Want to know if money can truly buy happiness? How about a brutally honest and refreshing look at money and happiness? That’s what author Melissa Leong has in store with her new book called, Happy Go Money.
Melissa takes readers along her journey, from frugal beginnings growing up in Winnipeg, to covering the personal finance beat for the Financial Post, then leaving it all behind to spend more time at home only to end up with her husband in the psych ward under the crushing weight of depression.
How’s that for the opening chapter of a personal finance book?
Easy to read, yet packed with the latest studies on behavioural psychology, Melissa dives into head first into happiness research and tells readers to F*ck the Joneses, Stuff your Stuff, Invoke the Dollar Lama, and to Bullet-proof your Happiness.
I enjoyed reading the research she included on life satisfaction and day-to-day happiness – the one that says after you make roughly $75,000 per year, any increase after that actually decreases your happiness.
Then there’s the Hedonic Treadmill, our tendency to quickly return to a relative stable level of happiness despite major positive or negative life events. It’s the reason why more money or more stuff is never enough. That quick dopamine rush wears off and we return to our normal state.
Or how about the idea that the worse off our neighbours are, the happier we’ll be? That’s right, studies show that people would prefer to earn $50,000 a year while their neighbours earn $30,000 a year, rather than earn $80,000 a year while their neighbours earn $100,000 a year.
Melissa explores all of these studies and more, while applying the research to her own life as she struggled through a career change and her husband’s mental health.
What she wrote about all of that hit home: More money wouldn’t have made things better or made her any happier. But she also was grateful they had their money house in order so that when sh!t hit the fan the last thing they had to worry about was paying the bills.
I highly recommend reading Happy Go Money – it might just change your perspective about money and happiness. If not, well the book is still a smart, witty, and fun read that you won’t be able to put down.
A Happy Go Money Giveaway
With that in mind, I’d like to give away two copies of Happy Go Money to a pair of lucky readers here on Boomer & Echo. All you have to do is leave a comment below and tell me about a recent money accomplishment.
Did you pay off a nagging debt? Open up a TFSA? Reach a savings milestone? Read a personal finance blog? Let me know in the comments and you’ll be entered for a chance to win one of two copies of Happy Go Money. The contest closes Friday January 18th at 5:00 p.m. EST.
Good luck!
PS – Don’t want to wait for the contest? Buy the book on Amazon here.
This Week’s Recap:
On Monday I wrote about how my wife will save money on taxes with a Wealthsimple RRSP.
And on Thursday I shared why you should disaster proof your life with easy and affordable term life insurance.
Weekend Reading:
Speaking of Happy Go Money, blogger Nick Maguilli shares a story about Eli Whitney, the inventor of the cotton gin who got a little too greedy when trying to sell his machine across the United States.
Attention headline writers across the financial news media. Stop taking otherwise sound articles like this one and putting ridiculous titles on them such as, “Is it time to jump back into the stock market?”
This week RBC and BlackRock teamed up to create an ETF giant – RBC iShares. It’s a massive merger, but index investing proponent Dan Bortolotti is sceptical it will have any real effect on investors:
“I suppose that’s a good thing, although any IIROC-licensed RBC advisor has always been able to use ETFs if he or she was so inclined. It’s not going to turn old-school active advisors into enthusiastic proponents of low-cost indexing.”
Ben Carlson at A Wealth of Common Sense updates his favourite investment performance chart for 2018. Of note, last year was the first time in a decade that cash outperformed all other asset classes, with a 1.7 percent return. The largest decline was felt by emerging markets, which fell 15.3 percent.
Not to be outdone, Dale Roberts posted his investing year in review and says 2018 was not financial Armageddon.
Frugal Trader at Million Dollar Journey shares a financial checklist to start 2019 strong.
Here’s everything you need to know about the enhanced CPP — from how much you’ll pay to how much you’ll get.
Is cashing in RRSPs now to maximize OAS and GIS a good idea for this New Brunswick couple when they retire next year?
Mark Seed at My Own Advisor shares some little known facts about Old Age Security that you need to know.
In his latest Carrick Talks Money Video, Rob Carrick says it’s okay to spend some savings in your healthiest retirement years:
Some excellent thoughts shared here by Morgan Housel on markets and investing:
“Underestimating adaptation and reversion to the mean is the greatest cause of pessimism. If you can stick around long enough to stomach the adaptations, optimism should virtually always the default assumption.”
Mortgage brokers behaving badly again? An alleged ‘shadow’ mortgage broker was implicated in dozens of shady deals, including altered tax documents that allegedly helped bump up a janitor’s annual income from $10,881 to $77,000.
Finally, Costco is selling a giant tub of Mac & Cheese it says will last for 20 years. The 27-pound tub contains 180 servings and despite the long shelf-life customer reviews say it tastes ‘delicious’. Ummm, no thanks.
Have a great weekend, everyone!
I moved from Calgary to Lethbridge when I was 18 years old. I can’t recall exactly how many times I’ve made the trip down Highway 2, but before I had kids I remember spending much of the two-hour trip in the passing lane driving a good 20-25 km/h above the speed limit.
We think we’re invincible when we’re young. It wasn’t until my 30s, when I got married and had kids, that I consciously decided to slow down and take my time when driving on the highway.
It’s around that time when I started thinking more about life insurance and protecting my loved ones in case something happened to me. You see, life insurance was just an afterthought in my 20s when nobody was dependent on my income.
But as a husband to a stay-at-home wife who 10 years ago was diagnosed with Multiple Sclerosis, and as a father to two young daughters less than 10 years old, I have a responsibility to provide for my family in the rare chance that I die sometime soon before our kids are grown.
I’m not alone in sharing these concerns. Nearly three-quarters of 1000 people surveyed last summer said they are kept awake at night worrying about their financial situation.
Why Term Life Insurance Is Worth a Look
Despite these worries, nearly four in 10 Canadians don’t have life insurance, and relatively few Canadians are willing to forego specific luxuries or conveniences when given the option of increased financial security gained through life insurance.
Listen up, folks. The good news is that term life insurance coverage can be ridiculously affordable for a young person in relatively good health. The younger you are, the cheaper it gets.
For example, with RBC Insurance, it would cost approximately $18/month for a female non-smoker age 35; $22/month for a female non-smoker age 40 with $500,000 coverage.
What are the benefits of term life insurance?
- Choose any term from 10 to 40 years. If you pass away within this time period, your beneficiaries receive your policy benefit tax-free
- Premiums and coverage are guaranteed for your entire term. Plus, you can renew your policy at the end of your term.
- Premiums are typically lower than for other types of life insurance, making term life insurance a good option if you have a growing family.
“Hey, but I’m covered through my group plan at work.”
That’s great, but…life insurance coverage through my work was inadequate – only 2.5x my annual salary. I’ve read rules of thumb that suggest you need coverage of anywhere between 10 to 20 times your annual expenses, especially with a young family who depends on your salary.
After our first child was born I looked into topping up my life insurance coverage at work. For an extra $12 per month I was able to get an additional $300,000 in life insurance coverage through my group plan. That’s a Netflix subscription, or 5-6 coffees a week. No big deal.
Still, I feel uneasy. Three years ago one of my colleagues died when his motorcycle was hit from behind while he was turning at an intersection. Two summers ago another colleague passed away suddenly when he had a brain aneurism while driving his daughter to her swim lessons. Both men left behind a wife and children.
These tragic events make me think about my own mortality, even to this day, and whether my family would be adequately protected if something happened to me.
It dawns on me that my workplace coverage still isn’t enough. First of all, if I leave my job I can’t take my coverage with me and so it would be much more expensive for me to replace that policy. Second, I have less than $600,000 in coverage and I’m not sure that is sufficient to meet the needs of my growing family if I suddenly died tomorrow.
Final thoughts
All this life insurance talk is pretty morbid but it’s absolutely crucial to have coverage in place soon after a major life event such as getting married or especially once you have kids.
You also need to re-evaluate your insurance needs from time to time as your family grows. In my case, we’ve become accustomed to the good life and so now I don’t think it’s unreasonable at all to have $1 million in coverage.
When you’re young, even that amount of term-life insurance coverage can be super affordable.
RBC Insurance introduced Simplified Term coverage of up to $1million – the first in the marketplace to offer this. You can get an instant quote online and get protected by completing a short, simple 12-question application.
This post was brought to you by RBC Insurance. All opinions are my own.
We like to tackle our taxes early in the year, which means assessing last year’s tax situation quickly so we can take advantage of RRSP contributions in the first 60 days of the New Year.
Here’s the quick and dirty tax situation for our household: Since I earn a salary at my day job we’ve set up a corporation for our online business activities and stream dividends to my stay-at-home wife (Lindsay) to smooth out our income and save on taxes.
For years I’ve been catching up on RRSP contributions so I would typically get a big refund. Meanwhile, without any deductions, Lindsay would owe a few thousand dollars each year. The easy way to solve that was to make sure my refund at least matched what Lindsay owed.
That has worked out great for the past few years but I finally maxed out my RRSP contributions and now can only contribute around $3,600 per year. This is a problem.
Also, we took out more money from the business last year (because no raise), which means more taxes owing for Lindsay, which means instalment payments this year (boo!) if we don’t find a way to reduce her tax bill.
The answer? Contribute to Lindsay’s RRSP.
A Wealthsimple RRSP
She opened an account at Wealthsimple and transferred a small RRSP balance from another bank to get started. As an incentive Wealthsimple will pick up any fees for RRSP transfers over $5,000.
The transfer was ridiculously simple. She selected from a list of Canadian banks, entered her RRSP account number, uploaded her latest statement, and signed electronically. Wealthsimple completed the transfer form and sent it to the bank. The process takes anywhere from 3-5 business days. She didn’t have to leave the couch.
We’re still determining the optimal amount to contribute as a lump sum to lower her tax bill and avoid instalment payments. She has over $20,000 in available contribution room to work with, so we’ve got options for this year and likely next year as well. Keeping track of her contributions will be a breeze through the new and sophisticated Wealthsimple RRSP contribution tracker tool.
Once we know how much to contribute Lindsay will make the deposit into her new Wealthsimple RRSP growth portfolio made up of the following holdings:
You better believe Lindsay used my referral link when she opened her account.
Make sure you use a referral link, too, when you open your Wealthsimple account. You’ll get a $50 cash bonus when you open and fund an account with $500 within 45 days.
The basic management fee for accounts under $100,000 is 0.50 percent. That’s less than one-quarter of the average mutual fund portfolio (which can be higher than 2 percent).
I didn’t know this before Lindsay signed up but there are some other cool incentives for Wealthsimple members to enhance their experience and save money.
For instance, if you make your account more secure by turning on two-step verification you’ll get an extra $100 managed free.
Turn on an active auto-deposit of at least $50 per month and you’ll get an additional $1,000 managed free.
Login to the Wealthsimple mobile app and get another $100 managed free.
Finally, when you become a high roller with $100,000 or more you’ll upgrade to Wealthsimple Black. Perks include:
- VIP airline lounge access for you and a guest
- A lower 0.40% management fee
- One-on-one financial coaching
- Tax-efficient accounts
Smart Savings
While she was at it, Lindsay opened a Wealthsimple Smart Savings account. She called it her rainy day savings account. I know that’s code for her Lululemon fund.
The Smart Savings account comes with a 2 percent interest rate without annoying account minimums or introductory promotional rates.
Best of all, free unlimited transactions – so you can contribute or withdraw as often as you like with no fees.
Final thoughts
You guys know I’m a hands-on do-it-yourself investor and have no problem building a portfolio of index funds and ETFs to manage on my own. But that’s not for everyone. Heck, that’s not even for most people.
I’d argue that most people would be better off with a hands-off automated solution like what Wealthsimple has to offer.
You’ll get the benefits of modern portfolio theory with low fees and globally diversified investments that get automatically rebalanced as you add new money and markets move around.
The amount of money you’ll save on investment fees over your lifetime should be enough to hire a fee-only planner to help you with financial decisions that really matter, plus max out your annual TFSA contribution, RESP contribution, take a family vacation, and still have money leftover for weekly brunch.
If you’re sceptical, take them up on a complimentary portfolio review where a Wealthsimple expert will give you a free second opinion on your investments and financial plan.