Whilst mindlessly scanning through my Instagram feed yesterday, my eyes settled on a meme that read: “Do you ever wonder if the bank just looks through your account and thinks, what the hell is this person doing?” I burst out laughing, quickly taking a screenshot to send to my friends. “Isn’t that the truth,” we all agreed.
Let’s face it — finances aren’t an easy thing to talk about. Unless we’re swimming in excess cashflow, most of us can attest to the anxiety that often washes through our mind as soon as we start to consider paying off our student debts, affording rent, paying our bills and saving for a house, travel and retirement all at the same time. Living in the city (or anywhere, for that matter) isn’t cheap and the professional landscape that exists today makes it, at times, especially difficult to land a full-time job with a guaranteed salary, benefits and a savings structure for retirement. With those financial burdens already weighing heavy on our shoulders, many of us may be far more concerned about making ends meet now, instead of also saving for the future. I mean, how can we consider investing our hard-earned dollars if we generally feel like we don’t have enough of them? Don’t you need a lot of money to invest?
I know this feeling all too well. After all, I have my downtown Toronto rent to worry about, monthly payments to chip away at, living expenses, a borderline obnoxious penchant for lululemon, and the added expense of a dog. Every time I pay my parents a visit and they begin to chip away at my (lack of) financial literacy, I can feel my anxiety spike. I also recently transitioned from a full time, salaried job into the freelance realm, a professional shift that directly impacts my financial situation and stability.
So when I sat down with Dave McGann, the Director of Tangerine Investments for this story, I was admittedly nervous that I would be in way over my head throughout our conversation. Sure, I seem like someone who has my life together, but do I really? Or was Dave about to tell me I was financially clueless and doomed to a life of paying rent and putting off retirement until I reached 90? After all, any consideration of investing hadn’t even crossed my mind, in any recent time (if I’m being honest). Luckily, Dave quickly put my anxiety at ease, and provided some serious, applicable insight from the millennial perspective — we can be a complicated bunch, after all.
First things first, let’s talk about instant gratification. This is a concept that the life of a millennial frequently revolves around. We have more self-serving technology at our fingertips than ever before, and with the price of a detached home in Toronto now sitting at $1,573,622, many millennials are shifting away from the traditional paradigm of graduating school, getting a job, buying a condo or house and settling down. Instead, we’re seeing young adults place their financial focus on things like paying off their increased student debt (it’s hard to get a well -paying, full-time job without a Masters degree these days, after all) and travel, while favouring the idea of monthly rent over the savings required to cover a hefty down payment on a house.
Basically, we are focused more on the present, and things that bring us instant gratification, than the future. Not only that, but we have the influence of social media, which frequently affects our perceptions of what people own, or the way they are living. Social media acts as a platform for countless young people to give the illusion that they are wealthy and living large, even if they aren’t, which can become a seriously misinformed social pressure.
Photo from http://screenmusings.org/
“Younger Canadians are struggling to figure out how to prioritize where they put their money”, Dave explained to me. “Think about it — debt, rent, living expenses, retirement; these are all important pieces to contribute to. It’s not about only prioritizing a couple of these while deferring the others, it’s about building the habit of contributing a bit to all of these pieces. Most commonly, people tend to defer their retirement savings, because they feel they need to worry about everything else now. But once we get into the habit of deferring something, that habit tends to stick with us. So how do we steer millennials towards the pain of giving up a little instant gratification in order to avoid the pain of wishing they had started saving earlier? Even if you’re able to invest say, just 5% of your disposable income, or even just $10 a week, you will get yourself into the habit of that contribution. It may be small, but you’re still investing your money. You’re creating a healthy, long-term habit.”
The question was flashing obnoxiously in my mind before I even worked up the courage to ask it. “But Dave, if I were considering investing even just a small amount of my income, where would I even begin? I used to work within a bank and even I feel clueless outside of knowing what a RRSP or TFSA is. Some of my friends might not even really know what those are, let alone a mutual fund. I’m not even sure I really know what a mutual fund is.”
For the record, a mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
“There’s actually so many cool blogs and influencers moving into the space of talking about wealth and investing now and, for millennials, this can be way more relatable than going into a bank. These are people who all speak the same language, but can still provide great tools and education links. Even at Tangerine, we’ve started this Forward Thinking blog, where we develop tons of content that isn’t about products, but about real life situations and allows us to break down the perception that finance is a really heavy topic.”
Okay, so maybe mutual funds aren’t as intimidating as I originally thought. According to Dave, the perception that you need a lot of money to get into investing is totally untrue. Tangerine takes all the complexity of investing away while empowering you to know that you can feel in complete control of your investments. While you don’t have control over the market, you have control over your investment strategy. They believe in index investing (versus expensive portfolio managers that try to outperform the market), so they can give you access to an entire market at a really low cost. Basically, you have two options with Tangerine, speak on the phone with a licensed Advisor or visit their website. Both Channels seek to understand who you are and what you hope to achieve, and they will suggest a portfolio based on that understanding. The cool thing is that the Advisors use the tools that are available to you on Tangerine’s website to come to these conclusions – but they have the added touch of being personal! Once you open that account, they take care of the rest. As the markets move and change, Tangerine will take a look at your investment fund every 3 months to see if it needs any adjustments or “rebalancing” and, if so, they take care of that automatically. There’s nothing for you to do other than stick to your plan and save into the investment. And did I mention it can take as little as 15 minutes to get set up?
That’s right — it’s basically like having a financial guardian angel, so you can invest with confidence while remaining for the most part, entirely hands-off.
“More actively managed portfolios can actually be a costly endeavour”, Dave explained. “Traditionally, mutual funds might be priced at 2% or just higher, Tangerine’s are 1.07%. The difference in fees can be tens of thousands of dollars over the long term… money that you would much rather keep in your pocket. We may not be able to control the markets, but what we can control are the fees that we pay for investments.”
Sure, it’s easy to keep saying “Maybe the next pay cheque” but what happens when tax time rolls around, or years down the road you realize you never took advantage of your RRSPs? No matter where we are at financially, millennials have the opportunity to invest in their future, if we create the habit of paying ourselves first to ensure we are investing and sticking to a certain percent or number, no matter how small, every time we get paid.
It doesn’t have to be one or the other, we can live now and effectively save for the future (even without becoming a Wall Street stocks expert), with a little help from Tangerine.