Investing Tips

The first question that most people ask when they do an initial consultation, is how can I become an investor when I'm barely keeping my head afloat? Most of my clients are 19-34 years old and don't own a home with $20,000 or more in consumer debt. The vast majority are also parents with 1-2 small, school age children. They don't feel that they have accomplished that much in life yet and certainly don't view themselves as a potential private investor. The reality is that, if you have a full-time job earning over $45,000 a year. You have to potential to put money away each month to build a brighter future for yourself and your kids. If you are earning $75,000 or more, you have the potential to make smart systematic monthly contributions that can accumulate into a large nest egg for retirement.

Here are a few things to consider:

• Understand your personal balance sheet and how to calculate your net worth. Do you own any assets and if so are they depreciating assets such as cars or are they appreciating ( increasing) assets such as real estate, jewelry or art.

• Start a business as soon as possible to maximize your earning potential while reducing your tax liabilities. Passive income is the best type of income to generate while you are young.

• Invest in tangible assets like real estate that have a quick and measurable re-sale value.

• Make monthly investment contributions to RRSP, TFSA, RESP accounts

• Lower tax burden by writing off/down interest payments, both personally and corporate benefits.

• Lease personal living expenses such as your primary home and car(s).

• Continue to reinvest portfolio earnings (capital gains) to ensure you are growing your portfolio while reducing your tax burden.

---

Remember that your debt is not an asset but a liability. Equity in your home is leveraged, if the market adjusts, your equity could be erased and you are left with just a liability. Understanding your personal balance sheet is important to navigating all your investment options.

---