Dale Jackson

Personal Finance Columnist, Payback Time

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We’re conditioned to believe we have to take risks to make money, but in many cases that simply isn’t true. There are ways most Canadians can put more money in their pockets by merely plugging leaks in their day-to-day finances.

Here are three surefire ways to boost your net worth without risk.

1. Pay down debt. Imagine being able to generate an annual tax-free return of 18 per cent, risk-free. It might sound like a scam but paying down credit card balances can do just that. Credit card issuers normally charge 18 per cent on balances owing and some can be as high as 29 per cent. Even paying down a consumer loan of 10 per cent beats anything the stock and bond market has to offer. Paying down debt also prevents that debt from compounding over time, creating further savings.

2. Implement a tax strategy. Experts say a good tax strategy can boost investment returns by 25 per cent over an individual’s lifetime. Utilizing available tax tools including a registered retirement savings plan (RRSP) and tax-free savings account (TFSA) can divert much of your money from the Canada Revenue Agency back into your account, and that money can compound over time.  

3. Lower investment fees. You could be paying more than three per cent each year in fees by investing in mutual or segregated funds purchased through an advisor. Those fees are deducted from your returns, so if the fund grows by seven per cent you only get four per cent. Alternatively, many fee-based advisors will only charge one per cent on the total amount invested. Annual fees on basic exchange-traded funds are often below half of one per cent. Like tax savings, savings on fees remain in your account and compound over time.