Mutual Funds, GIC’s, ETF’s, TFSA’s, HISA’s does it all sound like a different language to you? Don’t worry, you’re not alone. Knowing what to do with your money is big question mark for plenty of millenials, especially those who barely have any.
Mutual Funds– an investment program funded by shareholders that trades in diversified holdings and is professionally managed.
GIC’s (Guaranteed Investment Certificate)- a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. Due to its low risk profile, the return is generally less than other investments such as stocks, bonds, or mutual funds.
Exchange Trade Funds (ETF’s)- is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange.
Tax Free Savings Account (TFSA)- An account that does not charge taxes on any contributions, interest earned, dividends or capital gains, and can be withdrawn tax free.
High Interest Savings Account (HISA’s)- bank accounts offering a rate much higher than traditional daily savings accounts.
You may want to save for a house, a car, a baby, a wedding, travelling… But you’re drowning in student debt.
Here are a few simple tips to help you manage your funds:
Cut back on your spending. The easiest way to do this is to write a list of every little thing you spend your money on every day for a week. I mean from the Louis Vuitton Bag you bought to treat yourself, to the Toonie you dropped into the homeless man’s cup. You’ll realize how much money you could save over a month if you cut out your morning latte every day. Always question your expenses. Do you really that new pair of shoes?
Manage your debt. Pay off credit cards and loans as soon as you can. Having no money is better than having bad credit.
Build up your credit. Buy little things and pay them off quickly. Building up your credit will help you with bigger purchases where you’ll need a loan later on.
Invest. Whether stocks, bonds, long-term or short term. Let your money make money for you.
Save. You may not need to save if you plan on investing. But if you’re going to save, figure out how much you want to save and for how long. It may be worth looking into a GIC if you know that you won’t be touching the money at all. If not, look into high interest savings accounts. The higher the interest, the more money you’re gaining while your money just sits in the bank.
This is the biggest note so pay attention. ASK QUESTIONS. Don’t be afraid of sounding stupid or seeming lost, the only way to know is to ask. Go into the bank and sit down with an advisor, they get paid to help you, use them as resources.