Client Story

Investing should be done early : How to invest and manage your finances when your budget is tight.

Jessica,Top 5 banker

Basic Information

Seven years ago, Jessica came to Canada to pursue her studies. After graduating from the Western University Ivey Business School, she moved to Toronto and started working at one of the big five banks. Currently, Jessica and her pet dog Momo live in a studio apartment in downtown Toronto.

Financial Situation

After-tax income of $3600+/month

Rent $1300, no car, no additional income

Student loan $10,000 (already paid off)

Spending Habit

Half of the rent is subsidized by family.

Has a tendency to overspend and frequently maxes out credit cards.

Currently considering a side hustle to increase income.

需求

Scientific financial structure

Save money for the future

Hope to achieve financial independence as soon as possible, without relying on parents.

Summary

In the first half of 2020, Jessica accidentally attended an AI Financial webinar on Thursdays, and after two months of research and inquiries, she contacted an AI Financial advisor in June. Jessica’s request was very clear: “I want to start saving money, but I don’t want to put it in GICs, and I really don’t know what to buy.” “I trust your products, but I don’t have money, and I don’t want to wait 30 years to earn it.”
As of January 2023, we have set up a long-term savings account for Jessica and achieved quick profits through loans.

Challenges

Jessica requested an assessment of her eligibility for investment loans, hoping to see her own loan capacity. However, after the assessment, we immediately found that Jessica’s credit score did not meet the minimum requirement of 680. After sorting out the details, we learned that she had two large credit card debts and only held a credit card from the bank where she worked. She had no car loans, mortgages, or other loans, which led to a low credit score.

At the same time, we suggested that Jessica open a PAD (Pre-Authorized Deposit) TFSA account and make monthly contributions of $500, which exactly meets the annual limit of TFSA, and not to use this part of the funds easily.

Solution

After paying off her credit card debt, Jessica cleared her student loan within 8 months and conscientiously worked to improve her credit score based on the advice of the AI Financial advisor.

How to build credit score:https://www.aifinancial.ca/zh/creditscore/

In the first half of 2021, Jessica was approved for a $140,000 investment loan, officially starting her leveraged investment journey.

Jessica

Several times I wanted to stop my monthly investment of $500, but every time I opened my account and saw the money I had earned, even though it wasn't a lot, I felt that stopping would be too much of a loss. So I persisted for a year, and now I've become accustomed to it. Watching my savings grow more and more, the sense of satisfaction is stronger than buying things. When my dad found out, he even made a video call to me, saying that I am lucky to understand the importance of investment and savings so early. As long as I can continue to persist, I can avoid more mistakes than others.

Investment Direction

In terms of dollar-cost averaging, AI Financial selected index-based guaranteed funds for Jessica, such as the U.S. DAQ Index which includes the high-tech sector.

For the loan portion, Jessica has a relatively high risk tolerance and has no plan to withdraw money in the short term. In addition to high-tech investments, she was allocated to some healthcare sector funds and Fidelity Global Innovators.

At the beginning of 2022, Jessica’s loan account earned nearly 23% profit, and she withdrew some of the profits to cover some of the interest expenses for the year.

In 2022, the market fell sharply and Jessica’s account was down by about 12%. She decided not to withdraw money temporarily and keep the amount of her regular investments unchanged.

2023

Starting in 2023, Jessica began contributing to her RRSP for long-term savings, but not for the purpose of claiming a tax deduction. She plans to leave the contribution room for when she reaches a higher tax bracket in the future. In addition, the interest generated from her investment loans can also be used for tax deduction, which means Jessica doesn’t have to worry about tax issues in recent years.

Why do you choose AI Financial?

· I endorse the funds and overall plan that were selected for me, and it’s evident that there are returns. I am not very worried about the unrealized losses, as you all said, the market will always be on the rise.

· All the advisors are very responsive and honest.

· My advisor and I are both relatively young, so we can empathize with each other, and the things they talk about are more down-to-earth.

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