1. Millennials need to get on track with savings
Services are available to help this
generation start preparing for
retirement
CAMILLA CORNELL
SPECIAL TO THE STAR
Toronto Star
6 Feb 2016
Chelsea Strachan has seen enough
people her parents’age struggle to
find the money to retire.
“I never want to be in that position,”
says the 24-year-old,“knowing that I
don’t have a comfortable cushion of
money for my future.”
So when Strachan received a small
inheritance of $1,000 a few years
ago, she put it into a registered
retirement savings plan (RRSP). And
now she’s working full-time for a
Toronto-based producer of televi-
sion commercials, she funnels
another $50 monthly into the plan
through an automatic withdrawal
set up at her bank.
Although Strachan has struggled
with money in the last year, she has
resolutely avoided tapping into her
little nest egg.
“If I were in a desperate situation I
would,”she says.“But otherwise I
have no intention of touching it.”
Strachan’s RRSP stash puts her
ahead of many others her age.
A recent survey by TD Bank found
millennials (aged 18 to 33) were the
least likely to say they are thinking
about saving for retirement. Only 52
per cent reported making contribu-
tions to retirement savings plans,
What gets in the way? For starters,
millennials frequently need higher
educational levels just to get a foot in
the employment door,
says Victor Godinho, president and
senior financial planner with Pangea
Personal Financial Planning Inc. in
Toronto.
“Nowadays an undergraduate degree
doesn’t mean much,”he says.“There’s
always going to be someone with an
MA. So they’re getting a $100,000
education that results in a
$40,000-a-year job.”
Consequently, many millennials leave
school with debts that take priority
over savings. And when they do nail
down a job, they may not keep it long
term.
“There’s a lot of turnaround,”says
Godinho,“and lots of contract jobs
with no benefits.”Nonetheless, he says,
starting the saving habit early can put
you ahead of the pack.
Begin by taking a detailed look at
your cash flow:
How much you’re earning and how
much you’re spending. By tracking
expenses, you may be able to
identify areas where you could cut
back, says Godinho. Then you can
put those savings away every
month, first to pay off your debts
and then to save for your future.
If that seems intimidating, get some
help. You can set up a financial plan
yourself, using online resources such
as the Financial Consumer Agency of
Canada’s‘My Financial Plan’
(fcac-acfc.gc.ca) or invest in a session
with a for-fee financial planner
(commissioned advisers may not
want to take on someone who
doesn’t have much money) at a cost
of about $150 per hour.
Even if millennials are just starting their careers, it’s never too early to save for
the golden years. Only slightly more than half of 18 to 33 year olds say they are
saving for their retirement, according to a TD Bank survey.
Client Care: 1-855-415-4075 | Office: (416) 915-4165 | Fax: (416) 915-3177Website: www.pangeafinancialplanning.com

2. “That may sound like a lot, says Godinho,
but“lots of people I know spend that on a
night out. Believe me, it’s money well
spent.”
Still, with markets in chaos and fixed
income investments paying next to
nothing, is there a safe place to invest your
nest egg? Right now Godinho suggests
young investors stash their money in a
high-interest savings account or a GIC.
Although the returns are low — generally
less than two per cent for a one-year GIC
(see ratehub.ca) —“this next year is
expected to be a difficult one for the
markets,”he says.“I don’t suggest locking
the cash in for years. But it’s better to keep
your money in your pocket than lose it.”
As markets start to improve, Godinho likes
ETFs (exchange traded funds) for young
investors. Because they use computer
algorithms (rather than highly paid
managers) to choose a basket of equities,
the management fees charged are minimal
(often 0.5 per cent or lower).
The downside: For investors who want to
make small monthly contributions, ETFs
often don’t make sense, says Dan Bortolot-
ti, an investment adviser with PWL Capital
Inc. in Toronto and author of the Canadian
Couch Potato investing blog.
“This next year is expected to be a
difficult one for the markets. I don’t
suggest locking the cash in for
years. But it’s better to keep your
money in your pocket than lose it.”
“You pay a commission when you buy and
sell them,”he says — typically about $10
through a discount broker.
If you’re investing $300 monthly, you’re
going to pay that every time. What’s more,
novice investors may be intimidated by the
fact that they must buy and sell ETFs on a
stock exchange just like individual stocks.
The balanced index funds offered by
Tangerine offer a user-friendly alternative,
says Bortolotti. (He has no affiliation with
that company and says the product is
unique in Canada.) The beauty of these
funds, he says, is that they invest in a basket
of Canadian, U.S. and international stocks as
well as bonds, so they’re a one-stop solution
for those who aren’t exactly rolling in the
dough.
You can also set up convenient, automatic
contributions from your bank account. And
there’s no commission to buy or sell.
Management fees are slightly higher than for
ETFs (about one per cent), but not as high as
for most mutual funds (often two per cent or
higher).
In the end, though, whatever
investment you choose, both
advisers agree you’re better off
putting money away somewhere.
“I find it comforting to have that
money in the bank,”says Strachan.
“My mom and (my stepfather) have
some money set aside for them-
selves after raising six kids and
working so hard for so many years.
That means a lot to me. I know
they can continue enjoying the
things they like to enjoy, and I
hope to be able to give my
children the same reassurance.”
In January 2015, PANGEA Global
Wealth Group Corporation acquired
VTAG Financial Group Inc. Mr.
Victor Godinho is now President
and Sr. Financial Planner at
PANGEA Personal Financial
Planning Inc. PANGEA Global Wealth Group
Corporation is a Canadian Controlled Private Corporation.
Client Care: 1-855-415-4075 | Office: (416) 915-4165 | Fax: (416) 915-3177Website: www.pangeafinancialplanning.com