use a taxable account for your emergency fund. So I feel like that's a really key thing to remember. A tax-free savings account, you can put investments into it. You can save for retirement using a TFSA.

It doesn't mean you can only use your RRSP, your registered retirement savings plan for your retirement. You can use both or one or the other. You can do whatever you want. I'm going to confuse you with that one. I was about to say, I'm going to need a clarifying question. Yeah, so they're both very confusing, but the core things I would say with an RRSP, it's a tax deferral, right? So any investment gains you gain, you need to pay tax when you pull out the money eventually when you retire. And presumably you're in a lower income bracket at a time, so you're not getting taxed as

much. Whereas a tax-free savings account, you don't get any tax breaks right away, but all the gains are tax-free. The question is, it's like, which is better, one or the other? No simple answer. It depends on your income. You know, TD was talking about how they've got educational tools. Like, we could talk about an entire panel about this thing. But, you know, if you invest in either one, you know, Jessica said, like, a savings account is the worst thing you can do for TFSA, which is true. But if you're saving for something short term, maybe it's a good thing to do. Maybe it's good.

It depends. Totally, right? But more importantly, don't forget about, maybe it's a good thing to do. Maybe it's good. It depends. Totally, right? But more importantly, don't forget about this. It's not just these two accounts. If you work for an employer that offers some kind of a pension plan, stock matching plan, you want to take advantage of that free money that your employers are offering you, right? And a lot of people, their employers, they don't make it obvious because it costs them money, right? So they prefer not to tell you about it but then if

you look into it like you should basically what i'm getting is look at all the accounts available to you and even when you've got kids resps and see what's the maximum benefit how can you make the most money out of it generally speaking employer pension plans stock plans are always the best because it's literally free money so max those out first and then go to other things after but the point is you got to really educate yourself because you can't get that employer, you know, booklet that you have that you've never looked at. Cause I know you haven't cause it's, it's, it's annoying and see what kind of accounts they offer at a pension employer matched RRSP. Yeah. And like a good example is like, let's just say you sign up for, you know, you get a new job and you don't sign up for an

employer pension plan that has a defined benefit pension plan. And you don't sign up for an employer pension plan that has a defined benefit pension plan and you don't sign up for, I'm making this up, like say five years, you could literally be giving up hundreds of thousands of dollars when you retire because it could be like 10,000 a year you've given up because you didn't invest five years earlier when you were 25. Going back to that point of compounding interest as well, right?

Number one, when you said TFSA isn't only for savings, I think I heard an oh in the crowd so someone would learn something which is great you guys took like all 20 of my points but I will say that with an RRSP there is something called a home buyers plan and a lifelong learning plan that a lot of people don't know about and I would highly recommend you look into it especially if you are looking to one buy your first home or two, go back to school. Essentially what it is, is that you can borrow money from your RRSP

to fund either one, your education or two, your first home. You do need to pay it back, but essentially a way to look at it is current you is borrowing from future you. So you won't get any immediate tax. There's not, there Obviously, there's paperwork that needs to be done. Not too much. Don't get scared about it. But you can use your RRSP to fund something other than just your retirement while you're waiting those 30, 40 years until it happens. So homebuyer's plan and lifelong learning plan. So those are the names of the two different plans that you can use your RRSP for. So I actually have a question for all of you real quick. So this is an audience participation time. It's a tough question though,

because I am going to ask you to disclose whether or not you have student loan debt or any other type of debt. And I would love for anyone who either you or your partner has student loans or credit card debt or automobile debt, any sort of debt, please stand up. And this is, we have, mortgage is a different conversation. Okay, okay, okay. Mortgage is different. So go ahead and sit back down. One, gets the blood flowing. But two, I think it's really important to illustrate the fact that this is more common than a lot of us think. And that's a really tough question when it comes to investing. Are we supposed to be just focusing on paying off our debt first?

Or should we be balancing and investing at the same time? So that's my question to you all. You know, I think it differs for everyone. If you've got, like, a high-interest student loan that's, like, you know, 10% plus, yeah, you should definitely be paying that off first. But, you know, if it's OSAP or any of those things where the interest rate is pretty low, you know, you get, like, a grace period, yeah, you can probably afford not to. But, you know, you also got to think about what you did with that student loan.

If you used it just for education, great, but I wouldn't be investing, like, taking that money. It's like, oh, I'm only paying 2% interest. I can make more on the markets. Well, you could, but you could also lose more than that, right? So for me, I personally like emergency funds first because, you know, yeah, you got this debt, but you want to build up a little bit of savings in case you lose your job

or if you don't even have a job to begin with. Like, we don't know how hard it is coming out of school to get a job, so you want to have, have like a little bit of a safety net at least and it doesn't have to be crazy things that Jessica and I talk about like oh you should have six months to their expenses I don't expect you to have six months of expenses when you've been out of school for two months it makes no sense right but if you can put aside like a hundred dollars here and there now like it just adds up after time. For me, I would say, honestly, whatever helps you sleep at night. I came from a household that is strictly anti-debt.

Any debt is bad. It doesn't matter what kind of a debt it is. I'm sure a few of you guys maybe are in the same boat. So for me, a common answer for this question would be, if you can make more in the markets than your interest, so if your interest is 3%, if you can make 5% in the markets, it would be worth your time and effort. Assuming, one, you can make that because there is no guarantees. But for me, I like when I had student debt, I was like crippled at the thought that I owed money and every day was like $4 worth of interest or student debts as fast as possible because I want to sleep at night. So that was the basis of me deciding that.

But yeah, it's obviously individual to each person. Yeah, and I was the same way. I come from a household that we never, that I know of. My mom is very good at hiding it. I don't think we were in debt. I'm not actually sure. But it was very, yeah, no idea. But I knew that debt was bad.

That was very ingrained in me. And so when I graduated university, I had a very, yeah, no idea. But I knew that debt was bad. That was very ingrained in me. And so when I graduated university, I had a very small student loan. I had $5,000, but at the time that was like, Oh, I didn't have five, I had $0. And so, but I knew I'm like, that is what I need to focus on. There was no, and then after that, the emergency fund, and then after that, the investing. So it really does depend on your situation, but I feel like emergency fund is key. Everyone should make that a priority three three to six months of your living expenses, because we never know what's going to happen. I've been, you know, I've had a lot of different jobs, and the emergency fund has been my savior several times. So I'd say prioritize that.

Once that is fully funded, you feel comfortable, then it's time to move on to investing. I'd also point out there's more nuance in the student loan and investing conversation. The credit card debt and investing conversation pay off the credit cards. That's probably sitting between 15% to 30% interest. Maybe like 19.99%. Yeah, but that's between 15% and 30%. You're right, you're right, you're right. I figured throwing out those numbers, I was still going to be right on this side of the border, so You're right. You're right. You're right. I figured throwing out those numbers,

I was still going to be right on this side of the border. So we're good. But you're not likely to be seeing those kind of returns in the market. So just get rid of it. So I'm going to ask one more question of our panel before we hand it over to you guys to ask some questions. And I want you to take a step back through history. If you could rewind the clock to your early, early investor selves,

what do you wish you had known then that you know now? What an index fund was? Explain it. So back when I was in my early 20s, and this was, I want to say, in 2010. That's when I had money, a little bit of money. My older sister, she started getting into personal finance. Actually, I credit her for getting me to where I am because she started reading some blogs, some blogs that now I'm friends with these bloggers. She's like, there's a thing called

personal finance. You should look into it. I'm like, okay. And she's like, there's a thing called blogs. You should look into it. I'm like, what's a blog? And anyways. That dates us, by the way. I know. I got really into blogs and personal finance. And from my readings and also her recommendations, she's like, there's a bank called ING Direct, and they have a thing called index funds, and apparently from all my research, that's a good thing to invest in. I had no idea what she was talking about.

But I'm like, I trust you. You're my sister. So I started investing in that. I didn't really know what was... I knew that it was buy low, sell high, and don't touch it. That's what I remember from talking to her. And so I was invested in index funds for a number of years. I just didn't really quite understand the fee structure, the strategy, didn't know anything. And so after a couple years, me and my husband got married.

He had some mutual funds at a certain institution. He's like, we should combine. I'm like, okay. And so I took all my money out and put it into actively managed mutual funds that had a lot of high fees. Again, had no idea what I was doing. And so if I could do anything differently, it would be to not just take someone's advice, be like, I trust them. I'm married to you.

I'm related to you. Do my own research and be like, what does this mean? What is the strategy? What is the fees? All that stuff. I probably would have been a little bit richer today if I'd done that. For me, it's just education. You know, I think all of you guys who serve a shout out for just being here tonight, right? Like, I don't think you guys realize like the steps you're already taking just to get yourself on the right path. You Like, I don't think you guys realize, like, the steps you're already taking just to get yourself on the right path. You know, I look back when I started investing 10, 15 years ago, I was like, there wasn't anything like this. Index funds did not exist. Even TD, like, it was

a great platform, but back then, you know, it's a bit clunky. People, there was no education tool, so you really didn't know what to do. So I was reading, like, you know, even this isn't before I read, like, you know, textbooks, and you're like, what is this stuff? And there's, like, so many books, and, like, what you guys are doing today is, like, you're already ahead of 70% of the population, because those people aren't educating themselves. So those people who got student loans, like, who cares? Like, it doesn't matter. Like, you're already taking those steps. You know that this is an issue, or this is what you've been dealt, and you're trying to deal with it. So if you can just continue to educate yourself more than anything, or I wish I had educated myself earlier, because you're trying to deal with it. So if you can just continue to educate yourself more than I think it's where I wish I had educated myself earlier, because you're already hearing

about these things like fees, MERs, you know, compound interest, and you know what they are. But like, for me, it was just like, what is this? Right? I am so confused. And then like, oh, you work at a bank, you must know what you're talking about. Here's my money. And then it's like, right. And it's like, you know, I think Justin and I, we're not shitting on the banks. But like it was a different time frame. Like you've got to realize, like I said, it's amazing what the banks do now and they really educate yourself, educate the public. Definitely more clarity. Yeah.

So if you've got this whole mentality that banks are evil, it's like it's not true now. Like a lot of the banks are really out there to educate you. And they want you to just make your own informed decision more than anything else. So the tools are there for you and you can learn, but in the end, it's still up to you because no one's going to care more about your money than you guys. So I started investing because I worked for TD. I didn't have a finance background at all. My parents, their only form of investing was don't have debt and that was good enough for them. So I started investing when I was 22, which is that was good enough for them. So I started investing when I was 22, which is a lot earlier than most people. So I am quite happy for that. But if I

knew then what I knew now, you can open up an investing account when you're 18. If I put in 100 bucks when I was 18, every month, every few months, not even so much to make money, but more so I can get comfortable with the idea of investing, so I can get comfortable with things like index funds, mutual funds, kind of understanding accounts, and we're talking like, I know I had student debts, I know I was working for $7 an hour, but we can scrape $100 or $50 every few months, right? So if I was able to just put aside $100 every six months, tiny, tiny amounts that make no difference to you going out with your friends on the weekend, just so I can understand what the markets are like so that when I do pay off my student loans, when I do have a full-time

job and I do have a little bit more money, that I can now feel more comfortable getting into the markets with bigger sums of money, which isn't a hundred thousand dollars. We're just talking a thousand dollars now. Um, I wish I could have done that. So, you know, it's never too late to, to start. I wish I knew that too. I didn't know I could start at 18. Like, no, I thought, I don't know, like 30, like that's when people start investing. Yeah. I think the average is about 30 that people start investing. Um, but like, don't let that discourage you whatsoever. It's just letting you know that you guys are obviously, like we mentioned, you guys are a step ahead because

you're at these events and you're learning about investing. So don't have this be your first step and your last step. Have it be like the first step of a journey and kind of continue on from here. And that was the live recording of the Level Up Your Money event that happened on May 7th in Toronto. I'm going to include some more info in the show notes about this, jessicamorehouse.com slash 199 if you want to visit. But like I mentioned at the beginning of this episode, I'm going to be doing another special episode that will kind of be the Q&A portion of the event. And I want to make sure that I'm getting all the questions. So I heard a lot of questions at the event individually and on the panel. But if you have a question that you want

to make sure I, you know, take a look at and answer for you, I want to help you just shoot me an email. Jessica, Jessica morehouse.com. I'll put some more info in the show notes. So it'll be super easy for you or hit me up on social media, Twitter, Instagram, whatever your social media platform of choice is. And I'll compile all of them and do a really cool special kind of ask me anything podcast episode that I've literally never done. And I've been doing this for almost four years, which is crazy. So yeah, awesome. I hope you enjoyed that episode. Big shout out again to TD Direct Investing for helping us put on this event. Without your financial backing, we would not have been able to afford to do this event. So thank you so much. I will see you back here next Wednesday

with a fresh new episode of the show. Make sure to share this episode with your friends. Like it on social media if you see it and give me an iTunes review if you like it. Thanks again for listening. I'll see you next week. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.