There's a funny story I heard one time. 3 buddies were attending the funeral of their dearly departed friend. As the 3 of them stood around the casket saying their goodbyes the first guy opened his wallet and dropped a hundred-dollar bill in the casket. The next guy does the same thing. The third guy, however, does something different. He takes out his chequebook, writes a cheque for $300, places it in the coffin and then proceeds to take the 2 one hundred dollar bills as his change. Smart guy.
The point is you can't take it with you. You have never seen a U-haul behind a hearse.
Here are 4 things you can do with your money:
1. Spend it. Just go out and buy stuff. Go on a trip. Blow it. The average Canadian household spends $168 for every hundred they make. Apparently, Canadians do not need much help here - they are very good at it. We have the highest personal debt rates in the world. We have a spending problem.
2. Save it. I'm reminded of the story of a bag lady who died in Phoenix some years ago. Her apartment was filled with money she had begged for on the street. She lived like a pauper, while she saved everything she had. Not much value in saving all of your money so that someone else can spend it later. There's nothing wrong with saving money, but what is the purpose of your savings?
3. Invest it. You work hard for your money and you should get your money working hard for you. The question becomes, where should you invest the extra cash you have? Investments need to be made according to your knowledge, comfort, time horizon, and risk level. Start small. Learn. Then work up to more complex opportunities. There's no shortage of investment options available to you. Here are a few:
- GIC - pays a nominal amount of interest each year, but protects your principal invested.
- Stock market - there are all kinds of ways within the stock market to invest from ETFs to Mutual funds. Some stocks pay dividends. Bonds that pay interest. Growth stocks like Facebook and Apple.
- Real Estate - this has been a favourite of ours and we have done this for more than 25 years.
- Buy or start a business.
4. Give it away. You make a living by what you earn. You make a life by what you give.
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Retirement Income, Investment & Tax Planning for Those 55+,
Willis J Langford BA, MA, CFP
Nancy R Langford CRS