So you are graduating from school and you want to save for your future. You go to a financial planner and you say I
have $75 dollars a month to put away, can you make a recommendation? I have come across this situation more
than you can imagine and my answer has changed over the years.
have $75 dollars a month to put away, can you make a recommendation? I have come across this situation more
than you can imagine and my answer has changed over the years.
Today, more often than not though, I would probably give the same answer. If you have a job with a group plan
which has disability coverage, I would suggest that someone spends $25/mth on insurance and put $50 into a
savings “fund”. That $25 a month should get you a small life insurance policy as well as either a small critical
illness or catastrophic drug policy. The $50 should be put away in a GIC or accumulation annuity until you have
$2,000 dollars. Once you accumulate $2,000, you can put money into a non-registered money market mutual fund
or money market segregated fund until you accumulate $10,000. From there, in association with your GIC or
non-registered funds, you can graduate to more complicated instruments - like ETFs, stocks and equity or bond
mutual funds - or registered accounts like TFSAs, RRSPs, RESPs or the like.
which has disability coverage, I would suggest that someone spends $25/mth on insurance and put $50 into a
savings “fund”. That $25 a month should get you a small life insurance policy as well as either a small critical
illness or catastrophic drug policy. The $50 should be put away in a GIC or accumulation annuity until you have
$2,000 dollars. Once you accumulate $2,000, you can put money into a non-registered money market mutual fund
or money market segregated fund until you accumulate $10,000. From there, in association with your GIC or
non-registered funds, you can graduate to more complicated instruments - like ETFs, stocks and equity or bond
mutual funds - or registered accounts like TFSAs, RRSPs, RESPs or the like.
Now some might say that putting money into insurance as a student is a “stupid” way to go. I disagree. For, people
often don’t realize that bad things happen all the time. My experience has dissuaded me of the notion that bad things
only happen to bad people. Unfortunately, bad things happen to us all. So I can tell you about a baker in their mid
20s who fell into a vat, a contractor in his 40s who fell off of a roof or a business owner in his 20s who had a shelf
fall on them. I can talk about a hairdresser who developed cancer in their 30s; or the father who died in his 30s. I
know from experience that bad things happen. When those things happen, you want a safety net.
often don’t realize that bad things happen all the time. My experience has dissuaded me of the notion that bad things
only happen to bad people. Unfortunately, bad things happen to us all. So I can tell you about a baker in their mid
20s who fell into a vat, a contractor in his 40s who fell off of a roof or a business owner in his 20s who had a shelf
fall on them. I can talk about a hairdresser who developed cancer in their 30s; or the father who died in his 30s. I
know from experience that bad things happen. When those things happen, you want a safety net.
Experience also tells me that while our healthcare system is good; it is also not perfect. One problem that often
comes up is the cost of some drugs. When one looks around one can find cancer drugs that cost between $4,700
to $33,000 a month. For many Canadians, drugs such as those mentioned are out of reach. While, if you have a
groupbenefits plan, you might be unlucky to find that the drug formulary may not pay for those same drugs. But
a catastrophic drug policy could defer some of the costs. One such plan, as an example, for a twenty year old
could cost as little as $22/mth and it would cover all the drug costs after the deductible ($5,000/year) is spent.
That coupled with the medical income tax credit would ensure that any person could receive the drugs they
require. This for me is one good reason for a critical illness or catastrophic drug plan for a young person.
comes up is the cost of some drugs. When one looks around one can find cancer drugs that cost between $4,700
to $33,000 a month. For many Canadians, drugs such as those mentioned are out of reach. While, if you have a
groupbenefits plan, you might be unlucky to find that the drug formulary may not pay for those same drugs. But
a catastrophic drug policy could defer some of the costs. One such plan, as an example, for a twenty year old
could cost as little as $22/mth and it would cover all the drug costs after the deductible ($5,000/year) is spent.
That coupled with the medical income tax credit would ensure that any person could receive the drugs they
require. This for me is one good reason for a critical illness or catastrophic drug plan for a young person.
However, the other point is simple: when one leaves school their health will likely decline. For, when most of my
friends left school - high school, college and/or university - we gained weight, we exercised less and we started
taking more pills. It is one of the realities of a modern life. In a professional situation, we often are not as
energetic as we once were. So, if one gets insurance as they leave school, there is less likelihood of being
rejected for pre-existing conditions; and the stats reflect this. From ages 1-4, the incident of diabetes is low:
2 in 10,000 among boys and the same among girls. When one is between 25 to 29, the incident is higher: 1
for 1,000 boys and 1.1 for girls. But it only jumps from there. The next band is 30-34 and by then it has
doubled: 2 in 1,000 for men and 2.2 in 1,000 women. It nearly doubles until one hits their 55th year. Then it
increases again. By the age of 75, the incident is 20 in every 1,000. Consequently, it makes sense to get all life
and health insurances earlier in one’s life.
friends left school - high school, college and/or university - we gained weight, we exercised less and we started
taking more pills. It is one of the realities of a modern life. In a professional situation, we often are not as
energetic as we once were. So, if one gets insurance as they leave school, there is less likelihood of being
rejected for pre-existing conditions; and the stats reflect this. From ages 1-4, the incident of diabetes is low:
2 in 10,000 among boys and the same among girls. When one is between 25 to 29, the incident is higher: 1
for 1,000 boys and 1.1 for girls. But it only jumps from there. The next band is 30-34 and by then it has
doubled: 2 in 1,000 for men and 2.2 in 1,000 women. It nearly doubles until one hits their 55th year. Then it
increases again. By the age of 75, the incident is 20 in every 1,000. Consequently, it makes sense to get all life
and health insurances earlier in one’s life.
Furthermore in that vein, I will admit that the leading cause of death are accidents and suicides. Yet, it is also
true that after your twentieth year, you are more likely to have difficulties from cancer. We know that Half of all
Canadian will develop cancer over their lifetime and that Cancer is the leading cause of death in Canada
- responsible for about 30% - of them. So if you are in your twenties and creating a financial plan, I like to
remind people that things happen. So when one leaves school, one should think about a simple plan: get a life
insurance policy, a will kit, a critical illness or catastrophic drug plan and save for the future.
true that after your twentieth year, you are more likely to have difficulties from cancer. We know that Half of all
Canadian will develop cancer over their lifetime and that Cancer is the leading cause of death in Canada
- responsible for about 30% - of them. So if you are in your twenties and creating a financial plan, I like to
remind people that things happen. So when one leaves school, one should think about a simple plan: get a life
insurance policy, a will kit, a critical illness or catastrophic drug plan and save for the future.
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