I feel like I'm running out of month, and before we wrap things up for Your Money Month, I thought I would summarize a speech I gave many years ago and highlight some of the strategies we still believe in today. We tried to follow the fundamentals, so here it goes: Seven steps to financial freedom.
1. BECOME YOUR OWN CFO
• Nobody cares more about your financial well being than you do, so don’t abdicate financial responsibility. CFOs will alter course when required, know the numbers and focus on the bottom line.
2. SET GOALS
• Set realistic financial goals for yourself – short, medium and long-term – and be personally accountable for reaching them.
3. AVOID COMMON INVESTING MISTAKES
• Throwing caution to the wind
• Short-term view
• Over-confidence
• Under-estimating the power of compounding
• Letting taxes guide your investment decisions
• Using excessive margin
• Not knowing where you are going
• Portfolio concentration
• Not knowing what you are doing
• Procrastination
4. LEARN MORE, EARN MORE
• Upgrade your financial literacy and skills.
• Build a team of professionals that you trust – financial advisor, lawyer, accountant, etc.
5. BE DISCIPLINED
• Pay yourself first!
• Think hard about your wants vs. needs
• Work with a financial advisor to discover your true risk tolerance and implement an appropriate long-term portfolio strategy.
• Stick to your plan and don’t be tempted off-track by shortterm market movements.
6. GO BEYOND
• “Buy and hold” to defer taxes
• Maximize your RRSP and TFSA contributions
• Income split with family members
• Remember that dividends are your secret weapon
• Maximize your RESP contributions
• Maximize tax deductions
• Maximize employee benefits
• Employ yourself, part or full time
• Don’t forget about short/longterm disability, critical illness insurance and employee life insurance plans
7. SAVINGS
• Take a long-term approach to saving and investing
• Set up a pre-authorized purchase plan
• Keep six to nine months of living expenses for contingencies
CTV's Chief Financial Commentator Pattie Lovett-Reid offers a financial tip of the day during the month of February for Your Money Month.
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