Money Management 101 No Pension, But Lots Of Coffee Money!

By Lina Demedieros

Did you ever stop to think how much money you actually spend on coffee and how much of it would actually stay in your pocket? What do you think your favourite coffee shop is doing with your money? INVESTING IT!

Most of us complain how we do not have enough money put away for retirement however all these corporations have your money. How much is it?

Lets take as an example 2 large coffees twice per day at $2.90 each for 30 days (we like coffee on the weekend too) which comes to a total of $87.00. The results: $87.00 initial layout, $87.00 monthly over 20 years, 6.5% simple interest over compounded over 20 years, which works out to a total nest egg of $42, 984.73.

So 2 large coffees are taking $42,894.73 out of your pocket and re-invested by the coffee shop which helps them grow across North America. If you apply the same principal you can actually help build your own nest egg by simply starting an investment today.

How? By simply taking a minimum of $50-$100 monthly paying yourself first and start up a simple investment like a segregated fund offered by insurance companies that would compound interest monthly and build your nest egg. This investing style is called “dollar cost averaging”. It’s taking a lump sum like $87.00 and then taking the $87.00 out of your bank account every month. You can add lump sums each year and you do not have to register it as an RRSP. Since segregated funds are utilized by many Canadians for the many advantages they offer such as potential Creditor Protection, Estate By-Pass, Capital Guarantees at 75% and 100% of the initial deposit. These investments are also known for their higher rates of return simply because most people who invest in them do not withdraw for a very long time. The funds however are accessible to you at any time and their fees for withdrawing early most of our Owner Operators find it reasonable based on their rates of return.

Business Owners and Professionals love Segregated Funds for the potential Creditor Protection. This means if they got sued or lost their business they would not lose their savings especially if a child is the beneficiary. Most of our Owner Operators love this concept and appreciate the fact that they receive semi-annually statements and the fact that it is automatic withdrawal each month. They find they realize something for their efforts and that fact we always advise them never to put all their eggs in one basket. This is exactly what those coffee shops are doing with your money.

So what should you do today?

Discipline yourself today. Think about how much money you would like to put away each month $50-$200 per month.
Eliminate Discretionary Expenses. Coffee, snacks, magazines, newspapers that could actually be eliminated from your monthly expenditure.
Be aware of expenses that afford little or no return and consolidate some of your debt if you have property. (LMD has an excellent Debt Consolidation specialist who can help you today get your life back).
Take Action Today and pay yourself first. Remember most people who have a pension had it taken from their pay cheques and never saw that $40-$50 per pay cheque, take the initiative and do it today.

Following these simple steps will not only prevent DEBT but will help you BUILD for tomorrow.

Contact Lina M. Demedeiros with your comments and questions at LMD Insurance & Wealth Management, 1-800-236-5810.