Investment for Canadian Employees PART 1 – Importance of salary

hello. This is Miki’s Honey, MikiHoney

This time, I would like to talk about how employees in Canada make investments and prepare for retirement.

Perhaps because the content is long, I should divide it into a series and talk about it step by step.

The estimate is that it will probably be around 7-8 episodes.

1. The importance of salary
2. Pension Investment
3. House Investment
4. TFSA
5. Stock investment
6. Investment products other than stocks
7. Canadian Stock Brokerages

I will try to speak objectively, but since it is based on personal experience, a lot of my opinions may be reflected.

Rather than thinking that what is said here is necessarily the right answer, I hope you will listen to opinions from various perspectives and apply them if they suit you.

First of all, I have been working for almost 30 years. After working in Korea for about 10 years, I came to Canada and have been working at the company for nearly 20 years.

Although I personally have a part-time business, most of my income comes from my full-time job.

Currently, I am working as a developer at a bank, and I would like to talk about investment techniques that employees can use based on my personal experience and the common sense I have learned through exposure to financial products while working at a bank.

My personal investment inclination is somewhere between stability and risk. However, after looking back on this investment tendency, I think it is correct that it changes depending on age.

Talking about the knowledge learned in this background may not be appropriate for those who work in business.

Honestly, I think business people are very different from employees who have a lot of time because they spend a lot of time busy running their business because everything will be resolved if their business is successful.

I personally think There are three main financial strategies for employees.
Salary, Pension, House

Among these, what I think is the most important is salary.

Differences in salary also affect housing and pensions. If you earn a higher salary, you can get a larger mortgage and buy a bigger house, and you can save more pension when you are young.

If you have more seed money when you are young, you will be able to receive a much larger pension when you retire thanks to the magic of compound interest.

So, in the beginning, it is right to focus more on raising your salary rather than focusing on financial investment.

Since you don’t have much seed money in the beginning anyway and you have to get a mortgage and pay interest to buy a house, it’s better to focus on raising your salary quickly rather than worrying about saving seed money.

And it is easy to raise your salary in the early stages of your career. In particular, you can quickly increase your salary by working for 3-4 years and changing jobs.

Advantages of being an employees and the importance of salary

Compared to those who run a business, the advantages of employees are an income that does not have ups and downs and a predictable life. So you can invest consistently every month. The year may be a growth period or a recession, but employees always make investments every month, so they do not miss out on rising trends.

This kind of rising trend only happens once or twice every 10 or 20 years, but if you miss this period, you will suffer significant losses on your investment.

During these upturns, assets can double in just five years.

The problem is that no one knows when such a major upturn will come, so pensions must be invested consistently.

In particular, I think that investing in a monthly savings plan has the lowest risk and provides the greatest benefit.

When you first get a job, you have a lot of money to spend. You have to pay off a student loan, buy a car, pay monthly rent, and save up a mortgage down payment to buy a house.

After paying all this, there isn’t much left to actually save for the year.

In a situation where the actual basic living expenses are fixed at $40,000 to $50,000, if the annual salary is low, the amount that can be saved as a monthly pension is low, and the initial low pension will result in a large difference in the amount at the time of final retirement.

First, if you save $500 per month as a pension, you will receive about $580,000 upon retirement in 30 years.

However, if you earn $10,000 more per year and save $1,000, you will receive $1.16 million.

A difference of $500 per month will result in a difference of $600,000 in 30 years.

Therefore, in the early stages of your working life, you should focus on receiving a salary that exceeds basic living expenses rather than investing.

Of course, it would be even better if you received a sufficient salary from the beginning and had the ability to save.

Then, in the next article, we will talk about the importance of pension investment and why it is advantageous for employees to invest using pensions.

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Investment for Canadian Employees PART 2 – Pension >>