By Caroline Grimont
Every friend circle has types of friends. There’s the ‘Serious’ friend, who you go to for advice. There’s a ‘Fun’ friend, who you go out with on Friday night. There’s the ‘Quirky’ friend, who knows when the circus is in town. There’s the ‘Business’ friend, who knows all about money and savings and investment. Because I’m writing this blog, you probably think I’m the ‘Business’ or the ‘Money’ friend, but you’d be wrong. I’m the ‘Travel’ friend.
I grew up in Europe, so I still often go back there, and travel all over the continent for pleasure. But I also lived and worked in Asia, where I have many friends, so I spend quite a bit of my vacation time there as well. And of course, I live in Canada and spend a lot of time in the U.S. on work. Oh, and did I mention that I also have family in Australia, who I frequently visit? Which is why, yes, I am the ‘Travel’ friend for sure.
But equally, I can claim the hat of the ‘Money’ friend too, because through my travels, and the large amounts of time I have spent in different countries, I have learnt many savings tips and quirks from all the cultures I was fortunate enough to experience up close. I have assimilated many of these ideas and attitudes into my personal portfolio and want to share some of them with you today.
Save First, Spend Later.
Early on in my career, I spent many happy years living and working in Singapore. This was a good thing, because that’s where I learnt the importance of saving. According to the World Bank, in 2023, Singapore and Singaporeans had gross savings of over 40% of GDP. (As the World Bank describes it, gross savings represent the difference between disposable income and consumption and replace gross domestic savings, a concept used by the World Bank and included in World Development Indicators editions before 2006.) I’m glad I took home this lesson early on, because it introduced me to the single biggest gift I received in my investing life – the power of compounding.
Albert Einstein allegedly called compound interest the 8th wonder of the world – I have no idea if that’s true, but it is true that over time, compound interest can work wonders on your portfolio. In a nutshell, compound interest means the accumulation of interest on top of your principal, over and over again.
Let’s put some numbers on that. Say you start with an initial sum of $1000. Then you add $1000 a year on to that for 30 years, and put it into a product that gives you around 7% returns, say something like HBF. How much would you end up with? We used the Ontario Securities Commission’s compound interest calculator to find out. Here’s what it said: Your initial investment of $1,000.00 plus your yearly investment of $1,000.00 at an annualized interest rate of 7% will be worth $106,560.12 after 30 years when compounded monthly. Over $75,000 of that was interest.
Cash is King
I love trains. I try and go on train journeys everywhere I can, and my favourite train ride so far also made it to the top of the Conde Nast Traveller’s 2024 Best Train Journeys in the World list – India’s Palace on Wheels. While that luxury journey is one that I’d never forget, I also remember another lesson from my time in India, cash is important. Now during my time in India, I took that literally and paid for most stuff with crisp currency notes. But another way of looking at it, and one that I often do these days, is to try and stay out of debt as much as possible.
According to Statistics Canada, in 2024, Canada had the highest household debt to disposable income ratio in the G7, at 185% compared with an average of 125% for all G7 countries. Out-of-control debt makes it hard to build a stable financial future, and I was glad to learn to be wary of debt early on.
Cash Makes for a Great Gift!
And speaking of cash – though I think this is a universal thing and not connected to any one culture – cash makes for a great gift! Having said that, the reason this tip made its way into my travel list is a week I spent in China a few years ago. It was the week of the Lunar New Year, and I got to experience the festivities with a few local friends, who introduced me to the wonderful tradition of the ‘Red Envelope’ or ‘Red Pocket.’
The way it works is, you offer a red envelope filled with cash to those younger than you, or anyone that you’d like to gift. In my friends’ cases, they offered red envelopes to their parents, cousins, and others. I quickly realized that for the youngsters in the group, this was the best part of the festivities, aside from all the delicious food, of course!
Memories of my time in China stayed with me, and these years, I give myself a ‘Red Envelope’ of sorts at special times in my own life – not in the form of physical cash, but an equivalent product, like TBIL, and save up for special treats like another train ride. Perhaps a 2026 ride on the Orient Express?
Make Space for Happiness
As I spend time in some parts of Europe, one thing strikes me – the people seem happier, and more at peace. This seems to be borne out by the World Happiness Report, which in 2023 found that the three happiest countries in the world were Finland, Denmark, and Iceland.
I’ve been to Finland and Denmark, and am planning a trip to Iceland, and I’ll report back if I’m happier having completed the trifecta. But until then, I’m following the five principles laid out by Elizabeth Dunn and Michael Norton in their book Happy Money – The Science of Happier Spending:
- More Experiences, Less Stuff
- Buy Time
- Spend on Others
- Make Spending a Treat, and
- Pay Now, Use Later.
I’ve found that following these principles in the best way I can make me happier overall, and that helps my money too!
Rationing: Makes Special Times More Special
My grandmother often told me stories about war time rationing in Britain. The Imperial War Museum website explains it like this, “In January 1940, the British government introduced food rationing. The scheme was designed to ensure fair shares for all at a time of national shortage. Basic foodstuffs such as sugar, meat, fats, bacon and cheese were directly rationed by an allowance of coupons. Housewives had to register with particular retailers.”
Grandmothers like mine had a different version of this tale. Many of them remember saving up sugar for birthdays, or Christmas. With things being so freely available in Canada, I can have as much sugar as I want, whenever I want, but I also find that perhaps birthday cake doesn’t mean as much to me as it did to people like those British Grandmas. So, I save up for special treats, and I find that the wait makes it all the sweeter!
America and the FIRE Movement
Before anyone gets upset at the topic title here, I don’t claim to be the most knowledgeable expert on all things FIRE (financial independence, retire early) nor can I assert that FIRE is for everyone. What I can say is that I first heard about the FIRE movement from my friends in the United States of America, and I do think that some of the pillars of the movement are appealing.
According to Wikipedia, the main ideas behind the FIRE movement originate from the 1992 best-selling book Your Money or Your Life by Vicki Robin and Joe Dominguez, as well as the 2010 book Early Retirement Extreme by Jacob Lund Fisker. There are many, many offshoots of the original FIRE movement, including Lean FIRE and Fat FIRE. To me, I like the idea of maximizing savings to make my retirement as comfortable as possible.
Canada: Home of the World’s First ETF
Finally, less of a tip, and more of a utilitarian thing – where you invest your money matters. And did you know that the world’s first exchange traded fund was launched right here in Canada? Today, Canada is home to close to 1500 ETFs, with combined total assets of over half a trillion dollars!
Some of those assets are mine, as I choose to invest in ETFs, because they are (in many cases) cheaper than mutual funds, are liquid, convenient, and easy to access. You can access a detailed guide on how to pick the best ETFs here.
So, there you have it. My seven lessons learnt from Asia, Europe and America. If you have some tips you think I should know, send them my way, and perhaps your ideas will make it into my next column!
Disclaimer
Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.) Please read the relevant prospectus before investing. This article is meant to provide general information for educational purposes. Any security or investment mentioned herein is for illustration purposes and should not be taken as an invitation to purchase or sell such security or investment. The content of this article should not be construed as investment advice. Tax, investment and all other decisions should be made with guidance from a qualified professional.
