Investments

For the last four years I have only worked during the summer, in theory so I could concentrate on school, in practice I just like having lots of free time. Luckily I have connections to score a very well paying job (for a student) and am able to keep my expenses very low because I am at work 12 hours a day and after that just eat and go to bed almost.

I managed to save lots of the money I earned the last four years, so in August I decided to get my money working for me after rereading The Wealthy Barber over the summer (on my lunch breaks at work). The advice in the book said to put my money into mutual funds, so that is what I did. I did not do the research into which one was best or why mutual funds were a good idea. I learned from the book that it was giving my money to a pro so he could invest it, preferably wisely invest it. So I went to TD and opened a TFSA and RRSP and invested $1500, $1000 into the TFSA and $500 into the RRSP.

The book, written for an older audience, really advocates RRSP’s, which is good, but the way I figure is that one of the biggest benefits of it is the tax deductions, but I never make enough to pay income tax. Because of this I thought putting $500 in would be enough to experience some growth, but really I just wanted it opened so I don’t wake up in 10 years and realize I haven’t.

And The Wealthy Barber was written before the government implemented TFSA’s so I had to research those on my own. I love them. I made automatic payments every two weeks into my TFSA mutual fund. I only just recently stopped because the price somehow increased quite a bit and I wanted to invest in some stocks while everyone was afraid of the markets.

That is where being a young investor is on my side. I will not need the money I invest now for 10-15 years. So I can buy shares while there is a lot of volatility and fear. It was a bit of a hassle opening a discount brokerage account, which is the reason I unwisely did/have not opened a QuestTrade account. For simplicity’s sake I opened a Waterhouse account because all my other investments were already with TD. Unfortunately I paid $29 for the privilege of buying my own equities. But I did, I put $1000 in my TFSA trading account and bought 55 shares of a preferred shares exchange traded fund (ETF).

I chose to buy an ETF because I did not want to put my time into reading all the financial statements of companies, at least right now for such a small investment. And I chose the ETF that I did not because of the preferred shares, although from my admittedly rudimentary knowledge I understand that these have a tendency to be less volatile than common shares and get first dividend priority by companies, but because of the dividend payments.

I have been reading lots of blogs written by people older, wiser and wealthier than myself and it seems to be a fairly universal opinion that dividends are the bee’s knees. Companies send me money every couple months simply because I own a bit of their company. Plus with luck the shares still increase in value. This was just my initial investment, and I hope to invest more, not only into this ETF, but also into other dividend paying ETF’s or stocks. I think it is safe to say I have jumped on the dividend band wagon. I will let others explain more specifically and in depth why they are so great. My go to dividend blog is The Dividend Guy, but there are many others out there that I have read and you should give a read too.

These are the choices I have made in my very brief investing career, and are just the beginnings of what will one day hopefully be a very large net worth.


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