This will probably be a little different than most of the money diaries (at least the few I've checked out) partially because I'm not sure yet if I'm willing to share my net worth with many people, even online.
My overall goal right now is to learn more, and have my savings keep up with inflation!
My Past
My parents did a good job about teaching me the value of money, I think. Investing a little less so. My dad took me to get some GICs a few times with my own money. He also brought me to the bank once to get mutual funds, but since the bank account was in my name the advisor wouldn't allow it.
Throughout most of my adult life I've primarily just stuck with savings accounts and GICs. Luckily, my now husband told me about ING and I moved a big chunk there then to Canadian Tire so at least the interest was decent. I never wanted my money tied up for too long as there was always the potential I would need it - I might want a car, I'll be graduating, I'm moving out, I'm getting married, my scholarships will only be for so many years then I won't have any money coming in, etc. I'm also not a risk taker, so that combined with being a student has kept me a little too conservative with my money.
I'm not someone to take advice from the 'average person'. I am actually amazed at how often the 'average person' appears to be stupid. When someone has more qualifications or knowledge in an area than me, I do tend to trust them. Lately, this has been frustrating to me as I've been second guessing myself when I really shouldn't be.
Sometime in 2007 I went to the bank to put a decent chunk of money into a GIC. Interest rates were great. The advisor wouldn't just set up the GIC for me though. Rather, he pushed hard to get me to buy some mutual funds. At that point in time I had minimal knowledge (or interest) in finances and the market, other than the fact that rates were great for savings. Even I had heard of predictions of a recession. When I brought this up he just told me that no one could really predict that, but current returns were great. I at least got a bit of education (at the point I didn't even know what a MER was). I finally stated more firmly that maybe I would come back after I looked into them more, but I was not comfortable at that time getting into something I knew little about.
This incident recently came flooding back after looking over the history of funds when considering purchasing some. I have no idea what he was trying to get me to buy (at least it would have been reasonably conservative, based on the question tool I went through), but it wouldn't have mattered it would have just completely stressed me out when things really fell. I just wish he could have convinced me I wouldn't have needed access to all the money so soon and I had locked in the GIC longer!
My husband and I had a dispute for months about the TFSA. He's more knowledgeable for the most part when it comes to money, but he's bad at reading basic instructions sometimes. It wasn't anything major, we weren't withdrawing anything, but we were both uncertain about the contribution rules and took different stances. Everywhere stated that if you withdrew money you couldn't add it back in until the next year, fine that was simple. Nowhere actually specified though if it was just the principal you could add back in eventually or if it also included any interest that was withdrawn. We even searched examples online, they were all under $5000 withdrawals though, we couldn't seem to find one where someone withdrew their $5000 plus the interest they made. I figured that if it didn't specify anything about interest then surely that could be contributed, he said only the principal. We asked at the bank (will write about that in my next post!), and of course I was correct, as it usually is when we are both sure the other is wrong.
How to Get Good Financial Advice at a Bank
(and why don't people who work at banks know the TFSA rules?)
A few months after getting married, my husband and I went to my bank to set up a joint account. I was a little grateful he was so willing to use mine for the joint account, I didn't want to use another bank. I already had my own, a credit card from another and 2 online banks. While there, we asked our TFSA question (see above). I was a little surprised about the response, she just commented that it didn't matter as I was a student I had no need to worry about it because I couldn't max it out. Wrong Answer! I don't like being talked down to. I guess that's what you do when you don't know and don't want to admit you have to then call someone to find out. Oh well, at least our account was set up. Or so we thought but the Mr. couldn't use online banking to access the account and he went through a few debit cards before he was given one that worked. Then we were being charged fees, we were told it was free. We had both had it. I called and made a complaint. We got called back by the branch and were given an appoint with someone who was more experienced.
Unfortunately, more experienced doesn't mean good service. We weren't the type of clients he dealt with, and he made that quite obvious. We were a waste of his time; never mind the fact our future earning potential or assets elsewhere. The joint account was closed, and I dropped the other services that wouldn't have a big impact on me.
Time to try out his bank. Our advisor there is great! We even dealt with someone above her when she wasn't available. We were still treated like valued clients. Great! I set up a mutual fund under a TFSA. I'm happy with it, but was a little concerned when I was told I couldn't set up a successor and beneficiary, as I had done this for my Canadian Tire account. Went home reviewed the rules, doing both looked ok, so no longer a concern that I screwed it up. If the Mr. and I die in a car crash or something I doubt our families will be fighting over the money anyway.
Back at my first bank, I had a bunch of points to use if I was going to eventually pull everything. I could use them for a TFSA or RRSP. I went in to the bank quickly to get some answers. Maybe I'd open a TFSA and transfer it ASAP to my new bank. Otherwise, I could use the December Shuffle method. So I asked:
Does their TFSA have any fees? No, it's free
(Huh, really, NO FEES? I don't believe it, especially after the joint account issue!)
If there a transfer fee? Another financial institution may charge you a fee to transfer one here.
(Yeah ok, but I'm asking about this bank, not others. You said no fees though, I guess you actually meant it).
So if I decide to transfer my TFSA to another bank I won't be charged by this bank? Yes, $50 (WTF! I hadn't looked into how much these fees were before, the biggest bank fee I had ever seen was $5. How did this not come up with any of the questions I asked before this?)
Normally, this wouldn't have bothered me too much, but I wasn't in a great mood to start with and at this point I felt like the bank was just trying to slip as many fees as possible without me noticing until it was too late (there were many other times I was charged for something I shouldn't have been). Called again, this time quite annoyed. I still had to use up those stupid points though. Calmed down a bit, and started looking at their mutual funds. A few days later I was called by someone higher up at the branch, she actually cared. She made an appointment with someone who she said I would really like and had been their a long time. I'm guessing this advisor was also warned and told to make me happy.
I actually really did like this advisor. She quickly got a feeling for my level of understanding and gave me more information without talking down to me. She even discussed what could be happening with the markets and why in the near future - that surprised me! I was actually getting a lot of great advice. I didn't even have to make a lump sum payment with my points, I could spread it out over a year. Clearly, this is not the advisor students usually get an appointment with. If I can meet with her again, maybe I don't want to leave my bank completely.
When it came to setting up the beneficiary successor though, she told me I could only do one and advised I put the Mr. as a beneficiary, not as a successor as it was more advantageous. There comes the second guessing myself again (but I had looked at this stuff twice now, even if it wasn't super carefully). I asked her if she was sure, she actually phoned to double check for me; it turned out I had the successor rules correct, she had the beneficiary rules for a spouse correct. I'm still really happy with her, but what's going on with the banks and the TFSA rules?
Good for you for not giving in to the pressure. It leaves me dumbfounded when people agree to something when they really don't know what is involved and what the consequences are. Some people believe that just because the other person knows more about it, then they must be right... but that's not always the case. You never know what hidden agenda is on their plate. Although I've been suckered into a few things myself...!
You've mentioned that you would like someone with qualifications to help you out with all this, so that's why you've been going to the banks and talking to their advisors. There is a problem with that, because advisors at banks usually get commissions from the mutual fund companies, when they sell somebody one of their mutual funds. This is why that first advisor was pressuring you into buying mutual funds instead of GICs. There is a conflict of interest with these people... they are supposed to help you, but they are paid by selling you investments that may not actually be the best thing for you.
If I may make a suggestion... You seem to have met a new advisor who has a better head on her shoulders, but I suggest that you look into find a fee-only advisor. These people are independent, they only charge a flat fee to you for their advice and are not paid commissions for selling you particular products.
As a disclaimer, I haven't done this, I am a DIY kind of guy and do all my own research (largely in this forum) but if I were in your shoes and still wanted a real live person to help me out, that is what I would do.
Another thing I wanted to mention is about the $50 fee that your old bank would charge you to transfer your account. Well, sometimes the new bank will pay that charge for you, since you are a new customer. Usually they'll do it for larger accounts $25,000 so if your account is smaller, they might not, but it never hurts to ask and only takes a phone call.
What are these points that you're talking about? I'm not sure what you mean by points at a bank.
I'm working up to getting to the point where I feel comfortable of taking a more DYI approach. I really appreciate your advice! As for a fee only advisor, from what I've read, they are fairly expensive when you're just starting off, aren't they? I have saved up a decent amount but no one would consider me to be a high net worth client. It might be worthwhile if I was willing to invest all of my savings, but at this point I won't (and my husband wants to keep at least half of my current savings account as savings too).
My new TFSA was opened with credit card points that I had converted to a financial voucher. It was only for $425, and I will be topping it up to $500 to meet the minimum amount for the mutual fund and may even go a bit higher if the price drops. So it would be pretty hard to get a new bank to cover the fee (or justify paying it myself). I actually maxed out my contributions until this year, all of that is sitting in a savings account getting 2.75% right now.
The two of us are going to an educational seminar offered by our bank next week. I'm already considering to going to another one later in the month if the first one is worthwhile.
Our next financial decision will be what to do with some of the money in my (non-TFSA) savings account. I'll probably move at least $10,000 into something that will (hopefully) do better than the 2% it's currently earning. The money will be used for a house downpayment though, so it won't be a long-term investment.
The bank is gonna push its own investments on you at this seminar (probably their high-MER mutual funds) so keep that in mind. Have you looked into the TD e-series funds? Or maybe ING's streetwise funds.
Sherlock, it's an online investing seminar with TD so I'm guessing they will be pushing their e-series. As for ING streetwise funds I haven't looked into them in any detail, but my husband hasn't been impressed by their performance and from what I have seen I agree. If anyone really likes them I'd like to hear why. Maybe I'm missing something.
Well the streetwise funds are index funds, so their performance should mirror the indexes they track (minus the MER). The streetwise funds were started in early 2008, and you know what happened in 08, the big crash, so of course the funds' performance since inception is not good.
My husband has signed up, so maybe it’s time I said some nice things about him.
I'm a lucky girl! I married the man of my dreams this past summer. Not only does he make me happy, but he also has more investment knowledge than I.
I (and my parents) were always a little worried about the guy I would end up marrying. There are so many people in my generation with major debt and no savings, especially coming out of university. I was a little concerned about all my savings getting eaten up by someone else’s spending and partying ways. Luckily for me, I ended up with someone who has similar spending habits as I do.
My husband wasn't able to save up the way I was during school, he even had student loans but he paid them off shortly after graduating. I moved away for graduate school, and a year later he joined me to get a second degree. He had decent jobs during the summer, but still had a few student loans. Our accounts were separate, but he would give me half of his rent payments as a lump sum, I would pay the bills and he got the majority of the groceries. We got engaged his last year of school. I paid off his small student load debt to avoid the interest payments once he graduated and a short while later we got hitched!
Now, I am no longer making any money (it used to be from scholarships and teaching), but he has a good salary for a new grad. We had planned to keep separate accounts, along with a major joint account, but somehow I ended up with both whereas he doesn’t have a separate one (except for his TFSA). As I like to say – My money is my money and his money is my money.
Seriously though, we view it as all our money and we’re both aware of what’s going on with all the accounts.
This guy was looking out for me right from the start too. He got me to open an ING HISA back when the big banks were paying next to nothing. Now we’re working together to try to grow our money before our next big purchase – a house!
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