Risk evaluation (in relation to investments)

by Giana

When it comes to choosing an investment, there are some different factors that can contribute to whether the investment will be lucrative or not. Risk evaluation is the probability of you losing or gaining money on your investment. The main factor that will influence the risk of your investment and whether or not it will be rewarding is market conditions, including currency risk and political risk.

The risks you can take with your investments vary widely. The investments that have the lowest risk also give out the smallest gains, or none at all. The investments that have the highest risks have the potential to give out the biggest gains, but since they pose a higher risk, also have a potential for big loss. 

There are some things to take into consideration when you are trying to decide the amount of risk that you want to take with your investment. First, you should not be using the money that you need to live for investments. Depending on how much you have to invest, you might want to spread out your money into different investments, so if you do lose money, you will still have some elsewhere. Also, you might want to invest your money in different asset classes that have different amounts of risk (e.g., bank stocks, gold, real estate, cash and antiques). 

http://www.finra.org/investors/reality-investment-risk

http://www.finra.org/investors/reality-investment-risk

https://www.google.ca/search?safe=strict&biw=1366&bih=662&tbm=isch&sa=1&ei=eHkYW5irKoKwjwS2ooOgAw&q=market+risk+triangle+for+investing&oq=market+risk+triangle+for+investing&gs_l=img.3...42471.51459.0.51619.21.21.0.0.0.0.227.1590.20j0j1.21.0....0...1c.1.64.img..0.2.301...0i8i7i30k1.0.O9WZufaTA5s#imgrc=8YGyC9ZScr3mZM:

OSAP

by Kristy

          OSAP stands for the Ontario Student Assistance Program. OSAP assists students in paying for their post-secondary education, for those that need the financial help.

          OSAP offers two types of funding. OSAP offers grants, which is money that the student is not required to pay back. OSAP also offers student loans, which is owed back to OSAP once the student is finished school.

          Almost everyone is eligible for OSAP, including Canadian citizens, permanent residents and protected persons. Unfortunately, you are not eligible for OSAP if you lack the academic requirements, have enough financial resources, the income given on your OSAP application is significantly different from what you reported to the Canadian Revenue Agency, you have defaulted a student loan, have bursary or grant overpayments or significant loan overpayments, failed a credit check, declared bankruptcy or you have reached your limit of student loan funding (limits given below).

Ø 340 weeks of funding

Ø 400 weeks of funding for doctorial studies

Ø 520 weeks of funding for students with disabilities

          OSAP tries to help with as much as they can. OSAP helps pay for tuition, books, mandatory student fees that a school may charge, living expenses for full-time students and child care for students with children.

          When OSAP accepts your application, you are guaranteed to get some sort of financial help. How much money you receive depends on education expenses, the course load and your personal financial situation.

          OSAP is a huge support for students who want to continue their education into post-secondary. OSAP gives thousands of students every year the opportunity to get the education that they want to have.

Link to source: http://www.ontario.ca/page/learn-about-osap

Bonds

by Kristy

          Bonds are issued by corporations and governments in order to raise the amount of money that they have. When you purchase a bond, you’re giving the issuer a loan. The issuer is required to pay you back the value of the loan you gave them on a certain date, and typically in certain periods.

          If you’ve ever purchased a government savings bond, you’ve become a debtholder/lender/creditor to the federal government. Same goes for big or small businesses; if you’ve ever bought a bond from one, you now are the lender, and they now owe you money.

          Bonds are extremely important, because they provide a steady and secure source of income for the lender, and they also support the issuer in what they need the money for. For example, you purchase a bond for $1000.00, and has a 5% interest rate. Twice per year, you will receive $25, for as long as you are the owner of the bond. At the end of your bonds “life”, you will get the initial $1000.00 back as well.

          When a bond is purchased, there is still a risk of inflation. Inflation is the risk that the money you get back at the end of your bonds life isn’t worth as much as when you originally bought the bond. The higher interest rate, the more chance of inflation there is.

          Bonds are more beneficial then not. They provide a steady source of income (not enough to not have a job though), and they help governments, businesses, etc. to stay in tack.

Link to source: http://www.investopedia.com/university/bonds.1.asp

Minimalism

by Ben

The word minimalism has many different meanings. It can describe a lifestyle, a form of art, architecture and design. A person with minimalist lifestyle has a goal of clearing the clutter from their life and living with minimal possessions. They try to only own things that they need to survive and that are very important to them. Minimalism in an art form is abstract with a lot of geometric shapes. There isn’t much detail and is very simple. Minimalism in architecture strives to be simplistic with basic geometric shapes. It tends to look modern with straight lines and clean edges. In my opinion I think minimalism is a good idea because I hate clutter and love simple and modern aesthetics. Also it’s a good way for people who have a hard time getting rid of things and have a tough time letting go. It’s also a huge money saver because you buy a minimal amount of things. I think it’s a good movement because it teaches people you don’t need a lot of commercial items to live a happy life.

        

Here’s an example of a simple minimalistic house.

Mutual Funds

by Lauren

A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. Some investors may be retail or institutional. Advantages of mutual funds are that they provide economies of scale, a higher level of diversification, they provide liquidity, and they are managed by investors who are professional. Disadvantages is that the investors in a mutual fund must pay various fees and expenses. When you buy a mutual fund, your money is then combined with the money from other investors, which allows you to buy part of a pool of investments. For some people mutual funds may not be for them as there are multiple fees you have to pay, like sales charges, fees and expenses regardless of how the fund performs, even if the fund has a negative outcome. Also with mutual funds the fund’s holdings are only known to investors at certain points in time, which means you don’t have any influence or control over specific investment decisions made by the portfolio manager which some people may not like. Therefore if you’re interested in investing then I would recommend doing a mutual fund.

https://www.investopedia.com/terms/m/mutualfund.asp
http://www.globefund.com/centre/GettingStarted02.html
https://www.google.ca/search?q=advantages+and+disadvantages+of+mutual+funds&rlz=1C1GGRV_enCA751CA751&oq=advantages+and+disadvantages+of+mutual+funds&aqs=chrome..69i57.11246j0j4&sourceid=chrome&ie=UTF-8

Stocks

By Natasha

A stock is a general term used to describe the ownership certificates of any company. A share refers to the stock certificate of a particular company, holding a company’s share makes you a shareholder. There are two types of stocks: 1. Common stock: common stock is shares entitling their holder to dividends that vary in amount and may even be missed, depending on the fortunes of the company. The main reason people invest in common stock is for capital appreciation. They want their money to grow in value over time. An investor in common stock hopes to buy the stock at a low price and sell it at a higher price at some point in the future. 2. Preferred stock: preferred stock is a stock that entitles the shareholder to a fixed dividend whose payment takes priority over that of common stock dividends. Preferred shareholders are legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders who have a common stock. There is also something like preferred stock that is called convertible preferred stock. This is basically a preferred stock with an option of converting into a fixed number of common shares, usually any time after a predetermined date. The stock market is a very important part of the economy of a country because it issues shares for the investors to invest in the stocks a company needs to get listed to a stocks exchange and through the primary market of the stock exchange they can issue the shares and get the funds for business requirements. Stocks offer the most potential for growth. American stocks have consistently earned more than bonds over the long term, despite regular ups and downs of the market. That’s why investing in in stocks, exchange traded funds (ETF), or stock mutual funds is important when saving for retirement or other far-off goals you need money for.

Stocks: https://www.investopedia.com/university/stocks/stocks1.asp https://www.investopedia.com/terms/s/stockmarket.asp

Net Worth

By Giana

Your net worth is the amount of money you have plus how much you stuff cost (assets) minus how much you owe (liabilities).

Calculation:

list assets with estimated value of each item

list liabilities and the outstanding balances

total assets - total liabilities= net worth

Net Worth Calculation Website

https://www.getsmarteraboutmoney.ca/calculators/net-worth-calculator/

Net Worth App

https://itunes.apple.com/ca/app/wealthplus-net-worth/id933534901?mt=8

Downloadable Net Worth Spreadsheet

https://templates.office.com/en-us/Net-worth-calculator-TM01018308

Your net worth is the money that you have. It is your pay cheque after all deductions are made. Deductions may include mortgage, taxes and debt. A person’s net worth is the amount of money they actually have after everything has been payed off. It is their available means.

http://www.schwabmoneywise.com/public/moneywise/essentials/goals_budgeting/personal_net_worth

Passive income

By Natasha

Passive income is income resulting from cash flow that is received on a regular basis that requires minimal to no effort at all by the recipient to maintain it. The American IRS (international revenue service) categorizes income into three different groups: active income, passive income, and portfolio income. Passive income is taxable, what many people don't know is the difference between ordinary income and passive income. The federal government taxes ordinary income up to 35% and passive income at 15%. You can get passive income by government benefits, rental property earnings, pension, etc. Passive income is important because it's an easier way to make money that isn't active income and it helps people be financially stable because it's a reliable source of income. You also get to keep more passive income because it's taxed a lot less then active income.

Passive income: https://www.investopedia.com/terms/p/passiveincome.asp https://en.m.wikipedia.org/wiki/Passive_income

Consumer Debt:

By Abbie

Consumer debt is when purchased items don't rise in price over time with borrowed money, like with a credit card.  Worst case scenario, it can lead you to bankruptcy.  The purchase could be clothing, gadgets or even a vacation.  It is debt, as the name says, that you owe from goods you have purchased.  Payday Loans and credit cards are just two common examples of consumer debt.  Being in debt is not ideal as it can lead to stress and even make it harder for you to make regular payments.

Although consumer debt may sound bad, there are some positives to it, like going in to debt to boost your earning power.  For example, you could take out a car loan so you could travel to a higher paying job.  It's something you need to be responsible about, so don't go around making rash and the worst thing in the world, you just need to be smart.

https://www.investopedia.com/terms/c/consumer-debt.asp

https://loanscanada.ca/debt/what-is-consumer-debt/

http://www.theheavypurse.com/how-to-teach-your-kids-to-think-about-debt/

Net Worth

by Ben

Some people think that Net worth is how much money you have but Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. How do you figure out your Own Net worth? It takes three steps, first list what you own and estimate the value and add up the total, second list what you owe and add up the total and finally subtract what you owe from what you own and find out your personal net worth. For example a famous person such as Morgan Freeman who has many assets Net worth is two hundred million USD. According to CNN money “the average net worth for the following ages are: $9,000 for ages 25-34, $52,000 for ages 35-44, $100,000 for ages 45-54, $180,000 for ages 55-64, and $232,000+ for 65+.” That just shows that a stars net worth is much more than the average person. It is important to know your Net worth because if your liabilities exceed your assets then you have negative net worth and it’s important to keep track of it to keep it in the positives. Your Net Worth is like a snapshot of your financial situation at the current time.  

Credit Score and Credit Rating

by Alex

Credit score and credit rating are one of the most important things now when it comes to having, and getting a loan. Credit score and credit rating tell banks and dealerships how likely it is that you will pay them back. According to CreditKarma.com, credit score in Canada ranges from 300-900. 900 being the best, and 300 being the worst. Also, a good credit score ranges from 650-719. These are the numbers and the explanations attached to them. If your credit score is between 300-599 means your credit score needs some improvement. From 600-649 is considered fair credit. From 650-719 is considered good. From 720-799 is considered very good, and you will have more credit choices to choose from. And finally, 800-900 is considered excellent. If you have an excellent credit, you are very likely to be accepted and have a lot of choice when it comes to credit and interest rates. But if you are stuck in bad credit, you can improve it in many ways. For example, in the words of Heather Battison, VP of TransUnion Canada, consistency is key: “The most important factor for building and maintaining your scores is to pay your bills on time and in full each month. This activity demonstrates your ability to responsibly manage credit and can positively impact your credit scores.”

This is where I got my information; https://www.creditkarma.ca/credit/i/what-is-a-good-credit-score/

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

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

"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     

Needs vs. Wants

by Katara 

              Needs are things that people have to have to survive healthily (eg. Clothing, food, water, shelter.). But wants are things we desire to have but don’t need at all (eg. A new video game or movie). Abbie definition/ example- “food water shelter space. Things you can’t live without that falls into this category, yawl need Jesus. Wants are luxuries, things that will be nice to have but you can live without.

Is internet a need or want?   
            Abbie/Giana: Internet is a need, because people need it for jobs, schools, and getting a house.
Is drugs a need or want? 

            A drug is a want in the beginning but, if you have been using it for a while, there is a possibility that stopping could kill you. So it becomes a need, coming slowly off of it is the way. not all at once.   
Why is this important to know?  
                it is important to know because people need to know what we need over what we want, most people chose drugs or video games over food and rent most times in their life, so we have to remind ourselves of what we actually need. Drugs may be a need if you’re dug deep into it, slowly getting off it is the best plan, not all at once, and it could cause more damage.

Budgeting

By Jenna-Mae

For young adults, budgeting is a way to properly allocate their paychecks towards retirement savings, student loan repayments, emergency savings, rent and utilities etc. Not only making ends meet, but also preparing a secure, stress free system for an easier lifestyle. Budgeting isn’t only for young adults, it’s a way of creating a plan to spend your money. Creating the plan allows you to determine the advance whether you will have enough money to do the things you need or would like to do.

Seven steps to creating a budget plan.

Step one – set goals write down what’s important to you and use your list to determine goals for your money. Ex. If you plan on buying a particular vehicle then your goal is to save up a moderate down payment.

Step two – identify income and expenses. Look where your money comes from and where it goes now. Include everything for ex. Self- employment income, child tax benefits, child maintenance and spousal support etc. Then record your spending by receipts, bills or gathering information from your bank account.

Step three – separate needs from wants. If you aren’t sure an item is a need or a want, do without it for a period of time.

Step four - design your budget before going further, make sure your expenses aren’t more than your income.

Step five -Use a pay-cheque plan to match your spending patterns to your income schedule.

Step six- manage your seasonal expenses. Create two separate pages of your monthly expenses and your seasonal expenses. Ex. Car repairs, Clothing, Gifts etc.

Step seven – Looking ahead, ask yourself these questions.

• Did I calculate my income correctly?
• Are my expense figures accurate?
• Is everyone's income and expenses accounted for?
• Is my plan based on actual numbers or what I hope I can earn or spend?
• Did I give it a fair chance?
• Do I need professional advice?

For more information look for - https://www.mymoneycoach.ca/money-management/financial-planning-future