Financial Literacy: The Money Basics

Before funds, fees or tickers: five ideas decide most financial outcomes. Master these and the investing part gets dramatically easier.

1. Compound growth is the whole game

$500/month at 7% is about $260,000 after 20 years and roughly $610,000 after 30 — the last decade earns more than the first two combined. Starting early beats starting big. Every fee, and every year of delay, compounds against you the same way.

2. Inflation is the silent tax

At 2.5% inflation, today's $100 buys ~$78 worth in 10 years and ~$61 in 20. "Safe" cash guarantees a slow loss of purchasing power; investing exists to outrun it.

3. Risk and return are the same dial

Nothing pays more without risking more — anyone promising high returns with no risk is selling something (often to regulators, eventually). Your job isn't avoiding risk; it's taking the right amount for your horizon and temperament.

4. Pay yourself first, automatically

Budgets fail; automation doesn't. A pre-authorized contribution the day after payday outperforms willpower every month. Build the emergency fund (3–6 months of essentials, high-interest savings) first so market dips never force a sale.

5. Behaviour beats brilliance

The average investor underperforms the very funds they own — by buying after rallies and selling after crashes. The fix is boring: automatic contributions, a written plan, and the discipline not to check daily. Practice surviving a crash in a simulated portfolio before doing it with rent money.

Your literacy checklist

1. Emergency fund funded
2. High-interest debt gone (a 20% credit card is an unbeatable "return" when paid off)
3. Automatic contributions running into a TFSA/RRSP/FHSA
4. You can explain what you pay in fees, in dollars
5. A one-page plan you'll actually follow in a 30% drawdown

Frequently asked questions