My Favorite Wealth Building Habit: Illustrated and Shown with Receipts
Give me 5 minutes and I will show you my favorite wealth building habit, illustrated and shown with receipts. I will show you a recent example of how I do it, the receipts, and the screen shots of every step. It is small, easy, and yet highly effective for building wealth.
Create a Bargain and Invest the Difference
I Need a New Windshield
- $339 + Tax
- $339 + Tax but they subtract $130 if I bring a donation for the local Food Bank
- $209 + Tax
I booked it in with the last shop. The next day I was speaking with a friend about the windshield and he mentioned that I should call Windshield Surgeons and see if they could beat that lowest price. I called them and they could do the same work for $195 + Tax. Great! I called the previous shop back, the one for $209, and gave them a chance to beat the price but they couldn’t even match it. Now confident that I had the best deal, I booked it with Windshield Surgeons and took the car in the next day.
Here’s the receipt for the work:
Bargain Realized
The workmanship was excellent, they completed the job in about 40 minutes, and I took my kids to lunch while they did the work. While we were at lunch, I grabbed my phone and invested the $14.70 I had saved. This is money I would have otherwise spent but because of shopping around and getting a better deal, I was able to keep this money and put it to work. Now watch what happens.
I Put The $14.70 to Work
I open my WealthSimple Investment account and contribute $14.70 to my RRSP (401k) account. When I do, the application immediately tells me what the future value of this investment will be. Check it out:
Making it Count
Yes, that $14.70 becomes $75.54 over the next 29 years! Now this is in a tax deferred account which means this $14.70 will be deducted from my 2020 income and I will receive an additional tax break for this. My marginal tax rate is 30.5% which means I’ll get $4.48 back next year on my tax return. If I invest that too, I’ll turn that into $23.02 which means the $14.70 has turned into $98.56.
Same Product, But $98.56 Richer
This is the result from looking for the best deal, for the same product, and the same service. I didn’t forgo or sacrifice anything. I have the new windshield installed and its working great. The team at Windshield Surgeons did a great job and I’m happy because I have $98.56 of future money in my future pocket.
WealthSimple Invests It
Note the following:
- They take my contribution and divide it across 8 low cost Index ETFs according to my risk profile
- No commissions on even these small investment amounts
- The buying favors those ETFs that are falling behind the target allocations and buying less of the ones that are rising faster
- Purchasing of partial shares means I get very accurate and precise risk exposure and I keep on target
- Please note these are all in CAD funds, not USD, hence why VTI is quoted at $243.87 a share.
- Only $14.31 is invested of the $14.70 because a small portion is always held in cash within the portfolio at all times. So the remaining $0.39 goes to my cash portion in the portfolio.
I highly recommend WealthSimple. It is a very powerful investing and wealth building tool. Just look at what they can do with a small $14.70 investment. This is incredibly powerful. If you would like to get started with them, use my affiliate link and get $50 added to your account when you deposit $500.
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