3 Things I Wish I Had Done Differently With My Finances
We would all be very wise if we could act on hindsight. I am not too dissatisfied about the way I’ve handled our finances over the years, but here are three things I wish I had done differently knowing what I know now.
1. I would have joined my company pension plan.
When I started my banking position, the pension plan was mandatory for males and optional for females. The vesting period was seven years.
I declined the enrollment because I thought there was no way I’d stay working there for more than a couple of years, and, besides, the employee contribution amount was quite a hefty amount in my opinion. I needed that money.
Twenty-five years later I was still there and had missed out on a good future pension.
Bottom line: Studies show that most employees today will change jobs/careers at least seven times. It will become increasingly unusual to find a worker who stays with the same employer for his or her whole working life.
Most companies offer some type of pension plan and contributions are often matched by at least 50% up to 100% by the employer. Also, vesting time has been reduced to 2 years, so the employers’ contribution is more accessible. Where else can you get a guaranteed return like that?
Related: Have We Seen The Last Of Gold Plated Pension Plans?
Even if you end up with seven (or more) different LIRA’s and they start out as relatively small amounts, it’s worth it in the long run, especially if invested prudently – and you can’t be tempted to take withdrawals ahead of your retirement date.
2. I would have stocked my RRSP with US Dividend Aristocrats
I have done well with my Canadian dividend payers but they are mainly focused in financials, telecoms and utilities. Sectors like health care and consumer products are not well represented in an all Canadian stock portfolio.
Many US companies are multi-national so you can build a really diversified portfolio by industry and geographically.
Now that I think of it though, foreign content used to be limited to 20% of RRSP book value so I would not actually have been able to use this strategy at the time of opening.
However, if I would have purchased something like Colgate-Palmolive with my allowable portion instead of an International Mutual Fund and then branched out as my RRSP increased, I think I would have been better off in the long run even with the low (at that time) Canadian dollar.
Related: Why US Stocks Are Safer Than Canadian Stocks
Bottom line: I am not recommending that everyone hold US stocks in their RRSP. I’m just stating that I, personally, would like to have held more. I didn’t buy US stocks because I was uneducated about them at the time.
When you learn about different investments and strategies you become more comfortable with them and can more easily determine what’s right for you.
3. I would have worried less about money
There is no joy in your life when you’re constantly worrying about your finances. Worry makes it difficult to assess a situation calmly and determine a course of action. Worry does not allow you to seize a good opportunity when it appears.
Worry keeps you at a life-sucking job because you don’t think you have any other alternatives. Worry makes you depressed and cranky with your loved ones.
Related: Learn From The Boomers’ Mistakes
Bottom line: No one has a perfect life and the road can get rocky from time to time. Don’t let it beat you down. Talk it out instead of keeping your feelings to yourself. Accept help from others. Change your attitude and be grateful for what you do have. A clearer head allows you to think of solutions to your problems.
Is there anything you would have done differently in hindsight?
Not a thing. I usually learned from mistakes, and that likely saved me from worse ones. And some of the bad decisions are good stories now 🙂
I would have bought more life insurance and no mortgage insurance. I would have got a mortgage broker instead of getting a mortgage through my credit union. I would have got independent financial advice rather than go to the “wealth” department of my credit union. In short – I wish I’d never banked alone. Expensive lessons. Thanks for the post.
The biggest financial disaster for a woman, I think, at least in my day, was not having effective methods of collecting child support. Take a look around at the women who were single moms and are now in or nearing retirement. No financial resources to speak of and those dead beat dads have avoided paying out thousands and thousands. Divorce and raising kids alone with no financial support does not make for an effective platform upon which to build financial security. I think CPP should be re-routed from those deadbeats to the mother of their children. Let them deal with financial insecurity for a while. I am not a bitter woman because I am not one of these women. I just happen to know quite a few and it makes me angry. You would never know their situation because they gave up complaining about it a long time ago. Marrying the wrong person can be one of the biggest financial disasters in a person’s life.
@Rosemary. OK you tweaked my nose a bit. I am a man. I am not sure where this sexism comes from. This is not a female vs male issue, although the law is weighted toward women in the way the rules are applied. I raised my 3 kids from ages 3,5,and 7 alone with no support and a lot of disruption from an abusive ex-wife who kept trying to get money away from the family for herself. Because she briefly had custody early on, I was forced to pay HER support for all three for many many years when they were living with me. Because of the legal battles I had to start building financially from well below zero in my forties. I never received a nickel of support from their mother at any time. Frankly, I never understood the whole child support obsession anyway except in cases of extreme poverty – I love my children and was always happy to do what I had to to make things work for them. Would I be richer in retirement if I received child support? Absolutely. Regrets? None.
I am sure the younger readers are shocked by the bank pension rule of mandatory for men optional for women. The bank probably thought that all of the little ladies would have a husband to take care of things for them.
I regret that I don’t have more saved for retirement but I had to restart everything financially in my 40s and my only regret is that I didn’t leave the safety of my marriage and start over earlier. I am afraid to take chances instead of leaving bad jobs or relationships.
One note about pensions & job turnover: I started out as a school teacher but after a year of that discovered it was too stressful mentally for me, so was forced to switch careers. Ended up working in healthcare. Here in Alberta the teachers pension and public sector pension have reciprocal agreements so I was able to transfer my pension as well as years of service from one to the other. Several other pensions also have similar ageements. If all else fails you can always take the cash out if you aren’t working for the same empoyer anymore. After one year of teaching here that was well over 5G so a nice “bonus” after leaving an employer.
I’ve been reading your blog for several months now, but this is my first comment. I enjoy getting the emails as most of them are relevant and informative to my situation. Thanks and keep up the good work!
@Randorf: You’re correct that some pensions can be carried over to your new employer, especially in the public sector, where the jurisdictions are the same.
However, unless I needed the money, I would rather invest the commuted value tax free rather than consider it a bonus.
Thanks for stopping by.
One other benefit of transferring your pension from one employer to another is that this also counts as “years of service” with the new employer. I worked just over one year as a teacher, this counted as 1.8 years in my new career… which could potentially mean retiring almost 2 years earlier 🙂
Oops I see I already mentioned that in my first comment…
i don’t have much to add to your post boomer other than i worked for a bank for the first seven years of my working career and then left with my pension money and paid bills with it. i look at those with public sector pensions with a lot of envy and sometimes wish i had stuck it out. i had a lot of fun being self employed but i should have saved more and as you said — invested more in us dividend aristocrats. health is far more important than money so take care of yourselves everyone!
Robert, sorry for the tweak but it wasn’t directed at you. Also not sexist, in my opinion. All the men in my circle of friends have paid, are paying or are primary parents to their children, like you. All good men. But many women in my circle have been single parents with no support from their exes or little from the system. They worked for very low wages, paid for daycare and raised some great kids. Now, faced with retirement, they have very little to live on. I think in a few years, this demographic will emerge as the face of poverty in Canada. All other things aside, marrying the wrong person can have significant impact on financial well being that extends into retirement. Just sayin…..
We don’t have as much money as we “could have” had because we invested very conservatively (and still do.) In hindsight, we would have been fine taking more risks. But I don’t regret it at all. It suits us and we are managing fine. I think if we had tried to take more risks we would have fought more and probably ended up with stress-related illnesses.
@Bet Crooks: It’s better to have not gained a little by being conservative than to be too aggressive and lose a lot, especially when you don’t have the time to recoup. You need to be comfortable with your choices.
When I was working, I always contributed maximum in IRA and when the company started to offer 401(k), each year I contributed the maximum. I strongly believe you save a lot in your deferred-tax accounts. And the best part is the money grows tax-free as well in your investments.
Joining your company’s pension plan or 401k program is definitely a good idea. Especially if your employer offers matching contributions.
I try to take advantage of every money making/investing opportunity, regardless of how little I think of it at the time.
Not waiting so long to learn more about investing.
I should have done this in my 20s vs. 30s. Such is life 🙂
Thanks for sharing Boomer.
Mark
I haven’t regretted anything. I’ve kept my spending to a minimum, took full advantage of my employer’s RRSP contributions that was built up to $10K in less than 3 years. Not bad for an employee with only $22K in annual salary at the time
Stuck to safe stocks and bought a lot of cheap stocks during the crash allowing me to increase my return significantly.
Took an extended warranty on my new car that paid in dividends when one of the bad parts failed and got an even better $2000 upgrade for free.
Only regret right now is to stop worrying about money largely due to being self-employed right now. I’m definitely working on that.
It’s important to consider health care costs in retirement, as well. Even though you can’t predict your health care retirement costs, you do have some control over making them smaller. Read more here: http://www.startday.com/jobs-and-retirement/saving-for-retirement Hope this helps!
I wouldn’t have invested $2K in MP3.com. It was a sound business model, great for independent artists, respected copyright, and was innovative. I learned that all that doesn’t matter if the RIAA doesn’t like you. Even if you have David Bowie on your side, they’re the ones with the big lawyers. Musicians can’t give away free samples of their own music–that’s just crazy talk!
I also never would have opened an e-Trade account. Though it was fun to get in on the action, their insane quarterly $75 “low usage account fee” slowly burned away gains I might have made. Don’t you know you have to pay for something if you’re not using it?! How stupid was I?