Index funds

by Carol-Anne

An index fund is essentially a mutual fund that invests in the stocks that are the basis of a well-known stock or bond index. To put it in simpler terms, it is a list of investments.   It is wise to choose an index fund because after funds are made to pay their annual management fee of about 1%.  Most of the funds managers cannot beat their fund’s benchmark, however; when it comes to Index funds, they usually carry a very low fee which is usually 0.02% per year.  Which is a lot less than the other fees for the competitors.  As well as, they are reliable when it comes to delivering the market’s average performance.  In other words, by aiming for the average; you actually have a better chance at beating the competing investors.  It is most likely that when you invest in the index funds, you will not fall below average and keep a somewhat steady market income. 

https://www.investopedia.com/terms/i/indexfund.asp

Present bias

by Carol-Anne


     Present bias is our natural inclination to over-value present benefits and rewards at the expense of benefits further into the future. In simpler terms,  we over-value the here and now at the expense of the future.
Here's an example:
Which would you rather:  $150 in 52 weeks or $130 in 48 weeks?  
Most people said that they’d wait the extra 4 weeks to get the additional $20.
But what about this?  Would you rather have $130 today or $150 in 4 weeks?  
A lot of people say they'd take the IMMEDIATE benefits of the $130 TODAY instead of waiting 4 weeks for the extra $20.
In both instances, you are being asked if you value $130 sooner or $150 4 weeks later.  If you prefer to wait the 4 weeks in the first scenario, you should prefer to wait the 4 weeks in the second.
But many don't.  This is present bias.

Daniel Kahneman describes human thinking as being composed of two systems. System 1 and System 2.
System 1 functions automatically, quickly and is emotional. There is very little effort involved and relies mostly on impulse. 
System 2, on the other hand, is logical and involves mental activities that do require effort, such as calculations.
Your present self, mostly uses System 1 to make decisions.  It is constantly looking to satisfy its immediate needs and desires.  It pays little or no attention to the future.
The other self is your future self.  Your future self is logical, and thinks before it acts or speaks. It’s like the old angel on one shoulder and devil on the other scenario.
The problem is, your present self seems more “real” and is much more persuasive.  This is because you know this person. You arI one in the same this person.  However, 
Your future self, is like a stranger. You don’t know that person. They’re just too distant.   So when you go to make a decision, your present self’s best interests almost always win. 
Therefore we make illogical decision. Such as choosing to opt for less money now when you get a reward immediately.

Critiquing:

Honestly, I wish I had known about this sooner.  The amount of money this could have saved me is crazy! I would have opted for the patient option a lot more if I had known.  I think the best way to get past this bias thinking would be to sit down and ask ourselves:
”What do I want my present self to be doing in x years?”  As well as the impact on those around them.  I feel as though asking yourself questions about your future self will lessen the feeling of that person being a stranger and open more thoughts about how to engage with them.  If we made the future a benefit of the present, we’d most likely feel inclined to save money and choose options that benefit us in years to come.




 https://www.google.ca/amp/s/youngandthrifty.ca/save-money-by-going-back-to-the-future-countering-present-bias/amp/

Gross income vs Net income

by Carol-Anne

Before we can understand the defined definition between these two incomes, we need to understand what they mean on their own.  Gross income refers to an employee’s total wages.  it  is the total amount of wages earned by an employee before taxes and other deductions. An example of this would be: An employee making roughly $40,000 per year with $10,000 withheld for income taxes, social security, health insurance, etc. would have had a gross salary or income for the tax year of $40,000.
Whereas, Net income or net pay, refers to an employee’s take-home pay, which is the gross income minus withholdings like state and federal income taxes, FICA, insurance, retirement, etc. An example of Net income would be an employee making $40,000 per year, minus deductions totaling $10,000 would have net income of $30,000.
Now that we know their separate definitions, we can compare the two.  Net income is the take home pay after the deductions such as taxes, health insurance etc.  whereas, Gross income is the set salary amount before any deductions or anything of that sort.

https://www.quicken.com/what-gross-income
https://www.investopedia.com/terms/n/netincome.asp

"financial blogs"

by David

"Young and thrifty"

Young and thrifty was very professional everything was very easy to find it had an entire section of how to guides right on the home page they had a list of categories to choose from depending on what information you need to find. It also had a list of financial products and apps neatly sorted with links to each of them. I also discovered that they are featured in many different fanatical show and news channels and papers this website was very easy to use and was a good tool to find what I needed.

https://youngandthrifty.ca/

“Getting rich slowly”

This website was helpful but all there information was on one infinat scroll page which made things harder to find because I would have to keep scrolling and scrolling to find something that might not even be there. There were many good ideas and helpful strategies but I just think the way things were laid out on the page made it a bit difficult to find what you need

   https://www.getrichslowly.org/

"RRSP's"

by David

“How it works”

RRSP is an account that is set up for saving for retirement: but it’s a little more than that. Let’s say you put away $12,000 into an RRSP what happens now is the government will make it seem as if you didn’t make that $12,000 that year.

“How RRSP taxing works”

Let’s say you make 50,000 a year and every year you were to put 12,000 into an RRSP then you will only be taxed on the other 38,000 you made. And let’s say you did this every year then when you retire, As soon as you touch that money, you will pay takes on how much you take out so if you had $100,000 and took out 10,000 you would then have to pay tax on the 10,000 you took out and not on the 90,000 you still have in your RRSP account. Plus you get interest credit on the money that’s in your RRSP

“Benefit’s”

It allows you to pay less tax now, it acts as a locked box, and it gets you interest credit so you make money as you do it     

It’s not what you earn, It’s what you save!

by Katara

     "its not what you earn its what you save!" helps you remind yourself that spending less than you earn can be a big help in the long run of life. its common sense to spend less than you earn, it’s a rule everyone should fallow, and I mean we have been taught it from day one of our lives.  

   But why is so many people struggling?

               the biggest problem with that is not everyone can predict how much they spend, and most times fall in the hole with bills, or with life, children, cars, food, fires, trips, alcohol, addictions, Ext. can contribute. So there is a big flaw with this rule.

         This rule could be a try your best not to spend too much, or we could get help if needed from the people around you, this rule is hard to keep up when things happen, especially when life is harder than school makes it seem. So in the end this rule is basically non-existent.

(https://lifehacker.com/spend-less-than-you-earn-is-useless-unhelpful-financ-1710042416 )

$5 bill trick

by Katara 

               This trick is when you use cash you save any $5 bill you see, you don’t Spend it no matter what, and you can use any other currency but $5 you have to save. It’s an easy trick that can amount to so much.

Why is it not resourceful  today?

            this trick has a flaw, a lot of people consider using digital cash more often than not, which makes it harder to get bills and money these days, bills are becoming extinct. Instead we should re-vamp it, to how about anytime you spend a certain amount of money.

             let’s say for example $20 we save $5 out of what you have spent, It’s a slower production but does not hit any blocks for when the digital age has taken over, so this trick can be used way into the future.

              also its harder to get a $5 these days, most are in change, or we have to get a $10 or $20, as most bank machines these days don’t really give out 5.

(https://rockstarfinance.com/5-dollar-bill-savings-trick/  )