Historical article note: This article was originally published on 2018-05-06. Rates, policies, home prices, statistics, product names and qualification standards reflect the environment at that time and may have changed. This archive is for historical record and general education only. It is not mortgage approval, investment, legal or tax advice.
Financial wisdom, which we call financial intelligence, is a skill that everyone in modern society aspires to. The reason why it is a skill is that it needs to be learned, rather than being inherited through genes. I rode a bicycle to school every day for six years in middle school. The skill of riding a bicycle is learned, not innate. I didn’t learn to drive a car until I was 37 and have been driving almost every day for more than 10 years. Get a bicycle, as long as it has two wheels, ride on it, find your balance, kick off your feet, and start walking. Driving becomes more familiar. Turning left or right, where to look with your eyes, how to synchronize the accelerator and brake, you don’t even have to think about it, it’s done subconsciously. Acquired skills require repeated use to form grooves in the cerebral cortex and gradually become instinctive. The same goes for financial intelligence. It needs to be learned first before it can become a useful skill. Through repeated use and training, it can form a habit and gradually become an instinct that can identify investment opportunities and take the correct method to turn the opportunities into reality. Financial intelligence is not something you are born with, so you have to learn it, and learn it over a long period of time. All ideas of getting rich quickly despise the difficulty of cultivating financial intelligence, and they will cost you not only money, but most importantly, time. The elements for cultivating and improving financial intelligence are: learning, time, and practice.
Learning is the most important thing. "I have 100,000 yuan now, what is the best investment?" This is a common question on the Internet. Funds, as the gap between income and expenditure continues to expand, sooner or later every family will encounter a situation of surplus funds. Funds are bricks. If you want to build a house, you must have technology, concrete, time and other factors to participate in the construction. Otherwise, this pile of bricks will always be a pile of bricks. The role of learning is to learn to integrate existing resources to build the future. The difficulty in learning to invest is to separate yourself from reality and become your future self. Simply put, it is to acquire a mentality of living in the future. If we encounter a surge in the stock market and real estate values continue to appreciate, people who live in reality will rush in; people who live in the future will think, what will happen if we rush in now? In the investment field, reality and the future are mirror images and opposites. If you want to get high returns in the future, you should buy low now and sell high later, instead of buying high now and selling low later. Some people regard listening to financial news and reading stock market reviews every day as learning. In fact, this is just a step of collecting information after acquiring financial management wisdom, not learning financial management skills. The first step in learning financial management skills is to understand yourself and see if you can adjust your status to live in the future. Human personality can be roughly divided into two types: expressive personality (be good type) and enterprising personality (be better type). People with expressive personality live in the present and show it to others to prove that they are not bad; aggressive personality focuses on the future and does not care about their current performance, but cares more about whether they grow and whether they can achieve their goals in the future. People with expressive personalities are easy to identify because they often post about themselves in the circle of friends. They also buy houses when they see others buying them, and invest in stocks when they see others. Because these people live in the eyes of others, they are led by other people's gazes and comments. Their financial situation cannot be improved, and it is difficult to cultivate financial intelligence. Investment masters are mostly people with enterprising personalities who regard growth as the most important thing and live in the future. "I have 100,000 yuan now, what is the best investment?" The standard answer is: invest in yourself, buy books and videos, and learn financial intelligence. Because there were too few bricks, nothing could be built. As long as it can be accumulated, there will be a compound interest effect. Both funds and knowledge can be accumulated, so they will have a compound interest effect.
Time is the fairest yardstick. In the same time, some people have accumulated huge wealth, while others have gained nothing. The difference lies in how you use your time. When they were young, many people sang high-profile, talked about ideals and feelings, and did not care about money. As I approach my twilight years, I start to care about money. If you don't care about money at the beginning or end, then you have feelings and ideals. If the starting point does not care about money but the end point cares about money, then life is a tragedy. I have accepted mortgage loan applications from several retirees and learned about the post-retirement income of some Canadians. For two 71-year-olds, with all government benefits and pensions added together, the annual taxable family income is only 28,000 Canadian dollars. This is the maximum transfer payment capacity of the government. This is the maximum limit transferred from the pensions paid by these two elderly people when they were young and the current taxpayers. No matter how high it is, the current taxpayers cannot bear it. Most financial management traps prey on people who don’t have enough time. These people don't care about money when they start, don't care about money when they are halfway, and suddenly care about money when they end. If they fail to get rich quickly, they fall into a trap. There is no way to get rich quickly in this world, only financial education that provides quick access to financial management skills. Everyone's life cycle is different, and the corresponding economic cycle is also different. How can there be an investment portfolio and method suitable for everyone. A person who is 34 years old today and a person who is 64 years old today cannot adopt the same financial management methods, and the asset mix they choose should definitely not be the same. This is what the life cycle investment method says. You should choose different assets and different investment strategies according to your age. Someone sees "others" investing in real estate, and he invests in real estate, completely regardless of his own situation. In the investment field, even if you choose the right assets to invest in, you still need enough time. When Buffett said that the snow slope is long enough, he means that the time is long enough, otherwise the snowball will not roll very much. The funds used for investment should be capital that has been sentenced to death. Funds that will be used in the short term should not be used for investment.
Practice is the key to ultimately achieving your goals. Once you have acquired a skill and given enough time, it is all just talk without hands-on practice and actual practice. The phenomenon we see in real life is very interesting. The number of people who dare not go out and practice is far smaller than those who bravely plunge into the market without any preparation. I don’t have time to go to a driving school to learn, so I just drive on the road. Did I choose the right road? Do I know where the accelerator and brake are? The investment market is a competitive hunting ground, and those who end up are either hunters or prey. If you come into play without financial intelligence, you must be prey. Many people asked other spectators for their opinions before leaving the show. They went down after "hearing" that there was good prey down there. As a result, they became the prey, with no bones left and rivers of blood being inevitable. These people who left the house in a hurry were in agony and kept repeating "die early, live early" in their minds. The timing of buying the house was wrong and the motivation was wrong. Let's cut the meat and sell it as soon as possible. There must be such people. The money you get from cutting and selling your meat will no longer be invested in real estate, but try your luck in the stock market. Come On, this is just a change of hunting ground to hunt prey. It is easy to die early, but difficult to survive. Practice is a necessary step, and the best way is to find a coach. There are many professionals in Canada, but some are just professionally qualified traders and not real coaches. In practice, you first need to know how to control the risks. Do not start the car before you find the brake pedal. The second is to learn and accumulate practical knowledge in practice.
Financial intelligence, including 5 basic abilities. Make more money, hold on to your money, develop a financial plan, use financial leverage, and improve your financial information. These abilities can be learned, and with repeated use, they can be integrated into the blood and become a part of the body. Financial intelligence has two basic tools, compound interest and leverage, which can also be learned and mastered. In June, we held a two-day financial and business forum in Great Falls. We did not seek to make everyone get rich quickly, but only wanted to allow participating friends to get started quickly.
More money is the first priority to improve financial intelligence. Only by making more money can the balance of income minus expenses be larger, and only then can you be qualified to put your own investment funds to death, and only then can you be qualified to convert funds into capital, use capital to earn passive income, liberate active income, accumulate after-sleep income, and have a perfect retirement. You only care about money when you are young, and you don’t care about money after you retire. In the first financial and business forum, we dissected a sparrow and asked professionals from the Niagara Chamber of Commerce to introduce local business opportunities in hotels, tourism, wineries, and farms. From the perspective of a businessman, we examined and reflected on ourselves, how to tap and utilize business opportunities, and make more money. In addition, we also invited the president of the largest Chinese real estate company in the Greater Toronto Area to come and share with you whether there are still opportunities for us to make more money in the real estate market.
Guard your money, haha, the one who took your money legally is the Canada Revenue Agency, how can you guard it? Any accident can happen, how can we guard against it? To keep your money, you need to have a plan and plan to survive. We have invited lawyers in the field of wills and estates to share with you the standardized practices for asset preservation and inheritance within the Canadian legal framework. Everyone, the starting point of financial planning is defense, not offense. The most basic financial tool is insurance. Many people avoid the word "insurance" when they hear it, as if they see a liar in a suit. Risks exist objectively and are not subject to human will. Driving every day involves risks, isn't it? Risks cannot be avoided, they can only be dispersed. Buying insurance is to spread the risk before a catastrophic event happens to you. Many people regard buying insurance as an important and not urgent matter. They can put it off for a day, but how do you know what will happen tomorrow? I went out for lunch at noon, walking on the sidewalk, the wind was sunny, and in the quiet and peaceful atmosphere of North York, a desperado drove up and killed 10 people and injured more than 10 others. I went out happily in the morning, but the tragedy of not returning home at night could happen at any time. Insurance cannot make up for the loss when others have done so. The forum guests we invited will explain property insurance and life insurance thoroughly to everyone. Let’s talk about taxes. Since the Second World War in the 1940s, the government has collected taxes from people who earn wages before they even get the money. This temporary wartime practice has continued to this day because the government is increasingly short of money. People are living longer and longer, and the government needs to support the retired elderly and the growing number of civil servants through transfer payments. There are few state-owned enterprises in Canada, and state-owned enterprises such as the post office also lose money. Therefore, the country can only maintain the operation of the country through taxation, feed refugees, and provide benefits to the less fortunate. Therefore, the tax burden can only become heavier and heavier, no matter which party comes to power. The United States had a large-scale tax cut under President Reagan, and then raised it back within a few years. President Trump has started to cut taxes again. How much can be reduced this time, and how many years can it be maintained? Canada is a welfare state that advertises human rights and equality, but these core values and sentiments come at a cost, that is, the tax burden on its citizens continues to increase and cannot be stopped.