Assante hosts investing seminar for teens
By Bill Rea

Mary Rourke and Flavelle Barrett of Assante Wealth Management in King City were offering investment advice to teens recently.

When is the best time to start thinking about retirement savings and other forms of investment?

As soon as possible, was the nutshell answer offered recently.

About 10 teens attended a student investing seminar, hosted by Assante Wealth Management of King City.

The students, mostly children of Assante clients, were both local and from as far away as Alliston.

"My question is 'how to become a billionaire,'" one of them announced at the beginning.

Flavelle Barrett, senior financial planning advisor for the King City office, told them young people tend to be more interested in saving for cars or houses, and start thinking about retirement later. He pointed out everyone has to contribute to the Canada Pension Plan, but a person making contributions for 40 years can look forward to an annual income of about $10,000. People need about $40,000 to $50,000 per year to get by in retirement.

The kids were given some tips and information on the importance of budgeting.

Branch manager Mary Rourke said it includes setting schedules of income and expenses, and she added that can be done monthly, quarterly or annually. She explained that allows for focused spending, and forces one to set priorities. People who are able to budget get an understanding of how to avoid spending money on things they don't need, and make sure they don't spend more than they make, and thus go into debt.

She used sample scenarios to explain how a young person sitting down to budget can quickly learn if he or she is exceeding their income. Some expenses teens have to cover, like toiletries or transportation costs, can be fixed, but there might be room to maneuver in other areas, such as clothes, entertainment, school lunches, etc. Brownbagging lunch a little more frequently, or showing a bit more restraint when it comes to adding to the wardrobe are possible ways of bringing spending under control.

People who spend more than they have need to get the money from somewhere, and that source can often be a credit card. It's not much of a bargain, because of the interest rates they charge. Rourke said a teen who overspends to the tune of $40 per month can look forward to interest costs of $80 to $90 a year. And Barrett pointed out they aren't setting aside anything for future purchases.

Budgeting can mean making some hard decisions, Rourke said.

Barrett pointed out many of the kids will be thinking about going away to university in the next couple of years. "You are responsible for the clothing side, the food side and whatnot," he observed.

They will be forced to make decisions, and they try to live within them, which he agreed can be difficult.

He suggested they figure their expenses over the school year, including tuition, accommodation, food, phone, miscellaneous, and possibly divide that by two, to cover both semesters, and then factor in their income.

Barrett said his children all employed this method, and "they all blew their firstterm budgets."

But they got the hang of things by the second term.

When it comes to how to save, Barrett suggested trying to set aside a fixed amount every month, and he said it's usually possible to

have than money automatically withdrawn from bank accounts.

The money that's been set aside can be invested, and Barrett cited the magic of compounded interest to point out how beneficial that can be.

He used the example of the girl who set aside $30 per month, at seven per cent, on top of an initial deposit of $1,000, starting when she was 18 and stopping when she was 35, and compared her to the man who started with the $1,000 when he was 35 and put in $60 per month, and the man who waited until he was 55 and put in $600 monthly. By the time they were 65, the girl was ahead, with more than $111,000, and that's despite the fact she had made no additional contributions for 30 years. The man who started at 35 only had about

$78,000 when he was 65 and the man who saved for the last 10 years was nearing the $105,000 mark.

Barrett also reminded the students about keeping some money back to cover emergencies, like unanticipated car repairs.

As well, Rourke stressed the need of being aware of one's credit history. She said it's not a major problem to occasionally be late making a payment on a bill or credit card, but if it becomes a habit, then one can get a black mark on their credit rating. There have been cases of people with good jobs and lots of money who were unable to obtain mortgages simply because they had poor records when it came to paying bills on time.

They both warned the kids about over-using their ATM cards, because transaction fees mount up.