Back to School – Not Just for Kids

The air is crisp and the leaves are changing colour. While some things have stayed the same – the end of summer and the start of school – others have drastically changed. The COVID-19 pandemic has certainly impacted us in ways we could never have imagined.

Many of us are juggling the needs of work and our family, others may have spent a bit more than anticipated over the summer, or are having to pull the belt tighter due to changes in employment. Most of us have had to make choices that affect the amount of money we have brought into our household. Whatever your situation, the good news is that fall is a great time for you to “go back to school” by reviewing your financial situation and increasing your financial knowledge, which can help you stay on track for the rest of the year. Here are some tips to get you started:

Review your budget.

Over the summer, budgets tend to slide. The fall is a good time to review the budget you set earlier in the year to make sure you are still on track to achieve your personal goals. Look back at receipts and financial statements to see your family’s spending pattern, then account for any new or anticipated expenses. Ask yourself the following questions: Are you saving what you had set out to? Are you able to pay down debt? What is your cash flow situation?

While you’re at it, take some time to outline how you will manage your finances for the rest of the year. With the holidays around the corner, factor this into your budget and consider emergency funds for any big-ticket items that could pop up, such as car or home repairs. By knowing where your money is going, and living within your means, you take control of your spending and reduce your stress.

Review your financial statements.

It’s easy to allow financial documents like bank or investment statements to pile up unopened. Take the time to open all your financial documents and review your statements. Be sure you understand the investment fees you’re paying, and how your portfolio is performing. Be sure to note any questions you have for your financial planner or investment adviser. Follow up if there are any changes to your accounts or new investments that you do not recall making.

Study up to increase your financial knowledge.

Start by identifying where you may have gaps: there are many places online, such as CheckFirst.ca, that offer quizzes to help you gauge your knowledge. Start with the Investing Basics quiz – it is a good general overview of investment fees, financial planning, risk tolerance and the legitimacy of investment offers. Commit to improving your financial knowledge in the areas you find challenging. While money-management and investments can feel confusing, there are many reputable resources available to help you.

Talk to a financial adviser.

If it all seems overwhelming and you’re not sure how to manage your finances, a professional may be able to help and identify areas for improvement. If you have a financial planner or investment adviser, reach out to them for a check-in to discuss your questions or concerns. If you don’t have an adviser and want one, consider meeting with a few individuals to see who might be a good fit for you. If you can’t afford to hire one right now, speak to your current banking institution. Banks have obligations to their consumers and should be willing to talk to you about your situation. Before meeting with them be sure to check their registration and learn how the adviser or bank are getting paid.

Set Goals.

Just like in school, setting achievable goals will help you conquer that next milestone. Pay off debt? Save more money? Put away for emergency fund? These are great goals but in order to be successful in meeting them, goals need to be specific, realistic and measurable. Instead try “Pay off $3,000 of debt by the end of 2021” and map out how you will do it.

Be flexible.

School today is very different than last year, and you can think about your finances in the same way. Situations change, and as they do, adjust your financial plans, budget and goals accordingly.

A bell isn’t going to ring to let you know you need to learn more about your financial future; it’s up to you to decide when to head back to school and build your own financial know-how. We might not know what the year will bring, but being proactive about our financial knowledge and planning for the future may alleviate some stress. It may just help you sleep better at night and give you one less thing to think about as you tackle all the other demands in your life.

For more information on increasing your financial knowledge, making wise investments, learning about budgeting, how to check registration and how to talk to a financial adviser visit CheckFirst.ca. It is chock-full of helpful tools and resources.

What to consider before day trading

The number of novice investors day trading has surged during the coronavirus pandemic. People stuck at home have turned to playing the stock market on trading platforms with the hopes of big returns on their investments. While it has made some savvy investors rich, day trading has left many others with massive losses and in worse financial shape than before.

Day trading is risky and different from traditional investing. Day trading involves rapid buying and selling of securities to take advantage of small movements in prices. As a day trader, hedging your bets across a variety of day trades comes with inevitable losses on some trades and gains in others, with the goal of ending the day in the green. Day trading isn’t for everyone, and it takes a particular type of person to ride day trading’s rollercoaster of volatility day-in and day-out. Most individuals do not have the wealth, the time, risk tolerance or the temperament to make money and to sustain the devastating losses that day trading can bring.

If you are considering day trading, make sure you understand its dangers:

Huge risk – losing money is part of day trading.

Don’t enter into day trading if you don’t have the money to lose and you don’t have the flexibility to sustain losses daily across multiple trades.

Quick wins don’t guarantee future success.

Be careful of unfounded confidence and emotional decisions – each trade is unique and a huge win one day could be a loss the next.

Be prepared to treat it as a full-time job.

Day trading is time-consuming – to be successful, you need to have the self-discipline to view it as a full-time job and conduct ongoing investment research and monitoring.

Watch out for claims of easy profits, hot tips or expert advice

Relying on investment advice from day trading firms or platforms, websites, social media like TikTok or charismatic day traders can be dangerous as they may be seeking to gain profit from their recommendations. Don’t believe any claims without checking sources thoroughly.

Remember that seminars, classes and books about day trading may not be objective.

Find out whether anyone offering advice about day trading stands to profit if you start day trading.

Beware of easy training sales pitches.

Day trading training systems are heavily marketed to make it seem like an easy, safe, fun way to make money. These commercials leave out details about the pressure, the importance of researching and testing, and the high levels of risk.

 

If you recognize this and are still determined to try your hand at day trading, make sure you do the following:

Understand the risks and then choose whether this type of investing is right for you.

Know yourself as an investor, your risk tolerance and your financial goals before you decide to day trade. Take our Check your risk tolerance quiz to see if day trading aligns to your investing style. > Go to quiz

Learn all you can about investing and day trading.

In order to increase your chances of success, you need expertise, so read and research all you can on it. Day trading is not ideal for those new to the investing world.

Assess if you have the right personality and discipline 

You need long-term dedication, a focused mindset and the ability to ride the stressful highs and lows of the day trading roller coaster.

Only invest what you can afford to lose.

Day traders typically suffer severe financial losses in their first months of trading, and many never attain profits. Set aside a set amount and don’t get caught up in the hype or panic to invest more as a way to make up losses. Think of it like gambling in Las Vegas – it’s never a good idea to double down at a table when losing. Get up and walk away.

Research a good trading system, and keep at it.

Day trading requires a lot of self-discipline and trust in your trading system and algorithms. It is more complicated than just following a hunch. If you don’t have a system and manage risk, you are more likely to lose money.

Day trading requires expertise. If you do decide to pursue it, do your homework, and develop a financial plan to ensure it’s the right approach for you. Remember, all day trading firms must be registered, visit CheckFirst.ca to check the registration of any firm or call 1-877-355-4488.

5 Steps to Manage Financial Stress

We are living in challenging times and every day Albertans face the unprecedented combination of economic uncertainty, ongoing COVID-19 dangers, volatile stock markets, a shaky job market and rising costs of living expenses. In a recent national poll by FP Canada[1], more than forty percent of people in Alberta ranked money as their biggest cause of stress in life and more than half said the pandemic had impacted their finances.

Financial stress can impact your health and relationships, while negatively affecting how you approach money and planning for your future. The good news is that you can take control and do what’s right for you. By taking these five steps you can reduce your stress level, optimize your expenses to weather the storm and avoid unwise investments.

1. Start with your budget

When it comes to your finances, there is no better ally than your budget in order to understand where your money goes and give you a plan of action that can relieve stress. If you don’t have a current budget or know how to make one, visit CheckFirst.ca  to build your own. Compare the money you bring in to the house, and your expenses. Consider looking for areas where you can reduce unnecessary costs and make a few changes if you’re spending more than you make. For example, maybe you can take that step you always talked about and cut your cable or stop using food delivery services and cook at home instead. Once you have built your budget, make sure you review it at the end of each month to stay on track. Take note though, a budget isn’t a dream scenario – use real numbers and take action based on what you learn.

2. Establish or strengthen your emergency fund

Unforeseen events happen. Whether your hot water tank goes on the fritz or you unexpectedly lose your job, unwanted expenses can strike when you least expect them. Saving and protecting emergency funds are a great way to hedge your bets against these unforeseen circumstances and avoid the financial impact and stress that can occur. A solid budget includes dedicating some of your income to an emergency fund. Open a separate savings account, ideally one with a decent interest rate and low or no fees, and start automatically contributing what you can. Even $40 every two weeks can net you $1,000 in savings within a year – the key is to consistently save the amount you are comfortable saving, no matter how small.

3. Defer payments

You are not alone in feeling the financial stress of COVID-19. Many Albertans are facing unprecedented challenges, which has made meeting financial obligations like paying mortgages, utilities, and other monthly expenses more difficult. Fortunately, many businesses, banks, service providers and municipalities recognize this and are providing payment deferrals for up to six months to help ease your financial stress. If you’ve reviewed your budget and removed all unnecessary spending, your next step is to identify bills that may qualify for a deferral. Try and pinpoint the smallest bills you can defer that will help you balance your budget.  Just remember that deferred payments still have to be paid – they do not cancel or eliminate the amount owed, but instead put them on hold to give you time to either grow your income, or further reduce your expenses.

4. Consider using an investment adviser or planner

Sometimes calling in an expert is a necessary step to help reduce the stress you might be feeling about your financial future. If you have investments, you are not alone in worrying about the volatility of the stock markets and the rapid changes in your portfolio. Making an appointment with a registered financial adviser or planner and seeking their knowledge and guidance can be a great way to review your investment portfolio against your financial plan, ensure you’re staying on track with your goals, and make any adjustments as needed. Learn how to ask the right questions and check the registration of your investment adviser by searching “Choosing the right financial adviser” on CheckFirst.ca.

5. Beware of “get rich quick” opportunities

Current economic conditions create a breeding ground for fraudsters looking to capitalize on the fear and vulnerability of hard-working people trying to make ends meet. Fraudsters use economic uncertainties and current trends to sell COVID-related investments, forex trading work-from-home opportunities, and too-good-to-be-true offers with the sole purpose of stealing your money quickly and efficiently. If you’re approached with a red flag of fraud such as an investment opportunity with the promise of significant returns with little to no risk, you could be dealing with a potentially fraudulent investment that could make your financial situation worse. Don’t make rash decisions with your money. Learn more about the red flags to be wary of, and always check the registration and disciplinary history of the individual or firm offering you any investment at CheckFirst.ca

Financial stress is an overwhelming reality for many households across Alberta. Take control of your financial security and relieve stress by taking action through these five steps. Visit CheckFirst.ca for free, unbiased resources to empower you through every step of your investment journey, detours and all.

[1] Seto, Steve, Financial stress biggest concern for Albertans during pandemic: survey, 660 News, Jul. 13 2020.

Buying in the dip: What to consider when investing during an economic downturn

You may hear the investing motto “buy the dip” being used a lot these days. This phrase refers to looking at economic downturns as lucrative investment opportunities – one that can bring you significant gains by buying investments at reduced prices. While the idea behind the motto certainly seems exciting for investors, the truth is that there are many considerations and risks to weigh before buying the dip in today’s economic climate. If you are thinking of investing during this time, consider the following beforehand to ensure you make wise decisions that meet your financial goals.

 

Have you considered whether the money you invest is money you can afford to lose?

Many Albertans are impacted by the economic downturn in their immediate day-to-day lives with reduced working hours, less income and even job loss. Over the long-term, this may affect current retirement accounts and future retirees’ ability to save. If you are looking to invest money with the hope of covering your bills or building back your retirement fund quickly, you could be setting yourself up for unsuitable investments and even potentially fraud. Review your current financial situation against your financial plan and consider whether the money you want to invest is money you can afford to lose, should the investment not turn out as expected.

 

Are you in the right head space to be investing?

Emotional investing spurred on from fear of missing out or not having enough money to meet your needs is dangerous as it can quickly expose you to unsuitable investments and fraudsters. Removing the emotional component from investing is hard, but by analyzing the investment against your risk tolerance (how willing and comfortable you are to the risk of losing your money on an investment), the risks of the investment, your financial plan and investment strategy can help you see the opportunity clearly and determine if it is right for you.

 

Have you considered the significant market risks?

We are living through unprecedented times. Rapid market volatility over the past few months has resulted in some of the sharpest declines and gains in the history of many stocks and indexes. While governments worldwide try to stem the impacts of COVID-19, the fact remains that no one knows what the market will look like tomorrow or over the next while. The investment world is full of speculation on when and how things will turn around. With this in mind, make sure you research the investment you are considering. Check to make sure the person selling the investment opportunity is registered to do so; investigate the validity of the product, solution or service that you are considering investing in; understand what the opportunity is offering; and, ensure you are comfortable with its risks.

 

Have you considered whether the investment opportunity you’re interested in is fraudulent?

When it comes to economic downturns, many fraudsters capitalize on the uncertainty, fear and financial strain that people experience to gain their trust and then to sell them false investments. Watch out for red flags. Anyone offering you an investment opportunity with the promise of significant returns with little to no risk is a major cause for concern. If it sounds too good to be true, it probably is. Make sure you always check the registration and disciplinary history of the individual or firm offering you the investment at CheckFirst.ca or call the Alberta Securities Commission at 1-877-355-4488.

This global economic downturn is bringing a lot of uncertainty and panic. While mottos like “buy the dip” seek to bring a positive outcome, you should never let fear or the expectations of great returns cloud the proper assessment of any investment opportunity. By taking deliberate actions with your investments, based on your risk tolerance and research, you can stay true to your financial plan and navigate the uncertainty of today’s investing market.