We're Paying A LOT More In Taxes...😬

Happy Sunday, June 1st! The first of the month aligning with the first of the week always scratches a satisfying itch for us. 

We’re back with another issue of Money Convos with Steph & Den, and we have so many money topics to cover with you today - so, let’s get into it! 

Here’s what’s up in this copy 🤑🗞 

• We’re in our taxable investing era 👀

• It’s Steph’s birthday month 🧁

• We opened the stock market! 🥳

• Why couples need to talk about money 💰❤️

• The stock market is back up 📈

Money Convo Of The Month

Let’s Talk About Taxable Investing

We’ve been investing consistently for just over 5 years now, and we’ve recently gotten to the point where our tax-advantaged investment accounts (aka our ‘registered’ accounts) are almost completely maxed out (and in Steph’s case - as of this morning - they are officially maxed out!). 

If you’re wondering what we mean by ‘maxed out’, it basically means that we’ve made it our mission over the years to consistently invest into the accounts that provide us tax benefits, with the goal of hitting the maximum amount of money that we’re allowed to contribute to each and every one of them, ideally while we’re still young and have the ability to do so. 

And we’re going to continue to try and fully max out these accounts every single year as we gain more contribution room (because all three accounts - tax free, retirement and first home - gain more contribution room every January), but we also know that sometimes life happens. So, whether it’s kids, aging parents or whatever it is that’s going on in our lives, we know that there’s a possibility that there might come a time when we’re unable to invest as much as we’d like to (and that’s okay - but we hope to keep up this accomplishment!). 

Now, if you’re wondering what comes next after you max out all of your tax-advantaged accounts, this is where a taxable investment account comes in. 

Unlike your tax-advantaged accounts that provide benefits that save you money on taxes (like tax-sheltered growth), taxable accounts are the exact opposite - they provide you with limited benefits.

A taxable account is considered a flexible investment account, and it allows you to invest without any contribution limits (aka an unlimited amount of money), but you do have to pay taxes on the income that you earn from your investments (this could be interest earned, dividends and/or capital gains). 

The main reason why someone would want to use a taxable investment account is because they wouldn’t really have any other choice (aka they’ve already maxed out their tax-advantaged investment accounts). When that happens, it’s a fantastic option, as it allows you to continue investing your money (even though your money is guaranteed to be taxed at some point in the future). 

TLDR? A taxable investment account is the next step after you max out your tax-advantaged investment accounts, and it allows you to continue to invest your money… you just have to pay taxes. 

Now, on top of keeping taxes in mind, there’s something else that you have to keep track of when you invest using a taxable investment account, and it’s a very important thing that’s not always talked about. It’s called an Adjusted Cost Base (ACB). 

Here’s the gist - when you’re using a taxable account to invest, you have to keep track of your ACB, because it’s essentially a running total of how much you’ve paid for a particular investment (aka a stock or an ETF that you’ve purchased). The reason you have to track your ACB is because you run the risk of paying too much (or too little) in taxes, and you could potentially make things more difficult for yourself during tax time. 

BTW - some brokerages (or investment platforms) track this amount for you, but they can’t guarantee that the ACB they provide you with is 100% right, and ultimately you’re responsible for ensuring that your ACB is tracked correctly for every single investment that you purchase. You also only have to do this for your taxable investment account(s), not for your tax-advantaged investment accounts.

If you’re interested in learning more about how this works, and about our taxable investment account strategy, check out this YouTube video on our channel. 

It’s Officially The Last Year Of Our 20s 🥳

Does ‘a couple half in our 20s’ sound as good as ‘a couple in our 20s’? Asking for a friend… 

All jokes aside, Dennis’ 30th birthday is in a few months, and my 29th birthday is in literally two days, which means that it’s officially the last year of our 20s as a couple. 

For me specifically, knowing that my final birthday with a ‘2’ in front of it is about to be here, I’ve been reflecting a lot on all of the money goals that I’ve already hit, and still want to hit, before I turn 30. So, I thought it would be fun to share my list with you! 

Obviously there are some big goals that I’ve been able to hit, and I think it’s really important to acknowledge those successes and celebrate them! I’m proud of the intentional work I’ve put in, on top of what I was blessed with (aka starting off with no student loan debt, etc). 

I also have other goals that Dennis and I would love to hit together that you see on that list, but the main one is really continuing to grow my ‘money knowledge’ - learning is a lifelong journey, and I specifically want to really learn more about retirement planning over the next year or so (I know, it’s early - but it’s a part of our job, and I’d love to learn more about it and work backwards)! 

The next year is going to be an exciting one, and I honestly can’t wait to close out my 20s and enter my 30s - but, let’s not rush it too much!

 ETF Investor Day 📈

A few weeks ago we were invited to open the stock market in celebration of ETF Investor Day, and it was so much fun! 

We went to the Toronto Stock Exchange for this event, and it was our second time being there for the market open - by the way, ‘opening the stock market’ means literally pushing a big button at 9:30am on the dot, which is when the stock market starts trading for the day (sometimes it’s a bell that you ring, but at the TSX, it’s a button that you push!).

Then, we stuck around to hear a bunch of different panels hosted by the BMO ETFs team that all focused on being do-it-yourself (DIY) ETF investors… which you know is exactly how we invest! It was really nice to hear from other investors who also prioritize both 1) investing in ETFs, and 2) investing on your own. It’s not common for us to hear that combo at events we’re invited to! 

If you want to hear more about what ETF investing is, and why it’s our investment option of choice, check out this video. If you want to see more BTS of the event, check out the last video in our ‘Events’ highlight.

5 Money Topics Couples Need To Talk About 👩🏼‍❤️‍👨🏿

We came across a quote recently that said ‘most couples don’t talk about money unless they’re fighting about money’, and that’s sadly the truth! 

It’s so important to talk about money in a relationship, to avoid potential issues, and so that you both feel empowered - as a couple - in the life decisions that you’re making.

We decided to put together a list of 5 money topics that you need to talk about for a healthy relationship - 

1. How much money do you make? Salary transparency is important - it’s good to know how much money you’re both bringing in, so you can decide what’s ‘fair’ when it comes to your expenses as a couple. 

2. How much debt and savings do you have? Financial transparency in general is also important! Knowing these money facts about each other lay the foundation for your future together. 

3. What are your money goals? You want to see if you’re on the same page, and if you’re financially compatible. Do you want to buy a house? Retire early? Travel often? Go back to school at some point? Pay for your kids' education one day? Are those goals aligned?

4. What are your family financial obligations? Are either of you planning on taking care of your parents financially one day? What does that look like? Having these convos early can help you plan accordingly. 

5. What are our money responsibilities as a couple? Who’s going to pay for what? What does living together look like from a financial POV? Do we want to combine our finances one day? No matter what you decide, it’s important for you both to always have open communication about money, and include both people in big decisions. 

If you and your partner haven’t talked about these money topics, find a time to sit down and do it! It helps to be vulnerable first - share why you want to have this convo, and give your answers and thoughts first, so your partner is more comfortable opening up. 

Check out this post for more details on this topic, and this video for how we’ve personally dealt with these questions as a couple.

The Stock Market Roller Coaster 🎢

ICYMI, the stock market has been a busy place over the past few months. We saw it go down very quickly a few months ago, and now it’s fully recovered and is hovering around its YTD high.

So, what do we want to say about this? 👀

Well, our main thoughts are around the emotional roller coaster that short-term investing can take you on! 

Over the short-term (think: 1-3 years) the stock market is constantly dipping down and rising up. We’re going to see behaviour like this, for different reasons, again and again and again - and it really can stress you out if you’re not investing in strong long-term investment options.

But, if you are, and you’re a long-term investor, the short-term roller coaster ride shouldn’t bother you at all. It’s kind of like riding a roller coaster, but with confirmation that you’re going to be okay (seriously, wouldn’t that be nice?), because you’re in it for the long-term.

If you zoom out, and look at the stock market over the long-term (think: 5-10+ years), it historically always trends upwards. 

So, as a long-term investor, don’t get too scared of the dips, and don’t get too excited about the peaks - just keep doing what you’re doing. We hope that’s a helpful reminder!