Personal Finance and Investments Through an Immigrant’s Lens

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Relocating to Canada can sometimes feel like jump-starting a car in the middle of the highway and joining the traffic flow straightaway. First-generation immigrants have unique settlement and integration experiences, and money tends to play a big role.

Money for Emergency fund in the glass jar. Concept pictured by Sergeychuyko

The day-to-day money decisions you make impact the ‘if’, ‘how’ and ‘when’ you achieve financial stability. Your financial decisions as a first-generation immigrant shape the foundation upon which the second generation will build. While not an exhaustive list, here are ten tips to get you on your way to sound financial health in Canada.

  1. Protect your cashflow: your income is your greatest asset. It enables you to cover your living expenses and provides the seed money for investments. Once you cover basic living expenses, ensure that you put as much dollars as you can towards investments to grow your net worth.
  2. Build a good credit history/score: Accessing loans requires good credit history/score. If you apply for a mortgage, your credit history is one of the most important factors that will be assessed to determine your eligibility.
  3. Take advantage of registered plans for investments: every income you make in Canada is subject to tax, including investment income. Investments can be made in ‘Registered’ or ‘Non-Registered’ accounts. The term Registered connotes a special tax status, which could either be tax exemption or tax deferral. Everyone is awarded a contribution limit for Registered accounts and there are penalties for contributing above your limit. Some common Registered accounts are TFSAs, RRSPs, DCPPs and RESPs.
  4. Leverage your employer sponsored plans: if your employer provides a savings plan, it may include matching contributions. Even where contributions are not matched, the administration costs to you are likely to be lower than an individual plan.
  5. Get adequate insurance coverage: life is filled with risks. The right insurance coverage helps to reduce and may eliminate these risks. Death is a certainty for everyone but the ‘when’ is uncertain. Life insurance can alleviate the adverse financial implications on a deceased’s financial dependants. Illness and injury are other risks. Health and disability insurance help reduce the financial impacts of these risks.
  6. Save towards your children’s post-secondary education: education is a basic right of children in Canada. Primary (elementary) and secondary education are tuition-free in public schools, however post-secondary education is not. Saving towards post-secondary education can be done using  RESPs. This can save your children from taking student loans which positions them for a debt-free start to their adult life.
  7. Start investing early: time is the best friend of investments. It presents a wonderful opportunity for compound returns, allowing your investment to grow at an exponential rate.
  8. Limit consumer credit: credit for consumption is one of the easiest types of credit to obtain in Canada and tends to have higher interest rates which can make unpaid balances build up quickly over time. Repayments also reduce your cashflow; every dollar spent on repayment is a dollar unavailable for investments.
  9. Buy your home as soon as you can without giving up too much of your cashflow: owning your home can be a great way to increase your net worth. However, you must find the right balance by ensuring your mortgage payments do not consume your cashflow to the extent that your home becomes your only investment.
  10. Be consistent: focus and consistency in any endeavour are key to success. I once heard Geology defined as the study of pressure and time. Isn’t it amazing how water can cut through rock by running over it continuously over time? Whatever your plan, stick to it, reassess regularly, and stay the course.

Integration is more a marathon than a sprint, it takes time, and there is a need to prioritize the different parts based on your unique circumstance.

Olajide Moradeyo

Jide is a personal finance and investment enthusiast. He immigrated to Canada with his family in 2019.
He started his career in Retail Banking in 2007 and transitioned to investments and capital markets in 2013. He has worked as a Stockbroker and Investment Advisor and is a firm believer in the effectiveness of consistently saving and investing a portion of one’s income to secure one’s financial future. One of his favourite quotes on personal finance is: ­“if you don’t learn how to make money while you sleep, you will work until you die”, a quote he believes to be a self-fulfilling prophecy.
He is a lover of nature, and his interests include taking on nature walks, swimming, travelling, reading, playing basketball and watching soccer. He lives in Ontario, Canada with his family.

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